[Senate Hearing 108-]
[From the U.S. Government Publishing Office]



 
       DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 2004

                              ----------                              


                        WEDNESDAY, APRIL 2, 2003

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

                         DEPARTMENT OF DEFENSE

                         Department of the Navy

STATEMENT OF HANSFORD T. JOHNSON, ACTING SECRETARY OF 
            THE NAVY
ACCOMPANIED BY:
        ADMIRAL VERNON E. CLARK, USN, CHIEF OF NAVAL OPERATIONS
        GENERAL MICHAEL W. HAGEE, USMC, COMMANDANT OF THE MARINE CORPS

             OPENING STATEMENT OF SENATOR DANIEL K. INOUYE

    Senator Inouye [presiding]. I have just received word that 
the chairman of the committee is occupied at this moment 
getting prepared for the supplemental appropriations debate.
    So I will open the proceedings, and I thank all of you for 
being here this morning. We have some new faces, new Navy and 
Marine Corps leaders with us here today. For the first time, we 
have with us our Acting Secretary of the Navy, Mr. Hansford 
Johnson, and General Michael Hagee, Commandant of the Marine 
Corps. I look forward to working closely with both of you.
    I would like to take a moment to recognize and commend the 
men and women of the Navy and Marine Corps for their selfless 
service in the war in Iraq and the global war on terrorism. 
They are doing courageous and valiant work in the Gulf at this 
very moment and obviously, all of us are extremely proud of 
their service and their commitment to our Nation, and we wish 
them and their families the very best as they continue with 
this difficult and honorable mission.
    We are here today to discuss the Navy and Marine Corps 
fiscal year 2004 budget request. Again, we face challenges as 
we attempt to strike the appropriate balance between the needs 
of today and the transformation of tomorrow's fleet. This 
committee has demonstrated its commitment to our naval forces 
year after year. As always, we will want to hear from you about 
what is included in the budget for the men and women serving in 
the Department, but we are also interested in discussing the 
planned size of the naval fleet and the Marine Corps aviation 
programs.
    With that, I look forward to hearing your remarks today and 
extend to you the apologies of my chairman, and we assure you 
that we will continue working with you as we maintain the 
finest Navy and the most courageous Marine forces in the world.
    Senator Cochran.

                   STATEMENT OF SENATOR THAD COCHRAN

    Senator Cochran. Mr. Chairman, thank you very much. I am 
pleased to join you in welcoming our distinguished panel of 
witnesses before the committee today. Secretary Johnson, 
Admiral Clark, Commandant Hagee, thank you very much for your 
cooperation with our committee. We are looking forward to your 
presentation about the budget request for the next fiscal year 
and your observations about how we can be helpful to ensure 
that our Navy and Marine Corps remain well-supplied and well-
funded with the resources that you need in order to do your 
part to protect the security of our great Nation, and to 
continue to successfully wage the war against terror. I think 
your accomplishments to date have been truly outstanding in 
every way. You have reflected credit on our country and we 
thank you for your service.
    Senator Inouye. Thank you very much. May we begin with the 
testimony of the Secretary?

                     STATEMENT OF SECRETARY JOHNSON

    Secretary Johnson. Thank you, Senator Inouye, Senator 
Cochran. It is an honor to appear before you today and update 
you on the Department of the Navy and discuss our 2004 budget.
    Today in the Persian Gulf and around the world, our Nation 
is served by the most professional and capable naval force in 
the world. You should take immense pride as you did in your 
comments, Senator Inouye, with how you helped fund this force 
and prepare it to do what they are doing today. On behalf of 
each sailor and Marine, I thank you for your continuing strong 
support.
    The Navy and Marine Corps, alongside their Army, Air Force 
and Coast Guard partners, are on station in every corner of the 
world, taking the fight and global war on terrorism to the 
enemies, determining aggression against our Nation and our 
allies and representing U.S. interests abroad.
    Today, over 68 percent of our ships are underway, including 
seven deployed carrier groups. Sixty-six percent of Marine 
operating forces are deployed. The Navy-Marine Corps team's 
successes are reflective of this strong sustained support that 
you and the Congress have provided.
    As well as on the home front, our dedicated civilian and 
contractor employees, the great American moms and dads, wives, 
husbands and children who support these forward deployed 
defenders of freedom, we are eternally grateful for the hard 
work and sacrifice that they are making for our Nation each 
day.
    Our people remain our most precious asset. Our ships, 
submarines, aircraft and ground combat assets are of no value 
without them. The 2004 budget sustains the tremendous progress 
we made in personnel and readiness accounts. We have kept faith 
with our people by requesting targeted pay raises and further 
reduction of the out-of-pocket housing expenses. Recruiting 
goals are being met and retention remains strong. In sum, our 
Navy-Marine Corps team is well-trained, highly motivated, and 
meeting the Nation's call.
    Having made great strides in our current readiness and 
personnel programs, we must now turn to recapitalization and 
modernization. Two-thirds of our Department's top line 
increases for 2004 is dedicated to increased procurement.
    Eleven billion four hundred million dollars is dedicated to 
shipbuilding. This provides for the construction of seven new 
ships, two SSBN to SSGN conversions, and the first ship in the 
cruiser conversion program. Shipbuilding, while not at the 
optimal ten ships per year, represents a significant increase 
and a step in the proper direction.
    I am also pleased to report that the budget funds 100 new 
aircraft, it sustains the MV-22 program, continues development 
of the joint strike fighter, and continues a procurement 
process for the advanced amphibious assault vehicle. Moreover, 
we are pressing ahead with innovative ways to ensure that we 
are not locked into purchasing platforms whose electronic 
sensor and weapons systems are obsolete upon delivery.
    We are moving forward to procure ships not as a total 
package, but in the phased approach, the sea frame or hull 
followed by the weapons and followed by electronics. This new 
strategy will allow us to acquire our systems in the right way 
and insert them at the right time in the construction process.
    The budget reflects careful balancing of competing demands 
and risks. This is most evident in our decision to accelerate 
the retirement of the oldest, least capable and most 
maintenance-intensive ships. We are convinced that by selecting 
near-term divestment of platforms least relevant to our future 
is the fastest and most efficient way to recapitalize and 
modernize, and transform the Navy and Marine Corps without 
compromising our ability to accomplish the ongoing missions.
    In total, the retirement of legacy systems and application 
of transformational business practices will result in savings 
of $1.9 billion. More importantly, the budget builds the 
concept of transformation into our recapitalization and 
modernization.
    This commitment to transformational platforms includes the 
next generation aircraft carrier, the CVN-21, the DDX, which is 
the centerpiece of the Navy's future family of ships, and the 
Littoral combat ship, LCS, which is the newest member of our 
family of ships and is designed from the outset as a focused 
mission ship that uses reconfigurable mission modules to 
counter the most challenging threats in Littorals.
    In aviation, we continue to move forward with the joint 
strike fighter, the advanced Hawkeye upgrade program, and this 
year we are introducing the EA-18G, which will replace the EA-
6B Prowler, which is our most maintenance-intensive aircraft in 
the fleet today.
    Force Net is a future architecture that will enable 
netcentric warfare throughout our forces.

                           PREPARED STATEMENT

    We have made some difficult choices in the 2004 budget 
request. We have carefully crafted it to sustain advances made 
in personnel, quality of life and readiness, to balance the 
risk while divesting legacy systems and concepts to invest in 
shipbuilding, aircraft procurement and transformational 
technologies, all to achieve the total force that the future 
demands.
    We look forward to working with you as we move forward. 
Thank you, sir.
    [The statement follows:]
               Prepared Statement of Hansford T. Johnson

NAVY-MARINE CORPS TEAM: NATIONAL SEAPOWER--AROUND THE WORLD, AROUND THE 
                                 CLOCK

                              INTRODUCTION

    The Navy-Marine Corps Team continues to provide extraordinary 
service and value to our Nation. Throughout the past year our Naval 
Forces have distinguished themselves around the globe, and our Sailors 
and Marines operating in the air, on and under the sea, and on the 
ground--including our space cadre--remain at the leading edge of the 
Global War on Terrorism. They have demonstrated the full effect of 
their lethal power, from the blue water to the littorals and well 
beyond, engaging and destroying the enemy in areas that previously 
would have been considered sanctuaries from sea-based forces. At a time 
of great consequence for our Nation, our Navy and Marine Corps not only 
have ``answered the call,'' but have done so while improving our combat 
readiness and retaining our Sailors and Marines at historic rates.
    Our successes in the Global War on Terrorism, while significant, 
have not been achieved in isolation. We have worked alongside, in 
partnership, with our sister Services to realize the true potential of 
joint, interoperable forces in the new environment of 21st Century 
warfare. The superior operational and personnel readiness levels we 
have been able to sustain are directly reflective of the strong, 
sustained support of the Congress. In fiscal year 2004, we seek your 
support for the President's budget request to sustain the gains made to 
date, improve those areas where shortfalls remain, and continue 
transforming the Navy and Marine Corps for the 21st Century.
    In the balance of this statement we will describe the significant 
accomplishments the Navy and Marine Corps have realized during the past 
year, the improvements in our warfighting readiness and capabilities 
that are supported by the President's fiscal year 2004 budget request, 
and some details of our plans to transform and prepare for the 
challenges of the future. In assessing our request, it is important to 
note that our focus is on improving our ability to operate as an agile, 
lethal and effective member of a broader, networked joint warfighting 
force. To that end, we have given priority to the following overarching 
goals:
  --Successfully prosecuting the Global War on Terrorism while 
        sustaining our current readiness;
  --Recapitalizing, modernizing and transforming our Navy and Marine 
        Corps to meet the challenges of the future;
  --Fully networking our forces at sea and ashore to operate seamlessly 
        in a joint and coalition environment;
  --Continuing to invest in our Sailors and Marines; and
  --Sustaining the quality of our operational training.
    In pursuing these principal objectives, we had to make some 
difficult tradeoffs within our proposed program. However, our fiscal 
year 2004 budget request is the best balance possible among important, 
but often competing priorities.

 CONTEXT FOR THE FISCAL YEAR 2004 BUDGET REQUEST: SUCCEEDING IN A TIME 
                          OF GREAT CONSEQUENCE

    Last year, our Navy and Marine Corps forces built on the historic 
response of our Sailors and Marines following the September 11, 2001 
attacks on our Nation. Today, our forces continue leading the way on 
the front lines of the Global War on Terrorism. More than half of our 
Navy operating forces and over sixty percent of the Marine Corps 
operating forces are currently deployed around the globe. Since the 
beginning of Operation ENDURING FREEDOM more than 90,000 Sailors and 
Marines and 100 Navy ships have deployed in support of ongoing 
operations. Nine of our 12 aircraft carriers and half of our 12 
Amphibious Ready Groups have seen action in this worldwide conflict. 
Additionally, over 5,000 members of the Naval Reserve and 15,000 
members of the Marine Corps Reserve have been activated in support of 
these operations.
    Even after the effective defeat of the Taliban and the liberation 
of Afghanistan, our Naval Forces, whether sea-based or on the ground, 
continue their missions. For example, Marines from the 4th Marine 
Expeditionary Brigade (Anti-Terrorism) provide support and security for 
the U.S. State Department and the U.S. Embassy in Kabul, while others 
serve in Tactical Air Operations Detachments in support of air and 
Naval Special Warfare operations in Afghanistan.
    While the Global War on Terrorism remains our principal focus, the 
Navy-Marine Corps team still operates extensively, as in the past, 
representing U.S. interests throughout the world. In Southwest Asia, we 
maintained continuous carrier presence, conducting combat operations 
over Iraq in support of Operation SOUTHERN WATCH. At the same time, 
naval task forces continued Maritime and Leadership Interdiction 
Operations supporting United Nations economic sanctions against Iraq 
for the eleventh straight year. In addition to these operational 
commitments, over 2,000 Marines participated in EAGER MACE 2002, an 
amphibious assault exercise in Kuwait in late September 2002.
    During May through August 2002, over 1,400 Sailors, Marines, and 
Coast Guardsmen participated in the eighth annual Cooperation Afloat 
Readiness and Training (CARAT) exercise with countries including the 
Philippines, Thailand, Singapore, Indonesia, Malaysia and Brunei. 
Marines from the Third Marine Expeditionary Force participated with all 
CARAT nations in landing force operations as well as providing a Marine 
Security Element to advise and assist the armed forces of the 
Philippines in their efforts against global terrorism.
    In the Mediterranean, Navy ships, including surface combatants, 
submarines and patrol craft operated with friends and allies in over 60 
exercises with NATO and Western European nations to enforce United 
Nations sanctions in the Federal Republic of Yugoslavia. Marines from 
the 24th Marine Expeditionary Unit (Special Operations Capable) 
demonstrated their capability to offload and move inland to reinforce 
Kosovo Forces' security requirements.
    Our ability to sustain the preceding breadth of capabilities, from 
combat operations to peacetime coalition-building exercises, came as a 
result of difficult choices we made--choices that have proven wise by 
the manner in which history unfolded last year. As you recall, in last 
year's budget we placed great emphasis on fixing some of the chronic 
problems that had been threatening our long term ability to man, 
operate and sustain the fleet we have today. We made a conscious 
decision to give the highest priority to our personnel and current 
readiness accounts. Within our critical procurement accounts we 
undertook a major effort to make the foundations for our shipbuilding 
programs healthy, even at the expense of being able to procure only 
five new ships in fiscal year 2003. While Congressional support for 
supplemental appropriations did much to decrease our maintenance 
backlog and fill our spare parts bins, we fully recognize our fiscal 
year 2003 plan devoted fewer resources toward recapitalization than 
either the Department or the Congress would have wished. Having made 
that difficult prioritization we committed to translating a healthy 
procurement base in fiscal year 2003 into earnest recapitalization in 
fiscal year 2004. We have kept that promise.

       FISCAL YEAR 2004 BUDGET: BUILDING FROM A SOLID FOUNDATION

    The Department's fiscal year 2004 budget request reflects an 
increase of $3.5 billion above the amount provided in the fiscal year 
2003 Defense Appropriations Act. It also reflects the Department's 
commitment to get the most out of every dollar provided by the American 
taxpayers. We do not come to the Congress with ``hat in hand,'' but 
rather with a responsible request, optimally balanced across an entire 
department of competing priorities. In this budget request we have 
proposed an additional $1.9 billion for our priority programs with 
funds identified through our own rigorous cost savings and divestiture 
initiatives.
    Together, these sources of additional funds have enabled us to 
``turn the corner'' in our most pressing recapitalization efforts. Two-
thirds of our top line increase is dedicated toward increased 
procurement. This budget request reflects two more new construction 
ships and five more aircraft than appropriated by Congress last year. 
It increases our funding for transformational R&D initiatives by a half 
billion dollars while consolidating the critical gains in personnel and 
current readiness achieved in last year's budget. The following 
represents the priority funding in fiscal year 2004 for the Department 
of the Navy:
  --We propose 7 new construction ships and 100 new aircraft;
  --We propose significant transformational capabilities, including the 
        next-generation aircraft carrier (CVN-21), the next-generation 
        destroyer (DD(X)), the Littoral Combat Ship (LCS), two more 
        SSBN-to-SSGN conversions, the Joint Strike Fighter (JSF), the 
        V-22 Osprey, the Advanced Amphibious Assault Vehicle (AAAV) and 
        the Advanced Hawkeye (E-2C) Program;
  --The Administration proposes a range of military pay increases from 
        2.0 percent up to 6.25 percent, targeted by rank and years of 
        service, and additional reductions in out-of-pocket housing 
        costs from 7.5 percent to 3.5 percent;
  --We propose sustained funding for our key operational readiness 
        accounts, including an increase by over $200 million for 
        aviation depot maintenance;
  --We implement Navy-Marine Corps Tactical Aviation Integration, a 
        process that will maximize our combat power, optimize the core 
        capability of Naval aviation forces, and introduce 200 modern 
        aircraft across the fiscal year 2004-fiscal year 2009 program;
  --We improve the quality of our operational training through our 
        Training Resource Strategy, and provide $61 million in fiscal 
        year 2004 toward this end.
    Highlights of our fiscal year 2004 budget request are provided in 
the sections below.

Current Readiness
    The fiscal year 2004 budget request builds upon the best successive 
two years in readiness budgets in more than a decade. It funds an 
OPTEMPO of 54.0 days per quarter for our deployed forces. This level 
supports the Global Naval Forces Presence Policy in terms of Carrier 
Battle Group (CVBG) and Amphibious Ready Group (ARG) availability as 
required by national security policy. However, accelerated deployment 
timelines and increased OPTEMPO will cause current year execution to 
run ahead of the existing plan.
    Funding for ship maintenance will achieve more than 96 percent of 
the fiscal year 2004 notional goal. This reflects a virtually identical 
posture as compared to last year, both in terms of percent 
accomplishment and quantity of backlog remaining. The aggregate level 
of funding for ship maintenance declines from fiscal year 2003 to 
fiscal year 2004, due in part to the positive effects of the additional 
maintenance funding provided in supplemental appropriations in the 
previous year, and in part to the accelerated retirement of our oldest, 
least capable, and most maintenance-intensive ships.
    Accelerating the retirement of these ships was one of the most 
difficult decisions we made in building this year's budget. While 
aggregate warfighting capability is a better metric than the number of 
ships in our inventory, we recognize that below a certain threshold 
numbers do matter. However, our analyses indicate that the near-term 
inactivations we are proposing provide an acceptable level of risk 
without compromising our ability to accomplish our mission, and that 
the fastest and most efficient way to recapitalize and transform the 
Fleet is to pursue vertical cuts in our least capable type-model 
series, both in ships and in aircraft, and apply those savings toward 
procuring new ships and aircraft.
    The growing sophistication of potential threats, increasing 
complexity of modern warfare, advances in training technology, and the 
development of new weapons and tactics require more capable training 
facilities and methodologies. Under the leadership of Fleet Forces 
Command, the Department has produced the Training Resource Strategy 
(TRS), a multi-year plan to improve inter-deployment training for 
CVBGs, ARGs and Marine Expeditionary Units (MEUs). The Department is 
committed to implementing and fully funding these improvements.
    The training technology, range and facility improvements programmed 
via the TRS will ensure the long-term combat readiness and 
effectiveness of our deploying forces and produce a training capability 
superior to that existing today. The fiscal year 2004 budget will 
ensure deploying forces are fully prepared for the challenges of armed 
conflict in the 21st Century.

Personnel Readiness
    Our ships, submarines and aircraft have no ``asset value'' to the 
nation until manned by trained, educated, and motivated people. Sailors 
and Marines--along with our civilian workforce--remain the strong and 
steady foundation of our naval capabilities. The families of our 
service members also are vital to our readiness. It is a fact that we 
recruit Sailors and Marines, but we retain families, and we recognize 
that the effectiveness of our forces is dependent in large measure on 
the support they receive from their loved ones.
    Over the past two years we realized significant gains in the 
manpower arena that translated directly into increased personnel 
readiness. In the process of maintaining an increased readiness posture 
while transforming Anti-Terrorism/Force Protection positions, Navy 
operated just below the Congressionally-allowed maximum end-strength 
flexibility in fiscal year 2002. Doing so permitted us to sustain CVBG 
and ARG manning readiness near 100 percent. Our ability to surge deploy 
forces around the globe in response to recent events is testimony to 
the success of our personnel readiness posture. Over the course of 
fiscal year 2003 and 2004, we anticipate end-strength will decrease 
slightly to reflect force structure changes.
    Active Duty.--The Navy and Marine Corps met recruiting and 
accession goals in 2002, and continue to attract America's finest young 
men and women to national service. The Marine Corps notched its seventh 
year of meeting monthly and annual recruiting goals. Navy achieved its 
recruiting goals for a fourth consecutive year. Both Services are well 
positioned for success in meeting 2003 officer accession requirements. 
The Sailors and Marines entering active duty truly represent our 
country's best and brightest. In 2002, 92 percent of Navy's enlisted 
accessions were high school graduates (up from 90 percent in 2001), 
while the Marine Corps accessions of high school graduates rose 1.3 
percent to 97.5 percent.
    Retention rates in 2002 remained at record levels, with 58 percent 
of eligible first-term Sailors deciding to ``stay Navy.'' The Marine 
Corps met retention goals in 2002 in record time, achieving its highest 
occupational specialty match to date while also experiencing its 
highest officer retention rate in 18 years. Sailors and Marines have a 
sense of purpose and the desire to serve during this critical juncture 
in our nation's history. We provide them unique opportunities to grow 
professionally and personally, to achieve and be recognized, and to 
lead. They see improvements to their quality of service, and they 
appreciate the outstanding compensation and benefits provided to them 
and to their families. Our recruiting and retention success is 
reflected in the fully manned and operationally capable CVBGs and ARGs 
currently on station around the globe.
    We are fully committed to providing the finest education and 
training for these bright young minds, as befits their place as future 
leaders of the Navy and Marine Corps. Graduation from ``Battle 
Stations'' or the ``Crucible'' is but the first step toward achieving 
the technologically advanced force required to conduct naval warfare in 
the 21st Century. Our ``Revolution in Training'' is establishing a 
career-long learning continuum, ensuring the continuous personal and 
professional development of every service member.
    Successful as we are in attracting and retaining the best, we must 
not lose focus on people programs. Our immediate goals include:
  --Increase Navy recruit high school graduation rates from 92 percent 
        to 94 percent. Maintain Marine Corps recruit high school 
        graduation rates between 97 percent and 98 percent;
  --Increase the percentage of enlisted Navy recruits with previous 
        college experience or technical/vocational training;
  --Continue the Training Transformation started by Navy Task Force 
        EXCEL (Excellence through Commitment to Education and 
        Learning), and Marine Corps training continuum synchronization, 
        including partnering with industry and academia to impart 
        individual training and education;
  --Continue to develop a live, virtual and constructive training 
        environment both within the Department and for use in 
        conjunction with the Joint National Training Capability; and
  --Explore innovative manning initiatives such as the Optimum Manning 
        program, which relies on new technologies and creative 
        leadership to reduce ship manning.
    Congressional support for a targeted pay raise in fiscal year 2004, 
which recognizes and reaffirms the value of our career force, is 
critical to staying the course. So, too, is continuing the reduction of 
out-of-pocket housing expenses and the extension and enhancement of 
essential special pay and bonus authorities. Selective Reenlistment 
Bonus remains an important tool for retaining our critical skill 
personnel.
    Reserves.--Our reserve community remains an integral part of our 
Navy and Marine Corps team, with 88,000 Naval Reservists and 40,000 
Selected Marine Corps Reservists serving today. The seamless 
integration of the reserve and active components as a Total Force in 
the Global War on Terrorism has been a resounding success. The 
dedicated service, invaluable resources, and selfless sacrifices to 
duty each of these ``citizen Sailors and Marines'' provides on a daily 
basis are integral to operational success. We have recalled over 26,000 
Navy and Marine Corps Reservists as of mid-March 2003. These patriots 
have provided force protection, staff augmentation, intelligence, and 
warfighting skills to the Nation's war efforts.
    The Naval Reserve constitutes 19 percent of the Navy's Total Force, 
with an additional 69,000 Sailors serving as Individual Ready 
Reservists (IRRs). In 2002 the Naval Reserve met both its officer and 
enlisted recruiting goals, the result of significant recruiting program 
efforts. These reserve forces provide our inter-theater airlift, harbor 
defense, Naval embarked advisory teams, and Naval Coastal Warfare 
capabilities. In addition, a large portion of the Navy's port cargo 
handling support, Mobile Construction Battalions, intelligence, and 
medical capabilities are resident in the reserves.
    The Selected Marine Corps Reserve comprises nearly 25 percent of 
the Marine Corps' warfighting capability, with an additional 58,000 
Marines serving as Individual Ready Reservists (IRRs). The Marine Corps 
Reserve's contribution to the Global War on Terrorism continues with 
individuals and units mobilized to provide a wide variety of support. 
The additional mobilization of hundreds of Individual Mobilizations 
Augmentees and IRRs provided a critical surge of ready expertise and 
staff augmentation to warfighting commands, both Joint and Marine.
    Civilian Personnel.--The civilian workforce, currently totaling 
approximately 186,000, forms an essential role as part of our Total 
Force. 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. We continually refine and 
shape this vital work force for current and future missions. Twenty-one 
civilian occupational groups are targeted specifically for intensive 
active management. These include science and engineering, logistics, 
contracting, human resources, and financial management. Just as it is 
essential to recruit and retain the very best Sailors and Marines, it 
also is essential to recruit and retain the best and brightest 
civilians. We are in a competition for talent, and your support for a 
flexible set of civilian human resource management tools that will 
reward unconventional thinking will enhance our efforts to hire, 
develop, and retain this quality work force. The National Security 
Personnel System that is being considered would provide these tools in 
our competition for talent.

Shipbuilding
    The fiscal year 2004 budget request provides funding for seven new 
construction ships, the final two of four planned SSBN-to-SSGN 
conversions, and the first ship in our Cruiser Conversion program. In 
all, our shipbuilding program includes $11.4 billion, a significant 
increase above last year. Additionally, we invest more than $1.5 
billion for Research and Development (R&D) in transformational 
shipbuilding programs such as CVN-21, DD(X), LCS and SSGN, discussed 
later in this statement. The seven new ships include:
  --Three ARLEIGH BURKE Class (DDG-51) destroyers. These ships are 
        being procured as part of a multi-year procurement (MYP) of 10 
        DDG-51 ships over the period fiscal year 2002 through fiscal 
        year 2005. In addition to the cost savings from this MYP, the 
        Navy and its two principal DDG builders successfully negotiated 
        a workload swap arrangement in June 2002 in which General 
        Dynamics' Bath Iron Works will transfer LPD-17 ship 
        construction work to Northrop Grumman Ship Systems in exchange 
        for additional DDG-51 work. This arrangement will optimize 
        production efficiencies and stabilize workload at all shipyards 
        building DDG-51 and LPD-17 Class ships.
  --One VIRGINIA Class (SSN-774) fast attack submarine. The fiscal year 
        2004 ship marks the initial year of a seven-ship, five-year MYP 
        that will achieve significant savings while increasing 
        submarine procurement to two per year starting in fiscal year 
        2007. The first VIRGINIA Class submarine (SSN-774) will deliver 
        in June 2004.
  --One SAN ANTONIO Class (LPD-17) amphibious transport dock. The 
        fiscal year 2004 budget provides full funding to procure the 
        sixth ship of this class. The program is on track, and 
        represents an urgently needed contribution to the Marine Corps' 
        amphibious lift requirements.
  --Two LEWIS AND CLARK Class (T-AKE) auxiliary cargo and ammunition 
        ships. Fiscal year 2004 funding procures the fifth and sixth 
        ships of this class to continue recapitalization of our support 
        fleet. Delivery of the lead ship is expected in fiscal year 
        2005.
    Beginning in fiscal year 2004, the Cruiser Conversion Program will 
provide selected TICONDEROGA Class Aegis-equipped cruisers with 
essential land attack, force protection, and Area Air Defense Commander 
capabilities, extending their mission-relevant service life to 35-plus 
years.
    Beyond the new construction ships and conversions, the fiscal year 
2004 budget request provides additional incremental funding for LHD-8, 
service life extension for three Landing Craft Air Cushioned, and 
initial R&D efforts on the LHA Replacement (LHA(R)), scheduled for 
procurement in fiscal year 2007. In LHA(R) the Department is pursuing a 
far more capable replacement for aging amphibious ships such as the 
LHA. While the initial stages of design move forward, LHA(R) will offer 
many improvements over the LHA it will replace, and will set the stage 
for further development toward a new design that could offer 
capabilities such as concurrent flight operations of helicopters and 
fixed wing aircraft.

Aircraft
     The Department's fiscal year 2004 budget maximizes the return on 
aviation investment, primarily through the use of MYP arrangements for 
the F/A-18E/F (both airframe and engine), the E-2C, and the MH-60S. We 
also have agreed to enter a joint MYP contract with the Air Force to 
procure KC-130Js to replace the Marine Corps' fleet of KC-130F/Rs. In 
all, the fiscal year 2004 budget procures 100 new aircraft, including: 
53 tactical, fixed wing aircraft (42 F/A-18E/F, 2 E-2C and 9 MV-22); 28 
helicopters (13 MH-60S, 6 MH-60R and 9 UH-1Y /AH-1Z); 16 trainer 
aircraft (15 T-45 and 1 T-39); and 3 support aircraft (2 UC-35 and 1 C-
40A).
    The F/A-18E/F Super Hornet is the Navy's principal tactical 
aviation recapitalization program until we get to the JSF. The fiscal 
year 2004 budget includes $3.0 billion for 42 planes, which constitutes 
the final installment of an fiscal year 2000-fiscal year 2004 MYP 
contract. Deliveries remain ahead of schedule, and the first squadron 
of F/A-18E/F recently conducted combat operations aboard USS ABRAHAM 
LINCOLN (CVN-72). Of note, a variant of the F/A-18 airframe, the EA-
18G, has been selected as the Navy platform to replace the aging EA-6B 
Prowler. By using a common airframe, the EA-6B follow-on will deliver 
at lower cost while providing growth potential for improved future 
electronic warfare systems. The Marine Corps expects to fly the EA-6B 
(ICAP III) until approximately 2014 to 2015 before transitioning to a 
new Electronic Attack aircraft.
    Based on successful flight testing results, the Department felt 
confident to continue the minimum sustaining rate for the V-22 Osprey 
program and has requested nine MV-22s along with two CV-22s requested 
by the Air Force. Additionally, fiscal year 2004 funding supports key 
elements of the Department's helicopter master plan. We have requested 
procurement of 13 MH-60S platforms (organic mine countermeasures, 
combat search and rescue, special operations and logistics missions) 
and 6 MH-60R platforms (tactical support missions for surface 
combatants and aircraft carriers). Together, these will continue 
replacing the Department's aging fleet of H-46, SH-3, SH-60B and SH-60F 
helicopters. Fiscal year 2004 will mark the first year of procurement 
in the AH-1Z/UH-1Y program. These aircraft improve many capabilities 
for the Marine Corps, including increased payload, range and time on 
station, improved sensors and lethality, and 85 percent component 
commonality.

Weapons
    The fiscal year 2004 budget request supports the Department's 
objective to develop, upgrade and replace weapons and weapon systems to 
ensure we maintain our warfighting edge.
    Our precision guided munitions inventory will continue to improve 
in fiscal year 2004 as the Tactical Tomahawk (TACTOM) system ramps up 
to full rate production. TACTOM will accelerate the transition of our 
land attack missile inventory from the older Tomahawk Land Attack 
Missile to the newer, more capable, less costly TACTOM. The budget 
request sustains the maximum Department of the Navy production rate for 
the Joint Direct Attack Munition of 1,000 units per month while 
procuring over 5,000 Laser Guided Bomb kits. Production of the Joint 
Standoff Weapon (JSOW) baseline variant (dispenser) increases in fiscal 
year 2004, and the JSOW unitary variant (penetrator) enters full rate 
production.
    Several land attack R&D efforts central to future littoral warfare 
continue in fiscal year 2004. Advanced naval gun technologies will 
enhance fire support to Marines operating ashore. Evolving toward a 
fiscal year 2005 ``shoot-off,'' either the Extended Range Guided 
Munition or the Autonomous Naval Support Round will enhance the range 
and accuracy of Navy 5-inch guns. The Advanced Gun System will provide 
the next generation of surface combatants with a modular, large caliber 
gun system including an automated magazine handling system.

Key Warfighting ``Core Competencies''
    While the fiscal year 2004 budget request devotes a significant 
amount of resources toward recapitalizing and transforming to meet 
future requirements, it also provides solid support for our 
longstanding naval ``core competencies'' of Anti-submarine Warfare 
(ASW), Mine Warfare (MIW), Ship Self Defense (SSD) and Air Defense 
(AD).
    ASW.--ASW remains a challenging mission area, particularly in the 
shallow water littoral regions populated by modern, quiet submarines. 
The fiscal year 2004 budget request supports numerous improvements in 
ASW. The Improved Extended Echo-Ranging is incorporated into the USQ-
78B Acoustic Processor, which will improve large area acoustic search 
capability on our Maritime Patrol Aircraft. Further enhancements to our 
capability for large area search will be provided by acquiring the 
Automatic Periscope Detection and Discrimination system. Additionally, 
the capability for our surface combatants to survive attacks from 
threat torpedoes will be enhanced through the Surface Ship Torpedo 
Defense effort. The success of the Acoustic Rapid COTS Insertion (A-
RCI) program in providing significant improvement in ASW sensor 
processing for our submarine force has spawned similar efforts in 
submarine combat control, communications, and upgrades to the surface 
fleet's SQQ-89 combat suite. These programs validate the Navy's 
decision to use commercially available technology to deliver superior 
performance at less cost.
    MIW.--The Navy continues to make advances in MIW capabilities, and 
our emphasis on organic capabilities to counter the growing mine threat 
is enhancing our ability to ``get to the fight.'' The fiscal year 2004 
budget continues the development and acquisition of the Long-Term Mine 
Reconnaissance System (LMRS), which is on track for an fiscal year 2005 
IOC on LOS ANGELES Class submarines. LMRS will provide a clandestine 
reconnaissance capability for mines and mine-like objects. The fiscal 
year 2004 budget also includes funding for the development and 
acquisition of the Remote Mine-hunting System (RMS), a surface ship--
launched and recovered semi-submersible vehicle. RMS has an fiscal year 
2005 IOC with near-term fielding planned for DDGs 91-96. RMS also is a 
strong candidate for future deployment on the Littoral Combat Ship 
(LCS). To meet the Department's goal of an organic mine warfare 
capability by fiscal year 2005, the fiscal year 2004 budget continues 
the development and integration of five Organic Mine Subsystems into 
the MH-60S platform.
    SSD.--We continue to invest in upgrading our Ship Self Defense 
programs. Fiscal year 2004 funding covers the spectrum from electronic 
countermeasures to missiles to guns. The Surface Electronic Warfare 
Improvement Program (SEWIP) is a spiral development effort initiated to 
provide a robust, full spectrum electronic warfare system following 
cancellation of the Advanced Integrated Electronic Warfare System in 
fiscal year 2002. SEWIP will build on the legacy SLQ-32 system to field 
capabilities against next-generation threats. The current budget 
expands procurement of the Close-in Weapons System, Block 1B. The 
internationally-procured Rolling Air Frame Missile will provide ship 
self-defense against missiles as part of a layered defense. 
Additionally, we are pursuing installation of minor caliber guns on our 
deploying ships to improve our ability to counteract a small boat 
threat in the 0 to 8,000 yards range. We soon will install stabilized 
minor caliber guns on two DDGs.
    AD.--The fiscal year 2004 budget requests funds to develop the 
Extended Range Active Missile (ERAM). ERAM will enable over-the-horizon 
engagements against the most advanced anti-ship and land attack cruise 
missiles, and represents an important step in projecting area defense 
landward from the sea.

Maneuver Warfare
    The fiscal year 2004 budget supports the continued development and 
fielding of all equipment used by the Marine Corps' maneuver forces. 
This year we identify approximately $340 million for R&D and 
procurement of the Advanced Amphibious Assault Vehicle (AAAV). Last 
year we procured the first AAAV, which will serve as a full-up system, 
live-fire test vehicle. We will procure 186 systems over the remainder 
of the fiscal year 2004-fiscal year 2009 program. Scheduled for IOC in 
fiscal year 2008, the AAAV will provide a unique combination of 
offensive firepower, nuclear-chemical-biological protection, and high 
speed mobility on land and on sea.
    The fiscal year 2004 budget will fund the next 60 Lightweight 155 
mm (LW155) Howitzers. These units will provide significant improvements 
in Marine Corps fire support over the current M198 system. Compatible 
with all United States and NATO 155 mm rounds, the smaller footprint of 
the LW155 will reduce strategic sealift requirements while providing 
improved accuracy and greater lethality.

C\4\I, Space and Network Initiatives
    The Department's Command, Control, Communication, Computers, and 
Intelligence (C\4\I) and space programs are an integral part of network 
centric operations, enhancing the combat capability of our Naval Forces 
and serving as critical enablers of a transforming Navy and Marine 
Corps. Our concept of Information Technology for the 21st Century (IT-
21) is providing a common backbone for C\4\I systems to be linked 
afloat, ashore, and to the Internet. IT-21 combines satellite and line-
of-sight communication paths with commercial IT hardware and software 
to establish secure and unclassified Internet Protocol network 
connectivity for ashore and mobile Naval forces. This is a critical 
first step toward transformational network centric operations.
    Our next major objective is to integrate the successes of IT-21 and 
incorporate them across the full spectrum of naval operations to 
achieve significant improvement in knowledge management and operational 
performance. This full dimensional approach, called FORCEnet, will 
provide the operational construct and architectural framework for naval 
warfare in the information age. We will address FORCEnet in greater 
detail later in this statement.
    Support from space is essential to many Navy and Marine Corps 
operations today, and grows increasingly important as the force becomes 
more network centric. The fiscal year 2004 budget supports the 
Department's expanding efforts in space, including assured, high data 
rate satellite communications, precision navigation and targeting, 
intelligence, surveillance and reconnaissance systems and environmental 
support.
    The fiscal year 2004 budget continues critical enhancements that 
will provide our forces with a common tactical picture. Cooperative 
Engagement Capability (CEC) will provide real time exchange of fire 
control quality data between battle force units and will permit a 
single, identical tactical picture. The Block 2 version will reduce 
cost, size and weight, with procurement beginning in fiscal year 2006. 
The Naval Fires Control System and Joint Fires Network will use 
existing fire control infrastructure to serve as the nerve center for 
surface land attack by automating shipboard land attack battle 
management duties, incorporating improved land attack weapons systems, 
and utilizing battlefield digitization.
    The Navy/Marine Corps Intranet (NMCI) serves as the principal 
element of the IT-21 effort ashore and is a key enabler of IT 
transformation. Business Case Analyses conducted over the last two 
years have demonstrated that the NMCI strategy, characterized by having 
a single private sector entity provide IT services under a long-term 
commercial seat management contract is, in fact, a sound business 
decision compared to the way IT requirements previously were satisfied. 
Last year Congress approved a two-year extension to the base 
performance period of the original NMCI contract, extending coverage 
through fiscal year 2007. Fiscal year 2004 funding of $1.6 billion 
continues user seat roll-out and cutover to the NMCI architecture. 
Progressing toward a target end-state of 365,700 seats.

Missile Defense Initiatives
    The Department of the Navy is poised to contribute significantly in 
fielding initial sea-based missile defense capabilities to meet the 
near-term ballistic missile threat to our homeland, our deployed 
forces, and our friends and allies. We are working closely with the 
Missile Defense Agency (MDA) to upgrade six DDGs in calendar year 2004 
and another six in calendar year 2005 for ICBM surveillance and 
tracking duties. We also are supporting MDA's procurement of up to 20 
Standard Missile interceptors to provide a limited at-sea capability to 
intercept ballistic missiles in the ascent and mid-course phases of 
flight. Finally, USS LAKE ERIE (CG-70) will be assigned to MDA to 
facilitate a more robust testing program for missile defense. Our sea-
based missile defense programs experienced tremendous success on the 
test range during 2002, and we look forward to building on these 
successes to accelerate development of this vital capability for our 
Nation.

Shore Infrastructure
    The Department remains dedicated to maintaining and improving the 
quality of our support to Sailors and Marines. Maintaining and 
improving an aging infrastructure, while recapitalizing our operating 
forces, requires disciplined choices and innovative approaches.
    The fiscal year 2004 housing program continues the Department's 
course toward the goal of eliminating inadequate family housing by 
2007. The Navy's three-pronged strategy of improving allowances to 
service members, privatizing, and continuing traditional military 
construction is proving very successful. Increased Basic Allowance for 
Housing (BAH) is spurring local communities to provide necessary 
housing on the open market. Recent analysis shows we have reduced the 
total requirement for government furnished housing by over 9,500 units.
    Public/Private housing ventures are allowing us to achieve more 
with less commitment of resources. In fiscal year 2003 we will 
privatize over 10,400 homes in five locations; in fiscal year 2004 we 
are increasing this by another 7,000 units. Where BAH and privatizing 
do not apply we are renovating or replacing our inventory.
    We are building on our successes in Family Housing to help achieve 
our Homeport Ashore Program. Three bachelor housing pilot projects are 
being considered that could increase the number of spaces in San Diego, 
Norfolk and Camp Pendleton.
    The fiscal year 2004 Military Construction and Sustainment program 
reflects difficult but necessary trade-offs between shore 
infrastructure and fleet recapitalization. The Department remains 
committed to achieving a 67-year recapitalization rate by fiscal year 
2008. In pursuing that goal we will explore innovative solutions to 
provide safe, efficient installations for our service members, 
including design-build improvements, more efficient facilities and BRAC 
land sales via the GSA Internet.

Business Practices
    We have embarked on a mission to improve the business practices of 
the Department. Every dollar saved by working smarter or by ending 
outdated methods of operations is another dollar that can be used for 
our Sailors and Marines to equip, train or fight.
    Information is key to improving the way we do business. Better 
information makes for better decision making, both on the battlefield 
and at the budget table. We have four pilot programs in place utilizing 
enterprise resource planning, or ERP, which aim to improve the quality 
of information available to our decision makers. These pilot projects 
will eliminate dozens of incompatible computer databases and the 
business processes that once supported those databases. Even more 
importantly, ERP should produce financial and managerial information 
that is more complete, more accurate and more timely. Our focus now is 
on converging these pilots to achieve even greater synergy of 
management information across a broader spectrum of the Department, and 
working with the Department of Defense Comptroller to ensure these 
efforts are advancing the uniform business management architecture 
under development.
    In addition to better information, we need flexible and innovative 
tools to help manage the Department. Some of these tools, like 
strategic sourcing, are being used already. Competition helps achieve 
the best quality support to the Sailor and Marine at the lowest 
possible cost by introducing the discipline of the marketplace. The 
acquisition process still needs considerable reform. We owe it to every 
Sailor and Marine to ensure that today's technology arrives in their 
hands today, not tomorrow. It still takes too long from lab to live 
fire. Finally, the Navy and Marine Corps need better tools to recruit 
and manage the civilians who support our warfighter.
    This year's budget request includes reforms that will allow us to 
continue to improve business practices. These proposed reforms include 
increasing Operations and Maintenance appropriations from one-year to 
two-year money and consolidating Military Personnel accounts from ten 
to four accounts. These initiatives would allow more effective 
management and execution of these programs.

     NAVAL POWER 21: A TRANSFORMATIONAL VISION FOR THE 21ST CENTURY

    Fundamentally, our Navy and Marine Corps exist to control the seas, 
assure access, and project power beyond the sea. Our vision, Naval 
Power 21, is built upon three pillars:
  --We assure access. We assure sea-based access worldwide for military 
        operations, diplomatic interaction, and humanitarian relief 
        efforts.
  --We fight and win. We project power to influence events at sea and 
        ashore both at home and overseas.
  --We are transforming continually to improve. We are transforming 
        concepts, organizations, doctrine, technology, networks, 
        sensors, platforms, weapon systems, training, education and our 
        approach to people.
    Although the Navy and Marine Corps team remains the greatest 
maritime force in the world, the emerging challenges of the 21st 
Century demand a joint, netted, power projection force that offers 
modern and ever-evolving combat capability. Together, under the 
supporting service visions of Seapower 21 and Marine Corps Strategy 21, 
we will provide funding for a full array of transformational 
initiatives in our R&D, investment and operational programs. Evidence 
of the scope and magnitude of these changes is highlighted by our 
transformation: from a single new class of destroyer to a family of 
surface combatants tailored for the full range of 21st Century 
missions; from a Cold War force of 18 SSBNs to a 21st Century force of 
14 SSBNs and 4 SSGNs; from evolutionary aircraft carrier improvements 
to the revolutionary promise of CVN-21; from no ballistic missile 
defense (BMD) capability to limited sea-based BMD capability; and from 
competing Navy and Marine Corps tactical aviation to an integrated 
Naval tactical aviation.

Transformational Capabilities to Assure Access and Project Power
    The Navy and Marine Corps continue to meet the imperative of 
transformation. Our ``way ahead'' for the future capitalizes on 
transformational ideas that facilitate our recapitalization goals. The 
fiscal year 2004 budget request includes funding for initiatives in 
shipbuilding, aviation and C\4\I that promise dramatic improvements in 
assuring access and projecting power.
    In shipbuilding, we are fulfilling the President's stated goal to 
``skip a generation'' of technology by restructuring our previous two-
step (CVNX-1 and CVNX-2) evolutionary acquisition approach into a 
single transformational ship design that accommodates continuous 
evolution through the life of the class. The new design, named CVN-21, 
sustains the original development and construction schedule from CVNX-
1, but accelerates many critical technologies previously planned for 
the second step ship, CVNX-2. CVN-21 will feature a new propulsion 
plant, a greatly expanded electrical generation and distribution 
system, a new/enlarged flight deck, an improved sortie rate generation 
over CVNX-1, an electro-magnetic aircraft launching system (EMALS), a 
new advanced arresting gear, improved weapons and material handling 
systems, and improved survivability features--all with 800 fewer crew 
members. In support of this technology acceleration we have added 
significant funding across the fiscal year 2004 to fiscal year 2009 
program while providing $1.5 billion in fiscal year 2004 alone.
    The centerpiece warship of our future surface combatant ``family of 
ships,'' the DD(X), is on track to move to an initial construction 
contract award in fiscal year 2005. Fiscal year 2004 funding of $1.05 
billion will enable further development of key electric drive, power 
grid, and combat system components. Through a spiral development 
acquisition process, DD(X) will be the principal technology engine that 
will feed the entire family of ships.
    The fiscal year 2004 budget requests approximately $160 million in 
R&D to begin moving out with the next member of our future surface 
combatant ``family of ships,'' the Littoral Combat Ship (LCS). A 
networked, lethal, small, fast, stealthy, and highly maneuverable ship, 
LCS will be designed from the keel up as a focused mission ship capable 
of employing manned and unmanned mission modules to counter some of the 
most challenging anti-access threats our naval forces may encounter 
close to shore--mines, quiet diesel submarines and swarming small 
boats. Last year, we continued experimenting with a range of innovative 
hull forms, and the Congress supported us so we could get the program 
moving this year, avoiding a critical one-year delay. The fiscal year 
2004 effort will be aimed at defining requirements, improving our 
knowledge base for selecting an LCS design, and beginning mission 
module development.
    The fiscal year 2004 budget request contains nearly $1.2 billion 
for SSBN-to-SSGN conversion. This effort will provide a near-term 
transformational capability to the Nation by removing four OHIO Class 
submarines from their strategic mission, refueling their reactors to 
permit an additional 20 years of operation, and converting them into 
conventional strike platforms capable of carrying more than 150 
Tomahawk missiles and deploying over 60 special operations forces. 
Funding to commence the first two conversions was provided in fiscal 
year 2003; this year's request supports the conversion of the third 
submarine and the advance procurement and planning for the final 
overhaul in fiscal year 2005.
    The fiscal year 2004 budget provides $2.2 billion to continue 
development of the Joint Strike Fighter (JSF), a stealthy, multi-role 
fighter aircraft designed to be an enabler for Naval Power 21. JSF 
replaces the Navy's F-18A/C Hornet variants and the Marine Corps' AV-8B 
Harrier and F/A-18C/D Hornet while complementing the Navy's F/A-18E/F 
Super Hornet. JSF offers dramatic improvements in affordability and 
supportability. It has completed all major milestones to date on time, 
and remains on track to IOC for the Marine Corps in 2010 and for the 
Navy in fiscal year 2012.
    A critical enabler of transformational intelligence, surveillance 
and reconnaissance, the E-2C Advanced Hawkeye Program will provide a 
robust overland capability against current and future cruise missile-
type targets. The fiscal year 2004 budget invests over $350 million for 
continued development. IOC is planned for fiscal year 2008 with a total 
procurement of 66 systems.
    As the Global War on Terrorism has demonstrated, unmanned 
technology will play an ever-increasing role in the battleground of the 
21st Century. The Department's fiscal year 2004 budget invests more 
than $300 million across a series of Unmanned Aerial Vehicle (UAV) 
programs, including Tactical UAVs, Maritime Surveillance UAVs and an 
Unmanned Combat Air Vehicle (UCAV) initiative, developed in partnership 
with the U.S. Air Force. Beneath the sea, we will invest more than $80 
million in Unmanned Undersea Vehicles (UUVs) that are being developed 
to enhance capabilities in minefield reconnaissance and other submarine 
missions.

Transformational Organizations and Operational Concepts
    Beyond pure technology, transformation also includes revolutionary 
methods for achieving dramatically greater utility out of our existing 
assets. The Department's initiative to integrate its tactical aviation 
capabilities is one such transformational story. Navy and Marine Corps 
Tactical Air Integration will maximize forward deployed combat power 
and optimize the core capability of naval aviation forces. Its positive 
impact will be felt across the Department's entire tactical aviation 
enterprise, from leaner, more capable fighting formations to 
streamlined procurement requirements (tactical and training) to 
manpower savings. In total, this innovative program promises to save 
$975 million over the fiscal year 2004-fiscal year 2009 program and 
provide approximately $19 billion in cost avoidance from fiscal year 
2007-fiscal year 2012.
    To support the ability of forward based naval forces to respond to 
a host of scenarios, the Navy and Marine Corps are exploring more 
robust strike capabilities for the ARG/MEU team. The Expeditionary 
Strike Group pairs the traditional ARG with surface combatants and an 
SSN so the force has greater capability to conduct independent 
operations in the ``deter'' and ``swiftly defeat'' scenarios outlined 
in our defense strategy.
    FORCEnet is the Department of the Navy's catalyst for operational 
transformation. In the realm of network centric warfare and operations, 
it will enable orders of magnitude increases in combat power to ensure 
decisive influence and warfighting success across the full spectrum of 
military operations in the information age. FORCEnet is not a system. 
It is the architecture by which we will integrate our sensors, 
networks, decision aids, weapons and warfighters into a networked, 
distributed combat system, scalable across the entire range of conflict 
from seabed to space and sea to land. Leveraging powerful network 
infrastructure ashore, including NMCI and the various constituents of 
IT-21, with legacy and developing tactical networks at sea, including 
those as diverse as CEC, Joint Fires Network and the E-2C Advanced 
Hawkeye Program, FORCEnet will bring a dramatically expanded 
``toolbox'' of capabilities to the joint warfare commander. Through 
FORCEnet the Navy and Marine Corps will transform to a joint, netted, 
distributed and forward stationed force.

Transformational Initiatives for our People
    Sea Warrior is the process of developing 21st Century Sailors. 
Curriculum Mapping is the Marine Corps equivalent. These initiatives 
identify the knowledge, skills, and abilities needed for mission 
accomplishment; apply a career-long training and education continuum; 
and employ a responsive, interactive career management system to ensure 
the right skills are in the right place at the right time.
    Modern Naval Forces are manned by streamlined teams of Sailors and 
Marines who fight and manage some of the most complex systems in the 
world. We need Sailors and Marines who are highly educated and expertly 
trained. They must be creative thinkers and life-long learners, and it 
is for them that we undertook the Revolution in Training. They also 
deserve a human resource management and detailing system that provides 
information and choice, both to the Sailor and gaining commands, so 
that informed career decisions can be made. To this end, we are moving 
toward an interactive and incentivized distribution system that 
includes team detailing, web job listings, an information call center, 
and comprehensive and extensive engagement of our detailers with 
individual Sailors to help shape their careers.
    At sea, we are exploring two initiatives that promise a revolution 
in the way we man our ships. First, we have begun an ``Optimal Manning 
Experiment'' on board USS MILIUS (DDG-69) and USS MOBILE BAY (CG-53) to 
develop a more efficient model for the shipboard manning requirements 
of the 21st Century. Also, we have begun a crewing experiment, entitled 
``Sea Swap,'' in which we will deploy two destroyers for 18 months 
consecutively, rotating the entire crews at six-month intervals. This 
initiative will realize significant operational savings by avoiding 
multiple six-week transits to and from the deployed operating areas.

Transformational Initiatives for Doing Business
    Our ability to recapitalize and transform stems in large measure 
from a vigorous divestiture program that forced us to make hard choices 
across every facet of the Department's operations. We looked hard at 
older systems with their limited capabilities and high infrastructure 
costs (maintenance, parts, training, etc.) and ultimately decided to 
accelerate retirement of 11 ships and 70 aircraft. We reorganized and 
then reduced the Secretary of the Navy Headquarters Staff by 25 
percent. We divested ourselves from more than 50 systems and eliminated 
70,000 legacy IT applications from an original baseline of 103,000. In 
the aggregate, these difficult decisions yielded $1.9 billion for 
reinvestment in higher priorities.
    In addition to divestiture initiatives, we are transforming the way 
we manage the entire Department's internal affairs. Perhaps nowhere is 
this more evident than in our shipbuilding programs. Instead of locking 
ourselves into ``pre-ordained obsolescence'' through rigid designs for 
hull, combat and information systems that take years to execute, we are 
capitalizing on computer-aided, design-build strategies in which we 
harvest commercial, ``state-of-the art'' technologies and insert them 
at the optimum time as the construction process moves from hull to 
combat system suite to information systems. We have undertaken some 
remarkable initiatives within our acquisition community that have 
stabilized key industrial bases, expanded our ability to capitalize on 
the best commercial practices, and laid a strong foundation for 
controlling the costs of our major acquisition programs.
    We are working with industry as partners across the full breadth of 
our shipbuilding programs. The tri-partite agreement between Navy, 
General Dynamics and Northrop Grumman stabilized both our DDG-51 and 
LPD-17 programs, avoided a ``second lead ship'' challenge for the LPD 
program, and produced savings sufficient to purchase a third DDG in 
fiscal year 2004 and fiscal year 2005. We are working with the software 
industry to open all Navy architectures. These efforts are intended to 
lead to the development of a truly open architecture that can be shared 
between all of our current and future combatant ships. Finally, we have 
imposed a discipline on ourselves that severely limits change during 
the critical phases of our major shipbuilding programs. This discipline 
also has been implemented in the JSF program through a configuration 
steering board. By controlling the scope and timing of change, we hope 
to implement necessary changes in our programs in a planned fashion 
where we know what it will cost and how we will install it in the most 
economical manner.
    Through these transformational business initiatives and others, our 
Department will emerge with an optimal force structure; a healthy 
industrial base and an efficient and appropriately sized 
infrastructure.

THE WAY AHEAD: POSITIONING TODAY'S NAVY AND MARINE CORPS FOR TOMORROW'S 
                               CHALLENGES

    Although the Global War on Terrorism is closer to the beginning 
than the end, our Navy and Marine Corps, as members our nation's joint 
battle force, have disrupted terrorist networks and freed the people of 
Afghanistan. Our Nation can take pride that, in 2002, the Navy-Marine 
Corps Team continued its record of combat excellence, improved 
operational readiness and retained our magnificent people at historic 
rates.
    Much has been accomplished, but much remains to be done. The 
Department's fiscal year 2004 budget request positions today's Navy and 
Marine Corps to support tomorrow's joint warfighting environment by 
sustaining hard-fought advances in personnel and operational readiness, 
investing in critical shipbuilding and aircraft programs, fueling 
transformational capabilities, and building a global, agile and fully 
networked force. As our Navy and Marine Corps Team confronts a future 
with challenges already visible on the horizon, we thank you for your 
terrific support of our Naval Forces, and urge your continued support 
for the course upon which we have embarked to fight and win our 
nation's wars while preparing to meet the demands of an uncertain 
tomorrow.

    Senator Stevens [presiding]. Yes, sir. Who is next, Admiral 
Clark?

                  STATEMENT OF ADMIRAL VERNON E. CLARK

    Admiral Clark. Thank you, Chairman Stevens, Senator Inouye, 
Senator Cochran. Good morning. I am privileged to be here this 
morning to talk about our Navy and to talk about it in the 
context of the Navy-Marine Corps team. Mr. Chairman, I like to 
tell folks that the man sitting at the other end of the table 
is my number one joint partner, and I am extremely pleased and 
honored to be able to serve along General Mike Hagee, and 
especially at a time like this with what the Marine Corps is 
accomplishing in the theater of operations.
    This morning, Mr. Chairman, 54 percent of my Navy is 
forward deployed. As Secretary Johnson just talked about, they 
are forward deployed, they are at the tip of the spear, and 
they are doing what they are supposed to be doing and that is 
carrying out the orders of the President of the United States.
    And of course, most of them are engaged in Operation IRAQI 
FREEDOM. They are striking the enemy. They are providing close 
air support for Marines and Army troops, for coalition 
partners. They are clearing the sea lanes. They are providing 
supplies and logistics and are protecting our joint coalition 
forces at sea and on land. They remain ready, they are ready, 
and they are part of a very effective joint combined force.
    On the night before hostilities commenced, I passed a note 
to Secretary Rumsfeld and I said to him, Mr. Secretary, I have 
never seen our Navy as ready as it is today. And I never have. 
And I would just want to say to this committee that I am 
extraordinarily appreciative of the partnership that has been 
crafted by the leaders of America who have put the resources in 
place to see to it that we have the kind of ready Navy that we 
have today. And I can tell you that earlier in my career, I 
have not seen a time that we would have been able to surge this 
force forward with the kind of readiness statistics that we are 
realizing today, and I believe that the return on investment is 
showing itself on the battlefield and on the oceans in 
Operation IRAQI FREEDOM.
    Of course as Senator Inouye said, today we are here to talk 
about the 2004 investment strategy. What we are seeing in Iraqi 
Freedom is the return on investment from previous investments. 
Today we are here to talk about the 2004 investment plan.
    I would like to focus on two areas, two areas for 
investment.
    Number one, people. Secretary Johnson talked about the 
things that are going on in our Navy. Seventy-seven thousand of 
our sailors are deployed in the theater of operations and about 
10,500 reserves, and they are taking the fight to the enemy. I 
just want to say that Congress' attention to their pay, to 
allowances, to housing, to infrastructure and the things, the 
tools that allow them to do the job, have made a difference, 
and the quality of life and quality of work for our sailors and 
families is good and improving.
    I just want to also say that our sailors are responding to 
the signals that they are receiving from the citizens of the 
United States and from the Congress. We are enjoying as I sit 
here this morning, the best retention, the best manning that I 
have ever witnessed in my career. Three straight years now of 
record retention, never better in our 227-year history of our 
institution. Last month, first-term retention in my Navy was 79 
percent, and for this fiscal year it has been 76 percent. Never 
in our history have we had anything like this.
    I want to say that at the heart of our readiness is our 
manpower readiness, the readiness of our people. It did not 
happen by accident, it happened because of actions by leaders 
of America. Our ships and squadrons are fully manned. They have 
been able to surge forward on a moment's notice.
    Most noteworthy, the response by the United States Marine 
Corps and Amphibious Task Force East and West are great 
indicators of how ready the Navy and the Marine Corps team were 
at the time and are now in the battlefield.
    But I would like to say that numbers alone is not enough, 
and we have struck out on programs committed to the growth and 
the development of our people, of our skilled work force, and 
it is making a difference. We are focusing on something called 
sea warrior, I detailed it my written testimony. It is about a 
21st century revolution, and it is about new and innovative 
techniques in growing and developing people. It is about 
getting the right skills in the right place and at the right 
time.
    And so, my conclusion of all this is that the unprecedented 
success that we are realizing in the battle for people has been 
spearheaded by the incredible readiness postures that we 
realize today. The challenge for us is to sustain the gains 
that we have achieved in the past couple of years in readiness 
and manpower, while focusing on the second thing I want to talk 
to you about, and that is, it is time to focus on our future 
and that is modernizing and transforming the force.
    That leads us to capital investments in hardware, ships, 
airplanes, submarines. Programs that needed to mature, that 
were not where we wanted them to be. And I want to say that 
this committee specifically helped us deal with the very 
difficult problem in prior year shipbuilding costs, you helped 
us fix it, and it is paying dividends this morning. Building 
approaches to improve the industrial base. We are grateful for 
the way this committee has helped us put ourselves on a solid 
foundation so that we can move forward with transforming the 
United States Navy.
    Our strategy for the future is detailed in our vision for 
the Navy, Sea Power 21, and again, it is detailed in my written 
testimony which is a matter of record and I will not go into 
detail with it this morning, except to say this: It is about 
the commitment to being on the offense. I call that sea strike, 
projecting offensive power.
    It is happening this morning with long range tac air, and 
Tomahawks launched a thousand miles or more. And it is about 
the United States Marine Corps and what they are doing 
projecting power. It is about sea shield, and that is 
projecting defensive power, a new strategic capability, 
tracking missiles over land. This morning we are operating in 
concert with the United States Army on those missiles that have 
been launched on our forces. The capability that we have seen 
in testing over the last year in missile defense is, in fact, 
in place on the battlefield providing tracking, and in 
partnership with the United States Army.
    And of course we cannot forget that it is about clearing 
the Littoral, of mine threats, and the humanitarian assistance 
that is going on right now, and has been seen on television. 
One of the reasons it is happening is because the mine warfare, 
the people executing the mine warfare function and application 
have been performing superbly.
    And then it is about sea basing. I call that projecting 
American sovereignty from the sea, going where we need to go, 
where we want to go. The operational independence that comes 
from operating from the maritime domain. And so, the Marine 
Corps and the Navy are committed to exploiting the maritime 
battle space to the advantage of U.S. joint and combined forces 
in the future. This year's investment strategy is committed to 
building toward that vision of tomorrow.
    Starting with the family of ships for the 21st century. The 
Secretary mentioned it, DDX, the heart of the family of ships. 
And the Littoral combatant ship that is designed to deal with 
the kind of threats that we are facing in the first part of the 
21st century, designed to deal with the asymmetric threats that 
are going to come after us. Built with plug and play technology 
from the beginning, built and conceived for unmanned vehicles, 
unmanned air vehicles, unmanned surface vehicles, unmanned 
underwater vehicles. That is the family of ships spiraling to 
CGX.
    And of course the Secretary mentioned EA-18G, a very 
important development in this program. And the new carrier. And 
there is an exciting future detailed for the Navy and the 
Marine Corps with the family of ships there, the replacement 
LHA and maritime preposition forces for the future, and the 
importance of LPD-17 that is now a healthy robust program, with 
the first ship soon to be launched here in a couple months. 
Submarine programs, the exciting Virginia class and the new 
SSGN.
    So the challenge for us is figuring out how to find the 
resources, and of course that is what this committee is all 
about. And I just want you to know that we are trying to do our 
part. We are trying, we are working to find resources and make 
sure that we are putting resources in the right place to make 
our readiness what it needs to be today and for the future.
    We are challenging our people to innovate and to find 
deficiencies, and to get as much combat readiness as we can out 
of every dollar that is given to us by the taxpayers of the 
United States of America. And I would just say that the biggest 
example of that is Navy-Marine Corps tac air integration. This 
is a story that, you know, we could talk about for 30 minutes, 
but the bottom line is this program, this partnership between 
the Navy and Marine Corps will save billions of dollars and 
make us more combat ready in the future.
    So Mr. Chairman and committee members, in summary, your 
Navy is ready today. It is forward deployed, it is on scene, 
and it is carrying out in concert with the other services and 
our coalition partners Operation IRAQI FREEDOM. We are focused 
on the future while prepared for today, and the young men and 
women of our Nation's Navy are serving on the point today with 
distinction, and I am extremely proud of them.

                           PREPARED STATEMENT

    I thank you again for your continued support and for your 
roles as leaders of America in helping us create today's Navy, 
and I look forward to your questions.
    [The statement follows:]

             Prepared Statement of Admiral Vernon E. Clark

    Mr. Chairman and members of the Committee, I appreciate the 
opportunity to appear today. The investment you've made in America's 
Navy has been vital to the nation's security and your Navy's ability to 
project more power, more protection and more freedom to the far corners 
of the earth. I speak for the entire Fleet in thanking you for your 
exceptional and continuous support.

I: Your Navy Today--Enhanced Capabilities for the Joint Force
    This is a time of tremendous challenge and accomplishment for our 
Navy. Our men and women have been waging the Global War on Terrorism 
for well over a year and now they are in combat in Operation Iraqi 
Freedom (OIF). They are on the front lines of the first wars of the 
21st Century, serving with determination and distinction, leading the 
defense of America away from our own shores and our own homes.
    Today, there are 164 ships on deployment, over half of the Navy; 
this includes seven of twelve aircraft carriers, and nine of our twelve 
big deck amphibious ships (LHA/LHD). They are deployed in support of 
the nation's interests in the Persian Gulf, the Mediterranean, the 
Indian Ocean and the Western Pacific. Still others are preparing for 
deployment or continuing operations like strategic deterrent and 
counter-drug patrols in support of other national imperatives.



    Our Navy is ready for these missions today and is preparing for the 
difficult future challenges that lie ahead. After all, this new century 
is fraught with profound dangers: rogue nations in possession of 
weapons of mass destruction, potential conflict between regional 
competitors, widely dispersed and well-funded terrorist organizations, 
and failed states that deliver only tyranny and despair to their 
people.
    We frequently talk about the asymmetric challenges such enemies 
might present, assuming these advantages belong only to potential 
adversaries. Your Navy possesses asymmetric strengths all its own: its 
persistence, precision, independence and agility are but a few.
    More importantly, our naval strengths are critical to our joint 
combat effectiveness. Our forward deployed, combat ready naval forces--
sustained by naval and civilian shipmates around the world--are proving 
every day the unique and lasting value of sovereign, lethal forces 
projecting offensive and defensive power from the sea.
    There are numerous recent examples of the enhanced capability our 
Navy brings to the joint force.
  --In Operation Iraqi Freedom, the ABRAHAM LINCOLN, CONSTELLATION, 
        KITTY HAWK, THEODORE ROOSEVELT and HARRY S. TRUMAN battle 
        groups are providing persistent and credible combat power to 
        the joint force commander. The USS NIMITZ is speeding to the 
        Central Command's area of responsibility and is ready to 
        conduct combat operations. The CARL VINSON stands watch in the 
        Western Pacific. Our widely dispersed Tomahawk equipped ships 
        and submarines and our carrier-based aircraft--in combination 
        with land-based Air Force tankers and bombers and our Marine 
        Corps and Army ground forces--are delivering precise, time-
        sensitive strikes ashore and conducting decisive combat 
        operations deep inland in OIF.
  --The Navy's Military Sealift Command (MSC), is actively providing 
        combat logistics support to U.S. Navy ships; is prepositioning 
        joint military supplies and equipment at sea; and is providing 
        sealift and ocean transportation of defense cargo. MSC's high 
        quality shipping, augmented by charters, continues its sealift 
        of the Army's 4th Infantry Division. MSC is also delivering 
        fuel and aviation support equipment and supplies to deployed 
        Army and Air Force units. All eight of our Fast Sealift Ships 
        and nineteen of our twenty new large, medium speed roll-on/
        roll-of ships are employed. Over half of our ready reserve 
        ships have been activated, and when combined with other 
        chartered shipping, MSC has more than 130 ships committed to 
        the sealift of the joint team, and nearly 210 ships under their 
        control. This includes the eleven of our fifteen deployed 
        Maritime Prepositioning Ships (MPS) that have offloaded 
        supplies and equipment for our Marine force. In all, 95 percent 
        of all equipment and supplies needed by U.S. forces in time of 
        crisis moves by sea on MSC controlled ships.
  --Working alongside the Marine Corps, our Amphibious Ready Groups, 
        including 7 big decks (LHA/LHD) in the Persian Gulf area, are 
        supporting over 60,000 Marines ashore in OIF. Permanently 
        installed command, control, communications, computers, 
        intelligence, surveillance and reconnaissance (C\4\ISR) suites 
        and information technologies on these ships are enhancing the 
        entire joint team's knowledge superiority picture. Troops 
        ashore are supported with sustained logistic support and we are 
        hosting, operating and maintaining Marine aircraft--all from 
        the security our ships enjoy in the maritime domain. Most 
        importantly, these ships fully utilize the vast maneuver area 
        of the world's oceans, leveraging our asymmetric advantage and 
        improving our ability to bring decisive power to the point of 
        attack.
  --The AEGIS cruiser USS LAKE ERIE (CG 70) completed three medium 
        range ballistic missile defense tests last year, successfully 
        acquiring, tracking and hitting target ballistic missiles in 
        the mid-course or ascent phases with a Standard Missile 3 (SM-
        3) in all three tests. LAKE ERIE and the AEGIS destroyer USS 
        JOHN PAUL JONES also supported three successive Missile Defense 
        Agency intercontinental class ballistic missile tests; the 
        AEGIS system performed exactly as predicted in each of these 
        tests, acquiring the targets immediately and passing high 
        fidelity digital track data to national nodes ashore. These 
        cruisers' and destroyers' organic AEGIS Weapons System and 
        their SPY-1 multi-function, phased array radars, demonstrate 
        the capability and capacity to conduct a sea based missile 
        defense against those ballistic missiles that can target our 
        homeland, allies, forward operating bases, and joint forces 
        ashore. They could also provide important surveillance and 
        cueing of intercontinental class weapons directed at our 
        homeland.
  --The USS FLORIDA (SSBN 728), an Ohio-class fleet ballistic missile 
        submarine, successfully launched two Tomahawk missiles, 
        confirming the ability to launch a Tomahawk from a 
        configuration similar to the tightly packed cluster of Tomahawk 
        All-Up-Rounds (AUR) we will use in the SSGN. This experiment 
        was conducted in support of the SSGN program's Sea Trial 
        experiment, Giant Shadow, which also explored how a network of 
        forces, including special warfare forces, and various unmanned 
        aerial, underwater and ground vehicles and sensors could be 
        used to provide surveillance, collect real-time intelligence, 
        and develop and launch a time critical strike in support of the 
        joint force commander. This included the first vertical launch 
        of a UUV, testing of nuclear-biological-chemical sensors, and 
        the insertion of SEALs from one of the submarines we will 
        convert to an SSGN.
    These examples represent the return on investment the American 
people have made in our Navy: an agile, connected fleet that enhances 
deterrence, sustains our access, conducts precision strikes, exercises 
joint command and control, enhances knowledge superiority, responds to 
crisis, projects, sustains and operates with the joint force ashore, 
and leverages the priceless advantage of our command of the seas. It is 
why we are a critical component of the nation's joint defenses in 
peace, in crisis, and in conflict.
    None of the foregoing would be possible without the energy, 
expertise, and enthusiasm of our active and reserve Sailors, and our 
Marine and civilian shipmates in the Department of the Navy. After all, 
it is people that put capability to practice, and it is their dedicated 
service that makes these capabilities ready--around the world and 
around the clock.

II: A Culture of Readiness--A Commitment to Transformation
    This century's dangerous and uncertain strategic environment places 
a premium on credible combat forces that possess speed of response, 
immediate employability, and the flexible force packaging that brings 
the right capability to bear at the right time. It demands forces that 
can pair this capability with readiness, both today and in the future.
    Readiness is the Navy's watchword. Readiness is the catalyst that 
brings combat power, speed of response, and the ability to disrupt an 
enemy's intentions in both crisis and conflict. Readiness brings 
capability to bear wherever and whenever it is needed. We are making 
readiness a key element of our Navy's culture.
    The forces we've placed forward today are the most ready force in 
our history; properly manned, superbly trained and well provisioned 
with ordnance, repair parts and supplies so they can provide both 
rotational deployment and surge capability. Our operational forces are 
ready earlier and are deploying at a higher state of readiness than 
ever before.
    A greater percentage of our ships are underway today than at any 
time in the last dozen years. Our ability to do so is the direct result 
of two things: the investment of the American people and the 
extraordinary commitment and accomplishment of our men and women in the 
Navy this past year. We made a concerted effort in last year's budget 
request to improve our current readiness and reduce our immediate 
operational risk and I am proud to report to you today that this force 
is ready to fight and win!
    At the same time, it is apparent that the 21st century sets the 
stage for tremendous increases in precision, reach, and connectivity, 
ushering in a new era of joint operational effectiveness. We clearly 
will be able to integrate sea, land, air, and space through enhanced 
network technology to a greater extent than ever before. And in this 
new, unified battlespace, the sea will provide the vast maneuver area 
from which to project direct and decisive power.
    To navigate the challenges ahead and realize the opportunities, we 
developed this past year a clear, concise vision--Sea Power 21--for 
projecting decisive joint capabilities from the sea. It is a vision 
that stresses our asymmetric strengths of information dominance, 
advanced technology, and highly skilled and motivated professionals.
    Sea Power 21 advances American naval power to a broadened strategy 
in which naval forces are fully integrated into global joint operations 
across this unified battlespace and against both regional and 
transnational aggressors. It provides the transformational framework 
for how we will organize, align, integrate, and transform our Navy to 
meet the challenges that lie ahead.
    It also includes the transformed organizational processes that will 
accelerate operational concepts and technologies to the fleet; shape 
and educate the workforce needed to operate tomorrow's fleet; and 
harvest the efficiencies needed to invest in the Navy of the future.
    The capabilities needed to fulfill this broadened strategy are 
grouped into three core operational concepts: Sea Strike, Sea Shield, 
and Sea Basing, which are enabled by FORCEnet. The triad of transformed 
organizational processes that supports these concepts is: Sea Warrior, 
Sea Trial, and Sea Enterprise.



    Together, these concepts will provide increased power, protection, 
and freedom for America.
  --Sea Strike is the projection of precise and persistent offensive 
        power. Sea Strike operations are how the 21st century Navy will 
        exert direct, decisive and sustained influence in joint 
        campaigns. Sea Strike capabilities will provide the Joint Force 
        Commander with a potent mix of weapons, ranging from long-range 
        precision strike, to clandestine land-attack in anti-access 
        environments, to the swift insertion of ground forces.
  --Sea Shield is the projection of layered, global defensive 
        assurance. It is about extending our defenses beyond naval 
        forces, to the joint force and allies and providing a defensive 
        umbrella deep inland. Sea Shield takes us beyond unit, fleet 
        and task force defense to provide the nation with sea-based 
        theater and strategic defense.
  --Sea Basing is the projection of operational independence. Sea 
        Basing will use the fleet's extended reach of modern, networked 
        weapons and sensors to maximize the vast maneuver space of the 
        world's oceans. It is about extending traditional naval 
        advantages to the joint force with more security, connectivity, 
        and mobility from netted forces at sea.
  --FORCEnet is the enabler of our knowledge supremacy and hence, Sea 
        Strike, Sea Shield, and Sea Basing. It is the total systems 
        approach and architectural framework that will integrate 
        warriors, sensors, networks, command and control, weapons, and 
        platforms into a networked, distributed force and provide 
        greater situational awareness, accelerated speed of decision, 
        and greatly distributed combat power.
    Our transformed organizational processes are:
  --Sea Warrior is our commitment to the growth and development of our 
        Sailors. It serves as the foundation of warfighting 
        effectiveness by ensuring the right skills are in the right 
        place at the right time.
  --Sea Trial is a continual process of rapid concept and technology 
        development that will deliver enhanced capabilities to our 
        Sailors as swiftly as possible. The Commander, U.S. Fleet 
        Forces Command is leading this effort and developing new 
        concepts and technologies, such as the Joint Fires Network and 
        High Speed Vessels.
  --Sea Enterprise is our process to improve organizational alignment, 
        refine requirements, and reinvest the savings to buy the 
        platforms and systems needed to transform our Navy. It is the 
        means by which we will capture efficiencies and prioritize 
        investments. Sea Power 21 is dedicated to a process of 
        continual innovation and is committed to total jointness. It 
        extends American naval superiority from the high seas, 
        throughout the littorals, and beyond the sea. It both enhances 
        and leverages persistent intelligence, surveillance and 
        reconnaissance capabilities and precision weaponry to amplify 
        the nation's striking power, elevate our capability to project 
        both defense and offense, and open the door to the afloat 
        positioning of additional joint capabilities, assets and 
        forces.
    Sea Power 21 will extend the advantages of naval forces--speed of 
response, agility, immediate employability, and security--to the 
unified, joint warfighting team. It will increase our deterrence, 
crisis control and warfighting power. It will ensure our naval forces 
are fully integrated into global joint operations to bring more power, 
more protection, and more freedom to America.
    We will put our Sea Power 21 vision into practice through a new 
Global Concept of Operations (CONOPs) to distribute our combat striking 
power to a dispersed, networked fleet. This will optimize our flexible 
force structure and create additional, scaleable, independent operating 
groups capable of responding simultaneously around the world. This 
distribution of assets will take us from 19 strike capable groups to 37 
strike capable groups with the full implementation of the Global 
CONOPs.



  --Carrier Strike Groups will remain the core of our Navy's 
        warfighting strength. No other force package matches their 
        sustained power projection ability, extended situational 
        awareness, and survivability.
  --Expeditionary Strike Groups will augment our traditional Amphibious 
        Ready Group/Marine Expeditionary Unit team with strike-capable 
        surface combatants and submarines to prosecute Sea Strike 
        missions in lesser-threat environments. When combined with a 
        Carrier Strike Group, the resulting Expeditionary Strike Force 
        will possess the full range of our netted, offensive and 
        defensive power. We will deploy at least one pilot ESG this 
        year.
  --Missile-Defense Surface Action Groups will increase international 
        stability by providing security to allies and joint forces 
        ashore from short and medium range ballistic missile threats.
  --Our future SSGN forces--specially modified Trident submarines--will 
        provide large volume clandestine strike with cruise missiles 
        and the capability to support and insert Special Operations 
        Forces.
  --An enhanced-capability Combat Logistics Force and Maritime 
        Prepositioned Force will sustain a more widely dispersed and 
        capable Navy/Marine Corps team.
    It is our intention to continue to nurture this culture of 
readiness and invest in this vision in the years ahead.

III. Our Fiscal Year 2004 Budget Request
    This past year the Navy improved its current readiness by properly 
funding our current readiness accounts, deepening the growth and 
development of our people, and developing innovative operational 
concepts and capabilities.
    This year, we intend to:
  --Sustain our current readiness gains to support the war on terror;
  --Deepen the growth and development of our people into the 21st 
        Century, high-technology personnel force that is our future; 
        and
  --Invest in our bold new Navy vision--Sea Power 21--to recapitalize 
        and transform our force and improve its ability to operate as 
        an agile, lethal and effective member of our joint, networked 
        warfighting team.
    At the same time, we will continue to actively harvest the 
efficiencies needed to fund and support these priorities in both fiscal 
year 2004 and beyond. Our Navy budget request for fiscal year 2004 
supports this intent and includes:
  --7 new construction ships, two more SSBN-to-SSGN conversions, one 
        cruiser conversion and 100 new aircraft;
  --Investment in accelerated transformational capabilities, including 
        the next-generation aircraft carrier (CVN-21), the 
        transformational destroyer (DD(X)) and Littoral Combat Ship 
        (LCS), the Joint Strike Fighter, the Advanced Hawkeye (E-2C 
        RMP) Upgrade Program and the EA-18G Electronic Attack aircraft;
  --An 4.1 percent average pay increase in targeted and basic pay 
        raises, and a reduction in average out-of-pocket housing costs 
        from 7.5 percent to 3.5 percent;
  --Investment in housing and Public Private Venture that will help 
        eliminate inadequate family housing by fiscal year 2007 and 
        enable us to house shipboard Sailors ashore when their vessel 
        is in homeport by fiscal year 2008;
  --Continued investment in key operational readiness accounts that 
        includes an increase in aviation depot maintenance funding, 
        improvement in our annual deferred maintenance backlog for our 
        ships, submarines and aircraft carriers, and sustained funding 
        for our ordnance, ship operations and flying hours accounts;
  --Navy-Marine Corps Tactical Aviation Integration, a process that 
        will maximize our forward-deployed combat power, optimize the 
        core capability of naval aviation forces, introduce 200 modern 
        aircraft across the fiscal year 2004-fiscal year 2009 program 
        and save billions of dollars;
  --Divestiture of aging, legacy ships, systems and aircraft, producing 
        nearly $1.9 billion in fiscal year 2004 for reinvestment in 
        recapitalization;
  --Improvements in the quality of our operational training through a 
        Training Resource Strategy; and
  --Investment in transformational unmanned underwater vehicles (UUV), 
        unmanned aviation vehicles (UAV), experimental hull forms and 
        other technologies.

            A. Sustaining our Current Readiness
    Your investment last year produced the most ready force in our 
history. Training, maintenance, spare parts, ordnance, and fuel 
accounts enabled our Fleet to be ready earlier, deploy at a higher 
state of readiness, and as we are witnessing today, build a more 
responsive surge capability. These investments were vital to sustaining 
the war on terrorism, assuring friends and allies and leading the 
nation's global response to crisis.
  --Ship Operations and Flying Hours requests funds for ship operations 
        OPTEMPO of 54.0 days per quarter for our deployed forces and 28 
        days per quarter for our non-deployed forces. The flying hours 
        request receives an additional $137 million this year to 
        sustain the investment level we established in support of last 
        year's budget. This level of steaming and flying hours will 
        enable our ships and airwings to achieve required readiness six 
        months prior to deployment, sustain readiness during deployment 
        and increase our ability to surge in crisis. However, sustained 
        OPTEMPO at levels above this force-wide target, as is beginning 
        to occur during fiscal year 2003's time of accelerated and 
        extended deployments, will cause our current year execution to 
        run both ahead and in excess of the existing plan.
  --Ship and Aviation Maintenance. Last year, we reduced our major ship 
        depot maintenance backlog by 27 percent and aircraft depot 
        level repair back orders by 17 percent; provided 32 additional 
        ships with depot availabilities; ramped up ordnance and spare 
        parts production; maintained a steady ``mission capable'' rate 
        in deployed aircraft; and fully funded aviation initial 
        outfitting. Our request for fiscal year 2004 aviation 
        maintenance funding adds over $210 million to fiscal year 
        2003's investment and will increase the number of engine 
        spares, improve the availability of non-deployed aircraft, and 
        meet our 100 percent deployed airframe goals.
      Our ship maintenance request continues to ``buy-down'' the annual 
        deferred maintenance backlog and sustains our overall ship 
        maintenance requirement. The aggregate level of funding for 
        ship maintenance actually declines from fiscal year 2003 to 
        fiscal year 2004, due in part to the positive effects of the 
        additional maintenance funding provided in supplemental 
        appropriations in the previous year, in part to the accelerated 
        retirement of the oldest and most maintenance-intensive surface 
        ships, and as a result of scheduling and timing.
  --Shore Installations. The fiscal year 2004 request provides 93 
        percent of the modeled sustainment cost for facilities, an 
        increase from fiscal year 2003's 84 percent. Although the 
        overall investment in facility recapitalization has reduced 
        from last year, slowing the replacement rate of facilities, our 
        increased investment in sustainment will better maintain 
        existing facilities as we continue to pursue innovations to 
        improve our base infrastructure. Our Base Operations Support 
        funding request is based on sustaining the current level of 
        common installation and important community and personnel 
        support functions; we have factored in management and business 
        efficiencies to reduce the cost of providing these services. We 
        continue to support a Base Realignment and Closure effort in 
        fiscal year 2005 to focus our future investment and improve our 
        recapitalization rate in the years ahead.
  --Precision Guided Munitions receive continued investment in our 
        fiscal year 2004 request with emphasis on increasing inventory 
        levels for the Joint Stand-Off Weapon (JSOW), optimizing the 
        Navy's Joint Direct Attack Munition (JDAM) production rate and 
        commencing full rate production under multi-year procurement 
        for the Tactical Tomahawk (TACTOM). Our partnership with the 
        Air Force in several of our munitions programs will continue to 
        help us optimize both our inventories and our research and 
        development investment.
  --Training readiness. The Training Resource Strategy (TRS) has been 
        developed to provide for more complex threat scenarios, improve 
        the training of our deploying ships, aircraft, Sailors and 
        Marines, and support the range and training technology 
        improvements necessary to ensure the long-term combat readiness 
        of deploying naval forces. The TRS has identified the training 
        facilities necessary to provide this superior level of training 
        as well. Their dispersed character is more like the battlefield 
        environment our forces will face today and tomorrow and will 
        better challenge our deploying forces--before they are 
        challenged in combat. Our fiscal year 2004 request includes $61 
        million to support the Training Resource Strategy.
      At the same time, encroachment and environmental issues continue 
        to impact our ability to maintain an acceptable level of access 
        to our valuable testing and training ranges and operating 
        areas. As a result, we are looking for a balanced approach that 
        would protect our environmental obligations and our ability to 
        both train in realistic scenarios and develop transformational 
        systems for our future. Our approach would be limited to only 
        the most critical issues, such as the designation of critical 
        habitat on military lands designated for military training, and 
        the scientific measurements that achieve an appropriate balance 
        between our environmental concerns and our obligation to ensure 
        our Sailors are properly trained and our transformational 
        systems are properly tested. We will focus the use of our 
        ranges for these purposes while continuing to be an excellent 
        steward of these environmental resources. We look forward to 
        working with the Congress and the American people on this 
        important and urgent issue impacting our Sailors and Marines.

            B. Deepening the Growth and Development of our People
    We are winning the battle for people. Thanks to superb leadership 
in the fleet and the full support of the American people and Congress, 
we are making solid progress in addressing long-standing manpower and 
quality of service issues vital to having what it takes to win the 
competition for talent today and tomorrow.
    We are enjoying now, the best manning I have witnessed in my 
career. With few exceptions, we achieved C-2 manning status for all 
deploying battle group units at least six months prior to deployment. 
These accomplishments enabled our Navy to develop a more responsive 
force--one that surged forward with the right people, at the right time 
to fulfill our national security requirements.



    Retention is at record levels and recruiting has never been better. 
We achieved a 58.7 percent Zone A (<6 Years of service (YOS)) 
reenlistment rate, 74.5 percent Zone B reenlistment rate (6-10 YOS), 
and a Zone C (10-14 YOS) reenlistment rate of 87.4 percent in 2002. 
While we are also off to a great start in fiscal year 2003, we are 
instituting measures to ensure our annualized reenlistment rate meets 
our established goals (Zone A--56 percent, B--73 percent, C--86 
percent).
    Additionally, attrition for first term Sailors was reduced by 23 
percent from fiscal year 2001 levels. 92 percent of our recruits are 
high school graduates and 6 percent of them have some college 
education.



    These tremendous accomplishments allowed us to reduce at-sea 
manning shortfalls last year and reduce our recruiting goals. We were 
also able to increase the overall number of E-4 to E-9s in the Navy by 
1.3 percent to 71.5 percent working toward a goal of 75.5 percent by 
fiscal year 2007. This healthy trend allows us to retain more of our 
experienced leaders to manage and operate the increasingly technical 
21st century Navy.
    Targeted pay raises, reenlistment bonuses, improved allowances, 
enhanced educational benefits, retirement reforms, support for improved 
family services, and better medical benefits are making a difference 
and can be directly attributed to Congressional support and the 
outstanding work of our Navy leaders in our ships, squadrons, bases and 
stations.
    Our fiscal year 2004 request capitalizes on last year's 
accomplishments and provides the opportunity to align our manpower and 
skills mix to balance our end strength and shape our 21st century 
workforce. As part of Sea Power 21's transformed organizational process 
improvements we will begin our Sea Warrior process.
    Our goal is to create a Navy in which all Sailors are optimally 
assessed, trained, and assigned so that they can contribute their 
fullest to mission accomplishment. It is important that we sustain our 
manpower progress by furthering our supporting initiatives, to include:
  --Perform to Serve will align our Navy personnel inventory and skill 
        sets through a centrally managed reenlistment program. This 
        initiative makes Commander, Navy Personnel Command the final 
        authority for first term reenlistments and extensions and will 
        steer Sailors in over manned ratings into skill areas where 
        they are most needed. It provides the training necessary to 
        ensure these sailors will succeed in their new rating. Most 
        importantly, it will help us manage our skills profile.
  --Navy Knowledge Online introduces our integrated web-based lifelong 
        learning initiative for personnel development and learning 
        management. It connects Sailors to the right information in a 
        collaborative learning environment; tracks their individual 
        skills and training requirements; and provides lifelong support 
        between our rating, leadership and personal development 
        Learning Centers and our Sailors.
  --Task Force EXCEL (Excellence through our Commitment to Education 
        and Learning) is transforming the way we train and educate our 
        people. A more responsive organizational structure has been 
        established to include the Navy Chief Learning Officer, Naval 
        Personnel Development Command, and Human Performance Center. We 
        also partnered with Fleet, industry, and academia to improve 
        individual training and education; and with colleges, through 
        the Commissioned Navy College Program, to provide rating-
        related Associate and Bachelor degrees.
  --Project SAIL (Sailor Advocacy through Interactive Leadership), will 
        web-base and revolutionize the personnel assignment process by 
        putting more choice in the process for both gaining commands 
        and Sailors. It will empower our people to make more informed 
        career decisions and for the first time, create a more 
        competitive, market-oriented process.
    Our Sea Swap initiative is underway now, with the first crew-change 
on USS FLETCHER taking place in the Western Australia port of Fremantle 
last month. We will continue this pilot with another crew change this 
summer and we intend to continue to examine pilot programs in optimal 
manning, rotational crewing, assignment incentive pay, rating 
identification tools, and rate training.
    Your support of our fiscal year 2004 request for a targeted pay 
raise that recognizes and reaffirms the value of our career force and 
acts as an incentive to junior personnel to stay Navy is critical to 
staying the course. So, too, is continuing the reduction of average 
out-of-pocket housing expenses and the extension and enhancement of 
essential special pay and bonus authorities. All these efforts enable 
our Navy to sustain our forces in the war on terrorism, continue the 
increase in our Top 6 (E4 to E9), and develop the 21st Century, high-
technology personnel force that is our future.

            C. Investing in Sea Power 21
    Our 21st Century Navy will be a joint, netted, dispersed power 
projection force and Sea Power 21 is the framework for how our Navy 
will organize, integrate, and transform. It prescribes a strategy-to-
concepts-to-capabilities continuum by which current and future Naval 
Forces will exploit the opportunity that information dominance and 
rapid, highly accurate power projection and defensive protection 
capabilities bring to us.
    Together, these concepts will compress our speed of response and 
provide the nation with immediately employable, secure and sovereign 
forward ``capability sets'' from which to project firepower, forces, 
command and control, and logistics ashore.
    The following describes the core capabilities, and our initial 
investments in our highest priority programs that support this vision.
    Sea Strike is the projection of precise and persistent offensive 
power. The core capabilities include Time Sensitive Strike; 
Intelligence, Surveillance and Reconnaissance; Ship to Objective 
Maneuver; and Electronic Warfare and Information Operations. We are 
already investing in impressive programs that will provide the 
capabilities necessary to support Sea Strike; these include the 
following fiscal year 2004 priorities:


  --F/A-18E/F Super Hornet.--The F/A-18E/F is in full rate production 
        and when combined with this year's request for the EA-18G, will 
        be the backbone of Navy sea-based precision and time-critical 
        strike, electronic attack and airborne tactical reconnaissance. 
        It is in the fifth of a five-year multi-year procurement (MYP) 
        contract (fiscal year 2000-04) that will yield $700 million in 
        total savings. The second multi-year contract for 210 aircraft 
        will yield approximately $1 billion in savings as compared to 
        the single-year price. The Super Hornet employs new knowledge 
        dominance technologies, such as the Joint Helmet Mounted Cueing 
        System, Advanced Tactical Forward Looking Infrared System, 
        Shared Reconnaissance System, and Multi-Informational Display 
        System data link. It provides 40 percent increase in combat 
        radius, a 50 percent increase in endurance, 25 percent greater 
        weapons payload, 3 times the ordnance bring back, and is more 
        survivable than our older Hornets; most importantly, it has the 
        growth capacity to remain a mainstay of our tactical aviation 
        for years to come. Three of these squadrons are already 
        deployed today at one-third the operational cost of our legacy 
        F-14 aircraft. Fiscal year 2004 budgets for 42 E/F aircraft; 
        this program maximizes the return on our procurement dollars 
        through a multi-year procurement contract and a minimum 
        economic order quantity buy.
  --EA-18G.--The EA-18G will replace the aging EA-6B Prowler for joint 
        force electronic attack. Using the demonstrated growth capacity 
        of the F/A-18E/F, the EA-18G Growler will quickly recapitalize 
        our Electronic Attack capability at lower procurement cost, 
        with significant savings in operating and support costs and 
        three years earlier than previously planned; all while 
        providing the growth potential for future electronic warfare 
        (EW) system improvements. It will use the Improved Capability 
        Three (ICAP III) receiver suite and provide selective reactive 
        jamming capability to the war fighter. This will both improve 
        the lethality of the air wing and enhance the commonality of 
        aircraft on the carrier deck. It will dramatically accelerate 
        the replacement of our aging Airborne Electronic Attack 
        capability. Engineering and developmental efforts commence with 
        our fiscal year 2004 budget request.
  --JSF.--The Joint Strike Fighter will enhance our Navy precision with 
        unprecedented stealth and range as part of the family of tri-
        service, next-generation strike aircraft. It will maximize 
        commonality and technological superiority while minimizing life 
        cycle cost. The fiscal year 2004 budget requests $2.2 billion 
        in accelerated development funds; initial production is planned 
        for fiscal year 2006.
  --MV-22.--The Joint Service MV-22 Osprey tilt-rotor, Vertical/Short 
        Take-Off or Landing (V/STOL) aircraft represents a 
        revolutionary change in aircraft capability. It will project 
        Marines and equipment ashore from our amphibious shipping, 
        operationalizing Ship to Objective Maneuver from the Sea Base 
        and improving our expeditionary mobility and force entry needs 
        for the 21st century. The MV-22 program has been restructured, 
        redesigned, rebuilt and is undergoing testing to deliver an 
        operationally deployable aircraft on the restructured schedule. 
        The MV-22 will replace the Vietnam-era CH-46E and CH-53D 
        helicopters, delivering improved readiness, upgraded 
        capability, and significantly enhanced survivability. It is 
        overwhelmingly superior to our legacy CH-46E providing twice 
        the speed, five times the range, and three times the payload 
        capacity.
  --Unmanned Air Vehicles (UAV).--We increased our commitment to a 
        focused array of unmanned air vehicles that will support and 
        enhance both Sea Shield and Sea Strike missions with 
        persistent, distributed, netted sensors. We are initiating the 
        Broad Area Maritime Surveillance (BAMS) UAV this year to 
        develop a persistent, multi-mission platform capable of both 
        Sea Shield and Sea Strike surveillance and reconnaissance of 
        maritime and land targets, communications relay and some 
        intelligence collection. We have provided funding for testing, 
        experimentation and/or demonstration of the Fire Scout 
        Demonstration Systems, Global Hawk Maritime demonstration and 
        the Unmanned Combat Aerial Vehicle--Navy (UCAV-N) demonstration 
        vehicle as well.
    Sea Shield is the projection of layered, global defensive power. It 
will soon enhance deterrence and warfighting power by way of real-time 
integration with joint and coalition forces, high speed littoral attack 
platforms setting and exploiting widely distributed sensors, and the 
direct projection of defensive powers in the littoral and deep inland. 
It will enhance homeland defense, assure, and eventually sustain our 
access in the littorals and across the globe. Sea Shield capabilities 
include, Homeland Defense, Sea and Littoral Control, and Theater Air 
and Missile Defense.



    Our highest priority Sea Shield programs this year include:
  --Missile Defense.--Our Navy is poised to contribute significantly in 
        fielding initial sea based missile defense capabilities to meet 
        the near-term ballistic missile threat to our homeland, our 
        deployed forces, and our friends and allies and we are working 
        closely with the Missile Defense Agency (MDA) to that end. As 
        partners, USS LAKE ERIE will be transferred to MDA to 
        facilitate a more robust testing program for missile defense. 
        In turn, MDA is requesting funds to upgrade three AEGIS guided 
        missile destroyers (DDG) for ICBM surveillance and tracking 
        duties and procurement of up to 20 Standard Missile 
        interceptors to help us provide a limited at sea capability to 
        intercept short and medium range ballistic missiles in the 
        boost and ascent phases of flight. Our sea-based missile 
        defense programs experienced tremendous success on the test 
        range during 2002, and we look forward to building on these 
        successes and developing a vital capability for our Nation.
  --CG Conversion.--The first Cruiser Conversion begins in fiscal year 
        2004. The Cruiser Conversion Program is a mid-life upgrade for 
        our existing AEGIS cruisers that will ensure modern, relevant 
        combat capability well into this century and against evolving 
        threats. These warships will provide enhanced land attack and 
        area air defense to the joint force commander. Core to these 
        conversions is installation of the Cooperative Engagement 
        Capability, which enhances and leverages the air defense 
        capability of these ships, and the 5 inch/62 Gun System with 
        Extended Range Guided Munitions to be used in support of the 
        Marine Corps Ship-to-Objective-Maneuver doctrine. These 
        converted cruisers could also be available for integration into 
        ballistic missile defense missions when that capability 
        matures.
  --Unmanned Underwater Vehicles (UUV).--We will continue development 
        of UUVs for minefield reconnaissance in the littoral and other 
        surveillance missions; including funding that will result in 
        initial operating capability for the Long-term Mine 
        Reconnaissance System (LMRS) in fiscal year 2005.
    Sea Basing is the projection of operational independence. Our 
future investments will exploit the largest maneuver areas on the face 
of the earth: the sea. Sea Basing serves as the foundation from which 
offensive and defensive fires are projected--making Sea Strike and Sea 
Shield a reality. Sea Basing capabilities include, Joint Command and 
Control, Afloat Power Projection and Integrated Joint Logistics. Our 
intent is to minimize as much as possible, our reliance on shore-based 
support nodes.



    At the top of my list is the surface combatant family of ships--
centered on the next-generation multi-mission destroyer DD(X), the 
next-generation cruiser (CG(X)), and the Littoral Combat Ship (LCS)--
this combination of ships will provide joint force commanders with a 
robust range of transformational capabilities across the spectrum of 
warfare. From the long-range precision strike and volume-fires of 
DD(X), to the overland, theater and strategic ballistic and cruise 
missile defensive reach of the CG(X), to the ability to clear the way 
for the joint force in the tough littoral environment with LCS, the 
Navy's future surface warships will be designed from their keels up to 
operate as critical elements of our dispersed, networked, joint force.
    At the heart of this family is DD(X). Our DD(X) research and 
development effort is the baseline that will enable us to keep pace 
with today's rapid technological advances; it will spiral promising 
technologies to both CG(X) and LCS, and hence, permit us to both lead 
the threat and leverage the capabilities needed for the 21st Century. 
It will also enable us to upgrade in-service Aegis cruisers and 
destroyers with selected leading-edge technologies to ensure this vital 
core of our legacy, multi-mission fleet will maintain operational 
effectiveness throughout their lifetimes and until the DD(X) and CG(X) 
program comes to fruition. Specific highlights include:
  --Littoral Combat Ship (LCS).--Our most transformational effort and 
        number one budget priority, the Littoral Combat Ship will 
        counter anti-access threats, namely small, fast surface craft 
        carrying anti-ship missiles, torpedo-armed ultra-quiet diesel 
        submarines, and large numbers of inexpensive mines. It will be 
        the first Navy ship to separate capability from hull form and 
        will provide a robust, affordable, focused-mission ship to 
        enhance our ability to establish sea superiority not just for 
        our Carrier Strike Groups and Expeditionary Strike Groups, but 
        for all the joint logistics, command and control and pre-
        positioned ships that must transit the critical littoral threat 
        area to move and support forces ashore. They will be dispersed 
        and netted, both leveraging and enhancing the knowledge 
        superiority and defense of the theater joint force. They will 
        be the backbone of our organic battle group mine warfare 
        capability.
      We will separate capability from platform by developing 
        ``tailorable'' mission modules that can be rapidly changed in 
        forward locations. This kind of ``forward fit and fight'' 
        capability will enable us to distribute these small, minimally 
        manned, persistent, high-speed vessels across the globe and it 
        will permit us to use innovative crewing techniques. By 
        employing networked sensors, modular mission payloads, a 
        variety of manned and unmanned vehicles, and an innovative hull 
        design, they will also have the inherent capacity for further 
        transformation. We will capitalize on DOD initiatives, spiral 
        development, and new acquisition methods to streamline the 
        acquisition process and begin construction of the first LCS by 
        2005. The fiscal year 2004 budget accelerates development and 
        construction of 9 LCS in the FYDP, key to ramping surface force 
        structure to Global CONOPs levels outside the FYDP.
  --DD(X).--The DD(X) advanced multi-mission destroyer will be armed 
        with an array of land attack weapons to provide persistent, 
        distributed offensive fires in support of joint forces ashore. 
        Transformational and leap ahead technologies include an 
        integrated power system and electric drive; the Advanced Gun 
        System with high rate of fire and magazine capability; the new 
        Multi-Function Radar/Volume Search Radar suite; optimal manning 
        through advanced system automation, stealth through reduced 
        acoustic, magnetic, IR, and radar cross-section signature; and 
        enhanced survivability through automated damage control and 
        fire protection systems. The capacity in both hull form and 
        integrated electric power system, and the revolutionary radar 
        development work will allow us to spiral DD(X) to both an 
        entirely new class of ships--our robust, sea-based missile 
        defense CG(X) platform of the future--as well as other 
        potential systems, like the electro-magnetic rail gun, in the 
        years ahead.
    In addition to the surface combatant family of ships, our other 
high priority efforts include:
  --CVN-21.--We have accelerated transformational technologies from the 
        CVNX development plan into CVN-21 while sustaining the CVNX-1 
        development schedule submitted last year. This is the first new 
        carrier design since 1967. The fiscal year 2004 budget request 
        provides $1.5 billion in RDT&E and advanced procurement for the 
        first CVN-21 and programs for split-funded construction for two 
        years beginning in fiscal year 2007. The transformational 
        technologies include a new electrical generation and 
        distribution system, improved flight deck design with Electro-
        Magnetic Aircraft Launching System (EMALS), improved sortie 
        generation, enhanced survivability, reduced manning, and 
        incorporation of a flexible infrastructure that will allow the 
        insertion of new capabilities as they evolve. CVN-21 will be 
        the centerpiece of our Carrier Strike Groups in the future and 
        will replace USS ENTERPRISE in fiscal year 2014.
  --VIRGINIA-class submarine (SSN-774).--The first four ships of this 
        class are under construction: Virginia will commission in 2004; 
        the keel was laid for Texas (SSN-775) in July 2002; Hawaii 
        (SSN-776) was begun in 2001; and North Carolina (SSN-777) in 
        2002. This class will replace LOS ANGELES-class (SSN-688) 
        attack submarines and will incorporate new capabilities, 
        including an array of unmanned vehicles, and the ability to 
        support Special Warfare forces. It will be an integral part of 
        the joint, networked, dispersed fleet of the 21st Century.
  --SSGN Conversions.--We have requested two additional conversions in 
        fiscal year 2004; these ships will be configured to carry more 
        than 150 Tomahawk missiles, enabling covert, large-volume 
        strike. The SSGN will also have the capability to support 
        Special Operations Forces for an extended period, providing 
        clandestine insertion and retrieval by lockout chamber, dry 
        deck shelters or the Advanced Seal Delivery System, and they 
        will be arrayed with a variety of unmanned systems to enhance 
        the joint force commander's knowledge of the battlespace. We 
        will leverage the existing TRIDENT submarine infrastructure to 
        optimize their on-station time. The first two ships, the USS 
        OHIO and USS FLORIDA, enter the shipyard in fiscal year 2003 to 
        begin their refueling and conversion. USS MICHIGAN and USS 
        GEORGIA will begin their conversion in fiscal year 2004. We 
        expect this capability to be operational for the first SSGN in 
        fiscal year 2007.
  --Maritime Prepositioning Force Future (MPF(F)).--Our vision for the 
        future Maritime Prepositioning Force and tomorrow's Amphibious 
        force continues to develop. This fiscal year's budget and the 
        Joint Forcible Entry Operations study will refine our effort 
        and posture us for enhanced sea basing of Navy and Marine Corps 
        assets. I expect MPF(F) ships will serve a broader operational 
        function than current prepositioned ships, creating greatly 
        expanded operational flexibility and effectiveness. We envision 
        a force of ships that will enhance the responsiveness of the 
        joint team by the at-sea assembly of a Marine Expeditionary 
        Brigade that arrives by high-speed airlift or sealift from the 
        United States or forward operating locations or bases. These 
        ships will off-load forces, weapons and supplies selectively 
        while remaining far over the horizon, and they will 
        reconstitute ground maneuver forces aboard ship after 
        completing assaults deep inland. They will sustain in-theater 
        logistics, communications and medical capabilities for the 
        joint force for extended periods as well.
    Other advances in sea basing could enable the flow of Marine and 
Army forces at multiple and probably austere points of entry as a 
coherent, integrated combined arms team capable of concentrating lethal 
combat power rapidly and engaging an adversary upon arrival. The 
ability of the Naval Services to promote the successful transformation 
of deployment practices of the other Services will dramatically improve 
the overall ability of the Joint Force to counter our adversaries' 
strategies of area-denial and/or anti-access. We are programming RDTE 
funds to develop the future MPF and examine alternative sea basing 
concepts in fiscal year 2008.
    FORCEnet is the enabler of the foregoing capabilities, and the 
operational construct and architectural framework for naval warfare in 
the joint, information age. It will allow systems, functions and 
missions to be aligned to transform situational awareness, accelerate 
speed of decisions and allow naval forces to greatly distribute its 
combat power in the unified, joint battlespace. It puts the theory of 
network centric warfare into practice. We are just beginning this 
effort and we have requested $15 million in funds to administer the 
development of FORCEnet, the cornerstone of our future C\4\I 
architecture that will integrate sensors, networks, decision aids, 
warriors and weapons. Programs that will enable the future force to be 
more networked, highly adaptive, human-centric, integrated, and enhance 
speed of command include:
  --E-2C Advanced Hawkeye Radar Modernization Program.--E-2 Advanced 
        Hawkeye (AHE) program will modernize the E-2 weapons system by 
        replacing the current radar and other aircraft system 
        components to improve nearly every facet of tactical air 
        operations. The modernized weapons system will be designed to 
        maintain open ocean capability while adding transformational 
        surveillance and Theater Air and Missile Defense capabilities 
        against emerging air threats in the high clutter and jamming 
        environment. The advanced Hawkeye will be a critical 
        contributor to Naval Integrated Fire Control-Counter Air, and 
        to Sea Strike and Shield. The fiscal year 2004 budgets over 
        $350 million for continued development with first production 
        planned for fiscal year 2008.
  --Navy and Marine Corps Intranet (NMCI).--NMCI continues to bring 
        together Navy personnel, government civilians and contractors 
        into a single computing environment. This program is fostering 
        fundamental changes in the way we support critical war fighting 
        functions, conduct Navy business, and train and advance 
        Sailors. Fiscal year 2004 funding of $1.6 billion continues 
        user seat rollout and cutover to the NMCI architecture, 
        progressing toward a target end-state of 365,000 seats. 
        Although NMCI seat cutover was slowed initially by the need to 
        resolve the challenges of numerous, disparate legacy 
        applications, the transition to NMCI has succeeded in 
        eliminating more than 70,000 legacy IT applications and we are 
        on track for the future.
    Sea Trial.--Commander, U.S. Fleet Forces Command (CFFC) is now in 
charge of our Navy's revitalized process of experimentation, and is 
rapidly developing emergent concepts and experimenting with new 
technologies to speed delivery of innovation to the fleet. CFFC will 
reach throughout the military and beyond to coordinate concept and 
technology development in support of future warfighting effectiveness. 
Embracing spiral development, the right technologies and concepts will 
then be matured through targeted investment and rapid prototyping.
    CFFC is working in concert with the U.S. Joint Forces Command to 
refine the Sea Trial process and integrate select wargames, 
experimentation and exercises. We are already testing new operational 
concepts and technologies like the Collaborative Information 
Environment, Joint Fires Initiative, and the Navy Joint Semi-Automated 
Force Simulation in operations and exercises. We will continue to 
pursue evaluation of multiple platforms and systems, including 
experimental hull forms and electro-magnetic rail guns, among others.
    The Systems Commands and Program Executive Offices will be integral 
partners in this effort, bringing concepts to reality through 
technology innovation and application of sound business practices.

IV. Harvesting Efficiencies for Transformation
    We are working hard to identify and harvest the efficiencies needed 
to balance competing priorities and invest in our Sea Power 21 vision. 
Called Sea Enterprise, this process is intended to ensure our 
warfighting capability both now and in the future. It will help 
identify and produce those initiatives that both optimize our 
warfighting capability and streamline our organization and processes; 
to make it operate more efficiently, to reduce our overhead and to 
produce the savings needed for investment in recapitalization and our 
future. We have already identified several initiatives that have 
produced over $40 billion in savings and cost avoidance across the 
defense program--and many more billions outside the FYDP--to help fund 
our future. A few of the highlights include:
  --USN-USMC Tactical Aviation (TACAIR) Integration plan shows the 
        promise of cross-service partnerships. It will maximize forward 
        deployed combat power, enhance our interoperability, more fully 
        integrate our services, and save $975 million across the FYDP. 
        This aggressive effort introduces 200 modern aircraft in the 
        next six years while retiring legacy F-14, F/A-18A/B, S-3, and 
        EA-6B airframes, and it reduces our F/A-18 E/F and JSF total 
        buy requirements by 497 aircraft while enhancing our 
        warfighting capability. There is more than $30 billion in 
        projected cost avoidance outside the FYDP as well.
        
        
  --Partnerships. We are pursuing other promising partnerships to 
        include new munitions with the U.S. Air Force, common 
        communications and weapons systems with the U.S. Coast Guard's 
        Deepwater Integrated Systems program, and joint experiments 
        with high-speed vessels with the U.S. Army. We will continue to 
        leverage the gains made in programs like joint weapons 
        development (JDAM, JSOW, AMRAAM) as well.
  --Identifying savings within the force for recapitalization. Last 
        year we promised we would sharpen our focus on our force 
        structure in the years ahead--to buy the ships, aircraft and 
        the capabilities needed for tomorrow's Navy. At the same time, 
        we cannot overlook the important gains our focus on current 
        readiness made these last few years; it produced the more 
        responsive force on deployment today. As a result, we are 
        obligated to look hard at the ways we could balance these 
        priorities and our discretionary investments to both satisfy 
        the near term operational risks and prepare for the long term 
        risks of an uncertain future. This year we made some hard 
        choices across the Fleet to do more to address our future risk, 
        sustain our current readiness gains and strike this balance. We 
        looked hard at older systems with limited growth potential and 
        high operating and support costs (maintenance, parts, training, 
        etc.), and ultimately decided to accelerate the retirement of 
        11 ships and 70 aircraft, divest more than 50 systems and 
        eliminate 70,000 legacy IT applications from an original 
        baseline of 103,000.
      Accelerating the retirement of these ships was a difficult 
        decision. However, our analysis indicates that our proposed 
        near-term inactivations and our remaining warfighting 
        capability provide an acceptable level of risk without 
        compromising our ability to accomplish our mission. Vertical 
        cuts in our least capable type-model series, both in ships and 
        in aircraft, allowed us to use the savings to recapitalize, 
        modernize other legacy platforms, and invest in Sea Power 21. 
        In all, these difficult decisions yielded $1.9 billion for 
        reinvestment and will do much to help reduce our future risk.
  --Improved business operations and processes. We are improving both 
        the way we run the Fleet and our ability to control costs. The 
        LPD-DDG swap produced savings sufficient to purchase a third 
        guided missile destroyer in fiscal year 2004. We are using 
        multi-year procurement contacts and focusing where possible on 
        economic order quantity purchase practices to optimize our 
        investments. We conducted the Workload Validation Review, and 
        made Performance Based Logistics improvements. Other 
        initiatives like piloting mission funding for two of our public 
        shipyards, Enterprise Resource Planning, strategic sourcing, 
        NMCI and eBusiness are helping us find the funds necessary to 
        emerge with the optimal force structure, a healthy industrial 
        base and an efficient and appropriately sized infrastructure.
  --Installation Claimant Consolidation. In October 2003 we will 
        establish a single shore installation organization, Commander, 
        Navy Installations Command (CNIC), to globally manage all shore 
        installations, promote ``best practices'' development in the 
        regions, and provide economies of scale, increased efficiency, 
        standardization of policies where practicable and improved 
        budgeting and funding execution. This initiative has the 
        potential to save approximately $1.6 billion in the next six 
        years.
    We will continue to pursue the efficiencies that improve our 
warfighting capability. We are committed to producing the level 
investment stream that will help implement our bold new Navy vision and 
produce the number of future ships, aircraft and systems we need to 
counter the 21st Century threat. Harvesting savings for reinvestment is 
an important part of that effort, and we will continue to examine the 
potential efficiencies while weighing the operational risks, both now 
and in the future.

V. Conclusion
    The President has called upon us to ``be ready to strike at a 
moment's notice in any dark corner of the world.'' We are answering 
that call in the Global War on Terrorism and in the opening salvos of 
Operation Iraqi Freedom. We will also prepare our force for the battles 
of tomorrow by integrating Sea Strike, Sea Shield, and Sea Basing into 
the Joint Force; capturing the funds needed to build the 21st century 
Navy; and developing our workforce. We are creating the future 
capabilities and force structure required to counter these 21st century 
threats. In pursuing victory, the United States Navy--forward deployed, 
highly capable, and poised for action--will continue to provide our 
nation persistent combat power.
    At the same time, our people remain at the heart of all we do; they 
are the real capital assets in our Navy. We have invested heavily to do 
what is right for the people who are investing themselves in our Navy. 
``Growth and development'' is our byline. As we look to the future, we 
will build on the impressive progress we have made in recruiting, 
assigning, and retaining our military and civilian professionals. 
Active leadership is making it happen today and will do so in the years 
to come.
    I thank the Committee for your continued strong support of our 
Navy, our Sailors, and our civilian shipmates. Working together, I am 
confident we will win the Global War on Terrorism, make our great Navy 
even better, and provide our Nation with more power, more protection, 
and more freedom in the years ahead.

    Senator Stevens. Thank you very much. All this paper work 
is about what is going on on the floor. General Hagee.

                 STATEMENT OF GENERAL MICHAEL W. HAGEE

    General Hagee. Mr. Chairman, Senator Inouye, Senator 
Cochran, other distinguished members of this committee, it is 
indeed an honor for me to be here today representing your 
Marine Corps. I would like to thank this committee for its 
strong support for the issues and programs that are of such 
vital importance to the readiness of the Marine Corps and the 
Navy-Marine Corps team.
    I would also like to thank my good friend, Admiral Vern 
Clark, for his leadership of the Navy and his participation in 
truly making the Navy-Marine Corps team a reality. And as he 
mentioned, nothing reflects that more in my opinion, than these 
14 amphibious task force ships, 7 from each coast, that left 
within about a 2 to 3-week alert, carrying approximately 6,000 
to 7,000 Marines on each task force, and all of them arrived in 
the Gulf on time and on target. Now, Admiral Clark would say it 
is because of the sailors that he has in his Navy, and he is 
absolutely correct, but it takes leadership and vision, and 
that comes from the top, and I thank him for that.
    The actions of your Marines in Iraq attests to their 
morale, readiness and warfighting capability better than any 
words that I could say here today. They are performing 
magnificently. In addition to the events that constantly scream 
from our televisions, radios and newspapers, the Navy-Marine 
Corps team continues to play a key role in the global war on 
terrorism and in the establishment of stability and security in 
many of our world's other trouble spots.
    Active and reserve Marines are operating alongside 
soldiers, sailors, airmen, non-governmental officials (NGOs) 
and diplomats in diverse locations around the globe, from 
Afghanistan to the Arabian Gulf, to the Horn of Africa, to the 
Georgian Republic, Colombia, Guantanamo Bay, and the 
Philippines. Today Marines are flying from Baghram Air Base in 
Afghanistan and from Navy carriers at sea. Currently 67 percent 
of the Marine Corps operating forces are forward deployed and 
almost 80 percent of our operating forces are either forward 
deployed, forward stationed, or forward based.
    Marine Corps operations continue to highlight the 
versatility of our expeditionary forces. We have had one of our 
busiest years in terms of operational deployments, 
participation in realistic worldwide exercises and training 
events. To that end we have a thoroughly trained, ready and 
capable force for the Nation.
    Though the Nation is focused on current operations in Iraq, 
we continue to develop the capabilities we will need for 
tomorrow's challenges as well. Along with the Navy, we are 
moving out with new organizational concepts mentioned by the 
Chief of Naval Operations. These include tac air integration, 
carrier and expeditionary strike groups, and our concept of 
enhanced networked sea bases. These concepts will make us more 
responsive, flexible and effective in the future.
    The fiscal year 2004 budget continues our efforts to 
modernize and transform the force. The support that you have 
provided over the last 2 years has helped us make real progress 
in our modernization, transformation, personnel and readiness 
accounts. While Marines and their families have benefitted from 
increased appropriations for targeted pay raises and improved 
family housing and barracks, this committee's support for 
important procurement programs has also ensured that our 
Marines are better equipped and more likely to survive on the 
battlefield today.
    With regard to transformation and modernization, I am happy 
to report that our top Marine Corps ground programs are 
adequately funded over the near term. Among these are the 
advanced amphibious assault vehicle, the high mobility 
artillery rocket system and the lightweight 155 howitzer. On 
the aviation side, we are on track for funding for the V-22, 
the joint strike fighter, Short-Take-Off/Vertical Landing 
(STOVL), and the four-bladed Cobra and Huey airframes.
    Finally, we continue to make needed progress in readiness. 
Having recently come from the operating forces, I can tell you 
that there is a marked positive improvement in the way we are 
funding for readiness now compared to just a few years ago. 
Much of that improvement can be directly attributed to the 
welcome attention readiness has received from this subcommittee 
over the last few years. I know you are actually working on the 
much needed supplemental and I thank you very much for that, 
sir.
    My main funding concern is the cost of reconstituting our 
forces. We are making a concerted effort to capture these costs 
and ensure we know what will be required to maintain the future 
readiness of our Corps. We are currently doing what we have 
been trained to do, and we are ready to support our Nation to 
whatever challenges may lie ahead. We are on solid ground 
regarding our mission and our direction. We will remain your 
own only sea-based, rotational, truly expeditionary combined 
armed force ready to answer the call as part of the integrated 
joint force.

                           PREPARED STATEMENT

    Thank you again, sir, on behalf of all your Marines, and I 
look forward to your questions.
    [The statement follows:]

             Prepared Statement of General Michael W. Hagee

    Chairman Stevens, Senator Inouye, distinguished members of the 
Committee; it is my honor to report to you on the state of your United 
States Marine Corps. First, on behalf of all Marines, I want to thank 
the Committee for your continued support. Your sustained commitment to 
improving the warfighting capabilities of our Nation's armed forces and 
to improving the quality of life of our Service men and women and their 
families is vital to the security of our Nation, especially now, while 
our Nation is at war.

                              INTRODUCTION

    The Navy-Marine Corps Team continues to play a key role in the 
global war on terrorism and in the establishment of stability and 
security in many of the world's trouble spots. Marines, both Active and 
Reserve, are operating side-by-side in Iraq, as well as in diverse 
locations, from Afghanistan, the Horn of Africa, Turkey, the Georgian 
Republic, Colombia, Guantanamo Bay, and the Philippines. The actions of 
your Marines--along with Navy Corpsmen and SeaBees--attest to their 
morale and readiness better than any words I could say here today.
    Marine Corps operations throughout the past year have highlighted 
the versatility and expeditionary nature of our forces. Missions in 
support of Operations Enduring Freedom and Noble Eagle marked the most 
visible accomplishments of our forward-deployed forces. Marine Air 
Control Squadrons continue to provide air control, surveillance, and 
air traffic control support to Operation Enduring Freedom during their 
deployments to the Central Command area of responsibility. Elsewhere, 
the Marine Corps continues to support Operation Joint Forge in the 
Balkans by sending Civil Affairs teams to Bosnia.
    Even as the Marine Corps saw one of our busiest years in terms of 
operational deployments, participation in realistic, worldwide 
exercises remained critical to supporting the Combatant Commander's 
Theater Security Cooperation Plans and ensuring that we maintained a 
ready and capable force. Over the last year, Marines participated in 
more than 200 service, joint, and combined exercises. These included 
live fire, field training, command post, and computer-assisted 
exercises. Participants varied in size from small units to Marine 
Expeditionary Forces. Overseas, Marine Expeditionary Units (Special 
Operations Capable) conducted exercises in Jordan, Italy, Croatia, 
Tunisia, the Philippines, Australia, Thailand, and Kuwait.
    At home, Marine reserve units were designated as ``on call'' forces 
to support the Federal Emergency Management Agency's role in homeland 
security. In addition, the Marine Corps also conducted numerous 
training operations and internal exercises. This important training 
helps develop individual and unit proficiency and competency. It also 
allows the Marine Corps to examine unit operational skills and ensures 
that each unit has the capabilities required to execute our full range 
of missions.
    The Marine Corps continues to contribute to the Nation's counter 
drug effort, participating in numerous counter-drug operations in 
support of Joint Task Force Six, Joint Interagency Task Force-East, and 
Joint Interagency Task Force-West. These missions are conducted in the 
Andean region of South America, along the U.S. Southwest border, and in 
several domestic ``hot spots'' that have been designated as High 
Intensity Drug Trafficking Areas. Individual Marines and task-organized 
units are assigned to these missions in order to provide support for 
domestic drug-law enforcement throughout the United States, and to 
provide conventional training to military forces in South America that 
execute counter-narcotics missions. Marine operational and intelligence 
teams also support Colombian military efforts to combat narco-
terrorism. Marines of our reserve forces have executed the majority of 
these missions.
    Our successes in these global operations and exercises have not 
been achieved alone. We have worked closely alongside the Navy, our 
sister Services, and Federal agencies to realize the true potential of 
joint, interoperable forces in the new environment of 21st Century 
warfare. The operational and personnel readiness levels we have been 
able to maintain directly reflect the strong, sustained support of the 
Congress in last year's National Defense Authorization and 
Appropriations Acts. In fiscal year 2004, we seek your continued 
support for the President's Budget so we can consolidate the gains made 
to date, improve those areas where shortfalls remain, and continue 
transforming the way the Navy-Marine Corps Team will fight in the 21st 
century.

                          BUILDING ON SUCCESS

    The President's fiscal year 2004 budget, together with your 
support, will provide a strong foundation on which we can continue 
building on our successes. Our focus is on improving our ability to 
operate as an agile, lethal, ready, and effective member of a broader 
joint force that takes the complementary capabilities provided by each 
Service, and blends them into an integrated and effective force for 
meeting future challenges.
    Increases in our Military Personnel accounts have a positive effect 
on the retention of our most valued assets--our Marines. Given the 
increasing pressure to modernize and transform the force, the Marine 
Corps is constantly working to identify and assess program tradeoffs to 
enable the most effectively balanced approach between competing demands 
and programs. These tradeoffs occur within a larger context of the 
Department's overall program tradeoff decisions, which is driving the 
Navy and Marine Corps to work more closely than ever before in our 
planning, budgeting, and decision making. An additional concern that 
complicates this process is the sizeable unfunded cost of the ongoing 
global war on terrorism.
    Challenges also arise from the changing realities of our National 
security environment. The Marine Corps is committed to the idea that we 
will fight as an integral part of a joint team. We continue to place 
high priority on interoperability, shared concept development, and 
participation in joint exercises with our sister services. 
Additionally, the security environment now demands that we pay more 
attention to our role in Homeland Defense, our critical infrastructure, 
and force protection--even as we deploy more forces overseas. These 
challenges demand that we balance competing priorities while remaining 
focused on maintaining excellence in warfighting.
Adapting to a Changing, Dynamic World
    While we adapt the advantages of technology to meet the changing 
face of warfare, we draw strength from the unique culture and core 
values that make us ``Marines.'' We look for innovation in four broad 
areas to address future challenges: Transformational technology; New 
operational concepts; Refined organizations; and Better business 
practices.
    Innovative approaches culled from these efforts should provide 
insight into new capabilities that we can adapt for future warfighting. 
In this regard, we are currently engaged in an immediate and critical 
tasking to define how we, along with our partners in the Navy, intend 
to project Naval power ashore in the 2015-2025 timeframe. This effort 
requires the intellectual rigor and participation of all the elements 
of our Marine Air-Ground Task Forces and is influencing the entire 
Marine Corps--from our structure and training to the way we will fight 
on future battlefields as an integral component of a joint force.

Technology and Experimentation
    The plan for realizing future joint concepts consists of three 
closely related processes: (1) Joint Concept Development, (2) Joint 
Experimentation & Assessment, and (3) Joint Integration & 
Implementation. The overall process is more commonly known as Joint 
Concept Development & Experimentation. In order to ensure support and 
engagement throughout this process, the Marine Corps reorganized to 
establish three Joint Concept Development & Experimentation divisions 
under the cognizance of the Commanding General, Marine Corps Combat 
Development Command. These three organizations are key elements of 
Marine Corps Transformation and enable full Marine Corps involvement in 
Joint Experimentation and Transformation as well as the Navy's Sea 
Trial process for Naval Experimentation and Transformation.
    The Marine Corps Warfighting Laboratory maintains cognizance over 
Marine Corps-specific experimentation--with a focus on the tactical 
level--to develop enhanced warfighting capabilities for the future. 
Technologies and procedures are field tested in experiments conducted 
with the operating forces. In addition, the Lab coordinates closely 
with the Office of Naval Research to identify promising technologies 
that support the next generation of warfighting capabilities.

New Concepts and Organizations
    The Marine Corps is streamlining force development from concept to 
acquisition under the Deputy Commandant for Combat Development. Our 
Expeditionary Force Development System is a single system of dynamic 
functions integrated into a process that produces and sustains 
capabilities to meet the needs of the Marine Corps and the Combatant 
Commanders. The Marine Corps advocates for ground combat, aviation 
combat, command and control, and combat service support, as well as the 
Marine Requirements Oversight Council, are key participants in the 
process. The Expeditionary Force Development System continuously 
examines and evaluates current and emerging concepts and capabilities 
to improve and sustain a modern Marine Corps. The system is compatible 
with and supports Naval and joint transformation efforts and integrates 
transformational, modernization, and legacy capabilities and processes. 
This integrated, concept-based driver for transformation is currently 
working on several ideas that will influence the future Marine Corps.
    Expeditionary Strike Groups.--The Marine Corps and Navy are engaged 
in a series of experiments that will explore the Expeditionary Strike 
Group concept. This concept will combine the capabilities of surface 
action groups, submarines, and maritime patrol aircraft with those of 
Amphibious Ready Groups and Marine Expeditionary Units (Special 
Operations Capable), to provide greater combat capabilities to Regional 
Combatant Commanders. In the near future, the Navy-Marine Corps Team 
will conduct a pilot deployment on the west coast to test the 
Expeditionary Strike Group concept. Navy combatants have already been 
incorporated within the existing training and deployment cycle of the 
Amphibious Ready Group. This experiment will also allow us to test 
command-and-control arrangements for the Expeditionary Strike Group. It 
will provide critical information to support the future implementation 
of the concept and highlight any needed changes in service doctrine, 
organization, training, materiel, leadership and education, personnel, 
and facilities.
    Tactical Aviation Integration.--The Navy and Marine Corps Team has 
embarked on a Tactical Aircraft (Strike-fighter) Integration plan that 
will enhance core combat capabilities and provide a more potent, 
cohesive, and affordable fighting force. This integration is the 
culmination of a long-term effort to generate greater combat capability 
from Naval fixed-wing strike and fighter aircraft, and represents a 
shared commitment to employ the Department of the Navy's resources as 
judiciously as possible. This integration has been ongoing for several 
years, with four Marine Corps F/A-18 Hornet squadrons operating as part 
of embarked carrier air wings. This Navy-Marine Corps effort will 
guarantee that Naval aviation will be integrated as never before, and 
will effectively support the Marine Air-Ground Task Force and the joint 
warfighter. Specifically, the integration plan:
  --Reinforces our expeditionary ethos
  --Provides a smaller, more capable, more affordable force for the 
        Department of the Navy
  --Integrates Marine strike fighters in ten Navy Carrier Air Wings
  --Integrates three Navy strike fighter squadrons into the Marine Unit 
        Deployment Program
  --Includes the global sourcing of all DoN strike fighter assets and 
        ensures their support to Marine Air-Ground Task Forces and 
        Regional Combatant Commanders
  --Provides increased combat capability forward
  --Complements the enhanced seabasing concept.
    A cornerstone of this plan is Department of the Navy funding and 
maintenance of legacy aircraft at the highest levels of readiness until 
the Joint Strike Fighter and F/A-18E/F replace them. This requires an 
unwavering commitment to level funding of strike fighter readiness 
across the Department of the Navy. These integration-driven readiness 
levels will allow the Navy-Marine Corps Team to surge more aircraft 
than what is possible today.
    Enhanced Networked Seabasing.--Fully networked, forward-deployed 
Naval forces and platforms that are integrated into our seabasing 
capability will provide Naval power projection for Joint Force 
commanders. These forces will use the sea as a means of maneuver, 
enabling a broad range of joint campaign operations. Sea-based 
operations incorporate, integrate, protect, and sustain all aspects of 
Naval power projection, from space to the ocean floor, from blue water 
to the littorals and inland--without dependence on land bases within 
the Joint Operating Area. Seabasing will provide enhanced capabilities 
to the Naval force, such as rapid force closure, phased arrival and 
assembly at sea, selective offload of equipment tailored for individual 
missions, and force reconstitution for follow-on employment. The 
traditional Naval qualities of persistence and sustainment--enhanced by 
advanced force-wide networks--underpin the staying power and 
flexibility of the sea base. Naval platforms can stay on-station, where 
they are needed, for extended periods of time. The at-sea 
maneuverability of the seabase, coupled with advanced underway 
replenishment technologies and techniques, will ensure force readiness 
over time.
    Integrated Logistics Capabilities.--The Integrated Logistics 
Capabilities effort began as a unique collection of military, industry 
and academic organizations collaborating to develop a future vision of 
Marine Corps logistics processes. The product is a set of 
transformational initiatives that will provide better support to the 
warfighter. The purpose of the Integrated Logistics Capabilities 
concept and process is to implement a transformation strategy, based on 
best practices, that provides the framework for the execution of agile, 
effective logistics support to the Marine Air-Ground Task Force, with 
the focus of streamlining the logistics chain.
    Capabilities are being conceptually refined and incrementally 
validated in the Operating Forces as they are identified and 
recommended. An assessment of the Proof-of-Concept, published in 
November 2002 by the Center for Naval Analysis, reflected improved 
supply response time (68 percent reduction in time) and overall repair 
cycle time (33 percent reduction).
    Over both the mid- and long-term, improved combat effectiveness and 
efficiencies in the logistics chain are expected. However, efficiencies 
cannot be fully realized until the people, process and technology 
changes are applied across the entire operating force. The logistics 
transformation and process modernization, together with the cutting 
edge suite of technologies provided by the Global Combat Support 
System, will greatly enhance the combat capabilities of Marine forces.
    Reestablishment of Air-Naval Gunfire Liaison Companies.--We have 
validated the requirement to reestablish our Air-Naval Gunfire Liaison 
Companies (ANGLICO). These Companies will provide our Commanders a 
liaison capability with foreign area expertise to plan, coordinate, and 
employ terminal control of fires in support of joint, allied, and 
coalition forces. ANGLICO will be reestablished with a company on each 
coast, and a separate brigade platoon in Okinawa. Each company will 
have a habitual relationship with the reserves. Full operational 
capability is expected by late summer 2004.
    Marine Corps--U.S. Special Operations Command Initiatives.--Today, 
105 Marines are filling Special Forces billets around the world. In 
addition to providing the current Chief of Staff to U.S. Special 
Operations Command (US SOCOM), the Marine Corps provides support to and 
ensures interoperability with Special Forces through the actions of the 
SOCOM-Marine Corps Board. That board met twice in 2002 and developed 
initiatives in the areas of Operations, Training and Education, 
Communications/C\4\, Information Operations, Psychological Operations, 
Civil Affairs, Intelligence, Aviation, Future Concepts, and Equipment & 
Technology. One of the initiatives, pursued in coordination with the 
Naval Special Warfare Command, is the Marine Corps' first sizeable 
contribution of forces to the Special Operations Command. Consisting of 
81 Marines and 5 Sailors, a detachment has been organized, trained and 
equipped to conduct special reconnaissance, direct action, coalition 
support, foreign internal defense and other special operations 
missions, and will begin training at Camp Pendleton California in June 
2003. They will subsequently transfer to the operational control of US 
SOCOM during October 2003, and deploy in April 2004 as augmentation to 
a Naval Special Warfare Squadron supporting both U.S. Pacific Command 
and U.S. Central Command.

Better Business Practices
    We continue to seek out and use better business practices to 
achieve greater cost-effectiveness, improve performance, and sharpen 
our focus on our warfighting core competencies. In line with the 
competitive sourcing initiatives in the President's Management Agenda, 
we are increasing emphasis across our Supporting Establishment on 
competing our commercial activities with the private sector. We are 
complementing this initiative with continued development of an 
effective Activity-Based Costing and Management initiative across our 
installations. This allows us to focus on the true cost of various 
functions and services and to develop benchmarks that enable us to 
improve performance and to focus analyses on cost-saving initiatives. 
This will occur both in commercial areas that we compete, and in non-
commercial areas that cannot be competed. Competitions completed to 
date have resulted in saving millions of dollars annually and returning 
almost 900 Marines to the operating forces. We will continue to seek 
additional competition candidates. Activity-Based Costing and 
Management initiatives provided our installation commanders with cost 
and performance information that enabled them to save over $37 million 
last year. As we refine our databases, we expect continuing increases 
both in performance and cost effectiveness.
    Through all of the efforts outlined above, the Marine Corps is 
building on today's success. As we build on our current capabilities, 
embrace innovation, and transform to meet the daunting conventional and 
asymmetric threats to U.S. security in the 21st century, we will 
continue to be the Nation's Total Force in Readiness, fielding warriors 
whose unique seabased expeditionary and combined-arms capabilities will 
be critical to success in crisis and conflict. In the process of 
balancing our programs to meet these goals, we will focus on two 
primary objectives: (1) our main effort-maintaining excellence in 
warfighting, and (2) taking care of our Marines and families.

                         TAKING CARE OF OUR OWN

    Providing for the needs of our Marines, their families and our 
civilian Marines remain among our top priorities. The most advanced 
aircraft, ship, or weapons system is of no value without highly 
motivated and well-trained people. People and leadership remain the 
real foundations of the Corps' capabilities. 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.

Human Resources
    End Strength.--The Congressionally authorized increase in Marine 
Corps end strength to 175,000 in response to the global war on 
terrorism is very much appreciated. This increase of 2,400 Marines 
allows us to sustain the increased missions associated with the 
activation of the 4th Marine Expeditionary Brigade (Anti-Terrorism), 
enabling us to replace Marines in the active units that we ``borrowed'' 
in standing up the Brigade, and continue to provide the Nation with a 
robust, scalable force option specifically dedicated to anti-terrorism.
    Recruiting.--Sustaining our ranks with the highest quality young 
men and women is the mission of the Marine Corps Recruiting Command. 
Recruiting Command has consistently accomplished this mission for more 
than the past seven years for enlisted recruiting and twelve years for 
officer recruiting. These achievements provide the momentum fueling the 
continuous pursuit to improve the recruiting process and enhance the 
quality of life for our recruiters. To continue to attract America's 
finest youth, Recruiting Command has provided recruiters with the best 
tools available to accomplish their mission. The Marine Corps supports 
the National Call to Service Act and continues to work closely with DOD 
in developing an implementation policy. We expect to commence enlisting 
individuals under this program commencing October 1, 2003. The Marine 
Corps Reserve achieved its fiscal year 2002 recruiting goals, 
accessioning 5,904 Non-Prior Service Marines and 4,213 Prior Service 
Marines. With regard to our Reserve Component, our most challenging 
recruiting and retention issue is the ability to fill out our Selected 
Marine Corps Reserve units with qualified officers. The Marine Corps 
recruits Reserve officers almost exclusively from the ranks of those 
who have first served a tour as an active duty Marine officer.
    While this practice ensures our Selected Marine Corps Reserve unit 
officers have the proven experience, knowledge and leadership abilities 
when we need it the most--during mobilization--it limits the recruiting 
pool that we can draw from to staff our units. As a result, the 
Selected Reserve currently has a shortage of company grade (Second 
Lieutenant to Captain) officers. We are exploring methods to increase 
the reserve participation of company grade officers through increased 
recruiting efforts, increased command focus on emphasizing reserve 
participation upon leaving active duty, and reserve officer programs 
for qualified enlisted Marines. We are also pursuing the legislative 
authority to provide an affiliation bonus to reserve officers as an 
additional incentive for participation in the Selected Marine Corps 
Reserve.
    Retention.--Retaining the best and the brightest Marines has always 
been a major goal of the Marine Corps. The Marine Corps is by design a 
youthful service, however, it is of paramount importance to retain the 
highest quality Marines to lead our young force. History has proven 
that leadership in the Staff Noncommissioned Officer ranks has been the 
major contributor to the combat effectiveness of the Marine Corps. The 
Marine Corps has two retention standards. Our First Term Alignment Plan 
has consistently achieved its reenlistment requirements over the past 
eight years. With one-third of the current fiscal year completed, we 
have achieved 87 percent of our first-term retention goal. A look at 
our Subsequent Term Alignment Plan (second tour and beyond) 
demonstrates that we have already retained 51 percent of our goal for 
this fiscal year. Both of these trends indicate healthy continuation 
rates in our career force.
    Current officer retention is at an eighteen year high, continuing 
the strong performance of the last two years. Despite this positive 
trend, we cannot become complacent. As a Corps, we will continue to 
target specific qualifications and skills through continuation pay. 
Military compensation that is competitive with the private sector 
provides the flexibility required to meet the challenge of maintaining 
stability in manpower planning.
    Marine Corps Reserve--Partners in the Total Force.--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 training and 
operations. Concurrent with the various initiatives underway to improve 
integration and update capabilities, the Marine Corps Reserve continues 
to support its primary mission of augmentation and reinforcement. 
Reserve units and Marines provided over 1.8 million man-days in fiscal 
year 2002. Reserves provided support at all levels within the Marine 
Corps and at Combatant Commands and High-Level Staffs.
    As we enter the 21st Century, the overall structure of Marine 
Forces Reserve will retain the current basic structure. However, Marine 
Forces Reserve is currently working to create new capabilities 
identified as part of its comprehensive review. Both as a structural 
and an operational change, Marine Forces Reserve is increasing its 
operational ties with the Warfighting Commanders by improving lines of 
communication with our operating forces. These increased operational 
ties will improve interoperability, increase training opportunities, 
and enhance the warfighting capabilities of the Total Force.
    Mobilization.--Since the events of 9/11, the Marine Corps 
judiciously activated Individual Ready Reserve (IRR) Marines in 
response to both internal and joint operational requirements. The 
Marine Corps has maximized the use of individual volunteers to meet 
these requirements primarily in the areas of staff augmentation and 
force protection. In addition, Selected Marine Corps Units (SMCR), were 
activated for force protection requirements in support of homeland 
security. Because of emerging requirements associated with war on 
terrorism, we began involuntary recall of some of our Individual Ready 
Reserves on January 17, 2003.
    Stop Loss.--On January 15, 2003, the Marine Corps instituted Stop 
Loss across the Marine Corps to meet the emerging requirements 
associated with the expanding war on terrorism. Stop Loss was initiated 
to provide unit stability/cohesion, maintain unit readiness, meet 
expanded force protection requirements, and to reduce the requirement 
to active IRR personnel. We will continue to make judicious use of this 
authority and continue to discharge Marines for humanitarian, physical 
disability, administrative, and disciplinary reasons. We have 
instructed our General Officers to continue to use a common sense 
approach and have authorized them to release Marines from active duty 
if it is in the best interest of the Marine Corps and the Marine.

Education
    Our leaders--especially our noncommissioned officers--throughout 
the entire chain of command have kept the Corps successful and 
victorious. Their sense of responsibility is the cornerstone of our 
hard-earned successes. We will continue to develop leaders who can 
think on their feet, act independently, and succeed. In the future, as 
today, leaders will continue to instill stamina and toughness in each 
individual while simultaneously reinforcing character that values 
honor, integrity and taking care of our fellow Marines--including 
treating each other with dignity and respect. Aggressive and informed 
leadership demands education, training, and mentoring. The importance 
of these key elements cannot be over-emphasized, and we must attend to 
each at every opportunity.
    Marine Corps University has responsibility and authority for the 
planning, coordinating and overseeing all education for our Marines. 
The University is accredited by the Southern Association of Colleges 
and Schools to confer Masters degrees and currently offers a Masters of 
Strategic Studies at the Marine Corps War College, and a Masters of 
Military Studies at the Command and Staff College. The Chairman of the 
Joint Chiefs of Staff currently accredits the War College, Command and 
Staff College, and the College of Continuing Education for Phase I 
Joint Education. The President of the University also exercises command 
authority over the Expeditionary Warfare School and the Staff 
Noncommissioned Officer Academies worldwide. Notable accomplishments 
include Department of Education approval of a Masters of Operational 
Studies at the School of Advanced Warfighting, which is the first step 
toward our third Master's degree program.
    Plans for the future include providing coordination and continuity 
through a coherent education plan for all Marines. Our goal is to 
develop better warfighting leaders at all levels through an increased 
emphasis on relevant, structured education--at the graduate and 
undergraduate level--through both resident programs and distance 
education. Our intent is to greatly expand beyond the current emphasis 
on field-grade officers to support leadership development throughout 
the training and education continuum from Marine Private through 
General Officer, and to specifically bring senior Non-commissioned 
Officers further along the education continuum.
    Our Lifelong Learning mission is to establish an integrated 
approach to learning; providing Marines with one destination for 
enrollment in a college program, access to research tools such as 
books, periodicals, and the Internet, basic skills enhancement, and 
nonresident courses. In the face of a requirement to increase Tuition 
Assistance from 75 percent to 100 percent of tuition costs, and the 
rate from $187.50 per semester hour to $250 per semester hour, the 
Marine Corps added the necessary funds to expand the Tuition Assistance 
program in the fiscal year 2004 POM, which provides sustainment until 
fiscal year 2009.

Quality of Life/Quality of Service
    Congressional support for increases in the Basic Allowance for 
Housing, as well as the aggressive Marine Corps use of the Public 
Private Venture (PPV) authority provided by Congress five years ago, 
are resulting in dramatic improvements to the housing of our Marines 
and their families. Your continued support of our budget to help us 
achieve zero out-of-pocket expenses by fiscal year 2005 is greatly 
appreciated. The condition of other infrastructure, such as our 
barracks, workspaces, and training ranges, are also key factors in 
overall quality of life. While our infrastructure budgets reflect only 
the minimal essential military construction and re-capitalization 
necessary, they will allow us to achieve a re-capitalization rate of 67 
years within the FYDP (down from 100 years in fiscal year 1999) and an 
improvement of our facilities readiness by fiscal year 2013.
    We have been aggressively working to reduce the number of Marines 
and civilian Marines in non-core business areas, reapplying the Marines 
to other operational requirements, and looking to optimize the use of 
civil service/contractor support where appropriate. Our track record is 
good. By example, we have reapplied Marines in the garrison food 
service and mobile equipment areas back to the operating forces and 
competed a significant number of civilian positions. We will continue 
this process in line with the President's Management Agenda to review 
fifty percent of our positions by fiscal year 2008. By ensuring that 
quality of service remains high, we will help maintain our successful 
record of recruitment and retention.

Families
    The Marine Corps is an expeditionary force prepared to deploy on 
short notice to accomplish assigned missions. While we may recruit 
Marines, we almost always retain families--it becomes a family decision 
for a Marine to stay for an entire career. Because of our expeditionary 
culture, deployment support is provided to Marines and their families 
as part of our normal operations, largely through the efforts of Marine 
Corps Community Services. In addition to concerted efforts to improve 
housing and family services, security and support is offered during 
pre-deployment, deployment, and post-deployment phases of our 
operations. The Marine Corps also offers numerous programs focused on 
new parent support and the prevention of domestic violence, as well as 
services and programs for infants, toddlers, children and teens. The 
Exceptional Family Member Program focuses on assistance to service 
personnel who have a family member with special needs before, during 
and after Permanent Change of Station Orders.

Safety
    Ensuring a safe command climate and working environment remains a 
critical concern for the Marine Corps. Often, the settings and the work 
our Marines do are dangerous, but effective command climates 
continually mitigate those dangers through planning and leadership. Our 
safety programs are integral to force protection and operational 
readiness. Leadership and programming in safety awareness and standards 
are vital to providing Marines and their families with a meaningful 
quality of life and service. On the heels of a very successful year 
prior, fiscal year 2002 was a disappointing year for safety in the 
Corps, as we lost more Marines to mishaps in fiscal year 2002 than we 
had in any single year for the preceding decade. Our aviation mishap 
rate increased as well (from 1.40 to 3.9 class A mishaps per 100,000 
flight hours).
    These results do not indicate a lack of desire to safeguard 
Marines. Rather, several factors were involved that made it 
particularly difficult to prevent mishaps through normal operational 
risk management efforts. Demographically, the Marine Corps is a younger 
force than the other Services (by an average six to eight years), with 
maturity being a contributing factor in many mishaps; however, none of 
these factors are excuses for any failure to avoid preventable mishaps. 
Our leadership at all levels is deeply concerned about the negative 
trend and we are actively involved in multiple efforts to improve 
readiness and save our most precious Marines and valuable equipment.

               OUR MAIN EFFORT--EXCELLENCE IN WARFIGHTING

    Marines have a vision for the future, and we are moving forward 
with the modernization and transformation efforts needed to make this 
vision a reality. We fully understand that our vision cannot be 
achieved independent of our sister Services. Each of the Services has 
its own critical role to play in providing for our Nation's collective 
security; however, it is important that each of our contributions be, 
simultaneously, both unique and complementary. In particular, the Corps 
stresses the importance of our key partnership with the Navy. The Navy-
Marine Corps Team has never been stronger, or more necessary for our 
Nation.
    We have stated that our first concern is with the care and 
stewardship of our people. This philosophy extends to the rest of our 
programming in that we focus on procuring the programs and equipment 
that will maximize the abilities of our Marines to perform effectively 
in combat. With the foundation of requirements drawn from our emerging 
concepts, the Marine Corps is transforming its warfighting systems and 
assets throughout the elements of our Marine Forces. The following 
examples reflect but a few of our transformation and modernization 
efforts. A more comprehensive description of the Marine Corps' entire 
acquisition program can be found in the publication entitled Marine 
Corps Concepts & Programs 2003.

Training
    We believe the enduring wisdom, ``you fight the way you train.'' 
Because of this, our training exercises are becoming ever more Joint 
and Combined to provide our Marines with the experience they will need 
when called upon to respond to crises--because there is no doubt that 
we will work alongside our sister Services and coalition partners from 
other Nations in such circumstances. The Marine Corps Combat Training 
Center at Twenty-nine Palms, California focuses on integrated live fire 
and maneuver, as well as combined arms training, and will continue to 
play a central role as our foremost training and testing site for 
Expeditionary Maneuver Warfare. Ongoing initiatives will expand the 
role of the Combat Training Center and transform it into a ``Center of 
Excellence'' that will focus the training efforts across our operating 
forces. The Combat Training Center facilitates and supports the 
development of new concepts and capabilities, thereby reinforcing our 
combat effectiveness, enhancing joint interoperability, and supporting 
Dodd transformation efforts.
    The future role of the Combat Training Center will grow beyond its 
current emphasis on battalion-level integrated live fire, combined arms 
training to support expanded training opportunities for all elements 
(ground, air, combat service support, and command) of Marine Air-Ground 
Task Forces up to and including a Marine Expeditionary Brigade. This 
will include: enabling multi-site, distributed training evolutions that 
tie together units from various bases; and investing in technology that 
simultaneously links live, virtual, and constructive training. 
Additionally, improvements to the existing Expeditionary Air Field and 
construction of a large-scale urban training facility are being studied 
as possible ways to enhance training opportunities at Twenty-nine 
Palms. All of these efforts have the potential to increase the 
capability of our training center to support evolving training 
requirements, enabling the Corps to maintain its focus on uniquely 
Marine training skills, while providing a vehicle to further integrate 
Marine Corps capabilities into those of the Joint Force.

Infrastructure
    Marine Corps infrastructure consists of fifteen major bases and 
stations and 185 Reserve facilities in the United States and Japan. In 
keeping with the Corps' expeditionary nature, these installations are 
strategically located near air and seaports of embarkation, and are 
serviced by major truck routes and railheads to allow for the rapid and 
efficient movement of Marines and materiel. Recognized as the ``fifth 
element'' of the Marine Air-Ground Task Force because of the close link 
to the operating forces and their operational readiness, the condition 
of the Corps' bases and stations is of vital importance. With the 
ability to train as an integrated force being a fundamental requirement 
of the Corps, infrastructure development planning is designed to 
provide the facilities, training areas, and ranges (both air and 
ground) to accomplish this requirement while minimizing excess and 
redundant capacities. With increasing encroachment pressures and 
constrained fiscal resources, the Marine Corps face significant 
challenges to provide and maintain a lean and efficient infrastructure 
that fully meets changing mission demands.
    Blount Island Acquisition.--We are committed to undertake the 
wisest possible course to conserve our real property and, when 
necessary, to acquire any additional property that is mission critical. 
The Blount Island facility in Jacksonville, Florida, is a National 
asset that must be acquired to ensure its availability for long-term 
use. Blount Island's peacetime mission of supporting the Maritime Pre-
positioning Force is vitally important, while its wartime capability of 
supporting large-scale logistics sustainment from the continental 
United States gives it strategic significance. The facility will play a 
vital role in the National military strategy as the site for 
maintenance operations of the Maritime Pre-positioning Force for years 
to come. The Marine Corps plans to acquire the Blount Island facility 
in two phases. Phase 1, funded in fiscal year 2000 and fiscal year 
2001, is currently in progress and is will acquire interests in 
approximately 311 acres of land for the primary purpose of ensuring 
public safety on parcels adjacent to the leased central management 
operational area. Phase 2, planned for fiscal year 2004, involves 
acquisition of the central maintenance operational area, consisting of 
over 1,000 acres.
    Training at Eglin Air Force Base.--With cessation of training at 
Vieques, Puerto Rico, the established training ranges, quality of 
training support, and proximity to the ocean available at Eglin Air 
Force Base, Florida, can provide Naval Expeditionary Forces with an 
alternative training capability. Eglin's capabilities, location, and 
tenant commands provide the opportunity to facilitate joint training 
between Air Force, Navy, Marine Corps, Army and Special Operations 
Forces. Development of an expeditionary force training capability at 
Eglin can support the Secretary of Defense's vision and direction for 
training transformation and the development of a Joint National 
Training Capability. This type of training will be critical to Naval 
expeditionary combat-readiness.
    The Marine Corps proposes to execute two ten-day training exercises 
with a Marine Expeditionary Unit at Eglin each year. These exercises 
include a variety of scenarios such as amphibious landings, raids, 
mechanized operations, helicopter operations, and live fire and 
maneuver exercises. No final decision on training activities will be 
made until an Environmental Assessment currently underway is completed. 
The Navy and Marine Corps are actively working to develop and sustain 
cooperative relationships with the local community and the State of 
Florida.
    Encroachment and Environmental Issues.--Encroachment--defined as 
any deliberative action that can cause the loss of, or restrict, the 
use of land, airspace, frequency, or sea maneuver areas--is a serious 
threat to the operational readiness of the Corps. Urban and residential 
areas now surround many Marine installations that were originally 
remotely situated. This growth is often accompanied by pressure for 
access to Marine Corps resources, or demands to curtail Marine Corps 
operations to make them more compatible with surrounding land uses. The 
Corps' training lands often provide excellent habitat for threatened 
and endangered species, serving as islands of biodiversity amid the 
crush of densely populated urban areas that surround many of our 
installations. The Marine Corps is proactively engaged with federal, 
state, and local agencies and governments, as well as nongovernmental 
organizations, to provide win-win solutions to these encroachment 
pressures, and ensure compatible land usage and environmental security 
without degrading training and mission readiness. Unimpeded access to 
our installations and ranges is critical to the Marine Corps remaining 
America's ``Force in Readiness.''
    Our Nation has crafted a strong environmental code of conduct 
structured on a wide range of federal, state, and local laws and 
regulations. Vague or inflexible environmental requirements, however, 
can present significant challenges for Marines performing their primary 
mission. We support ongoing efforts to seek clarity and limited 
flexibility in certain environmental laws, so that we may more 
effectively balance our training requirements with our long-term 
environmental stewardship responsibilities. Our ultimate goal is to 
``fight the way we train,'' while preserving the natural environment. 
Today, Marines at all levels perform their jobs with an increased 
awareness of potential environmental impacts. All of our bases and 
stations, for example, have implemented Integrated Natural Resource 
Management Plans and aggressive pollution prevention programs. The hard 
work does not end with these initiatives. The impact of encroachment on 
the Corps' ability to fully utilize its installations are varied and 
require constant vigilance and attention to ensure that operational 
readiness is not diminished.

Command and Control
    Interoperability is the key to improving Naval expeditionary 
command and control effectiveness, especially as we begin to integrate 
battlespace sensors residing in our manned and unmanned aerial, space, 
and ground vehicles. This is particularly true as the Marine Corps 
continues to work routinely with a range of government, non-government, 
and international agencies. The command, control, communication, and 
computer (C\4\) end-to-end interoperability of the Global Information 
Grid will serve to enhance our ability to conduct joint, multi-
department, and multi-agency operations through the use of technology, 
standards, architectures, and tools.
    The Marine Corps works closely with the Joint Staff, combatant 
commanders, operating forces, and other Services to ensure that, where 
possible, joint concepts of operations are developed for common 
capabilities. An example of this process is occurring with the 
development of the Joint Tactical Radio System, which combines numerous 
single function programs of current inventories into a single, 
interoperable, joint radio program that will provide secure digital 
communications while enhancing wideband tactical networking.

Intelligence
    Our fiscal year 1996-fiscal year 2003 enhancements to Marine 
Intelligence Support are paying off during Operation Enduring Freedom 
and the Global War on Terrorism. Intelligence Support organic to Marine 
Forces combined with capabilities from our Marine Corps Intelligence 
Activity in Quantico, Virginia to provide federated production 
(reachback) support has been validated through current operations. 
Marine Expeditionary Unit's forward deployed with organic all-source 
intelligence collection and production capabilities provide current 
intelligence support to Marine and Special Operations units. Our 
deployed signals intelligence, human intelligence, ground sensor, and 
reconnaissance teams provide the commander current situational 
awareness. All-source intelligence Marines have the systems and 
training to integrate organic collection, network with the joint force 
on the ground, and effectively reach back to the Marine Corps 
Intelligence Activity and joint centers at secure locations.

Mobility
    While the global war on terrorism has demonstrated the current 
capabilities of the Navy-Marine Corps Team, our continuous 
transformation and modernization efforts hold even greater potential 
for increasing Naval power projection capabilities in the future. Many 
of these efforts focus on increased speed, range, payload, and 
flexibility of maneuver units--mobility. This concept includes a vision 
of an all-vertical lift Air Combat Element, with the introduction of 
tiltrotor and Short-Take-Off/Vertical-Landing (STOVL) aircraft. The 
following initiatives are some of the keys to the achievement of Marine 
Corps operational mobility objectives:
    MV-22 Osprey.--The MV-22 remains the Marine Corps' number one 
aviation acquisition priority. While fulfilling the critical Marine 
Corps medium lift requirement, the MV-22's increased capabilities of 
range, speed, payload and survivability will generate truly 
transformational tactical and operational opportunities. With the 
Osprey, Marine forces operating from the sea base will be able to take 
the best of long-range maneuver and strategic surprise, and join it 
with the best of the sustainable forcible-entry capability. Ospreys 
will replace our aging fleets of CH-46E Sea Knight and CH-53D Sea 
Stallion helicopters.
    KC-130J.--The KC-130J will bring increased capability and mission 
flexibility to the planning table with its satellite communications 
system, survivability, and enhancements in aircraft systems, night 
systems, and rapid ground refueling. The KC-130J is procured as a 
commercial off-the-shelf aircraft that is currently in production. We 
are pursuing a multi-year program for purchase with the U.S. Air Force.
    Advanced Amphibious Assault Vehicle.--The Advanced Amphibious 
Assault Vehicle (AAAV) is the Marine Corps' only Acquisition Category 
1D program and will be one of the principal enablers of the 
Expeditionary Maneuver Warfare concept. AAAV will provide never before 
realized high-speed land and water maneuver, a highly lethal day/night 
fighting ability, and advanced armor and Nuclear-Biological-Chemical 
protection. This--coupled with a systematic integration into emerging 
service and Joint Command and Control networked information, 
communications and intelligence architectures--will provide the Marine 
Corps with increased operational tempo, survivability, and lethality 
across the spectrum of operations.
    Maritime Pre-positioning Force.--The Maritime Pre-positioning Force 
(Future) will be the true enabler of primarily sea-based operations. 
When it becomes operational, the future Maritime Pre-positioning Force 
role will expand beyond that of today, and will provide a true 
seabasing capability. In this regard, it will serve four functions that 
the current capability cannot: (1) Phased at-sea arrival and assembly 
of units; (2) Selective offload of equipment and cargo; (3) Long-term, 
sea-based sustainment of the landing force; and (4) At-sea 
reconstitution and redeployment of the force. The Naval Services are 
exploring several new technology areas during the development of 
Maritime Pre-positioning Force (Future). Currently, the Maritime Pre-
positioning Force (Future) Program is conducting an analysis of 
alternatives to inform an acquisition decision by the Office of the 
Secretary of Defense.
    High-Speed Vessel (HSV).--High-speed vessels will enhance the 
Marine Corps' capability to perform a wide range of missions, from 
providing support to a theater security cooperation plan to sustaining 
long-term operations ashore. High-speed vessels can enhance our ability 
to conduct sea-based operations and use the sea as maneuver space. HSVs 
do not have the loitering and forcible entry capabilities of amphibious 
ships or the pre-positioning capacity of our Maritime Pre-positioned 
Force Squadrons. However, their shallow draft, high speed, 
maneuverability, and open architecture make them a valuable link in a 
seamless logistics system that extends from source of supply to the sea 
base and the joint force, enabling a faster, more responsive, and 
capable deployment of a range of force modules from forward-based 
``hubs'' such as Okinawa, or from the United States. The Marine Corps 
is currently testing and validating these concepts by employing a high-
speed vessel in the Pacific theater as a form of strategic lift.
    Power Projection Platforms.--Combined with embarked Marines, Naval 
expeditionary warships provide the Nation with forward-presence and 
flexible crisis response forces. They also provide a truly unparalleled 
expeditionary forcible-entry capability. As part of a joint effort, the 
Marine Corps will remain capable of getting to the fight rapidly in 
order to decisively deter or defeat adversaries who try to impose their 
will on our country or its allies. A fiscally constrained programmatic 
goal of twelve Amphibious Ready Groups--one that deliberately accepts 
increased operational risk by attempting to balance force structure 
with available resources--does not change the warfighting requirement 
to lift the Assault Echelons of three Marine Expeditionary Brigades via 
future platforms for amphibious shipping. The Marine Corps supports the 
LPD-17 and a modified LHD-8 (``Plug Plus'') ship design in fiscal year 
2007 and will evaluate the adequacy of the R&D and SCN funding for the 
development of future LHA(R) ships for the remainder of the class.
    Mine Countermeasure Capabilities.--Naval expeditionary forces 
require an effective counter-mine warfare capability to open and 
maintain sea lines of communication and to operate within the littoral 
battle space. This is probably our greatest concern when it comes to 
projecting power in an anti-access environment. With respect to mine 
countermeasures, we require a family of capabilities that encompasses 
mine detection, location, neutralization, marking, and data 
dissemination. Designed to provide an organic mine counter-measures 
capability within operationally acceptable timelines and with 
acceptable levels of operational risk, this next generation of systems 
includes the Advanced Mine Detector, the Assault Breacher Vehicle, the 
Remote Minehunting System and the Long-term Mine Reconnaissance System. 
Our most critical mine countermeasures deficiencies exist in the area 
near the shoreline through the high water mark and beyond, where 
detection and neutralization capabilities are extremely limited. Given 
the broad proliferation of known and unknown mined areas throughout the 
world, we must improve our ability to operate in this exceptionally 
lethal environment. Our intent is to leverage America's strength in 
technology to dramatically improve our ability to locate and avoid or 
neutralize mines and obstacles as necessary, and eventually remove the 
man from the minefield.

Fires and Effects
    With the increased range and speed of expeditionary mobility 
assets, the landward area of influence of Naval forces has increased by 
an order of magnitude. Consequently, the Nation requires weapon systems 
with correspondingly greater range, lethality, flexibility and tactical 
mobility. A range of lethal and non-lethal fire-support programs is 
moving the Corps in that direction. The development and acquisition of 
non-lethal weapons systems will expand the number of options available 
to commanders confronted with situations in which the use of deadly 
force is inappropriate. The Marine Corps is developing a robust non-
lethal capability that will address the non-lethal core requirements of 
clearing facilities, crowd control and area denial. Additionally, we 
are enhancing the capabilities with which we can affect our adversaries 
that defy the traditional concept of weapons and fire-support means. 
Technical advances in directed-energy weapons hold much promise for 
future capabilities in this area.
    Joint Strike Fighter.--The Joint Strike Fighter is the next-
generation strikefighter for the Marine Corps, Air Force, and Navy and 
will replace the Marine Corps' AV-8B and F/A-18A/C/Ds. The JSF family 
of aircraft will include a short takeoff and vertical landing (STOVL) 
variant, a conventional take-off and landing (CTOL) variant, and an 
aircraft carrier-capable variant. Commonality between the variants will 
reduce both development and life cycle costs and will result in 
significant savings when compared to the development of three separate 
aircraft. The Marine Corps requires that its STOVL variant be able to 
operate from large-deck amphibious ships, austere sites, and forward 
operating bases. The STOVL Joint Strike Fighter version can use from 
three to five times more airfields around the world than our existing 
conventional take-off and landing aircraft. Moreover, because the STOVL 
variant can operate from both conventional carriers and amphibious 
assault ship decks, it thereby effectively doubles the number of 
platforms available for seabased operations. The advantages of a 
stealthy STOVL strike fighter--capable of taking off from an 
expeditionary base on land or at sea, flying at supersonic cruise, 
accomplishing its mission with advanced sensors and weapons, and then 
returning to its expeditionary site--are dramatic. The STOVL Joint 
Strike Fighter will provide the reliability, survivability, and 
lethality that Marines will need in the years ahead, and transform the 
very foundations of Naval tactical air power for the 21st Century.
    Naval Surface Fire Support.--Our ability to provide fires in 
support of expeditionary forces operations beyond the beach has not 
kept pace with the dramatic increases in mobility. Critical 
deficiencies currently exist in the capability of the Navy to provide 
all-weather, accurate, lethal and responsive fire support throughout 
the depth of the littoral in support of expeditionary operations. The 
Marine Corps supports the Navy's near-term efforts to develop an 
enhanced Naval surface fire support capability with the fielding of the 
5-inch/62-caliber Naval gun and the development of extended-range 
munitions. In the far-term, the Marine Corps supports the development 
and fielding of the Advanced Destroyer [DD(X)], armed with 155 mm 
Advanced Gun Systems and Land Attack Missiles, to fully meet our Naval 
surface fire support requirements. Our Nation's expeditionary forces 
ashore will remain at considerable risk for want of suitable sea-based 
fire support until DD(X) joins the fleet in significant numbers.
    Indirect Fire-Support.--A triad of indirect fire-support programs 
will provide needed firepower enhancements for Marines in the near- to 
mid-term. The first element of the triad is the Lightweight-155 mm (LW-
155) towed howitzer needed to replace our current M-198 howitzer, which 
is at the end of its service life. The Lightweight-155 is a joint 
Marine Corps-Army effort that will meet or exceed all the requirements 
of the current system while significantly reducing its weight.
    The second element, the High Mobility Artillery Rocket System 
(HIMARS), will deliver very high volumes of rocket artillery in support 
of the ground scheme of maneuver. The HIMARS will provide accurate, 
responsive general support and general support reinforcing indirect 
fires at long range, under all weather conditions, and throughout all 
phases of combat operations ashore. It will fire both precision and 
area munitions to a maximum range of 36 miles.
    The Expeditionary Fire Support System, the third system of the 
land-based fire support triad, will accompany Marines in any 
expeditionary mode of operation. It will be the primary indirect fire-
support system for the vertical assault element of the ship-to-
objective maneuver force. The Expeditionary Fire Support System, as a 
system, will be internally transportable by helicopter or tilt-rotor 
aircraft to allow the greatest range and flexibility of employment for 
our future operations.
    Information Operations.--Defense planners are engaged in studies 
exploring Information Operations as a core military competency, fully 
integrated into both deliberate and crisis action planning. The Marine 
Corps intends to enhance our operational capability in both offensive 
and defensive Information Operations. Marine Corps doctrine and 
warfighting publications are being reviewed and revised to acknowledge 
Information Operations as a core warfighting capability fundamental to 
all operations spanning the spectrum of conflict with equal 
significance during non-combatant and humanitarian operations. We 
recognize a requirement to develop and train an Information Operations 
career force of trained professionals from the ground up in support of 
joint and inter-agency efforts.
    New Weapons Technologies.--The Corps is particularly interested in 
adapting truly transformational weapon technologies. We have forged 
partnerships throughout the Department of Defense, other Agencies, and 
with industry over the past several years in an effort to develop and 
adapt the most hopeful areas of science and technology. Several notable 
programs with promising technologies include: (1) advanced tactical 
lasers, (2) high-power microwave, non-lethal active denial systems, (3) 
free electron lasers, (4) electro-magnetic guns (rail guns), and (5) 
common modular missiles for aircraft.

Logistics and Combat Service Support
    The Marine Corps logistics' vision is to significantly enhance the 
expeditionary and joint warfighting capabilities of our Operating 
Forces. Key warfighting capabilities encompassed in our future 
concepts--Enhanced Networked Seabasing and Ship-To-Objective-Maneuver--
will be defined by our logistic capabilities and limitations. Hence, we 
are committed to exploring and implementing actions to increase combat 
power, operational versatility, and deployability. The concept of 
focused logistics in Joint Vision 2020 is guiding the Marine Corps as 
we strive to increase the sustained forward-deployed capability of our 
forces. Future force combat service support--and the Marine Corps 
logistics that enables it--will be changing as we shift more of our 
operations to the sea base. At the forefront of this effort is the 
Marine Corps Logistics Campaign Plan that outlines essential objectives 
and tasks based upon overarching Marine Corps, Naval, joint, and DOD 
concepts and guidance. Our strategy encompasses four pillars:
    Logistics Information Fusion and C\2\.--A key to current and 
emerging warfighting capabilities is a robust and responsive logistics 
information technology capability--one that is integrated with our 
command-and-control architecture and interoperable with Naval and joint 
systems. The Global Combat Support System--Marine Corps (GCSS-MC) and 
shared data environment, along with the Common Logistics Command and 
Control System, provide logisticians across the Marine Corps with a set 
of common logistics assessment, planning, and execution tools that are 
interoperable with the common operating picture.
    Seamless Distribution.--The single capability that defines Marine 
Forces in a joint environment is its ability to sustain itself over an 
extended period of time. The principal goal is to move from defining 
sustainment in terms of deployable ``days of supply'' to a continuous 
uninterrupted sustainment capability for the force. A key element in 
achieving this is integrating current distribution processes and 
systems into broader Naval and joint distribution processes. Achieving 
this capability will not only greatly enhance Naval operations, but 
will be transferable to the task of sustaining joint forces and 
operations.
    Enhanced Equipment Readiness.--The bulk of our logistics effort and 
associated ``footprint'' is driven by its equipment-support activities. 
The Marine Corps seeks to reduce the required level of support for 
equipment by greatly improving the reliability, availability, and 
maintainability of ground tactical equipment.
    Enterprise Integration.--Achieving the emerging warfighting 
capabilities envisioned by future concepts require dynamic shifts in 
our logistics processes and organizations. Leading this effort toward 
logistics modernization is true enterprise integration consisting of 
GCSS-MC, process reengineering, and organizational reform.

                               CONCLUSION

    The major challenges confronting the Marine Corps today center on 
organizing, training, and equipping our force to better support joint 
force commanders, now and in the future. The modernization programs and 
the transformational systems that we are pursuing are key to our 
ability to meet the Nation's wartime, crisis, and peacetime 
requirements. We have put into place well-conceived programs addressing 
the needs of our Marines and their families, the requirement to enhance 
the current readiness of legacy systems, the critical role 
infrastructure plays in present and future readiness, and the balance 
between modernization and transformation.
    We are focusing on the development of integrated capabilities that, 
when combined with those of our sister Services and Special Operations 
Forces, will effectively meet the challenges of an increasingly varied 
and threatening National security landscape. You can remain justifiably 
proud of what your Marine Corps contributes as America's forward 
engagement and expeditionary combined-arms force. We are grateful for 
the unwavering support you provide in this vitally important work.

    Senator Stevens. Thank you very much, gentlemen, and I 
apologize for not being here at the opening so I will just 
submit my opening statement in the record. We will soon take up 
the supplemental, and I was working on it, as I said.
    [The statement follows:]

               Prepared Statement of Senator Ted Stevens

    Secretary Johnson, Admiral Clark and General Hagee, I 
welcome all of you today.
    Today we will discuss the fiscal year 2004 budget request 
for the Navy and Marine Corps. We are currently considering the 
Administration's request for a fiscal year 2003 supplemental 
for Operation Iraqi Freedom and the continuing Global War on 
Terrorism. We know how much the Navy and Marine Corps need this 
additional funding and will do all we can to get this to you as 
quickly as possible.
    The last two years have been a time of extraordinary 
accomplishment, effort, dedication, and duty for the men and 
women of our Navy and Marine Corps. Since September 11, 2001, 
the Navy/Marine Corps team expanded the role of what was 
thought possible for carrier-based flight operations and 
expeditionary landing forces. Now, in Operation Iraqi Freedom, 
our Navy and Marine Corps continue this excellence in the air, 
on the ground, and at sea.
    Right now, the Navy has 54 percent of the fleet forward 
deployed and 68 percent of the fleet underway. I believe that 
this is the highest deployed percentage since World War II. 
Also interesting, is that the Navy is also the smallest it's 
been since World War II--dropping to about 300 ships this year. 
All this, while at the same time, the Navy is achieving its 
highest retention rates in history.
    The Marine Corps is equally engaged. 90 percent of the 
deployable Marine Corps force is deployed today. This is 56 
percent of the total U.S. Marine Corps end strength, the 
highest percentage since World War II.
    We look forward to your testimonies today on your 
priorities for the fiscal year 2004 budget. As always, your 
full statements will be made a part of the record.

    Senator Stevens. I do want you to know we are grateful to 
you for what you are doing, and for what all of the Navy and 
Marine Corps are doing to support the war in Iraq and the war 
in Afghanistan and the war against terrorism.

                       OPERATIONS AND MAINTENANCE

    Let me start off by saying this, that the Army and Air 
Force have informed us that because of the funds that have 
already been expended for these efforts that I mentioned, there 
will be a shortage in funds for operation and maintenance (O&M) 
for their services by sometime in May. Is that the situation 
with you also?
    Secretary Johnson. I would say the summer, but it will vary 
from May to July, but the same time frame.
    Senator Stevens. They said their initial shortages will 
start in May. Is that the situation with the Navy and Marines?
    Secretary Johnson. Yes, sir.
    Senator Stevens. General Hagee?
    General Hagee. Yes, sir, it is. Without the supplemental 
that is a true statement, sir.
    Senator Stevens. Admiral Clark?
    Admiral Clark. I will run out of money in June, the first 
part of June.

                               SEA BASING

    Senator Stevens. We have just seen the situation that has 
developed because of our lack of access to the land mass of 
Turkey. I was reminded last night of the proposal that was 
outlined to us just informally by one of your predecessors, 
Admiral Clark, a man for whom I had great regard, and 
unfortunately he left us in a strange way, Admiral Boorda.
    He outlined the plans for a floating cargo type landing 
facility that could be easily moved from theater to theater. 
Whatever happened to his proposal?
    Admiral Clark. I did not see the specifics of that 
proposal, Mr. Chairman, but I will tell you that when I talked 
about an exciting future for the Navy-Marine Corps team, I will 
tell you that as we look at the development of future ways to 
exploit the sea under our sea basing concept and construct, we 
have taken the approach that we are going to challenge every 
assumption, and in the coming years, it is not reflected in 
this budget because we are doing a lot of examination of 
potential concepts right now with the Marine Corps, looking at 
ways we can exploit the operational advantage and independence 
of operating from the sea. And so I will tell you that we 
believe that there is potential for new kinds of approaches and 
new kinds of platforms, and this is a key part of the Maritime 
Prepositioning Force (MPF) future concept. I will tell you that 
2 years ago when we heard the word MPF future----
    Senator Stevens. What does that mean?
    Admiral Clark. That is the maritime preposition force for 
the Marine Corps. I will tell you that now General Hagee and I 
are looking at ways that that kind of capability can be 
exploited by both of us. And I will not try to define it this 
morning, Mr. Chairman, but I will tell you that I believe that 
our future is about exploiting those kind of potential 
opportunities.
    Senator Stevens. Well, I commend to you the research that 
Admiral Boorda had done, and urge you to go back and look at it 
to see what happened to it because it sort of disappeared, but 
I will not belabor it here now.
    General Hagee, I think it is clear that the concept of air 
superiority is something we must maintain. One of the things 
that we have been very interested in is the new cutting edge 
aircraft, the V-22. Tell us, what is the situation now?

                              V-22 PROGRAM

    General Hagee. Sir, we continue to work on testing the V-22 
and I can report to you, sir, that that testing is going very 
well. We are about 80 to 85 percent finished with a high rate 
of dissent testing, which investigates the so-called vortex 
ring state phenomena where the aircraft comes down and actually 
flies through its own wash when it is in the helicopter mode. 
And what we have found is that the model accurately predicts 
what will happen to that aircraft when it enters its downwash.
    We have found that the envelope for the V-22 is actually 
larger than for a normal helicopter, in other words, it is not 
as vulnerable to this phenomena as a normal helicopter is. In 
addition, we have found that it is easier to exit this 
phenomena in the V-22, you simply rotate the nacelles forward 
and you go into horizontal flight and you fly out of it.
    We are also about 80 percent finished with the low speed 
maneuverability testing, and that is going very well. A couple 
months ago we landed on board amphibs, absolutely no problem at 
all.
    Through inspections we have found that the rubbing that was 
noticed before we did the redesign on the engine is no longer 
occurring, so I can report to you that that testing is going 
very well and I am very optimistic about the aircraft.
    Senator Stevens. Good. Your predecessor made a commitment 
to me that I would ride on that very soon, and I believe it is 
one of the real significant portions of our aeronautical 
capabilities. You are testing a plane that will be used in the 
future not only by you but by the Army and by the civilian 
sector to a great extent.
    As a matter of fact, there is a civilian portion of it that 
has not had some of the problems that the larger ones have, as 
I understand it. So, I would hope you keep us posted.

                     PRIOR YEAR SHIPBUILDING COSTS

    Let me ask Secretary Johnson, and then I have to leave, 
Secretary Johnson, last year at the request of I believe your 
Department, added $635 million to the President's budget 
request to help the Navy pay for shipbuilding cost overruns. My 
staff advises me that despite the fact we provided those funds 
to pay for those bills, that the overruns and deficits remain 
the same. What happened to the $635 million we provided last 
year?
    Secretary Johnson. Sir, our deficits this year are the 
lowest they have been in, I think we said 10 years, and that is 
largely due to the great work that John Young is doing as our 
head of research, development and acquisition. We are watching 
those very carefully, and I can provide you the exact number.
    Senator Stevens. Am I improperly advised that your bills 
for past overruns are--have been paid? I have been told they 
were not paid, despite the fact that we put up the $635.
    Secretary Johnson. Sir, it is my understanding that they 
have been paid. This year the deferred ones are on the order of 
100, which is less than it has been in 10 years or more. So the 
account is in better shape now than it has been in a long, long 
time.
    Senator Stevens. Will you give us a statement for the 
record of the prior year bills that have not been paid for the 
Navy?
    Secretary Johnson. Yes, sir, I will.
    [The information follows:]

    Question. Explain status of overall PY bill throughout the FYDP to 
include why fiscal year 2004 PB request is the same as the fiscal year 
2003 PB despite the Congressional increase.
    Answer. From PB03 to PB04 there was a $225.5 million increase in 
the overall PY bill (PB03--$3,546, PB04--$3,771.5). The $635 million 
Congressional increase in fiscal year 2003 was used to pay for this 
increase in the overall PY bill and to reduce the PY bill in fiscal 
year 2004-fiscal year 2006 by $409.5 million. The upcoming PY bills 
were reduced as follows:

                        [In millions of dollars]
------------------------------------------------------------------------
                                            PB03       PB04      Change
------------------------------------------------------------------------
Fiscal year:
    2004...............................      645.9      635.5      -10.4
    2005...............................      743.7      484.4     -259.3
    2006...............................      185.3       45.5     -139.8
                                        --------------------------------
      Total............................  .........  .........     -409.5
------------------------------------------------------------------------

    Question. Explain SECNAV's statement that PY bill was in the ``best 
shape it has ever been in''.
    Answer. The initiatives described in our Prior Year Report to 
Congress of 2002 February 2003 have been very effective in reducing the 
rate of increase in prior year shipbuilding costs. The prior year cost 
growth from the fiscal year 2003 President's Budget request to the 
fiscal year 2004 President's Budget request is 6 percent, as compared 
to the 16 percent and 256 percent growth rates from the two previous 
budget submissions.
    Initiatives undertaken over the past year to address the prior year 
shipbuilding costs, and to prevent cost estimate increases in future 
programs include: (1) Elimination of configuration changes except to 
remedy Government responsible defects; (2) Executive oversight and new 
funding in addition to the budget baseline for mandatory changes in 
requirements; (3) Reinstitution of the Chief of Naval Operations (CNO) 
Ship Characteristics Improvement Panel Process; (4) Budgeting to Cost 
Analysis Improvement Group (CAIG) estimates; (5) Employment of 
Engineering Development Models to mitigate technology risk; and (6) 
Adjustment of scope prior to contract award to better ensure budget 
alignment.
    Question. Breakdown all cost increases (by platform) and provide 
the reason for the increase.
    Answer. In recent years, the shipbuilding industry has experienced 
material and labor escalation rates that exceeded the Department's 
projections. Contributing factors include cost increases for health 
care and workman's compensation costs that are not unique to the 
shipbuilding industry.
    A breakdown of all cost changes by platform (PB03 to PB04):

                                                       DDG
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                           Fiscal year--
                                                          ----------------------------------------------  Total
                                                             2003     2004     2005     2006      2007
----------------------------------------------------------------------------------------------------------------
PB03.....................................................    125.5     59.4     70.2      38.1  .......    293.2
PB04.....................................................    383.5     75.9    128.3       0    .......    587.7
Change...................................................    258.0     16.5     58.1     -38.1        0    294.5
----------------------------------------------------------------------------------------------------------------

    Reason for $294 million increase:
  --$100 million--Higher labor, overhead, & production hour estimates.
  --$96 million--PB03 budgeted change orders at 3 percent of basic, 
        whereas historic data supports 5 percent.
  --$98 million--Increase in DDG 102 ship cost as a result of the ship 
        being transferred from NGSS to BIW.

                                                    VA CLASS
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                      Fiscal year--
                                                   ---------------------------------------------------   Total
                                                       2003      2004      2005      2006      2007
----------------------------------------------------------------------------------------------------------------
PB03..............................................    276.682     213.1     254.4      75.8  ........    820.0
PB04..............................................    326.7       300.4      91.3      38.7  ........    757.1
Change............................................     50.018      87.3    -163.1     -37.1         0    -62.882
----------------------------------------------------------------------------------------------------------------

    Reason for $62.9 million decrease:
  --$62.9 million for Post Shakedown Availability (PSA) moved to the 
        Post Delivery and Outfitting (PD/OF) line.
  --PSA costs are properly funded in PD/OF, not in ship end cost.

                                                       LPD
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                          Fiscal year--
                                                         -----------------------------------------------  Total
                                                            2003     2004      2005      2006     2007
----------------------------------------------------------------------------------------------------------------
PB03....................................................    242.7     373.4     419.1     71.4  .......  1,106.6
PB04....................................................    569.7     259.2     264.8      6.8  .......  1,100.5
Change..................................................    327.0    -114.2    -154.3    -64.6        0     -6.1
----------------------------------------------------------------------------------------------------------------

    Reasons for $6.1 million decrease:
  --$10 million of PB03 request absorbed by program.
  --$3.9 million net increase resulting from decrease in PYC bill, 
        Swap, increases from higher CAIG estimate, and increases in 
        shipyard rates.

          IMMINENT DANGER PAY AND FAMILY SEPARATION ALLOWANCE

    Senator Stevens. I hope, gentlemen, you will excuse me. We 
had the Army hearing on March 19th and the Air Force hearing on 
March 26th, and I asked your predecessors, and maybe I should 
not just throw it at you, but we have an amendment pending that 
would increase the hazardous duty pay.
    In the Persian Gulf War, the amount going into the war was 
$100 and now it has increased to $150. Family separation was 
increased from $75 to $100. The proposal was to increase the 
$150 to $400 and the $100 to $400, and that would come out of 
your existing appropriations. We are talking about fiscal year 
2003 now, 2003 bills.
    Have you looked into the question of the adequacy of the 
pay, we used to call it combat pay, you call it imminent danger 
pay, or family separation allowance? Has that been looked at 
yet by the Navy?
    Admiral Clark. Mr. Chairman, that has not come before me 
and I have not looked at that issue, no.
    Senator Stevens. I did some rough calculations and the 
increase in 1991 was a 36 percent increase, which was made 
permanent. As I said, it was raised from $110 to $150. We are 
in the position of having to go out to offer an amendment right 
now, and I wonder, when you say you have not studied it, have 
you studied it at all, Mr. Secretary?
    Secretary Johnson. No, sir.
    Senator Stevens. Have you, sir?
    General Hagee. Nor have we, sir.
    Senator Stevens. I worry about the amount that has been 
proposed, a $400. We are prepared to go to about a 50 percent 
increase in each of those allowances, but to go to $400 is 
going to cost an enormous amount of money from the money that 
we have made available so far, and this is the last bill I 
believe we are going to have for Defense for fiscal year 2003, 
so it will be a matter of substantial problems to fund much 
more than a 50 percent increase. That would take the funds up 
from $150 to $225, and the separation from $100 to $150, but 
you still would have to absorb those increases.
    I would appreciate it if you would put some comments in the 
record with regard to those figures.
    [The information follows:]

    The Congressionally proposed rate increase will entitle 
military personnel receiving Imminent Danger Pay (IDP), an 
additional $75 per month retroactive to October 1, 2002, 
raising the statutory entitlement from $150 per month to $225 
per month, and entitle military personnel receiving Family 
Separation Allowance (FSA), an additional $150 per month 
retroactive to October 1, 2002, raising the statutory 
entitlement from $100 per month to $250 per month. The 
increased rate is projected to cost Navy an additional $131.6 
million ($48.9 million for IDP and $82.7 mission for FSA) and 
the Marine Corps $141.2 million ($67.8 million for IDP and 
$73.4 million for FSA) in fiscal year 2003. Funding is required 
to support the rate change for both this fiscal year and future 
years if the increased rate for the entitlement extends beyond 
October 1, 2003.

    Senator Stevens. The matter will be decided at least in the 
Senate before we get the replies. I do not know if my 
colleagues have looked into that. I am worried about the 
allowance because I do not foresee a substantial increase, but 
yet I do believe that because of changes in the level of pay 
between 1991 and now, that an increase in the imminent danger 
pay, and I think my colleagues will remember I raised that 
with, but we asked for a study by the Department here about 
what, 3 weeks ago.
    Gentlemen, I have to leave. Thank you very much. Senator 
Inouye.
    Senator Inouye. My only comment, Mr. Chairman, is I doubt 
if anyone here would want to give anything less to our men and 
women in combat. For those in combat, $400 does not suffice, 
but the question before us will be if that means that we may 
have to forego procurement of munitions, procurement of ships, 
what choice do we take? Because there is a limit to what this 
Government can raise from our taxpayers. As one who has had a 
little experience in combat, every little dime is welcomed, no 
question about that, but if it means giving up ammunition, 
giving up weapons systems, we will have to give it a hard look.
    Secretary Johnson. You captured it very well, sir, and we 
would like to give more money to our combat people but 
protecting them with good equipment is equally or more 
important now.

                            DEPLOYMENT DAYS

    Senator Inouye [presiding]. Admiral, may I ask you a 
question, sir? How many days per year has the average sailor 
spent deployed away from home since 9/11?
    Admiral Clark. Senator, I do not have a specific answer for 
you, but I can certainly put it in perspective. The average 
sailor has spent more time away from home and underway since 9/
11 than he did before. I do not have specifics. I have a policy 
in my Navy that we try to limit deployments to 6 months and 
then guarantee a two-to-one turnaround when they are home. I 
will tell you that I have violated that policy and when my 
people have asked me about it, I told them I will do the very 
best I can to hold to that, and that is a peacetime construct.
    But then I told them this: If them staying longer on 
deployment would make one difference in winning the global war 
on terrorism, that I would not blink twice about having them 
stay. And in the context of this current operation, I have 
several units that are over the 6-month period.

                             NAVY RETENTION

    Senator Inouye. I was well aware, as you pointed out, that 
you spent less time deployed before 9/11 than since 9/11. I 
asked that question because I am amazed that with those 
numbers, your retention level has gone up.
    Admiral Clark. If I can, I believe it is a tribute to the 
people and to the challenges we have given them, and it says a 
lot about America's young people. And what we have tried to do, 
Senator, is say this: The young men and women--and by the way, 
2 days ago I just reduced my retention goal for this year for 
the second time, I cut 3,000 more out of the retention 
objective, and the reason is because more and more people are 
staying in.
    What we have said to them is that we are going to do our 
best, we are going to commit ourselves. They promised to 
support and defend the Constitution of the United States 
against all enemies, foreign and domestic, and to obey the 
orders of the President and all the people in the chain of 
command. And I have challenged our leaders to, you know, what 
do we promise them in return? What we are promising them is a 
chance to make a difference, and I promised them that I am 
going to come up here and sit in front of this committee and 
talk to them about the things that our men and women need so 
that they have the right tools so they can get the job done.
    And Senator, you have been out there, you have seen them. 
They are fired up. They believe in what we are doing. They 
believe that we are engaged in a just cause, and it shows in 
their face and it shows in the work they are doing on station.

                      RETIRING SHIPS AND AIRCRAFT

    Senator Inouye. Your plans for this budget request call for 
the retirement of 16 ships and I believe about 260 aircraft. In 
light of the mission that you have at this moment, can this be 
carried out?
    Admiral Clark. Senator, I believe it is the right plan and 
let me describe it this way. The proposal to retire ships 
early, principally the ships of the 963 class, that 
recommendation from me to the Secretary and from him to the 
Secretary of Defense (SecDef), is built upon the belief that we 
need to retire those platforms that no longer bring the kind of 
combat capability to the point that we can retire those and we 
can accept the risk in retiring them.
    And this strategy retires old airplanes as fast as we 
possibly can. Yesterday, we lost an F-14 over southern Iraq. 
That is one of the classes of airplanes that I am recommending 
that we retire as rapidly as possible. It just turns out that 
the aircraft that went down was the oldest one in the wing, and 
one of our oldest airplanes. It is one of the most expensive 
airplanes to operate and maintain, because of its age.
    And I have talked to this committee before about the high 
age of our air force, and the only way out of this dilemma is 
to rapidly procure new aircraft, and the F-18E and F, which 
will take the place of the F-14, is currently on its first 
deployment and it is part of Operation IRAQI FREEDOM and is 
performing brilliantly. So, Senator, those recommendations, 
those are hard choices. They were choices that I recommended 
because I believe that we should divert those resources to 
recapitalize and transform our Navy for the future, and I 
believe that this is the time to do it and I believe that the 
operational risk is acceptable.

                         MARINE CORPS RETENTION

    Senator Inouye. General Hagee, the Marine Corps has 
traditionally surpassed any other service in recruiting goals. 
Since 9/11, have the trends kept up?
    General Hagee. Yes, sir, they have. In fact, for this 
fiscal year, about the middle of the second quarter we were at 
85 percent of our retention goal for the entire year. In 
November of this year, we will reach the hundredth month of 
having met mission on the enlisted side. On the officer side, 
our retention goals have never been better over the last 12 
years.
    Senator Inouye. It seems like your retention goals are 
better than the Naval Academy. Am I wrong on that?
    General Hagee. I would have to check the numbers, Senator. 
I am not sure.

                              NAVY RESERVE

    Senator Inouye. Admiral Clark, according to the statistics 
that we have received, compared to the Army, Air Force and 
Marine Corps, the Navy has called a substantially low 
proportion of its Ready Reservists to active duty. Can you tell 
us why?
    Admiral Clark. Yes, I can. We currently have about 10,500, 
the number changes every day and is growing, and we have 
authorized in the neighborhood of 12,000 and some of them are 
in the process, but it is fundamentally because we do not have 
to have Reserves to conduct the kind of operations, with the 
force structure that we have to call forward, we do not need 
more than we have called up.
    We have been very careful with the number that we have 
called up because we wanted to make sure that we have got jobs 
with real requirements and real job content for the people that 
we have called up. And I will tell you, Senator, that a large 
number of those that we have called up have been for force 
protection. But on the ships and in the squadrons and in the 
submarines themselves, we do not require the Reserves for us to 
conduct these combat operations. So it is the way our forces 
are shaped.
    I will tell you also that after 9/11, we saw areas where we 
had force structure, an example would be harbor security kinds 
of capabilities, that existed only in the Reserve structure. 
And it became clear to us that we were going to have to 
recreate some of that in the active force. And so in the last 2 
years we have been adding active duty people in the force 
protection area and in some of these areas that I addressed 
like harbor security and so forth, so we would not have to rely 
solely and completely on recalled Reservists.

                               FLEET SIZE

    Senator Inouye. Admiral, the Administration speaks of a 310 
ship fleet and the Department of the Navy 375. What number 
should this committee follow?
    Admiral Clark. Well, obviously the Secretary of Defense 
when they speak to it, and the Quadrennial Defense Review had 
numbers in it that identified the program for the current 
force. They have, and the Secretary of Defense has commented on 
this in congressional testimony, and when the question was 
asked about Admiral Vern Clark talking about the number 375, he 
has given me the leeway to talk about what I believe a longer 
range projection is for the right number of ships in the Navy.
    In the context of our current program and our current--the 
program that we have today, that number is in the low 300s, but 
the proposal that I have before you now takes us down under 
300. It is not the objective that we want and that we believe 
that we need. So, I have used the number about 375. I do not 
believe numbers alone are the right answer. For example, I 
could give you a program that would give you 375 ships that 
were not the right kind of capability. Capability is more 
important to me than the numbers per se, but the Secretary has 
given me the authority to talk about a vision for the future 
and where I believe it needs to go.
    And so I believe when you look at the kinds of missions 
that are going to come to us in the future, you look at the 
addition of the Littoral combatant ship, the capability that we 
are going to have to add to dominate the near land areas, when 
you look at the addition of things like missile defense and sea 
based missile defense, I believe those numbers are going to 
grow. I cannot tell you exactly what the number is this 
morning, Senator, but I believe that the 375 target is about 
correct.

                                HARRIER

    Senator Inouye. Let me now go to the Marines. Does the 
Marine Corps intend to use the Harrier in operations in Iraq? I 
say this because according to articles we have read, that 
aircraft has been plagued with problems.
    General Hagee. Sir, the Harrier is in Iraq right now. We 
have a number of them flying, almost every night. Their 
availability is about 75 percent, which is extremely good. We 
have a squadron flying out of Baghram, Afghanistan. They are 
flying every night. Their availability is over 90 percent, and 
they are flying at night and being maintained during the day. 
We are very happy with the performance of the Harrier to date.
    Senator Inouye. Thank you. Senator Cochran.

                              SHIPBUILDING

    Senator Cochran. Admiral Clark, I was interested in your 
comments in response to Senator Inouye's question about the 
shipbuilding rate and the number of ships that are projected to 
be needed by the Navy over the next several years. Our 
challenge is to put a number in the appropriations bill for 
this next fiscal year that meets our near-term needs and what 
can be foreseen just for next year or the next. So I wonder if 
you have in mind a suggestion to the committee about how we can 
most effectively use funding for shipbuilding in the near term.
    Admiral Clark. Well, the program recommendation is the 
recommendation for what we can do in the near term, Senator, 
and I would say this. I have testified before this committee 
now, this is my third year, talking about my belief that we 
need to take every measure that we can to level fund the major 
acquisition accounts. I believe that is a two-way street. I 
think we have to do our part, and one of the reasons I am so 
pleased about this submission is that it commits a significant 
addition in the major investment accounts over last year.
    We have worked hard to find resources to commit to the 
shipbuilding and aircraft acquisition accounts. You know, last 
year's submission had five ships; for this year, this has 
seven. It is capability, not just numbers, but as you look at 
the projection, we have diverted $39 billion in this multiyear 
program and we have put that toward shipbuilding. I believe, 
and there have been studies, Congressional Budget Office (CBO) 
did a study that talked about the total amount of investment 
that needed to be made long-term to support future 
modernization and transformation requirements, and I have 
testified that I believe that we need to be planning on a level 
fund of $12 billion a year in new construction, so that we get 
the best kind of balance. That would be the best balance that 
we could put forward.
    And we have done studies, for example, with the war games 
actually, with the shipbuilding industry that said if we could 
get to a level funding approach, we actually would produce more 
product, we would be a better partner and we would produce more 
product for each dollar that the taxpayer puts into 
shipbuilding. So, I would say that that means then that 
multiyear stands us in high, because they fit that mold, 
multiyears are good.
    If you look at what has gone in Amphibious Assault Ship 
(LHD)-A, an incremental approach to funding that has allowed 
use to proceed with construction without having the spike of it 
in 1 year. The split funding approach that is in this budget 
for the carrier in fiscal year 2007 and fiscal year 2008 is I 
believe the right way to do these kinds of things.
    Senator Cochran. We appreciate your leadership in helping 
figure out how we can most efficiently use scarce funds that 
are available to us and meet the needs that we have to continue 
to keep forces deployed in areas that are so important to our 
national security.
    In that connection, General Hagee, I know you have some 30 
ships deployed to the operation theater, I think 32 are forward 
deployed in support of current operations, I hope that is not 
classified. But with so many of our Marines and amphibious 
ships forward deployed, I have to ask the question, do we have 
enough Amphibious Transport Dock (LPDs) and LHDs to meet future 
requirements?
    General Hagee. I believe the ones we have on the books 
right now will meet our future requirement. I can tell you we 
need the LPD-17, we need all 12 of them, and we need them as 
soon as we can based upon the resources that we have.
    Senator Cochran. I notice the LPD-17, which Admiral Clark 
mentioned we are going to see launched here in a couple of 
months at the Avondale Shipyard on the Gulf Coast, what are 
your thoughts about the LPD-17 program profile? I notice you 
have funds requested for fiscal year 2004, but no LPD is in the 
fiscal year 2005 plan. Should we do something about that?
    Admiral Clark. Well, we put forward a recommendation again. 
When you do this whole program, you put together the program in 
the best balance that we knew how to put it together, Senator. 
And so we had a number of ships under construction, and so we 
left fiscal year 2005 that way, with then a couple in fiscal 
year 2006, and the whole idea was that we had ships under 
construction when we thought--you know, it is enough, and we 
would look at it again in fiscal year 2005 to see--you know, 
one of our responsibilities, and John Young as the acquisition 
official who works the industrial base balance questions all 
the time. So the way we put it together for the fiscal year 
2004 submit was the best way we knew how to balance the total 
resources that we had, and that is what we recommended.
    I do know that there have been unsolicited proposals that 
have been submitted to Secretary Young looking at potential 
ways to work through that void in fiscal year 2005. I do not 
know the specifics and details of that recommendation and 
frankly, that is not in my area of authority or responsibility. 
Secretary Young will deal with that kind of unsolicited 
proposal.
    But I have been, I believe rock solid in my testimony on 
this. Last year when people asked me, I said my first priority 
is to get the LPD line healthy and producing, and I am 
extremely pleased with where we stand now. You know, we 
introduced this ship and we had this computer aided design 
approach, it was new, we experienced the kind of things that 
one experiences when they are going through new first time ever 
kind of developments. We are at a stage now where we are 
reaping the benefits of that computer aided design, in the 
acquisition process.
    So the program is healthy. General Hagee said it right, we 
believe that this ship is a tremendously capable ship, and 
provides the kind of lift that the Marine Corps needs. And it 
is at, from where I sit, it is going to be a key part of the 
Marine Corps structure in expeditionary strike groups which we 
talk about in our written testimony, our vision for the way 
this force is going to operate and function in the future, LPD-
17 is going to be a key part of it.

                              HOMEPORTING

    Senator Cochran. One of the other concerns I have is the 
Navy's plan for the future of the use of home ports around the 
country. Back in the 1980s a decision was made to distribute 
ships among several or numerous home ports around the United 
States, and then there came along something called a fleet 
concentration area plan which was based on trying to achieve 
maintenance and supply efficiencies.
    One thing that concerns me, if we get too carried away 
about concentration and putting all our ships in one place or 
just a few places, in the face of the terrorist threats, does 
this make us more vulnerable to a cataclysmic event that would 
look like Pearl Harbor, or would we be wiser to think through 
that again and think about distribution for safety's sake? Is 
anybody thinking about that? Mr. Secretary, maybe that is a 
question that is a good one for you.
    Secretary Johnson. We always think about that, sir. We have 
to make the trade-off of the cost involved of protecting the 
ships no matter where they are and also the maintenance 
associated. As we look at the great armada that we have at sea 
now, when we bring them back we will have to maintain them, and 
that will be a great expense. There is a trade-off between 
dispersion and protection, and we look at that continuously, 
sir.

                          PATROL COASTAL CRAFT

    Senator Cochran. One of the programs that you mentioned, 
Admiral Clark was the Littoral combat ship program. This is an 
exciting new program, and I am told that in fiscal year 2005 
the Navy is considering transferring five of its patrol coastal 
craft to the Coast Guard and decommissioning the remaining 
eight patrol craft. I wonder, before we get too far along on 
that plan, whether consideration can be given to transferring 
the remaining patrol craft to the Navy Reserve. I was told that 
they would like to have those under their responsibility with a 
mission that may very well make good sense. Have you had an 
opportunity to look at that and has a final decision been made?
    Admiral Clark. We have had discussions, Senator, and in 
fact we have had discussions with the Coast Guard. I do not 
know if it is widely known or not, but on 9/11 the second call 
I made was to the Commandant of the Coast Guard, and we talked 
about a memorandum of understanding between the two of us that 
we had just signed. And we have had one for a number of years 
but we had renewed it, sharpened it on points that we needed 
to, and that memorandum is about going to war and that in 
wartime the Coast Guard would become an operating support of 
the Navy.
    And I told him that day, I said obviously this one is 
different, so tell me what you need. And then in the ensuing 
weeks, I transferred all 13 of them to him, and we have been 
operating. There have been discussions about potential 
distribution, because indications are that the Coast Guard will 
not need all 13 on a full-time basis. There have not been 
decisions made, so for me to make a comment about potential 
distribution would be premature, and that will have to be 
submitted up the chain of command for a decision and approval.

                            MISSILE DEFENSE

    Senator Cochran. You mentioned missile defense capabilities 
and the tracking of missiles by the Navy ships, and the support 
you are giving to the operations in the Persian Gulf area. I 
understand you do have plans to upgrade several Arleigh Burke 
class destroyers with significant missile defense capability. 
Can you give us some idea of that program?
    Admiral Clark. Absolutely. Thank you for asking the 
question. The President announced last year that we would 
develop an interim sea based capability in fiscal year 2004. 
And in my guidance to the Navy for this year, I laid out the 
direction for us to develop the path to achieve that objective. 
The last 12 or 13 months has been an extraordinarily successful 
period for the Navy and the missile defense program. We have 
had six tests, 100 percent success in all six of them, three 
tracking events and three firing events.
    And so, the Missile Defence Agency runs this program. The 
Missile Defense Agency was thinking about and proposing to 
build a test ship, and in cooperation with key players in the 
Office of the Secretary of the Navy, and I am talking 
specifically about John Young, the Secretary and myself, and 
key members of our team, we made the decision to offer an 
existing ship to speed up this process.
    And we are going to commit the U.S.S. Lake Erie to the 
full-time testing that operates in Hawaii full time to rapidly 
develop this capability. It is our belief that this is the 
right thing to do for the country.
    The capability that we have demonstrated in the last year, 
we have taken that and we are still in research and 
development, but we have taken that tracking capability and we 
have been using it in the theater of operations and it has been 
very successful.
    Senator Cochran. Thank you. Mr. Chairman, I have a couple 
more questions but I did not want to encroach on anyone else's 
time.

                              UAV PROGRAM

    I know in these unmanned vehicles such as Global Hawk, Fire 
Scout, and others that are under development, the Navy is 
investing substantially in this technology. General Jumper last 
week referred to the Global Hawk when we had the Air Force 
before our subcommittee as a very effective low level satellite 
in terms of capability. What are the plans of the Navy 
specifically in using this technology in the future?
    Secretary Johnson. First of all, Admiral Clark and General 
Jumper are working very, very closely in the unmanned air 
vehicle program. The Marine Corps has the Pioneer, which 
General Hagee can talk about, but we are moving forward on 
unmanned vehicles in all media, in the air obviously, 
underwater, and we are working very closely with the other 
services, most closely with the Air Force of course.
    Admiral Clark. Senator, this is one of the major changes 
between last year and this year in our submission. We are 
moving forward strongly in the UAV program. There is $3.6 
billion across the FYDP in the program, and as the Secretary 
said, General Jumper and I are working real closely together.
    In February one of the S&T programs for the unmanned combat 
air vehicle, the first flight was conducted on February 23. We 
have put resources against the development of another vehicle, 
and Secretary Young is working in concert with the Air Force to 
accelerate this kind of capability. We are investing in two 
Global Hawks ourselves.
    We are seeing now the vertical take-off UAV that has been 
in development, we are now seeing the potential utility in that 
vehicle for our new Littoral Combat Ship (LCS), and so we see a 
lot of potential here. We are also very interested in 
developing long dwell surveillance capability that we believe 
will be best done in an unmanned vehicle because of the ability 
to persist long on station times without the wear and tear on 
people, and that kind of long duration capability, crucial for 
us to dominate the battle space in the maritime domain.
    So this budget has significant additions for the Navy and 
we are moving out as rapidly as we know how to move out in this 
area that we believe is going to greatly improve our 
warfighting effort.

                    LIGHTWEIGHT 155 HOWITZER PROGRAM

    Senator Cochran. My last question which I am going to 
submit, and then I will have a question or two to submit for 
the record, is to General Hagee. I notice the budget request 
includes funding for 60 lightweight 155 howitzers. Could you 
provide us an assessment of that how this program is 
progressing.
    General Hagee. Yes, sir, I can. The program is actually 
progressing very well. We are in the operational test phase of 
the program. We are quite excited about it. It is going to 
provide us the ability to lift heavy artillery with the Osprey.
    The digital fire control is somewhat behind in its 
development, but we are going to purchase that when it is 
available. We project that will be available probably one to 2 
years after we actually start receiving the lightweight 155, 
but all the mounts will be on the artillery piece and as soon 
as it is available, we will purchase it.
    Senator Cochran. Thank you.
    Senator Inouye. Thank you very much. Senator Durbin.
    Senator Durbin. Thank you very much, Senator. I appreciate 
you being here today, and thank you all for what you are doing 
to serve our country. I have a family affection for the Navy as 
I had two brothers who served during the Korean War, and I have 
a political and personal connection to the Marine Corps by 
virtue of the fact that the first man I ever worked for on 
Capitol Hill was a Senator from Illinois named Paul Douglas, 
who in 1942 enlisted in the Marine Corps and went through basic 
training in Parris Island at the age of 50. And that is still 
amazing as I reflect on what he did in the service. He served 
in combat in the South Pacific and suffered a serious wound, 
but went on to a great public career. I thank you all for being 
here today.

          FAMILY SEPARATION ALLOWANCE AND IMMINENT DANGER PAY

    One of the things that I would like to reflect on was 
brought to my attention by Senator Inouye on the floor of the 
Senate, who rose one day to make a point that I think we should 
all keep in mind. And that is in World War II, maybe you will 
remember the exact percentage, Senator, but you told us that I 
believe over 80 percent of the people in uniform in that war 
were single, not married, and I believe today that statistic 
has changed dramatically, that the majority of those in service 
to our country are married with families. Could you tell us for 
the record if you know, in each of your branches, what 
percentage of your personnel are married today?
    General Hagee. Yes, sir, I can. As you know, the Marine 
Corps is a relatively young force, but even though we are a 
young force, 44 percent of our personnel are married today.
    Senator Durbin. Admiral.
    Admiral Clark. Senator, I do not have the number, I will 
provide it for the record, but what we are fond of saying is 
that we know that we recruit individuals and we retain 
families, and the major focus of our retention effort is to 
make sure we are touching families and dealing with their 
needs. So there is no question about that the numbers have 
changed dramatically over time.
    [The information follows:]

    Fifty-three percent of Navy Enlisted personnel and 76 
percent of Navy Officer personnel are married.

    Secretary Johnson. That is particularly true at this time, 
sir. I was up at Bethesda yesterday and the families were 
there. We care about the families at home very much. Our 
sailors and Marines forward are not as concerned about their 
own safety as they are that their families are well cared for, 
and everybody goes out of their way to take care of the 
families.
    Senator Durbin. The estimates I have read, Mr. Secretary, 
suggest that about 60 percent of the servicemen now in the war 
zone in Iraq have families back home, servicemen and women have 
families back home. And that is the reason why I wanted to 
speak for a moment and ask your thoughts about an issue. When I 
meet with these families, as I recently did at the Rock Island 
Arsenal back in my home State, I find of course they are 
extremely proud of the member of the family that is serving, 
they are encouraging it, praying for them, as we are all very 
proud of them.
    But they are also facing some unusual hardships that may 
not have been the case even a few years ago, hardships 
involving childcare, involving medical expense, additional 
expenses related to the separation. And I was surprised to read 
and learn that the current family separation allowance is $100 
a month, and that the imminent danger pay, the combat pay is 
$150 a month. I think that perhaps those, particularly the 
family separation allowance, was a figure that was established 
at a time when fewer servicemen and women came to serve our 
country with a family or had a family, and may not reflect the 
reality of the cost of service to those families.
    One of the amendments which I hope to offer to the 
supplemental to the Appropriations Bill will attempt to 
increase both the imminent danger pay as well as the family 
separation allowance, and I am working with Senator Inouye and 
others to try to find if there is a way to do this in a 
bipartisan fashion. Could you either, General Hagee or Admiral 
Clark, or the Secretary, reflect on the concerns that you hear 
expressed by the families of those who have been activated to 
serve, beyond the obvious, that they want their loved ones home 
as quickly and as safely as possible. General?
    Secretary Johnson. Can I say something first?
    Senator Durbin. Of course.
    Secretary Johnson. You make a very interesting observation. 
The current environment with family members is much different 
now. We have women who are quite involved in almost every 
aspect of our business, not necessarily as a rifle person. And 
we have a bigger problem of oftentimes a husband and wife being 
in the military. And it looks really bad when we send both of 
them off to war, but yet, that is what they trained and desire 
to do, and when we have to execute it, it looks like we do not 
care. We care very much and we try very hard to take care, and 
particularly where they have children, they have to have well 
laid out plans to care for them.
    Senator Durbin. General?
    General Hagee. Obviously the most important things for the 
families is that their Marine or sailor is well-trained and 
well-armed and well-prepared so that they will come back. That 
is obvious. And as Senator Inouye was really quite articulate 
on this, on how we balance how much money we are able to pay 
them, as compared to how much money we put into procurement and 
insuring that they are properly trained and armed is something 
that we have to work with the committee on. So the number one 
thing is they want them to come back.
    I think we have to look at this from a holistic standpoint. 
If I could give you one example, the impact of family 
separation allowance and hazardous duty pay that has occurred 
to a Marine family out in California, and I strongly support 
family separation allowance and hazardous duty pay, I am not 
sure that we pay them enough for that, and I am not sure that 
we can pay them enough for that, but we come back to the 
balance again. But this particular Marine had a child that 
needed special care and was getting that from the State of 
California, and the State of California was providing about 
$80,000 a year in care for this child, and that was based on 
the income of this particular Marine. When he was deployed to 
the Gulf, he received family separation allowance and he 
received hazardous duty pay. That put him above the line, and 
California by law was ready to take that funding away from him.
    We are working that issue, I think that we can solve that 
issue, but that is why I say we have to look at this from a 
holistic standpoint, sir.
    Senator Durbin. But what concerns do you hear expressed by 
the families, aside from that very extraordinary one case? Do 
you hear any particular concerns of the families of your 
Marines that are left behind in terms of their economic 
situation?
    General Hagee. There are concerns. I have been a Marine for 
35 years, I have deployed quite often. I know firsthand what 
happens when an individual Marine leaves their family. The 
costs actually go up, they do not go down. As the Secretary 
mentioned, that is especially true today when we have male 
Marines, female Marines, sometimes they are married, sometimes 
they are not. They may have children. They have particular 
challenges and I have heard those concerns from the families, 
yes, sir.
    Senator Durbin. Admiral Clark?
    Admiral Clark. I recall vividly being an ensign in the Navy 
and being off on my first deployment, and family separation was 
a dollar a day. Like any kind of pay like that, it has to 
have--you must periodically review to see if it is at the right 
level. I am not hearing about family separation pay.
    The one issue I am hearing raised is the issue of the tax 
exclusion, which is, to most of our people is a significant 
financial issue and so that when they are in a combat zone and 
war, it makes a difference. And the issue of it being addressed 
from my folks is that I have a large force in the Eastern 
Mediterranean and they are not in it.
    I will tell you that we have a large family support 
structure that is a formal part of our Navy life whether we are 
at war or not, and it runs on the back of volunteers and people 
who are determined to be involved, and they make it work.
    Senator Durbin. I am not going to dwell any further on this 
other than to say to you, Admiral, that we are particularly 
proud to have your training facility at Great Lakes in my 
State, and I have visited there and seen the wonderful work 
that is being done there, and we want to continue to help you 
in any way we can to train the sailors to serve our Nation.
    Admiral Clark. Thank you very much for your support, and 
Great Lakes is doing superbly.
    Senator Durbin. Thank you very much. Thank you, Senator 
Inouye.
    Senator Inouye. Senator Domenici.
    Senator Domenici. Thank you very much, Mr. Chairman. I am 
sorry I was late, I had to be somewhere else, but I hurried.
    First, I want to take just a minute to do what I hope to do 
every time I have the military before me in the future. I am 
convinced that the story of this war is going to be told for a 
long time and it is going to be what kind of men and women are 
these Americans. It is absolutely fantastic for Americans and 
the world to see the behavior of these young men and women. 
That is the story. They are warriors but they are gentlemen. 
They are warriors but they are considerate, they are 
articulate. What kind of training they get and what kind of 
esprit de corps and spirit they have is beyond what I could 
have expected from any group of Americans or any group of 
humans, so we are doing something very right.
    We have had books written about other generations of 
American warriors and I have read them. Now I am seeing these, 
and I do not think the past books about American valor or 
American military men or women, I do not think what we are 
seeing, I think it far exceeds anything written about previous 
generations of American fighters. It will be the story, what 
kind of men and women are there and how did we happen to bring 
them up that way. Concerning what goes on in American streets 
and American neighborhoods and American families in terms of 
the difficulties we have, it is truly something kind of 
miraculous that is happening with reference to the transition 
that the training and bringing of them together has brought.

                      NAVY PROGRAMS IN NEW MEXICO

    So I say that for openers, and then I just have a couple 
local issues. Believe it or not, even in the State of New 
Mexico where things are very dry, the Navy has a program going 
for water desalinization, and I just wanted to commend you for 
the work being done on it. It is being done on a very large 
inland aquifer in New Mexico, it is $6 or $7 million, I believe 
being spent, and I want to commend you for bringing the 
technology together, I think better than anyone else has 
brought it together. We may see some breakthroughs as a result, 
and we want to thank you for that and wish that program success 
not only for the Navy but for the United States.
    Secondly, there is a most incredible observatory that the 
Navy is building in the State of New Mexico also, it is called 
the Magdalena Ridge Observatory. It is a new kind of 
observatory on top of a very beautiful mountain, and when it is 
finished, this new approach to observing outer space is going 
to magnify what we can see by many fold. It will not look like 
a telescope and those things related to it, it is something 
completely different. So as one who is a primary supporter of 
this new approach, this program which is going to create a new 
method for observing outer space, is also something the Navy 
can be very proud of, and I want to commend you and thank you 
for the work that is being done on that.
    Are you aware of that, Mr. Secretary?
    Secretary Johnson. Yes, sir. We expect to have the 
groundbreaking on the 20th of October of this year.
    And the first one you talked about, we know more and more, 
anyplace we go, we have to take care of the water. Just 
drilling and drinking and using the water around the world does 
not work and in our business, a lot of it is on the seacoast, 
and of course we have the reverse osmosis plants to take care 
of the fresh water, but seawater is quite different.
    Senator Domenici. I will tell you that the only significant 
breakthrough on clean water is also in New Mexico technology, 
you all are using it in the Marines. Have you seen any Marines 
carrying around a water purification device that looks like a 
fountain pen, General?
    General Hagee. No, sir, I have not.
    Senator Domenici. They are practicing with it now. It is 
the size of a thick fountain pen and literally, you can take a 
glass of muddy water with whatever bugs, bacteria are in it, 
and you can purify it if you do not mind drinking muddy water, 
and you can drink it, and it is absolutely pure.
    Secretary Johnson. It probably tastes better at night.
    Senator Domenici. That is an invention that came out of one 
of the laboratories and actually it is quite the thing. And I 
would assume the next conflict, if there is one, everybody will 
be using those, but only a few thousand are using them now. It 
is an interesting invention.
    I also have one other item that I want to comment on with 
reference to technology. The Navy has a high energy laser-
testing program in New Mexico, it is called High Energy Laser 
(HEL). The Army has a program there that is not moving as 
rapidly, but I want to express my interest in the testing that 
is going on there, which has been putting pressure on the Army 
to move ahead a little more quickly. That is to defend against 
anti-ship cruise missiles. It is the first study that will 
prove the feasibility of killing a missile head on with 
reference to something like the cruise missile coming in our 
direction. And again, that is moving ahead with great dispatch 
and right on target, and I wanted to comment on it and thank 
you for that effort.
    Secretary Johnson. And we understand it takes a different 
approach than some of the airborne lasers and others, it is a 
new type of laser, and we are very excited, as you are aware.
    Senator Domenici. That is correct. I will put something 
into the record that goes into one of those in a little more 
detail. I thank you, Mr. Chairman, and again, I apologize for 
keeping the committee. Thank you all.

                       JOINT STRIKE FIGHTER (JSF)

    Senator Inouye. My last question is to the Commandant. The 
Joint Strike Fighter will be the future Marine Corps fixed wing 
strike fighter. I gather it will replace the Harrier and the 
current F-18C and D, and you have no plans to purchase the F-
18E and F. What is the status of the JSF now?
    General Hagee. Sir, you are absolutely correct on what our 
plans are. The Joint Strike Fighter will replace both the F-18C 
and D that we have, and the Harriers, and we are going to wait 
and not purchase the E and F, we are going to wait for the 
Joint Strike Fighter, which is currently in the system 
development phase.
    My reports are that it is going relatively well. There is 
some recent concern about weight growth, we expect that during 
this phase about a 6 to 8 percent weight growth, both for the 
Short Take-Off and Landing (STOL) version and the carrier (CV) 
version; it is above that right now. We are talking with the 
contractor, sharing our concern with them about that weight 
growth.
    Senator Inouye. I suppose you have concerns over the Navy's 
F-18 and the Air Force F-22, do you not?
    General Hagee. No, sir, we do not. I think the Navy has 
made the absolute right decision to go to the E and F during 
this interim period. Admiral Clark has already talked about 
legacy systems and how he wants to move legacy systems out. We 
believe, firmly believe that during this intervening period 
that the Cs and Ds and the Harriers will stand us in good 
stead.
    I have to say, we look forward to having the Joint Strike 
Fighter, especially as we move into tac air integration, and 
the efficiencies that that is going to provide us where we have 
one common air frame, common pilot training, common mechanic 
training, it is going to provide us great efficiencies. At the 
same time, it is going to significantly increase the 
operational effectiveness.
    Admiral Clark has talked about this significant range 
increase that we will get with the Joint Strike Fighter, which 
means we need less gas and less tankers.
    Secretary Johnson. In our current environment we find that 
most often the critical element is fuel, refueling, and these 
aircraft will give us much longer range, and Admiral Clark has 
some wonderful examples.
    Admiral Clark. If I might comment on this, Senator, I would 
like to talk about, I think it is important for all of us to 
keep learning. I tell all of my leaders that we all have to 
keep learning and I am continuing to learn, and my biggest 
lesson learned from Afghanistan in these current operations is 
the importance of combat range. We have told you the stories 
about our pilots flying from a carrier to Afghanistan, some of 
those missions 700, 800, 900 miles in range, and 7 or 8 hours 
in the cockpit. Several times going to the tanker.
    We have an E and F that, they are on their maiden 
deployment right now on the U.S.S. Abe Lincoln. The U.S.S. 
Nimitz will come into the theater in the next few days, I will 
not talk about specific time on it, but the E and F is doing so 
well, we springboarded some of the airplanes forward while the 
U.S.S. Nimitz was en route, and the U.S.S. Nimitz E and Fs are 
in theater flying off of the U.S.S. Lincoln right now.
    The reason it is important is that it has 40 to 50 percent 
more combat range, and so they can get to the target without 
tanking. It is also important because this airplane can go with 
Cs, and Ds for that matter, and it has such a much bigger 
payload, and we can load it up with fuel and the E and F can 
fuel three or four other airplanes and get them to the target 
area, without going to the big airplane for fuel.
    As good as that is, the JSF is going to be even better. The 
projection is that it will fly 800 miles unrefueled out and 
back to the target area. That kind of capability, we would 
not--the whole investment in the tanking structure will be 
totally different for Navy air.
    So we are very pleased with what is going on in the E and 
F. I am in an enviable position. I have got an effective 
program that is performing, is delivering on time and 
performing very well in the battle space. JSF is still going to 
bring us important things that I very much want, an improved, 
designed in from the beginning, improved reliability. It will 
in fact change--and this is why when the Commandant and I put 
together the Navy-Marine Corps tac air integration program, it 
was based upon these new factors that allow us not to have to 
replace airplanes on a one-for-one basis. And so, this kind of 
delivery of this capability is important, and this budget we 
have invested significantly in JSF.
    Senator Inouye. Senator Cochran?
    Senator Cochran. I have no further questions.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Inouye. If not, Mr. Secretary, Admiral Clark, 
General Hagee, thank you very much. Your full statements will 
be made part of the record.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]

               Questions Submitted to Hansford T. Johnson
          Questions Submitted by Senator Kay Bailey Hutchison

                     NAVAL FORCES--SOUTHERN COMMAND

    Question. Do you have plans to relocate the headquarters of 
Southern Command's Navy Forces from Puerto Rico?
    Answer. In August 2001 the Secretary of Defense directed all 
Combatant Commanders to review overseas basing requirements and to 
examine opportunities for joint use of facilities and land by the 
Services, consolidate infrastructure, and enhance training. The study, 
which was recently completed, did not recommend any changes that were 
not already contemplated to either our overseas forces or basing 
structure. While the Department of Defense is continuing to examine its 
overseas basing and presence within the context of a global strategy, 
Commander, U.S. Naval Forces Southern Command is expected to remain at 
Naval Station Roosevelt Roads for the foreseeable future.
    Question. What locations are you considering?
    Answer. The relocation of Commander, U.S. Naval Forces Southern 
Command is not under consideration at this time.

              JOINT STRIKE FIGHTER (F-35) PROGRAM PROGRESS

    Question. Highlight the progress the Joint Strike Fighter is 
making.
    Answer. The Joint Strike Fighter (JSF) Program continues moving 
forward in the early design stages of the program. It is 16 months into 
a 126-month Systems Development and Demonstration (SDD) phase. Design 
milestones the program passed early this year include numerous sub-
system Preliminary Design Reviews (PDRs) encompassing Mission Systems 
and Air Vehicle Systems that lead up to the Air System PDR in March. 
The March 2003 PDR has not been completed due to weight concerns with 
JSF, particularly in the Short Takeoff and Vertical Landing (STOVL) 
variant. A Blue Ribbon Action Team has been convened to review 
mitigation measures and a final report is due in June 2003.
    The Pratt and Whitney F135 engine will complete its Critical Design 
Review in May 2003 leading to the F135 First Engine to Test currently 
planned for September 2003. First flight of the Conventional Takeoff 
and Landing (CTOL) variant of the F-35 is currently planned for the 4th 
Quarter calendar year 2005. First flight for the STOVL aircraft is 
scheduled for 2nd Quarter calendar year 2006 and the first flight of 
the Carrier (CV) JSF variant is scheduled for 1st Quarter calendar year 
2007.
    The F-35 is the Department's largest cooperative development 
program. In fiscal year 2002, the F-35 program successfully concluded 
SDD cooperative agreements with seven additional international 
partners: Canada, Denmark, the Netherlands, Norway, Italy, Turkey, and 
Australia. Including the United Kingdom, this brings the total number 
of international partners to eight.

                                  V-22

    Question. Provide a detailed update on the progress the V-22 
program is making.
    Answer. The V-22 program is currently mandated to continue 
production at the minimum sustaining rate until the Secretary of 
Defense certifies this aircraft meets the requirements outlined in 
Section 123 of the fiscal year 2002 National Defense Authorization Act. 
The program continues to ensure a methodical and event driven test 
flight program to validate all engineering and software changes. 
Program reviews have been comprehensive; the organizational, technical 
and programmatic issues are well addressed. The plan represents a 
rational ``event driven'' approach to flight testing.
    The V-22 has flown over 400 flight hours (as of May 2003) since 
return to flight May 29, 2002 and has accomplished the following:
  --Three Engineering and Manufacturing Development (EMD) aircraft have 
        returned to flight.
  --Three Low Rate Initial Production aircraft have been modified and 
        delivered early or on time.
  --CV-22 EMD Aircraft 9 has accomplished 40 percent more test points 
        than planned in the Benefield Anechoic Chamber (BAF) at Edwards 
        AFB CA, resulting in a significant flight test savings.
  --EMD CV-22, Aircraft 7 is progressing well thru multi-mode terrain 
        following radar testing to include flat rolling and isolated 
        peak at over 200 kts.
  --Simultaneous deployments to U.S.S. IWO JIMA (shipboard suitability) 
        and Fort Bragg, NC (parachute loads testing).
    Since return to flight the V-22 program has had no hydraulic 
failures or software anomalies attributed to earlier mishaps.

                  MINE WARFARE FUNDING AND CAPABILITY

    Question. What funding is there in the 2004 request for mine 
warfare and what will it enable you to do?
    Answer. The Department of Navy (DON) budget request for fiscal year 
2004 is $734 million. The DON commitment to maintain readiness of the 
dedicated Mine Countermeasure (MCM) Force is balanced with the 
requirements to fund transformational capabilities, to include: the 
development of seven organic MCM systems to integrate into Battle 
Groups, replacing diver and mammal with unmanned systems, and the 
development of a modular MCM capability from the Littoral Combat Ship 
(LCS). The mine warfare ships, helicopters, and Explosive Ordnance 
Disposal (EOD) force demonstrated their readiness in Operation IRAQI 
FREEDOM, by clearing mines from Iraqi waterways and opening the port of 
Umm Qasr for humanitarian relief supplies. Highlights of the request 
include:
    Organic Airborne MCM (OAMCM).--To meet the DON's goal of an organic 
mine warfare capability by fiscal year 2005, the fiscal year 2004 
budget continues the development and integration of five OAMCM 
subsystems into the MH-60S platform. The notional plan for 
consideration by companies planning proposals for the LCS Flight 0 
design is that the OAMCM systems would be part of the mission modules 
on the LCS, giving the LCS great flexibility to support the Carrier and 
Expeditionary Strike Groups (CSG/ESG) in the MCM role.
      ALMDS/AQS-20A.--In fiscal year 2005, the Navy will introduce the 
        minehunting suite of OAMCM systems. The AN/AQS-20A Advanced 
        Minehunting Sonar and Airborne Laser Mine Detection System 
        (ALMDS) (AN/AES-1) are scheduled for Initial Operational 
        Capability (IOC) in fiscal year 2005. The ALMDS will detect 
        near surface and floating mines with a water-penetrating laser, 
        while the AN/AQS-20A will detect, classify, and identify moored 
        and bottom mines with a towed sonar/laser system. The DON is 
        requesting $17.2 million for the AN/AQS-20A to continue system 
        developmental testing, and $21.9 million to complete 
        developmental testing and award two AN/AES-1 Low Rate Initial 
        Production units.
      RAMICS/AMNS.--In fiscal year 2007, the Navy will introduce the 
        mine neutralization suite of OAMCM systems. The Rapid Airborne 
        Mine Clearance System (RAMICS) (AN/AWS-2) is being developed to 
        neutralize the near surface and floating mines found by ALMDS. 
        The RAMICS uses a supercavitating 30 mm projectile to pierce 
        the mine case, causing deflagration of the mine explosive, and 
        flooding of the case. The DON is requesting $31.2 million to 
        complete critical design review and begin developmental testing 
        of AN/AWS-2. The Airborne Mine Neutralization System (AMNS) is 
        being developed to counter deeper moored mines and visible 
        bottom mines and DON is requesting $14.5 million to continue 
        development through critical design reviews. The AMNS uses 
        tethered, small expendable neutralization vehicles to approach 
        the mine and destroy the mine with an explosive charge.
      OASIS.--In fiscal year 2008, the Navy will introduce the Organic 
        Airborne and Surface Influence Sweep (OASIS) system. The OASIS 
        will generate magnetic and acoustic signals to satisfy the 
        firing logic of influence mines, causing them to actuate. The 
        DON is requesting $14.8 million for completion of critical 
        design review and commencement of development testing.
    LMRS.--The fiscal year 2004 budget requests $56.1 million funding 
to continue the development and acquisition of the Long-term Mine 
Reconnaissance System (LMRS), which is on track for an fiscal year 2005 
IOC on the LOS ANGELES Class submarine and will be incorporated on the 
VIRGINIA Class as it delivers. The LMRS system features an untethered 
Unmanned Underwater Vehicle (UUV), launched and recovered covertly from 
the submarine's torpedo tubes. The LMRS will provide a clandestine 
reconnaissance capability for mine-like objects.
    RMS.--The fiscal year 2004 budget includes $55.5 million funding 
for the development and acquisition of the Remote Minehunting System 
(RMS), a surface ship-launched and recovered semi-submersible vehicle. 
The RMS gives surface ships the capability to conduct low-observable 
minehunting operations from over the horizon, maintaining control of 
the vehicle from a safe standoff distance. The RMS will reach IOC in 
fiscal year 2005, fielding on six new construction DDG Flight IIA ships 
(DDGs 91-96). The RMS also is a strong candidate for future deployment 
on the Littoral Combat Ship.
    Very Shallow Water (VSW) MCM.--The capabilities of the Naval 
Special Clearance Team ONE were highlighted in port clearance 
operations in Umm Qasr. In addition to the superb performance of EOD 
forces and marine mammals, small UUVs played a vital role in 
identifying mine-like objects in very low visibility conditions. $6.6 
million is requested in the fiscal year 2004 DON budget to support 
small UUV programs to operate from surface MCM ships, in VSW MCM 
applications, and in force protection missions.
    High Speed Vessel (HSV).--The fiscal year 2004 budget contains 
funding ($17 million) for the charter of a High Speed Vessel (HSV 2 
SWIFT) for fleet experimentation and concept development, focusing on 
MCM command and control issues and new technology demonstrations that 
may feed into development of the LCS program.
    Littoral Combat Ship (LCS).--The LCS will become the focal point of 
DON efforts to transform Mine Warfare (MIW). Within the DON fiscal year 
2004 request for LCS Mission Modules, $18.4 million contributes to the 
development of the MIW Mission Modules. When equipped with the 
appropriate Mission Package, LCS will conduct mine warfare missions 
with on-board and off-board systems from deep water through the beach. 
The potential for modernization through its modular, multi-mission 
design will allow LCS to incorporate new unmanned vehicle technologies 
as they mature.
    Dedicated MCM ships.--The surface MCM fleet faces several 
challenges in current readiness issues, which are addressed in this 
proposed budget. The DON has requested $8.4 million in fiscal year 2004 
OPN funds for the initiative to improve the operational readiness of 
the surface MCM ships through replacement of low-reliability engines. 
$1.8 million is requested in fiscal year 2004 to fund acoustic 
generators to replace antiquated acoustic sweep systems on the MCM-1 
class ships. $3.8 million is requested for sonar data recorders for the 
AN/SQQ-32 minehunting sonar to record sonar targets of interest.

                            T-45 COCKPIT 21

    Question. I understand that the Cockpit 21 program for T-45A 
aircraft is unfunded in the fiscal year 2004 budget request. Does the 
Navy plan to fund this in 2005 or 2006? What is the impact of not 
funding the program?
    Answer. The Navy remains committed to the T-45 program as an 
integral part of undergraduate flight training. Cockpit 21 addresses 
several avionics obsolescence issues in both the T-45A and the T-45C. 
If left uncorrected, degradation in aircraft ``Ready For Training'' 
will eventually affect the ability to maintain the required pilot 
training rate. The Navy will closely examine funding for Cockpit 21 as 
part of the fiscal year 2005 Budget development process, but must 
continue to balance this requirement against competing priorities.
                                 ______
                                 
             Questions Submitted to Admiral Vernon E. Clark
              Questions Submitted by Senator Thad Cochran

                               HSV PLANS

    Question. Admiral Clark, I understand the Navy has been impressed 
with the early feedback in operating a High Speed Vessel under a lease 
arrangement. Can you comment on the HSV hull form, and how it might fit 
into our shipbuilding planning?
    Answer. Currently, there are three High Speed Vessel craft under 
lease agreement with the Department of the Navy. The lease for HSV X1, 
Joint Venture, originally contracted under a joint arrangement between 
the Army and the Navy in October 2001 has been extended through 
September 2003. HSV 2, Swift, a slightly larger version of Joint 
Venture, will deliver in late July 2003 and will incorporate additional 
military enhancements to its hull that support mine warfare 
experimentation. Additionally, the USMC has been conducting intra-
theater lift missions with a third HSV, Westpac Express. All three 
vessels are wave piercing, aluminum hulled, commercial catamarans, 
based upon existing high-speed ferry designs.
    The Navy is continuing its efforts to explore the concept of 
advanced high-speed hull forms and propulsion systems, evaluating new 
hull designs in monohulls, catamarans, trimarans and surface effect 
ships. Additionally, efforts are underway to combine the lessons 
learned from these vessels for application in the design of future 
classes of Navy ships.
    The U.S. shipbuilding industry has limited experience in the design 
and construction of these categories of vessels with the necessary 
displacement and speed. U.S. shipbuilders are, however, working 
together with industry to explore the concepts and viability of these 
advanced hull forms and propulsion systems for Naval applicability.

                          LONG-TERM HSV PLANS

    Question. Admiral Clark, it seems leasing these craft during the 
experimentation phase was appropriate. If the experiments have proven 
successful, we should explore procuring U.S.-made craft to meet the 
Services' needs. Can you explain the Department of the Navy's long-term 
plan to eliminate the need for leasing commercial High Speed Vessels?
    Answer. The High Speed Vessel (HSV) project is a joint effort with 
the Navy, Marine Corps, Naval Special Warfare Command and Army. The 
goal for HSV(X1) is to explore the concepts and capabilities associated 
with commercial high-speed vessels with respect to advanced hull and 
propulsion technologies integrated with advanced communications 
technologies. HSV 2 will continue to build on these concepts and 
evaluate the utility of the craft, while supporting new doctrine 
associated with advancing Mine Warfare systems, including 
experimentation with the use of unmanned underwater and surface 
vehicles. Successful experimentation with Joint Venture has 
demonstrated the utility and potential suitability of high-speed 
vessels for military operations.
    While experimentation to date with HSV(X)1 and Westpac Express has 
been promising, the Navy is still assessing the utility of this type 
platform to support Sea Power 21. Should an operational requirement be 
developed for HSV to permanently support the Navy or USMC, the 
vessel(s) will be competitively procured from a U.S. shipyard.

                    LITTORAL COMBAT SHIP--HULL FORM

    Question. Admiral Clark, I understand the Navy has not yet 
determined a hull form on which to base the Littoral Combat Ship (LCS). 
Given the variety of roles and missions anticipated for these ships, is 
it possible there may need to be more than one ``final'' hull form for 
LCS, perhaps a percentage would be catamarans and a percentage would be 
composite mono-hulls?
    Answer. The current acquisition strategy envisions two Flight 0 
ships to start construction in fiscal years 2005 and 2006. These ships 
may be different designs built in different yards. The Navy will 
evaluate both ships and will then make a decision on the remainder of 
the Littoral Combat Ship (LCS) flights. Flight 1 LCS ships are 
scheduled to start construction in fiscal year 2008.

                                 ______
                                 
             Question Submitted to General Michael W. Hagee
           Question Submitted by Senator Kay Bailey Hutchison

    Question. I am concerned we take all measures necessary to prevent 
a recurrence of Gulf War Syndrome now that our troops are in Iraq. One 
way is to medically assess our troops before they deploy to establish a 
health baseline. What percentage of Marines had a health baseline 
established before they deployed to Southwest Asia? What percentage of 
our personnel was pre-screened (with a health survey) before 
deployment?
    Answer. Pre-screening is required per Department of Defense 
Instruction (DODI) 6490.3 for personnel deploying out of CONUS for more 
than 30 days. The screening form is completed by the Marine or Sailor 
and kept in his/her medical record for future reference. DODI 6490.3 
included no reporting requirements to higher headquarters. Because a 
centralized reporting requirement did not exist, the percentage of 
personnel who deployed to participate in Operation Iraqi Freedom and 
who were pre-screened is unknown at this time. On April 23, 2003, the 
Under Secretary of Defense for Personnel and Readiness issued a 
directive Memorandum, stating new reporting requirements for both Pre- 
and Post-Deployment Surveillance. The new guidance requires the 
Services to conduct and track post-deployment health surveys for all 
personnel who were involved in Operation Iraqi Freedom. On May 1, 2003, 
Health Services, HQMC, released a message to Marine Corps units 
identifying the new requirements and providing further guidance. In 
addition, The Medical Officer of the Marine Corps, in conjunction with 
the Naval Bureau of Medicine and Surgery, is developing a comprehensive 
plan to conduct required surveys and monitor compliance.

                          SUBCOMMITTEE RECESS

    Senator Inouye. The next scheduled subcommittee meeting is 
Wednesday, April 9. At that time we will receive testimony 
regarding the activities of the Missile Defense Agency.
    Thank you very much, and the hearing is recessed.
    [Whereupon, at 11:35 a.m., Wednesday, April 2, the 
subcommittee was recessed, to reconvene at 10 a.m., Wednesday, 
April 9.]
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