[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

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                      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.
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    \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.
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                                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).
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                     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.
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    \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).
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                         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: [email protected]) or Brenda 
S. Farrell at (202) 512-3604 (e-mail address: [email protected]). 
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.]

                                 
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