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



 
       DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 2005

                              ----------                              


                       WEDNESDAY, MARCH 10, 2004

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:02 a.m., in room SD-192, Dirksen 
Senate Office Building, Hon. Ted Stevens (chairman) presiding.
    Present: Senators Stevens, Cochran, McConnell, Burns, and 
Inouye.

                         DEPARTMENT OF DEFENSE

                         Department of the Navy

STATEMENT OF HON. GORDON R. ENGLAND, SECRETARY, UNITED 
            STATES NAVY

                OPENING STATEMENT OF SENATOR TED STEVENS

    Senator Stevens. Good morning. This morning, we're pleased 
to welcome the Secretary of the Navy, the Chief of Naval 
Operations, and the Commandant of the Marine Corps to discuss 
the fiscal year 2005 budget request.
    Secretary England, we welcome you back after your time away 
with the Department of Homeland Security.
    Mr. England. Thank you.
    Senator Stevens. Admiral Clark, this is your fourth time 
before the committee, and we welcome you again. And, General 
Hagee, we also welcome you, sir.
    We would like to take this opportunity to thank the Navy 
and Marine Corps for the extraordinary commitment and 
dedication to duty. The ever-increasing demands placed upon the 
men and women of the military do not go unnoticed here in 
Congress, and we really hope that you'll convey our thanks to 
all of the forces under your command. Our forces are deployed 
to more locations around the world than ever before, and will 
be called upon to return to some familiar places, like Haiti. 
We've heard a lot recently about your efforts to reduce manning 
and end strength. We've also heard about the new challenges 
associated with the joint strike fighter, and are anxious to 
hear about your shipbuilding initiatives.
    Gentlemen, we look forward to hearing more about these 
topics and your budget priorities. I thank you for your 
personal visits in the past, and, as always, your full 
statements are already a part of the record.
    And I turn to my co-chairman, Senator Inouye, for his 
remarks.

                 STATEMENT OF SENATOR DANIEL K. INOUYE

    Senator Inouye. I thank you very much, Mr. Chairman. And, 
gentlemen, thank you for being here with us to discuss your 
fiscal year 2005 budget request.
    The Navy and Marine Corps forces are performing 
magnificently, as the chairman has stated, in difficult 
environments, from Operations in Iraq to Afghanistan and, most 
recently, in Haiti. The operational tempo is high, and forces 
are stretched thin. I would like to hear from you today on the 
impact that these operations have on the budget, and the effect 
on the forces if no supplemental funding is requested this 
fiscal year.
    I also look forward to discussing how the fiscal year 2005 
budget request continues to support the men and women serving 
the Department of the Navy while, at the same time, balancing 
the modernization of today's forces with the transformation of 
tomorrow's fleet.
    The Navy and Marine Corps each have a number of significant 
investment programs underway. For the Navy, it's the E-2C 
Advanced Hawkeye, the next generation of destroyer DD(X) and 
carrier CVN 21, the Littoral combat ship and the Virginia class 
submarine, to name a few. The Marine Corps is investing heavily 
in the Expeditionary Fighting Vehicle, the Joint Strike 
Fighter, and the V-22 Osprey.
    This committee knows well, as do each of you, that these 
major acquisition programs tend to experience significant cost 
and schedule growth as many of the programs I just mentioned 
have experienced over the course of their development. Although 
the capabilities that these programs will bring to the naval 
forces will surpass those of our adversaries, we still have an 
obligation to modernize equipment for use in today's conflicts 
and to ensure that the sailors, marines, and their families are 
taken care of. As you know, this is a difficult balance to 
strike. And so I look forward to working with each of you this 
year as we review our budget, and your budget, for the fiscal 
year 2005, and to hearing your remarks today on how to maintain 
the finest naval and marine forces in the world.
    And I thank you very much, Mr. Chairman.
    Senator Stevens. Thank you very much.
    Mr. Secretary?
    Pardon me Senator Cochran.

                   STATEMENT OF SENATOR THAD COCHRAN

    Senator Cochran. Mr. Chairman, thank you. I just----
    Senator Stevens. I apologize. I didn't see you come in, 
sir.
    Senator Cochran. I'm happy to be here to help you welcome 
this distinguished panel before our committee, Secretary 
England, Admiral Clark, and General Hagee.
    We understand the enormous strain that's been placed on the 
Navy and Marine Corps team, with major operations all over the 
world. It has already been mentioned by the chairman and the 
distinguished Senator from Hawaii that operations are underway 
in Iraq, Afghanistan, and in Haiti. You have deployed nine 
aircraft carriers and 10 big-deck amphibious ships to these 
areas of major operations, and it indicates that this team is 
hard at work, and we are hopeful that we can find a way, within 
the constraints of the budget that we have to operate under, 
that we can provide the funds that you need to continue to 
protect those who are deployed and to help ensure that they 
carry out their missions successfully. I'm confident that 
that's the purpose that we will bring to this process, and we 
thank you for being here today to help acquaint us with the 
challenges you face and let us know how we can be helpful to 
you and to our country.
    Thank you.
    Senator Stevens. Thank you very much, Senator. Again, I 
apologize. I didn't see you come in. You were sort of stealthy 
here this morning.
    Mr. Secretary?

              SUMMARY STATEMENT OF HON. GORDON R. ENGLAND

    Mr. England. Chairman Stevens, Senator Inouye, members of 
the committee, it is a distinct privilege and a great honor to 
appear before you again as Secretary of the Navy.
    It is great to be back, back with the very best Navy and 
Marine Corps in our Nation's history, and particularly to be 
back with Admiral Vern Clark and General Mike Hagee. Admiral 
Clark and General Hagee are both magnificent military leaders, 
and I am distinctly privileged and proud to serve with them.
    On behalf of all those great Americans in uniform, I thank 
you for ensuring that we are properly resourced. And on behalf 
of all our deployed men and women, and especially their 
families, I also thank you for your personal visits to our 
areas, both in combat and our home bases.
    This is, indeed, a critical budget year for the Department 
of the Navy. This year, we have established a future course for 
our naval forces to quickly respond to and to quickly defeat 
future threats. We have been working for the past 3 years to 
develop this integrated program, a program where line items are 
now linked to provide synergy and complementary capabilities. 
The fiscal year 2005 proposal before you is more than just a 
budget. This is a naval roadmap for the future, and it should 
provide the foundation for many successive administrations.
    Another critical aspect of the fiscal year 2005 proposed 
budget is our people. People continue to be our most valuable 
asset. We are a strong, well-trained, high-motivated and 
combat-ready force. Retention is at record levels, and 
recruiting continues to be robust. We have the best people, and 
their morale is high.
    One last comment. A guiding principle in all we do is 
improving the effectiveness of our organization to also gain 
efficiency. We are good stewards of the taxpayers' money. At 
the same time, being a very lean organization makes us more 
vulnerable to budget adjustments and modifications.

                           PREPARED STATEMENT

    In summary, the Chief of Naval Operations (CNO), the 
Commandant and I are confident that our proposed budget will 
dramatically improve our ability to secure America in the 
future while protecting our Nation today. And I thank you for 
the opportunity to be here today with you.
    [The statement follows:]

              Prepared Statement of Hon. Gordon R. England
            value to our nation--the navy/marine corps team

                              INTRODUCTION

    During my last appearance before this Committee in February 2002 
and as reported in that statement, the Navy and Marine Corps 
contributions in the ``War Against Terrorism'' have been significant 
and important in the overall success of U.S. military forces. This 
continues to hold true today. Our Navy and Marine Corps Team projects 
decisive, persistent, joint power across the globe, in continuing to 
prosecute the war on terrorism.
    Projecting power and influence from the sea is the enduring and 
unique contribution of the Navy and Marine Corps to national security. 
Operation IRAQI FREEDOM (OIF) demonstrated the strategic agility and 
operational flexibility that forward deployed Naval expeditionary 
forces provide. This committee's support has been vital for the Navy 
and Marine Corps Team to exploit the access afforded by the seas and to 
respond to the full spectrum of contingencies. Congressional support 
has led to increased readiness which was proven in OIF, where dispersed 
military forces, networked together, fought as a single, highly 
coordinated joint team.
    Naval warfare will continue its progression to operate in a joint 
environment in responding to new threats and to the increased 
asymmetric capabilities of our enemies. We will be bold and continue to 
develop new capabilities and concepts, and fund them in quantities that 
are relevant to tomorrow's emerging threats. We have embraced 
transformation. We are addressing the challenge to operationalize our 
vision, Naval Power 21, with technological, organizational, and 
doctrinal transformation.
    The following statement highlights key elements of the fiscal year 
2005 President's Budget applicable to the Department of the Navy within 
the Balanced Scorecard approach of managing Operational, Institutional, 
Force Management and Future Challenges Risks.
    fiscal year 2005 budget priorities--underway with naval power 21
    The fiscal year 2005 Department of the Navy Budget fulfills our 
essential warfighting requirements. We are resourced to fight and win 
our Nation's wars and our number one priority, the war against 
terrorism, is reflected across each allocation. Additionally, we 
continue to invest in future technologies and capabilities that are 
part of a broader joint warfighting perspective. The Navy and Marine 
Corps are continuously working with other Services to draw on the 
capabilities of each Service, to eliminate redundancy in acquisition, 
and create higher levels of military effectiveness. A prime example is 
our agreement with the Department of the Air Force to merge our two 
Joint Tactical Radio System (JTRS) programs into a single program that 
will produce a common family of radios for use aboard our ships, 
submarines, and aircraft. The following summarizes the fiscal year 2005 
Budget request priorities for the Department of the Navy:
    Personnel Salary and Benefits.--Smart, motivated and capable people 
are a key element to any successful transformation effort. Our Navy and 
Marine Corps are increasingly a technologically advanced maritime force 
and we are in competition with the private sector to attract and retain 
the best men and women we can find. Accordingly, our budget includes a 
3.5 percent basic pay raise for all military personnel. Additionally, 
housing allowances have been increased to buy down out-of-pocket 
housing expenses for our military personnel. Concurrent with this 
commitment to provide an appropriate level of pay and benefits to our 
Sailors, Marines, and their families is a responsibility to operate 
this Department as efficiently and effectively as possible. While we 
want the best people we can get to serve in the Navy and Marine Corps, 
we don't want a single person more than we need to properly operate the 
force. Job satisfaction comes not only just from compensation, but also 
from meaningful service--we owe it to our people to ensure that they 
are given duties and equipment appropriate to a volunteer force.
    Operations and Maintenance.--The operations and maintenance 
accounts are funded with over a $2 billion increase. The present 
environment requires Naval forces to be both forward deployed and 
capable of surging when called. This account will help develop the 
transformational Fleet Response Plan (FRP). This is the means to 
institutionalize the capability to maintain a more responsive force 
that is ready to surge, more efficient to maintain, and able to 
reconstitute rapidly.
    Shipbuilding Account.--The Department's shipbuilding plan supports 
our transformational vision and increases the number of new 
construction ships from seven in fiscal year 2004 to nine in fiscal 
year 2005 plus one SSBN Engineered Refueling Overhaul (ERO). Initial 
LCS and DD(X) platforms are funded from the RDT&E account. 
Additionally, the Navy's fiscal year 2005 spending plan completes the 
purchases of the last three DDG-51 Class ships for a total of 62 ships.
    Aviation Account.--The Department's fiscal year 2005 Budget request 
is structured to maintain the continued aviation superiority of the 
Navy and Marine Corps. The Naval aircraft procurement plan emphasizes 
replacing costly stand-alone legacy platforms with more efficient and 
capable integrated systems. The number of aircraft requested increases 
from 99 in fiscal year 2004 to 104 in fiscal year 2005 which includes 
five VXX helicopters. The budget continues to maximize the return on 
procurement dollars, primarily through the use of multi-year 
procurement (MYP) for the F/A-18E/F, the E-2C, the MH-60S and the KC-
130J programs. Development funding is provided for Joint Strike Fighter 
(JSF), MV-22, AH-1Z/UH-1Y, CH-53X, EA-18G and the Multi-mission 
Maritime Aircraft (MMA). The budget reflects an amended acquisition 
strategy for the V-22 to fund interoperability issues and cost 
reduction initiatives.
    Munitions Account.--During OEF and OIF, the Department expended 
less precision ordnance than projected. In this environment, the 
precision munitions purchases for fiscal year 2005 have been decreased 
for JDAMs and LGBs. This decrease in procurement provides no increased 
risk to the DON but merely reflects the lower utilization rates of 
expended ordnance.
    RDT&E Account.--An increase of $1.4 billion reflects our commitment 
to future transformational capabilities and technology insertion for 
major platforms including DD(X), LCS, CVN-21, V-22, Joint Strike 
Fighter (JSF), Advanced Hawkeye (AHE), and MMA. As demonstrated in 
recent operations, our Naval forces have been able to project 
overwhelming combat power because they are technologically superior. We 
continue to sustain a robust RDT&E effort as we transform the Navy and 
Marine Corps to the next generation of combat systems.
    Effectiveness and Efficiency.--A guiding principle in all we do is 
improving effectiveness to gain efficiency. The very best organizations 
are the most efficient organizations. If you are very efficient, you 
incorporate technology more quickly, you can develop new systems and 
capabilities, and you can bring them on line faster. Underlying all of 
the previous accounts and our execution of them is a continuing and 
concerted focus to achieve the most efficient organization. The Fleet 
Response Plan, TacAir Integration, and establishment of the Commander 
Naval Installations are a few of our initiatives to improve 
effectiveness within the Department.
    Our objective for the fiscal year 2005 Budget request is to move 
forward with Naval Power 21. This budget builds upon the foundation 
laid in the fiscal year 2004 program and reaffirms our commitment to 
remain globally engaged today while developing future technology to 
ensure our future military superiority. We are also continuing to 
emphasize the Department's commitment in the areas of combat 
capability, people, technology insertion and improved business 
practices. With our fiscal year 2005 Budget request we are committed to 
executing this vision.

            CY 2003 OPERATIONAL SUCCESSES (A NATION AT WAR)

    The extraordinary capability of our joint forces to project power 
around the world in support of vital national objectives was 
demonstrated over the last year. The maritime contribution to our 
success in the defeat of Saddam Hussein's Baathist forces, as well as 
in support of other joint engagements in the Global War on Terrorism, 
was significant. The rapid deployment and the warfighting capability of 
your Naval force in the liberation of Iraq provided an example of the 
importance of readiness and the responsive capabilities to support our 
Nation's objectives in an era of unpredictability and uncertainty. The 
demonstrated importance of our multi-dimensional Naval dominance, our 
expeditionary nature, our ability to deal with complex challenges, and 
adaptability of our forces are illustrative of the high level of return 
on investment of your Naval force.
    The accomplishments of this past year tell the Naval forces 
readiness story and its return on investment. The ships, aircraft, 
weapon systems, and readiness you funded provided our Sailors and 
Marines the tools necessary to remain the premiere maritime and 
expeditionary combat ready force. In preparing for and conducting 
operations in the Iraq Theater, speed of expeditionary operations and 
sustainment were important military competencies. Naval forces applied 
dominant, persistent, decisive and lethal offensive power in support of 
coalition warfighting objectives. The speed, agility, flexibility and 
persistence of Naval combat capability helped end a regime of terror 
and liberate a people during OIF.
    The past year has been one of significant accomplishment. Our men 
and women operating in the air, on and under the sea, and on the ground 
are at the leading edge in the Global War on Terrorism. As in OEF, we 
once again have demonstrated Naval forces' unique value in contributing 
to the security of our Nation and our friends and allies.
  --During OIF, more than 50 percent of our force was forward deployed. 
        The deployment of seven Carrier Strike Groups (CSGs) and eight 
        large deck amphibious ships proved our ability to be both a 
        surge and a rotational force demonstrating our flexibility and 
        responsiveness.
  --Navy and Marine Corps aircraft flew more than 8,000 sorties and 
        delivered nearly 9,000 precision-guided munitions.
  --Over 800 Tomahawk cruise missiles were fired from 35 coalition 
        ships, one-third of which were launched from submarines. The 
        highest number of TLAM's launched in one day occurred on March 
        21, 2003--nearly 400 Tomahawks.
  --Navy Special Forces, MCM, EOD and coalition counterparts cleared 
        more than 900 square miles of water, ensuring the safe passage 
        of critical humanitarian relief supplies to the Iraqi people.
  --Marines from the I Marine Expeditionary Force (I MEF), supported by 
        Sea Basing concepts, made one of the swiftest combat advances 
        in history. They fought 10 major engagements, destroying nine 
        Iraqi divisions in the 450 mile advance into Iraq.
  --Eleven Maritime Prepositioned Force (MPF) ships provided equipment 
        and sustainment for over 34,000 Marines and Sailors and 
        fourteen amphibious ships embarked and delivered another 12,000 
        Marines and Sailors and their equipment.
    Since the end of major combat operations, Naval forces have been 
instrumental in supporting the coalition's goals of security, 
prosperity and democracy in Iraq. Coalition maritime forces have 
diligently supported the United Nations Security Council Resolution 
1483. They have queried over 6,000 vessels, boarded close to 3,500 and 
diverted approximately 430. These forces have confiscated and returned 
to the Iraqi people approximately 60,000 barrels of fuel. Additionally, 
seaward protection of the Al Basara Oil Terminal (ABOT) is enabling the 
generation of critically needed oil revenue. Since re-opening, the ABOT 
has pumped 261,500,000 barrels of oil valued at over $7.5 billion.
    Navy Seabees and Marine Engineers, as the I MEF Engineer Group, 
undertook construction initiatives that built and repaired major 
roadways and bridges, and completed major utility restoration projects. 
In all, 150 projects valued at $7.1 million were completed.
    Naval Explosive Ordnance Disposal (EOD) forces are working with 
Army counterparts in support of the coalition forces and Iraqi Police 
and are collecting over 2,000 pounds of unexploded ordnance per week.

            NAVY AND MARINE CORPS TODAY (CURRENT READINESS)

    Today's Naval forces exist to control the seas, assure access, and 
project power beyond the sea to influence events and advance American 
interests. Navy and Marine Corps forces continue to lead the way to 
secure the peace by responding with speed, agility, and flexibility. 
The value of Naval forces continues to be demonstrated through the 
projection of decisive, persistent, joint power across the globe. The 
investment in training, maintenance, parts, ordnance, flying hours, 
steaming days, and combat ready days coupled with our forward presence 
and our ability to surge has positioned Naval forces as the most 
effective and efficient military force.
    Congress' investment in readiness over the past several years has 
paid large dividends for Naval forces during OIF. With combat forces 
operating in two fronts in the GWOT our readiness investments have 
resulted in enhanced Naval forces ready to strike on a moment's notice, 
anywhere, anytime. Our success in deploying 9 out of 12 aircraft 
carriers and 10 out of 12 big deck amphibious ships to major combat 
areas of operation in demanding environments is attributable to the 
continued improvements in current readiness.
    The Department is in the process of re-deploying Navy and Marine 
forces in preparation for Operation IRAQI FREEDOM II. Navy and Marine 
Forces will deploy in two seven-month rotations with the first 
beginning this month. This initial ground rotation will include about 
25,000 Marines, 3,500 Marine Reservists, over 5,000 active duty Navy 
and 800 Naval Reservists.
    Since the return of our forces from OIF we have invested heavily in 
constituting the Navy and Marine Corps Team for the next fight. 
Continued successful programmed investment will ensure we have the most 
capable forces to face the unique challenges ahead. The fiscal year 
2005 Budget continues a broad range of modernization and readiness 
initiatives for Naval forces.

Acquisition Programs
    The Fleet and Marine forces continue to take delivery of the most 
sophisticated weapon systems in the world. In 2003, the Navy launched 
the first of two new classes of ships, USS VIRGINIA (SSN 774) and USS 
SAN ANTONIO (LPD 17), commissioned the aircraft carrier USS RONALD 
REAGAN (CVN 76), and continued timely delivery of the ARLEIGH BURKE 
Class guided missile destroyers and F/A-18 E/F Super Hornets.
    We are continuing to build on previous budgets to ensure we equip 
and train our forces to help us continue to meet the challenges of the 
future. What the DON budget will buy to advance our vision in Naval 

Power 21:
    Shipbuilding.--The fiscal year 2005 to fiscal year 2009 
shipbuilding rate of 9.6 battle force ships per year is up from 8.4 
battle force ships per year for the same period in fiscal year 2004. 
The fiscal year 2005 Budget request closes the procurement gap and with 
the exception of a slight reduction in fiscal year 2006, provides an 
upward trend through the FYDP, procuring 17 battle force ships by 
fiscal year 2009. The fiscal year 2005 to fiscal year 2009 investment 
is an average of $13 billion per year in new construction. The fiscal 
year 2005 to fiscal year 2009 plan also procures three Maritime Pre-
positioned Force (Future) (MPF(F)) ships and a MPF(F) aviation variant. 
While our build rate drops to six in fiscal year 2006, this is a 
reflection of a shift to the next generation surface combatants and sea 
basing capabilities.
    The Navy has nine new ships and one SSBN refueling requested in the 
fiscal year 2005 budget, as well as substantial shipyard/conversion 
work. This investment includes:
  --3 DDG's ($3.4 billion)
  --1 VIRGINIA Class submarine SSN-774 ($2.5 billion)
  --1 LPD-17 ($967 million)
  --2 T-AKE ($768 million)
  --1 DD(X) ($221 million) (RDT&E funded)
  --1 Littoral Combat Ship (LCS) ($108 million) (RDT&E funded)
  --1 SSBN conversion/refueling ($334 million).
    Fiscal year 2005 marks the final year of DDG 51 procurement, 
bringing to closure a 10-ship fiscal year 2002 to fiscal year 2005 MYP 
contract awarded in fiscal year 2002. The Navy will move to the DD(X) 
and LCS hulls as quickly as possible. In addition to vitally needed new 
capability, these ships will increase future shipbuilding rates. 
Investment in these platforms will also help maintain critical 
industrial bases.
    The Department is modernizing its existing submarine with the 
latest technology while, at the same time, continuing to replace aging 
fast attack submarines with the new VIRGINIA Class submarine. The 
VIRGINIA Class design is complete and the lead ship (SSN 774), will 
commission on schedule. Fiscal year 2004 funded the first of five 
VIRGINIA Class submarines under a MYP contract. The second submarine of 
the MYP contract is funded in fiscal year 2005. Consistent with 
Congressional approval of five year-five ship MYP authority (fiscal 
year 2004 to fiscal year 2008) for SSN 774, the Navy is maintaining one 
submarine per year through fiscal year 2008.
    The DON accelerated one LPD from fiscal year 2006 to fiscal year 
2005 leveraging fiscal year 2004 advanced procurement resources 
provided by Congress. The lead ship detail design has been completed 
and lead ship construction is over 80 percent complete with a 
successful launch in July 2003. Production effort is focused on a 
November delivery. The LPD 17 Class ship represents our commitment to a 
modernized expeditionary fleet.
    The fiscal year 2005 Budget request also provides for procurement 
of two auxiliary cargo and ammunition ships (T-AKEs) in the National 
Defense Sealift Fund. These will be the seventh and eighth ships of the 
class. Lastly, the fiscal year 2005 Budget request accelerates the lead 
MPF(F) from fiscal year 2008 to fiscal year 2007 to reflect an emphasis 
on sea basing capabilities.
    DD(X) is a centerpiece to the transformational 21st Century Navy 
and will play a key role in the Naval Power 21 strategic concept. This 
advanced warship will provide credible forward Naval presence while 
operating independently or as an integral part of Naval expeditionary 
forces. The DD(X) lead ship design and initial construction contract 
will be awarded in fiscal year 2005.
    Conversion and Modernization.--The fiscal year 2005 Budget request 
proposes advanced procurement funds for the USS CARL VINSON (CVN 70) 
Refueling Complex Overhaul (RCOH), now scheduled to begin in fiscal 
year 2006. CVN 70 has sufficient reactor fuel for one additional surge 
deployment.
    Funding for the TICONDEROGA Class cruiser modernization effort 
began in fiscal year 2004 and continues in fiscal year 2005. The 
cruiser modernization effort will substantially increase the service 
life and capability of CG 47 Class ships. The conversion will reduce 
combat system and computer maintenance costs, replace obsolete combat 
systems, and extend mission relevance service life. Fiscal year 2005 
will fund advanced procurement items for the first cruiser 
modernization availability in fiscal year 2006.
    Funding is included in fiscal year 2005 to complete the conversion 
of the third and the overhaul of the fourth hull of four OHIO Class 
SSBNs to SSGNs. The SSGN conversion provides a covert conventional 
strike platform capable of carrying up to 154 Tomahawk missiles. The 
fiscal year 2006 Budget request will complete the conversion of the 
last SSGN. All four of these transformed platforms will be operational 
by CY 2007.
    Aircraft Production.--Consistent with the fiscal year 2004 program, 
the fiscal year 2005 Budget request reflects continued emphasis on re-
capitalizing our aging aircraft. Our focused efforts to aggressively 
``shore up'' operational readiness by providing requisite funding for 
our Flying Hour Program, Ship Depot Maintenance, Ship Operations, and 
Sustainment, Re-capitalization and Modernization accounts continue. 
While we continue to make substantial investments in readiness accounts 
and working capital accounts, we identified the resources to procure 
104 aircraft in fiscal year 2005. The Department's aircraft procurement 
plan emphasizes replacing costly legacy platforms with more efficient 
and capable integrated systems. This has resulted in significant 
investments in transformational aircraft and program investments across 
the spectrum of aviation capabilities. Such valuable investments in 
more capable aircraft have allowed a reduction of 40 aircraft from 
fiscal year 2005 to fiscal year 2009.
    During the past year, we continued to enjoy the fruits of our 
aviation investments with the successful first deployment and 
operational employment of the F/A-18 E/F Super Hornet in support of 
OIF. Highly praised for tactical capability and platform reliability, 
the F/A-18 E/F program has been funded to provide a transformational 
radar, helmet mounted sight, advanced targeting pod and integrated 
weapons system improvements. Additionally, we recently awarded a second 
MYP contract that includes the EA-18G airframe to replace the Navy's 
aging EA-6B beginning in fiscal year 2009.
    All helicopter missions continue to be consolidated into the MH-60R 
and MH-60S airframes. These helicopter platforms are the cornerstone of 
Navy helicopter concept of operations designed to support the CSG and 
ESG in various mission areas.
    The Department significantly increases the funding requested for 
MMA. MMA will provide the Navy with strategic blue water and littoral 
capability by re-capitalizing the P-3 Maritime Patrol Aircraft broad 
area anti-submarine, anti-surface, maritime and littoral Intelligence, 
Surveillance and Reconnaissance (ISR) capability.
    Progress continues towards delivering a high-quality aircraft to 
the Marines and Special Forces including increasing capability and 
interoperability of the aircraft, investing to reduce production costs, 
and maximizing production efficiency. Since the resumption of V-22 
flight-testing, in May 2002, the V-22 is satisfying the threshold 
levels for all its key performance parameters and reliability and 
maintainability measures. V-22 test pilots have recorded more than 
1,100 flight hours since that time. The V-22 program will continue Low 
Rate Initial Production (LRIP) until the Milestone III decision 
expected late CY 2005.
    The Department will continue to procure the AH-1Z/UH-1Y. These 
aircraft meet the Marine Corps' attack and utility helicopter 
requirements by providing increased aircraft agility, airspeed, range, 
and mission payload. They provide numerous capability improvements for 
the Marine Corps, including increased payload, range and time on 
station, improved sensors and lethality, and 85 percent component 
commonality. The KC-130J MYP is funded and supported in this budget. 
The advantages include an all digital cockpit that reduce aircrew 
manning requirements, a new propulsion system that provides more cargo 
capability, and increased fuel delivery.
    Mine Warfare Programs.--In keeping with the Department's goal to 
achieve an organic mine warfare capability in 2005, the budget request 
supports the development and procurement of five organic airborne 
systems integrated into the MH-60S helicopter: the AQS-20A Mine-hunting 
System, the Airborne Laser Mine Detection System (ALMDS), the Airborne 
Mine Neutralization System (AMNS), the Rapid Airborne Mine Clearance 
System (RAMICS), and the Organic Airborne and Surface Influence Sweep 
(OASIS) system. The fiscal year 2005 Budget request also supports the 
development and procurement of the Remote Minehunting System (RMS) 
integrated into DDG-51 hulls 91-96, and the Long-term Mine 
Reconnaissance System (LMRS) integrated into SSN-688. The ALMDS, AQS-
20A, and RMS will reach an initial operating capability in fiscal year 
2005. The budget request supports the transition of assault breaching 
technologies into acquisition, which will provide a capability to 
detect, avoid, and defeat mines and obstacles in the surf and craft 
landing zones. In fiscal year 2005, we will continue with our Surface 
Mine Countermeasures (MCM) mid-life upgrade plan. We have initiated a 
product improvement program for the engines of the MCM-1 AVENGER Class 
mine countermeasure ships to enhance their reliability and 
availability. We are upgrading our minesweeping capability with new 
acoustic generators and magnetic sweep cables, and have programmed 
resources to replace our maintenance-intensive mine neutralization 
system (AN/SLQ-48) with an expendable mine neutralization system.
    Munitions.--The Standard Missile (SM) program replaces ineffective, 
obsolete inventories with the procurement of more capable SM-2 Block 
IIIB missiles. The Rolling Airframe Missile (RAM) program continues 
procurement of the improved guided missile launching system and the 
upgraded Block I missile, providing an enhanced guidance capability 
along with a helicopter, air and surface mode. In addition to SM and 
RAM, the fiscal year 2005 Budget request provides funding to continue 
production of the Evolved Sea Sparrow Missile (ESSM) and will support 
the first Full Rate Production (FRP) contract award of 82 United States 
and 288 international missiles. We have committed to replenish our 
precision munitions inventories and to do so, we will utilize a five-
year MYP to maximize the quantity of Tomahawk missiles procured.
    Marine Corps Expeditionary Capability.--The Expeditionary Fighting 
Vehicle (EFV), formerly the Advanced Amphibious Assault Vehicle (AAAV), 
will provide surface assault elements the requisite operational and 
tactical mobility to exploit opportunities in support of joint 
operations. The EFV will be capable of carrying a reinforced Marine 
rifle squad at speeds in excess of 20 nautical miles per hour from over 
the horizon in sea state three. Once ashore, the EFV will provide 
Marine maneuver units with a world-class armored personnel carrier 
designed to meet the threats of the future. Production representative 
vehicle procurement occurred in fiscal year 2003 and will deliver in 
fiscal year 2005. IOC will be released in fiscal year 2008 and FOC in 
2018.
    Also critical to Marine Corps transformation efforts is the Joint 
Lightweight 155 mm Howitzer (LW-155). This system will enter FRP in 
fiscal year 2005, and our budget includes a request for a Joint Marine 
Corps--Army MYP. Another transformational component of the fiscal year 
2005 Budget, the High Mobility Artillery Rocket System (HIMARS), will 
continue LRIP delivery.
Alignment
    The DON is transforming to dramatically reduce operating and 
support costs. Changes will embrace efficiency and result in increased 
effectiveness and a higher readiness standard in concert with the 
overarching goals of the President's Management Agenda. We have made 
several fleet and shore organizational changes that have shown great 
potential in maximizing the way forces can be employed and supported.
    Fleet Response Plan (FRP).--FRP provides a model for a new joint 
presence concept that will transform how the U.S. military is employed. 
It refines maintenance, training, and readiness processes in order to 
increase the number of combat ready ships and aircraft throughout the 
Fleet. FRP ensures six employable Carrier Strike Groups (CSGs) always 
are ready to respond to a crisis, plus two additional CSGs capable of 
deploying to the fight within 90 days of notification (``6+2''). With 
the implementation of FRP, half of the Fleet either could be deployed 
or postured to surge, able to arrive swiftly with the overpowering 
combat power needed either to deter or defeat the hostile intentions of 
an adversary, or to win decisively in combat against a significant 
enemy.
    TacAir Integration.--The Navy and Marine Corps Team embarked on a 
Tactical Aircraft Integration plan that will enhance our core combat 
capabilities and provide a more potent, cohesive, and affordable 
fighting force. The culmination of a long-term effort to an increased 
level of readiness from the resources given to us, TacAir integration 
seeks to generate a greater combat capability from Naval TacAir. 
Through TacAir integration, the Department will reduce the number of 
tactical aircraft (JSF and F/A-18) from 1,637 to 1,140 aircraft by 
2021. This integration will provide increased combat capability forward 
and is in concert with enhanced sea basing concepts. A cornerstone of 
this plan is the global sourcing of the Department's TacAir assets and 
the funding and maintenance of legacy aircraft at the highest level of 
readiness until they are replaced by the JSF and the Super Hornet (F/A-
18 E/F).
    Training Resource Strategy (TRS).--TRS was developed to provide 
high quality training to our deploying combat forces. The training of 
our high technology force in modern warfare has shifted to a network of 
existing ranges and installations stateside. Fully implemented, TRS has 
resulted in more training options, reduced pre-deployment training 
transit time, and has increased productive training days. The USS 
ENTERPRISE was the first CSG to deploy under the TRS, utilizing six 
training ranges, each unique to the successful completion of her 
qualification. TRS supports the FRP and will quickly respond to surge 
requirements by delivering and bringing to bear a capable fighting 
force.
    Current and future readiness requirements underscore the continued 
need for realistic training and maximized use of training and testing 
ranges. While we continue to find ways to enhance readiness through 
increased use of information technology and simulation, live training 
on actual ranges and training areas remains critical during the 
essential phases of the training cycle. Maintaining training realism 
and access to these ranges has been of keen concern to our Naval 
forces. We continue to balance the need to maintain a ready and capable 
force with the need to be sensitive to environmental and encroachment 
issues.
    For the last two years, Congress has addressed critical Navy needs 
regarding encroachment. Readiness-specific changes to the Marine Mammal 
Protection Act (MMPA), Endangered Species Act, and Migratory Bird 
Treaty Act will help the Navy meet training and operational needs. The 
Navy and Marine Corps has and will continue to demonstrate leadership 
in both its military readiness role and as an environmental steward of 
the oceans we sail and the lands we train upon. We are pursuing 
opportunities for acquiring land buffers adjacent to our training 
lands. We are implementing the Integrated Natural Resources Management 
Plans prepared under the Sikes Act to address endangered species 
concerns in lieu of designating critical habitats. We will continue 
operational actions to minimize harm to marine mammals, as we continue 
investments in research into marine mammal biology and behaviors. The 
Marine Mammal Protection Act is due for reauthorization in this 
legislative cycle. To maintain our military readiness, your support is 
necessary to retain the proper balance between environmental protection 
and military readiness during the reauthorization debate.
    Carrier Strike Group (CSG)/Expeditionary Strike Group (ESG).--CSG 
alignment is complete and the first Pacific Fleet Expeditionary Strike 
Group (ESG-1), centered on the USS PELELIU Amphibious Ready Group and 
the embarked Marines of the 13th Marine Expeditionary Unit (Special 
Operations Capable), is completing an eight month deployment. The Navy 
deployed an Atlantic Fleet ESG, the USS WASP Amphibious Ready Group, 
last month.
    The ESG adds to the ARG/MEU, a robust strike, anti-air, anti-
surface, and anti-subsurface capability of a cruiser, destroyer, 
frigate and attack submarine and for the first time, the Advanced 
Swimmer Delivery System (ASDS). These combined capabilities give the 
Combatant Commander a wider variety of options and enables independent 
operations in more dynamic environments.
    Vieques/NSRR closure.--The former training ranges on Vieques have 
been closed and the property has been transferred to the Department of 
the Interior (DOI), Fish and Wildlife Service. We have active clean-up 
and range clearance programs underway at disposal sites on both East 
and West parcels. We are working with the appropriate agencies to 
negotiate a Federal Facilities Agreement governing clean-up activities. 
We are refining costs to complete clean-up estimates for range areas 
and resolve litigation issues filed by the residents of Vieques. We 
will close Naval Station Roosevelt Roads by March 31, as directed by 
the Fiscal Year 2004 Defense Appropriations Act. Naval Activity Puerto 
Rico will serve as the caretaker organization following operational 
closure. Puerto Rico has established a Local Redevelopment Authority, 
and we will proceed quickly to property disposal.
    Commander Navy Installations Command (CNI).--We have aligned all 
Navy shore installations under a single command that will allow us to 
make better decisions about where to invest limited funds. By 
consolidating all base operations worldwide and implementing common 
support practices the Navy expects to save a substantial amount of 
money over the next six years.
Communications
    FORCEnet will provide the overarching framework and standard 
communication mechanism for future combat systems. Navy Open 
Architecture, in conjunction with the FORCEnet standards, will provide 
a common open architecture for warfare systems aboard surface, 
subsurface and selected airborne platforms such as the E-2C Advanced 
Hawkeye. A critical subset application already being procured is the 
Cooperative Engagement Capability (CEC), which will be installed on 38 
ships and 4 squadrons (16 aircraft) by fiscal year 2006. CEC includes 
robust data communication capability among cooperating units in support 
of sensor netting. In the future, CEC will also include a Joint Track 
Manager to create a single integrated air picture of sufficient quality 
to support fire control application for each combat control system.
    Navy Marine Corps Internet (NMCI) is operational and providing 
commercial IT services for more than 300,000 DON employees and two 
Combatant Commanders. To date, we have ordered 330,000 of the expected 
345,000 fiscal year 2004 seats. Implementing NMCI has enabled us to 
increase the security posture of our networks and has given 
unprecedented visibility into IT costs. As we roll out NMCI we are 
doing away with the over 1,000 separate networks that the Navy used to 
run. We have reduced the number of legacy applications in the Navy's 
inventory from 67,000 to about 31,000 and begun further efforts to 
reduce this number to around 7,000--an almost 90 percent reduction. As 
we proceed with NMCI, we anticipate other opportunities for progress in 
areas such as enterprise hosting, software release management, IT 
resource analysis and technology insertion.
    We have designed the NMCI Operational Evaluation to provide 
critical information necessary to determine how well NMCI is supporting 
mission of the user and to judge how well service level agreement 
metrics measure the service. As part of the spiral development process, 
NMCI worked with the testing community to segment the testing effort 
into a local evaluation of Network Services and a higher-level 
assessment of other Enterprise Services. Testing was completed December 
15, 2003; the Final Report is due in April.

       NAVY AND MARINE CORPS IN TRANSFORMATION (FUTURE READINESS)

    The Chief of Naval Operations and Commandant of the Marine Corps 
consider the culture of transformation integral to the development of 
future combat capabilities. Innovative capabilities will result in 
profound increases in military power, maintaining the Navy and Marine 
Corps Team as the preeminent global Naval power. We are now at the 
point of delivering on many of our transformational goals.
    We have embraced a vision in how Naval forces will contribute to 
joint warfighting in the future. This vision can only be implemented 
with the support of Congress. This section describes the principal 
components of Naval Vision 21.

Acquisition Programs
    The fiscal year 2005 Budget request supports continued funding for 
accelerated development of several critical technologies into the CVN 
21 lead ship. This transformational 21st Century ship, the future 
centerpiece of the Navy Carrier Strike Group, will bring many 
significant changes to the Fleet. These changes include a new 
electrical power generation and distribution system, the electro-
magnetic aircraft launching system, a new enlarged flight deck, weapons 
and material handling improvements, and a crew reduction of at least 
800. Construction of the CVN 21 remains on track to start in fiscal 
year 2007.
    Critical components of Sea Power 21 are the DD(X) and LCS. These 
ships, designed from the keel up to be part of a netted force, are the 
centerpieces of the 21st Century surface combatant family of ships. 
DD(X) will be a multi-mission combatant tailored for land attack. LCS 
is envisioned to be a fast, agile, relatively small and affordable 
combatant capable of operating against anti-access, asymmetric threats 
in the littorals. The FYDP includes $2.76 billion to develop and 
procure modular mission packages to support three primary missions of 
mine countermeasures, anti-submarine warfare, and anti-terrorism and 
force protection. Detail design and construction of the first LCS is 
planned to begin in fiscal year 2005.
    The V-22 Osprey, a joint acquisition program, remains a top 
aviation acquisition priority. The V-22's increased capabilities of 
range, speed, payload and survivability will generate truly 
transformational tactical and operational opportunities. With the 
Osprey, Naval forces operating from the sea base will be able to take 
the best of long-range maneuver and strategic agility, and join it with 
the best of the sustainable forcible-entry capability. LRIP will 
continue until the Milestone III decision is made late CY 2005. We 
expect to move from LRIP to FRP in CY 2006.
    Another important joint program with the Air Force, the JSF has 
just completed the second year of a 10-11 year development program. The 
program is working to translate concept designs to produce three 
variants. This is a complex process requiring more initial development 
than we predicted. JSF development is experiencing typical challenges 
that affect System Development and Demonstration (SDD) program schedule 
and cost. LRIP was deferred and research and development increased to 
cover SDD challenges. The current issues are solvable within the normal 
process of design fluctuation, and have taken prudent steps necessary 
to meet these challenges.
    The plan to re-capitalize the P-3 Maritime Patrol Aircraft with the 
MMA was further refined this past year in collaboration with the Broad 
Area Maritime Surveillance-Unmanned Aerial Vehicle or BAMS-UAV program. 
With a MMA IOC of fiscal year 2013, we also developed a robust 
sustainment plan for the current P-3 that includes special structural 
inspections and kits that extend the platform service life by a minimum 
of 5,000 hours. Additionally, the Department has decided to join the 
Army's Aerial Common Sensor (ACS) program as the replacement platform 
for the aging EP-3.
    In order to maintain Electronic Warfare (EW) superiority, the 
Department is pursuing both upgrades in current Airborne Electronic 
Attack (AEA) capability as well as a follow-on AEA aircraft to replace 
the aging EA-6B. The Navy has selected the EA-18G as its follow-on AEA 
aircraft and will begin to replace Navy EA-6Bs in fiscal year 2009.
    Continuing an emphasis on transformational systems, the Department 
has budgeted R&D funding through the FYDP for several aviation 
programs. The Advanced Hawkeye (previously known as E-2 Radar 
Modernization Program (RMP)) is funded through the FYDP with the first 
production aircraft in fiscal year 2009. A fully automated digital 
engine control and improved generators have been incorporated into the 
aircraft to improve performance and reliability. Additionally, the 
Department has included funding to support procurement of required 
capabilities in the Fleet, such as Advanced Targeting Forward Looking 
Infra-Red and the Joint Helmet Mounted Cueing Systems.
    The fiscal year 2005 Budget continues to demonstrate the 
Department's commitment to developing, acquiring and fielding 
transformational UAV technologies for Intelligence, Surveillance and 
Reconnaissance and tactical missions. The budget includes funding for a 
second Joint Unmanned Combat Air System (J-UCAS) demonstrator and 
continues development of the BAMS. The Navy's Unmanned Combat Air 
Vehicle (UCAV-N) is incorporated into J-UCAS under a DOD joint program 
office.
    Helicopters.--The fiscal year 2005 Budget request includes an 
incremental approach to developing a replacement for the current aging 
Presidential helicopter. The Presidential Helicopter Replacement 
Aircraft (VXX) will enhance performance, survivability, communications, 
navigation and executive accommodations inherent in the existing fleet 
of Presidential airlift helicopters.
    Ballistic Missile Defense.--The fielding of a National Ballistic 
Missile Defense capability is critical to protecting the U.S. homeland 
against the evolving ballistic missile threat. As part of the 
President's Directive to accelerate the fielding of a BMD Initial 
Defensive Operations capability by September 2004, the Navy will 
deploy, on a continuous basis, a DDG to serve as a Long-Range 
Surveillance and Tracking (LRS&T) platform. Additionally, Aegis 
Ballistic Missile Defense (ABMD) continues its development and testing 
of the SM-3 missile in order to support deployment of a sea-based mid-
course engagement capability by December 2005. Since November 2002, 
ABMD had two of three successful intercepts with the SM-3 Block 
missile. The Navy is also evaluating the benefits associated with 
developing a Sea-based Terminal Missile Defense capability. A viable 
regional and terminal sea based ballistic missile defense system is 
important to ensure the safety of U.S. forces and the flow of U.S. 
forces through foreign ports and air fields when required.
    FORCEnet/Navy Open Architecture/Space/C\4\I.--FORCEnet is the 
operational construct and architectural framework for Naval warfare in 
the Information Age which integrates warriors, sensors, networks, 
command and control, platforms and weapons into a networked, 
distributed combat force, scalable across the spectrum of conflict from 
seabed to space and sea to land. FORCEnet is the core of Sea Power 21 
and Naval Transformation, and is the USN/USMC vehicle to make Network 
Centric Warfare an operational reality. It is being implemented in 
coordination with transformation initiatives in the Army, Air Force, 
and Coast Guard--enhancing efficiency, joint interoperability, and 
warfighting effectiveness. DD(X), LCS, CVN-21, SSGN, VIRGINIA Class 
SSN's, SAN ANTONIO Class LPD's, and MMA are examples of platforms that 
are being designed from inception to perform in the netted environment 
of the future. Systems being procured and produced under the FORCEnet 
concept are CEC, Naval Fires Network (NFN) and Airborne/Maritime/Fixed 
(AMF) Joint Tactical Radio System (JTRS).
    The Navy is engineering a single open architecture for all warfare 
systems called Navy Open Architecture. Future systems will be designed 
to this architecture while legacy systems will be migrated to that 
single architecture where it is operationally and fiscally feasible. 
This integrates the Command and Control and Combat systems information 
flow using open specifications and standards and open architecture 
constructs, to support FORCEnet and other global information networks. 
Further, this significantly reduces the development and maintenance 
costs of computer programs. The Navy and its Joint Service partners 
continue to jointly engineer the Joint Track Manager and plan to 
implement it into Navy Open Architecture as the Open Architecture Track 
Manager. This joint focused application will be populated in all Naval 
warfare systems that conform to the single OA warfare system 
architecture.
    The Navy and Marine Corps continues to pursue the maximum use of 
space to enhance our operational capabilities. We look to leverage 
existing systems and rapidly adapt emerging technology. For example, 
the Navy has long been the leader in ultrahigh frequency (UHF) 
satellite communications (SATCOM). The Navy is the executive agent for 
the next generation UHF SATCOM system. This program, the Mobile Users 
Objective System, will be the system used by all DOD components for 
their UHF communications needs.
    Sea Basing and Strategic Sealift.--Sea Basing is a transformational 
operating concept for projecting and sustaining Naval power and a joint 
force, which assures joint access by leveraging the operational 
maneuver of sovereign, distributed, and networked forces operating 
globally from the sea.
    The Sea Basing concept has been endorsed by the other military 
services and its importance was confirmed when DOD announced a Joint 
Sea Basing Requirements Office will soon be established. Central to the 
staying power of Naval forces will be the Maritime Pre-positioned 
Force-Future MPF(F). The fiscal year 2005 Budget accelerates the lead 
MPF(F) from fiscal year 2008 to fiscal year 2007 to reflect an emphasis 
on Sea Basing capabilities.

Infrastructure
    Prior Rounds of Base Realignment and Closure (BRAC).--The 
Department of the Navy completed the closure and realignment of 
activities from the 1988, 1991, 1993 and 1995 rounds of BRAC. All that 
remains is to complete the environmental cleanup and property disposal 
on all or portions of 23 of the original 91 bases. We have had 
significant successes on both fronts. We are successfully using 
property sales as a means to expedite the disposal process as well as 
recover the value of the property for taxpayers. We sold 235 acres last 
year at the former Marine Corps Air Station, Tustin, California on the 
GSA internet web site for a net $204 million. We sold 22 acres at the 
former Naval Air Facility Key West, Florida in January 2004 for $15 
million. The City of Long Beach, California opted to pre-pay its 
remaining balance on a promissory note, and gave us $11 million to 
conclude its purchase of the former Naval Hospital Long Beach, 
California. We are applying all funds to accelerate cleanup at 
remaining prior BRAC locations. More property sales are planned that 
will be used to finance remaining prior BRAC cleanup actions. Of the 
original 161,000 acres planned for disposal from all four prior BRAC 
rounds, we expect to have less than seven percent (or about 11,000 
acres) still to dispose by the end of this fiscal year.
    BRAC 2005.--The Fiscal Year 2002 Defense Authorization Act 
authorized another round of BRAC in 2005. We will scrupulously follow 
the process laid out in the law. We will treat each base equally and 
fairly, whether considered for closure or realignment in the past or 
not. In no event will we make any recommendations concerning any 
closures or realignment of our bases until all the data has been 
collected, certified and carefully analyzed within the overall BRAC 
2005 statutory framework.
    BRAC 2005 gives us the opportunity to transform our infrastructure 
consistent with the significant changes that are, and will be, 
happening with the transformation of our force structure. The Secretary 
of Defense is leading a process to allow the military departments and 
defense components to closely examine joint use opportunities. Military 
operations in Afghanistan and Iraq demonstrated the force multiplier 
benefits of joint operations. We will apply those approaches to our 
shore infrastructure. We will look beyond the traditional stovepipes of 
Navy bases and Marine Corps bases in BRAC 2005 and take a joint 
approach matching military requirements against capacity and 
capabilities across the Department of Defense.
    The added benefit is the opportunity to eliminate excess capacity 
and seek greater efficiencies in our shore infrastructure. Continuing 
to operate and maintain facilities we no longer need diverts precious 
resources from our primary mission. Resources freed up as a result of 
this process will be used to re-capitalize our ships, aircraft, 
equipment and installations for the future.
    Better Business Practices.--The DON has implemented several 
continuous improvement initiatives consistent with the goals of the 
President's Management Agenda that enable realignment of resources in 
order to re-capitalize.
    Specific initiatives include: converging our Enterprise Resource 
Planning (ERP) pilots into an end-to-end operating system; 
incorporating proven world class efficiency methodologies such as Six 
Sigma and Lean concepts into our day-to-day operations; and 
implementing additional Multi-Ship/Multi-Option (MSMO) repair contracts 
and Performance Based Logistics (PBL) agreements. Of note, Lean 
efficiency events that concentrate on increasing velocity and 
productivity in our Aviation Intermediate Maintenance Departments 
(AIMD) were initiated on USS GEORGE WASHINGTON (CVN 73) and USS HARRY 
TRUMAN (CVN 75). The outcome of these events will allow us to improve 
our afloat AIMD processes and influence our future manning requirements 
on CVN 21 Class carriers. These are the first Lean events conducted on 
Navy warships.
    These continuous improvement initiatives enable us to increase our 
combat capabilities with the expectation that we become more efficient, 
agile, flexible and reliable at a reduced cost of doing business.

           OUR TOTAL FORCE (SAILORS, MARINES, AND CIVILIANS)

    Today more than other time in recent history our Sailors and 
Marines have a greater understanding and appreciation for service to 
country. In time of war they have shown the Nation the highest 
standards of military professionalism and competence. The heaviest 
burdens in our war on terror fall, as always, on the men and women of 
our Armed Forces. We are blessed as a Nation to have a 228-year legacy 
where magnificent men and women volunteer to protect and defend 
America. Sailors and Marines--along with our civilian workforce--remain 
the strong and steady foundation of our Naval capabilities.

Active Duty
    The Navy and Marine Corps again met enlisted recruiting and 
accession goals in 2003, and continue to attract America's finest young 
men and women to national service. The Navy achieved recruiting goals 
for a fifth consecutive year and in February completed the 31st 
consecutive month of attaining goals for accessions and new contracts. 
The Marine Corps met its eighth year of meeting monthly and annual 
enlisted recruiting goals and its thirteenth year of success in officer 
recruiting. Both Services are well positioned for success in meeting 
2004 officer and enlisted accession requirements.
    During 2003, the Navy implemented a policy requiring 94 percent of 
new recruits be high school diploma graduates (HSDG), and Navy 
recruiters succeeded by recruiting 94.3 percent HSDG. Navy Recruiting 
continued to seek the best and brightest young men and women by 
requiring that 62 percent of recruits score above 50 on the AFQT; Navy 
recruiters excelled with a rate of 65.7 percent. Navy recruiting also 
sought to increase the number of recruits with college experience in 
fiscal year 2003, recruiting more than 3,200 applicants with at least 
12 semester hours of college.
    The Marine Corps accessed 97.1 percent High School Diploma 
Graduates in fiscal year 2003, exceeding their annual goal of 95 
percent and ensured the Marine Corps recruited the highest quality 
young men and women with 70.3 percent of Marine Corps recruits scoring 
over 50 on the AFQT. This achievement exceeded their annual goal of 60 
percent of accessions scoring above 50 on the AFQT. The Marine Corps 
began fiscal year 2004 with a 58.8 percent starting pool in the Delayed 
Entry Program and has continued to achieve its monthly recruiting goals 
during the second quarter of fiscal year 2004. The Marine Corps Reserve 
achieved fiscal year 2003 recruiting goals, assessing 6,174 Non-Prior 
Service Marines and 2,663 Prior Service Marines. Navy Recruiting was 
also successful in Naval Reserve recruiting by exceeding the enlisted 
goal of 12,000 recruits for fiscal year 2003.
    Retention.--Retaining the best and brightest is as important as 
recruiting them. Military compensation that is competitive with the 
private sector provides the flexibility required to meet that 
challenge.
    The Marine Corps has achieved first-term reenlistment goals over 
the past nine years. They have already achieved 79.8 percent of their 
first term retention goal and 59.8 percent of second tour and beyond 
goals. Officer retention is at a 19 year-high.
    Retention in the Navy has never been better. For the third straight 
year, we experienced the highest retention in history. Retention goals 
for all categories were exceeded. As a result, at-sea personnel 
readiness is exceptional and enlisted gaps at sea are at an all-time 
low.
    Notwithstanding our current success in retention, we are constantly 
on alert for indicators; trends and developments that might affect our 
ability to attract and retain a capable, trained and talented 
workforce. We are aware that we need to compete for the best, and 
ensure continuing readiness, through a variety of means including 
effective compensation and bonus programs.
    The Selective Reenlistment Bonus (SRB) remains the primary tool 
available to the Navy and Marine Corps for retaining our best and 
brightest enlisted personnel. SRB represents an investment in the 
future of our Navy and Marine Corps. The Department of the Navy has a 
proven track record in the judicious management of this program and 
other continuation pays used to keep the right force mix to meet the 
nations requirements. Your continued support of the SRB program as a 
proven and highly effective tool is important and appreciated.
    Attrition.--Navy leaders reduced attrition 10 percent from a year 
ago and 33 percent from fiscal year 2000, while Marine Corps First-Term 
Post Boot Camp attrition continues the favorable downward trend begun 
in fiscal year 1999. For the Marine Corps, fiscal year 2003 attrition 
was at a historical low, down 1,773 from the previous year. This drop 
is due largely to a reduction in misconduct and incidents of desertion.
    The Department's ``Zero Tolerance'' drug-use policy continues to be 
strictly enforced, widely disseminated, and supported throughout the 
leadership. Through a comprehensive random drug testing program, 
educational programs, and Command support, the Navy and Marine Corps 
Team achieved an 18 percent reduction in attrition even while testing 
rates increased.
    Training.--The Navy and Marine Corps have defined their respective 
strategies for advancing into the future as part of a Joint Force. The 
Services have developed strategies that clearly define how Navy and 
Marine forces of the 21st Century will be equipped, trained, educated, 
organized and used in our continued efforts to control the seas, to 
project American military influence abroad, and to protect our borders.
    Marine Corps' Strategy 21 defines as its vision and goal the 
development of enhanced strategic agility, operational reach and 
tactical flexibility and enabled joint, allied and coalition 
operations.
    Navy's Sea Power 21 defines its commitment to the growth and 
development of its Service members. Sea Warrior is the ``people'' part 
of Sea Power 21. Its focus is on growing individuals from the moment 
they walk into a recruiting office through their assignments as Master 
Chiefs or Flag Officers, using a career continuum of training and 
education that gives them the tools they need to operate in an 
increasingly demanding and dynamic environment. Transformation for the 
future, leveraging technology and tapping into the genius of our people 
to make them more efficient and effective--creating a single business 
process for the range of human resource management activities is 
exactly what Sea Warrior is all about. Our goal remains attracting, 
developing, and retaining the more highly skilled and educated 
workforce of warriors that will lead the 21st Century Navy.

Reserves
    Reserves remain an integral part of our Navy and Marine Corps Team. 
The Department of Defense is undergoing a transformation to a more 
responsive, lethal and agile force based on capabilities analysis 
rather than threat analysis. Last July, Secretary Rumsfeld issued a 
memorandum, Rebalancing Forces, in which he directed the Services to 
promote judicious and prudent use of rebalancing to improve readiness 
of the force and to help ease stress on units and individuals. Three 
areas of focus of the Services are: Enhance early responsiveness; 
resolve stressed career fields; and employ innovative management 
practices.
    The Navy recently completed a study focused on redesigning the 
Naval Reserve so that it is better aligned with, and operationally 
relevant to, active forces. Working groups have been chartered to 
implement key points of the study. Implementation has commenced and 
will continue through this year and next. The three main areas of focus 
are Personnel Management, Readiness and Training, and Organizational 
Alignment. The Navy is transforming the Naval Reserve so that it is 
fully integrated with active forces. Reservists are shifting away from 
thinking of ``Naval Reserve requirements'' to ``Navy requirements''--a 
shift that includes goals, capabilities and equipment. The Navy mission 
is the Naval Reserve mission. One Navy, one team, is the message.
    Naval and Marine Corps reservists are filling critical joint and 
internal billets along with their active counterparts. Naval and Marine 
Corps Reserve mobilization is a requirements-driven evolution and 
reservists, trained and ready, are making significant contributions. 
While the numbers of mobilized reservists can fluctuate as GWOT 
requirements dictate, our objective is to keep the number of mobilized 
personnel at a minimum.
    Since September 11, 2001, the Navy has mobilized over 22,000 
reservists with a peak of just over 12,000 during OIF. This is from a 
Selected Reserve population of just over 87,000. Mobilized commissioned 
Naval units include Coastal Warfare, Construction Battalion and 
Aviation communities, while individuals were mobilized primarily from 
Security Group, Naval Intelligence, Law Enforcement and Physical 
Security augment units. We anticipate a steady state of approximately 
2,500 mobilized Naval Reservists this year.
    The Marine Corps has mobilized over 22,000 reservists from an 
authorized Selected Reserve end strength of 39,600 and just over 3,500 
from the Individual Ready Reserve. Currently mobilized reservists 
number just under 6,500. With OIF II requirements, the number of 
mobilized Marine Reservists is expected to increase by approximately 
7,000. OIF II Marines will deploy in two rotations of approximately 
seven months each, augmenting Marine Corps capabilities in Infantry, 
Armor, Aviation, Command, Control, Computers and Intelligence, Military 
Police and Civil Affairs.

Civilian Personnel
    A large part of the credit for the Navy's outstanding performance 
goes to our civilian workforce. These experienced and dedicated 
craftspeople, researchers, supply and maintenance specialists, computer 
experts, service providers and their managers are an essential part of 
our total Naval force concept.
    In the past, our ability to utilize these skilled human resources 
to accomplish the complex and fast-developing missions of the 21st 
Century has been limited by the requirements of a 19th Century 
personnel system. The fiscal year 2004 Defense Authorization Bill now 
allows DOD to significantly redesign a National Security Personnel 
System (NSPS) for the civilian workforce. This change represents the 
most significant improvement to civilian personnel management since the 
1978 Civil Service Reform Act.
    The DON has volunteered to be in the first wave of conversions to 
NSPS later this year. The Department expects to transition as many as 
150,000 of our dedicated, hard-working civilians to the new system this 
year. We will work closely with DOD to ensure we meet this aggressive 
timeline. We are also working Defense Acquisition Workforce Improvement 
Act streamlining initiatives alongside NSPS to ensure we use these 
tools to produce a robust and capable workforce.
    The reforms will provide supervisors and managers greater 
flexibility in managing our civil service employees, facilitate 
competition for high quality talent, offer compensation competitive 
with the private sector, and reward outstanding service. It will build 
greater pride in the civilian workforce and attract a new generation of 
civilians to public service. Properly executed, these changes also will 
assist us in better utilizing the active duty force by making it easier 
to employ civilians in jobs currently filled by uniformed military 
personnel.
    NSPS legislation will have a transformational effect on 
organizational design across the Department. NSPS will improve 
alignment of the human resources system with mission objectives, 
increase agility to respond to new business and strategic needs, and 
reduce administrative burden. The NSPS Act authorizes a more flexible 
civilian personnel management system that allows us to be a more 
competitive and progressive employer at a time when our national 
security demands a highly responsive system of civilian personnel 
management. The legislation also ensures merit systems principles 
govern changes in personnel management, whistleblowers are protected, 
discrimination remains illegal, and veterans' preference is protected. 
The process for the design of NSPS is specified by statue and covers 
the following areas: job classification, pay banding, staffing 
flexibilities, and pay for performance.
    The foundation for NSPS is a more rigorous tie between performance 
and monetary awards for employees and managers. Basic pay and 
performance incentives should be tied directly to the performance 
measurement process--supervisory personnel are also rewarded for 
successfully performing managerial duties. Implementation of this 
system will be a significant step forward by linking employees' 
performance to mission accomplishment and enabling better management of 
scarce resources throughout the DON.
    We are faced with a monumental change in how we will do business 
and an even larger cultural change from one of entitlement to one that 
has a performance-based compensation. This will be a huge effort and we 
are determined to ensure successful implementation. We will continue to 
scrutinize our human resource business methods. As we implement the 
bold initiatives in NSPS, we will take a hard look at our 
administrative policies with a specific eye on those that are 
burdensome or add no value.

Quality of Service
    We will continue to provide an environment where our Sailors and 
Marines, and their families have confidence in themselves, in each 
other, in their equipment and weapons, and in the institution they have 
chosen to serve. This year, with your help, we continued the 
significant advances in compensation, in building the structure to 
realize the promise of the revolution in training, in improving 
bachelor and family housing, and in strengthening our partnership with 
Navy and Marine families.
    The Department remains committed to improving living conditions for 
Sailors and Marines, and their families. Our policy is to rely first on 
the private sector to house military families. As a result, along with 
the initiative to increase Basic Allowance for Housing (BAH), the need 
and consequently the inventory for military family housing is going 
down. Additionally, we are partnering with the private sector in 
Public/Private Ventures (PPV) to eliminate inadequate housing.
    At the top of nearly any list put together in our partnership is 
the promise of medical care for Sailors, Marines, and their families. 
Naval medicine is a force multiplier, ensuring our troops are 
physically and mentally ready to whatever challenges lie ahead. High 
quality care and health protection are a vital part of our ability to 
fight the Global War on Terrorism and execute other worldwide mission. 
Naval medicine today is focused on supporting the deployment readiness 
of the uniformed services and promoting, protecting and maintaining the 
health of all those entrusted to Naval Medicine care--anytime, 
anywhere.

Safety
    The Navy and Marine Corps are working to meet the Secretary of 
Defense's goal of reducing mishaps by 50 percent from fiscal year 2002 
to the end of fiscal year 2005. We have many initiatives in place and 
planned for the near future. We have seen real progress in reducing 
private motor vehicle fatalities, which are down 20 percent from the 
fiscal year 2002 baseline. We have begun applying technologies now used 
in commercial aviation to provide a visual and quantitative feedback 
loop to pilots and mechanics when either the pilot or aircraft has 
exceeded specific safety of flight parameters. We will continue to 
press forward with safety both to take care of people, our most 
precious asset, and to allow us to invest elsewhere.

Shaping the Force
    The Navy is making an effort to reduce its active duty manpower as 
part of the DON transformation program. This is the first step and an 
integral part of our strategy to properly shape both the officer and 
enlisted force. Today, as the Navy moves to a more efficient and surge-
ready force, maintaining the correct skill sets is more important than 
ever. We are convinced we can get the job done with fewer people; by 
eliminating excess manpower we can focus better on developing and 
rewarding our high-performing forces. Additionally, reducing manpower 
gradually today will ensure the Navy is properly manned when a new 
generation of optimally manned ships joins our force, with completely 
revised maintenance, training, and war-fighting requirements. We will 
ensure any manpower reductions will be preceded by reductions in 
functions.

                                SUMMARY

    Naval forces remain a critical and unique element of our national 
security strategy. The Navy and Marine Corps Team answers the 
President's call to duty by being the first on station--with staying 
power. Our forces exploit the open oceans and provide the Combatant 
Commander with persistent sovereign combat Naval forces. This is the 
value that credible forward deployed Naval forces provide our Nation.
    The fiscal year 2005 Budget unifies many of our innovative and 
transformational technologies with Naval Power 21. Sustaining 
investment in Naval forces continues to protect and promote American 
interests by allowing the forward deployed Navy and Marine Corps Team 
to shape the international security environment and to respond to the 
full spectrum of current and future crises.
    With our fiscal year 2005 Budget request we focus on people, combat 
capability, technology insertion, and improved business practices. 
Additionally, we continue to work with our Joint Service partners in 
organizing, equipping and training to fight jointly. With continued 
Congressional support the Department of the Navy will position the Navy 
and Marine Corps Team as part of the most formidable military force in 
the 21st Century.

    Senator Stevens. Admiral Clark.

STATEMENT OF ADMIRAL VERNON CLARK, CHIEF OF NAVAL 
            OPERATIONS
    Admiral Clark. Chairman Stevens, Senator Inouye, and 
distinguished members of the committee, good morning. I, like 
Secretary England, consider it an honor to be with you here 
today, representing all the sailors, both active and reserve, 
and the civilians who are serving in our Navy today.
    I am particularly happy, also, to be here at the table with 
leaders like Secretary England and General Mike Hagee. I'd like 
to report to you that this group has a great partnership, 
working together, leading our Navy and Marine Corps team to the 
future. That's what we see as our task, and we are set out to 
do it.
    Today, and I believe appropriately so, America's focus is 
primarily on the Army and, more so, soon to be the Marine 
Corps, as they execute their missions in Operation Iraqi 
Freedom II. Having said that, I want to report to you that your 
Navy continues to be out and about. And while the Army 
dominates Operation Iraqi Freedom today, we have two carriers 
and three Expeditionary Strike Groups, and fundamentally one-
third of the Navy, still deployed around the world. Ships and 
submarines, forward deployed on the point representing the 
United States of America. And that includes two of our large-
deck amphibious ships, the Boxer and the Bataan, who are now 
returning home, after surging forward just a few weeks ago to 
carry Marine Corps aviation assets forward for Operation Iraqi 
Freedom II.
    A year ago this time when I appeared before this committee, 
we were an important part of the joint team that conducted 
major combat operations last spring in Iraq. Lifting the joint 
force, projecting power ashore, and fully 55 percent--Senator 
Cochran, mirroring the numbers that you talked about--55 
percent of our Navy deployed in support of the conflict. No 
other Navy in the world can deliver this kind of decisive 
combat capability. It highlights our fundamental mission, and 
that is to take credible, persistent combat power to the far 
corners of this earth anywhere, anytime we need to do so, 
without a permission slip.
    I appreciate the opportunity, Mr. Chairman, to be here 
today, to appear before you, and to talk about this great Navy, 
and to thank you on behalf of all of our outstanding men and 
women in the uniform, and those that are wearing civilian 
clothes, too, that are working to make our Navy better every 
day. And we are all grateful for the continued strong support 
that is being provided by the Congress that is making our Navy 
ready to respond, ready to act anytime the Nation needs us to 
do so, but also helping us create the Navy of the future, which 
is our fundamental task, also.
    As the Secretary said, our budget request this year is a 
solid and balanced investment plan, the roadmap, as he has 
called it, that focuses on three areas. First, it accelerates 
our investment in Sea Power 21 capability. Second, it delivers 
the right readiness at the right cost, and that's been a key 
factor in our ability to respond this past year. And it 
continues to shape the 21st century workforce. This budget 
includes the next steps in our journey to the future.
    A much more capable Navy is what we're talking about. It 
includes funding for the Littoral combat ship, the DD(X), CVN 
21, the Joint Strike Fighter, unmanned vehicles in the air and 
on the surface and under the sea, the Virginia class submarine 
and the modifications to Trident SSGNs, among others.
    And maybe most importantly today, it lays the foundation 
with LHA(R) and maritime pre-positioned forces, the future for 
the Navy/Marine Corps team. That future is laid down in this 
budget request. And this is a very exciting concept, the next 
step in expeditionary warfare. We stand at the threshold of 
creating the next generation Navy/Marine Corps team, a team 
that will deliver the kind of quick-response, global-reach 
capability that this Nation needs. This budget will help us 
deliver a more responsive Navy. The Fleet Response Plan and a 
readiness assessment process that we are now using has allowed 
us to better assess risk, and allowed us to present a budget 
that delivers the right readiness at the right cost.
    And what this means, unlike previous submissions that I 
have been involved in, is that we have taken more risk--we have 
assessed the risk, and we have taken risk where we believe that 
it is prudent so that we can invest in the new acquisition that 
is required for us to have the Navy of the future. And so I ask 
for your support in this year's readiness request. It will 
deliver the right readiness at the right cost for the Nation.
    Lastly, our request continues to sharpen our investment in 
our people so that we can shape them into the workforce that we 
need for the future. And, of course, in the Navy we recognize 
that every single thing that is good that is happening in the 
Navy is happening because we have been winning the battle for 
people. For all of our advanced technology--and our advanced 
technology is incredible--for the readiness that we have 
achieved, it is still our people that bring our capabilities to 
bear whenever and wherever the Nation needs them.
    But, at the same time, Mr. Chairman, we do recognize the 
cost of manpower. We know that manpower is not free. And I am 
committed to building a Navy that can maximize the capability 
of our people and minimize the total number of people on the 
payroll. And as you can see from this request, and as Senator 
Inouye has indicated, this budget request reduces our end 
strength. Our strategy for doing this is straightforward, 
Senator. We are investing in the growth and the development of 
our people. We are improving training and our maintenance 
processes. We are leveraging technology. We are decommissioning 
older, more manpower-intensive platforms that have less 
capability for the future, and we are rebalancing our reserve 
and active forces. And as we deliver more high-tech ships and 
aircraft, our workforce will intentionally get smarter, but we 
intend for it also to get smaller.
    Your support, over the years, of incentive pay, re-
enlistment bonuses, and the kind of training and information 
tools that make our people more productive, has been critical 
to our success in the past and is crucial to our ability to 
attract and retain and shape the kind of workforce we need for 
the future.
    I want to report to you that your support for these 
initiatives has been working. We have the highest retention 
that we ever had in the history of the Navy, and we have an 
extraordinarily competitive and talented group of people in our 
Navy. I ask you to continue to give us the tools that we need 
to shape this force for the future. And I look forward to 
discussing this with you in the minutes and hours ahead, and 
the months ahead, as we move toward this budget.
    I close by saying that we have a higher quality Navy and 
Marine Corps team today than at any time that I've witnessed in 
my career, and I believe it's so for a very important reason. 
It is because our sailors feel the support and the confidence 
that is being placed in them by the citizens of the United 
States of America.
    Mr. Chairman, this is a very proud team. They believe in 
the importance of what they are doing. And each of you have 
seen them on the point, and you know how they are reacting to 
the challenges that are being presented to them. And they are 
responding to the signals of support that are being sent to 
them by the citizens of America.

                           PREPARED STATEMENT

    I thank you for your support, and the citizens of America 
for their support, and I look forward to your questions this 
morning.
    Thank you very much.
    Senator Stevens. Thank you very much, Admiral.
    [The statement follows:]

                Prepared Statement of Admiral Vern Clark

    Mr. Chairman and members of the Committee, I appreciate this 
opportunity to appear before you. I want to express my gratitude for 
the substantial investment you have made in making this Navy the best 
Navy the nation has ever seen.
    Your Navy is built to take credible combat power to the far corners 
of this earth, taking the sovereignty of the United States of America 
anywhere we need to take it and at anytime we choose to do so. It is 
capable of delivering the options this nation needs to meet the 
challenges of today and it is committed to the future capabilities the 
joint force will need to win throughout the 21st century.
    It is a wonderful time to be a part of this Navy and a great 
privilege to be associated with so many men and women--active and 
reserve, uniformed and civilian--committed to the service and defense 
of this nation. I speak for all of our men and women in thanking you 
for your exceptional and continuous support.

   YOUR NAVY TODAY--PROJECTING DECISIVE JOINT POWER ACROSS THE GLOBE

    Your Navy's performance in Operations ENDURING FREEDOM (OEF) and 
IRAQI FREEDOM (OIF) last year proved--more than anything else--the 
value of the combat readiness in which you have invested. It 
demonstrated the importance of the latest technology in surveillance, 
command and control and persistent attack. It highlighted our ability 
to exploit the vast maneuver space provided by the sea. Most 
importantly, it reaffirmed the single greatest advantage we hold over 
every potential adversary: the genius of young Americans contributing 
their utmost in their service to this nation.
    This past year, the fleet produced the best readiness levels I've 
seen in my career. We have invested billions of dollars to training, 
maintenance, spare parts, ordnance, flying hours and steaming days 
accounts these last few years, and that investment resulted in the 
combat ready response of more than half the Navy to operations 
worldwide.
    Seven aircraft carriers and nine big deck amphibious ships were 
among the 164 U.S. Navy ships forward deployed last spring in support 
of OEF and OIF and contingencies worldwide. The Military Sealift 
Command sailed and chartered more than 210 ships and moved 94 percent 
of the nation's joint and combined capability to the fight. We also 
deployed three Fleet Hospitals, a Hospital Ship, 22 P-3 aircraft, 25 
Naval Coastal Warfare detachments and we mobilized more than 12,000 
reservists.
    OIF and OEF were the most joint operations in our history and they 
have provided the best possible opportunity to dissect, study and 
analyze some of the limiting factors and effects of how we fight. 
Beyond the mere numbers, these operations confirmed that we should 
continue to pursue the capabilities that enhance our power projection, 
our defensive protection and the operational independence afforded by 
the sea.
    While we recognize that we must continue to challenge all of our 
assumptions in a variety of scenarios, our lessons learned indicate 
that the capabilities-based investment strategies, new war fighting 
concepts and enabling technologies we are pursuing in our Sea Power 21 
vision are on the right vector. Let me give you some examples.
  --The reach, precision and persistence of our Sea Strike capability 
        added lethality to ground combat engagements in Afghanistan and 
        Iraq. The joint surveillance and attack technologies and 
        processes that we have already put in place forced enemy combat 
        formations to either disband and desert or be destroyed in 
        place by precision weapons. Navy aviation generated more than 
        7,000 combat sorties in support of OIF, sometimes flying joint 
        missions with land-based Air Force tankers more than 900 miles 
        from their carriers. Surface combatants and submarines struck 
        targets throughout Iraq with more than 800 Tomahawk missiles. 
        The initial deployments of new F/A-18E/F Super Hornet squadrons 
        greatly extended our range, payload, and refueling options. And 
        we will realize more of these capabilities in the future 
        through the conversion of the first of four Trident SSBNs into 
        the SSGN conventional strike and Special Operations Forces 
        platform.
  --USS HIGGINS (DDG 76) provided early warning and tracking to joint 
        forces in Kuwait and southern Iraq to help warn forces and 
        defend against the threat of theater ballistic missiles. This 
        tracking-only capability demonstrated the initial potential of 
        extending Sea Shield defenses to the joint force. In a sign of 
        things to come, we advanced our missile defense capability with 
        another successful flight test of our developmental sea-based 
        defense against short-to-medium range ballistic missiles. USS 
        LAKE ERIE (CG 70) and USS RUSSELL (DDG 59) combined to acquire, 
        track and hit a ballistic test target in space with an SM-3 
        missile in support of the Ballistic Missile Defense program. 
        This was the fifth success in six tests.
      Our OIF mine warfare efforts cleared 913 nautical miles of water 
        in the Khor Abd Allah and Umm Qasr waterways, opening 21 berths 
        in the Umm Qasr port and clearing the way for operations in the 
        littoral areas of the Northern Persian Gulf and for 
        humanitarian aid shipments into Iraq. These operations included 
        the use of the High Speed Vessel X1 (JOINT VENTURE), Navy 
        patrol craft and six unmanned, autonomous underwater vehicles 
        (AUV) directly from our science and technology (S&T) program in 
        the littoral for special operations and mine clearance 
        operations, and gave us important insights into our vision for 
        both future littoral and mine warfare concepts and 
        capabilities.
  --We projected joint combat forces across the globe with greater 
        speed and agility than we have ever done in the past. Along 
        with our number one joint partner, the United States Marine 
        Corps, we put more than 60,000 combat-ready Marines ashore in 
        Kuwait in 30 days. The Navy's Military Sealift Command 
        delivered more than 32 million square feet of combat cargo and 
        more than one billion gallons of fuel to the nation's war 
        fighters in Operations Enduring Freedom and Iraqi Freedom. We 
        were able to sustain the strategic and operational flexibility 
        afforded by Sea Basing to generate a three-axis attack on Iraq 
        from our dispersed aircraft carriers, surface combatants and 
        submarines in the Red Sea, the Mediterranean Sea and the 
        Persian Gulf.
      We forged ahead in our shipbuilding investments. We awarded three 
        preliminary design contracts for the Littoral Combat Ship 
        (LCS), leading to the construction of the first LCS in fiscal 
        year 2005. We selected the baseline design for the DD(X) 21st 
        Century multi-mission destroyer, launched SAN ANTONIO (LPD 17), 
        christened VIRGINIA (SSN 774) and began fabrication of MAKIN 
        ISLAND (LHD 8) and LEWIS AND CLARK (T-AKE 1).
  --In OIF, we were able to know more, decide faster and act more 
        decisively than ever before. Our three-axis, multi-platform 
        attack from the Persian Gulf, Red Sea and Mediterranean Sea--as 
        well as the geometric increases in striking power, defensive 
        protection and speed of maneuver generated by our joint 
        forces--is made possible by the power of joint command, 
        control, communications, computers, intelligence, surveillance 
        and reconnaissance (C\4\ISR). Fully eighty percent of targets 
        struck with precision ordnance were unknown at aircraft launch. 
        We developed and installed CENTRIX and COWAN networks to 
        enhance joint and coalition interoperability on all of our 
        deploying ships, and we also promulgated the FORCEnet campaign 
        plan, defining the architecture and standards that will help us 
        further integrate warriors, sensors, weapons, and platforms.
    These accomplishments this past year have taught us more about who 
we are and where we're headed. We know that the combat power of the 
truly joint force is much more than the sum of the services' 
contributions. We understand the value of readiness and the importance 
we must place on improving the fleet's ability to respond and surge 
with decisive combat power. We relearned the lesson that over flight 
and basing is not guaranteed; our dominance of the maritime domain and 
our consequent ability to quickly deliver an agile combat force is a 
priceless advantage for our nation. And we reaffirmed that our people 
are now, and always will be, the root of our success.

            YOUR NAVY TOMORROW--ACCELERATING OUR ADVANTAGES

    Readiness, advanced technology, dominance of the maritime domain, 
and the genius of our people--these are our asymmetric advantages. They 
are the core of our Sea Power 21 Navy and we intend to accelerate these 
advantages over the coming year. We are in a position to continue to 
build upon and recapitalize these strengths, to innovate and 
experiment, and to push the envelope of operational art and 
technological progress. Our ability to project persistent, sovereign 
combat power to the far corners of the earth now and in the future 
depends on it.
    In last year's statement, I discussed principally the advantages 
brought by advanced technology and the vast maneuver area of the sea in 
our Sea Power 21 vision.
    This year, I'd like to spend a few moments on the efforts we've 
taken to improve our other advantages: our readiness to respond to the 
nation's defense needs and the tools we'll need to ensure the right 
people for our Sea Power 21 Navy.
    Today's naval forces and personnel are superbly trained and well 
provisioned with ordnance, repair parts and supplies. They are ready 
earlier--for a longer period of time--and they are deploying at a 
higher state of readiness than ever before. In short, the Navy the 
nation has paid for is truly ready to accomplish its missions and it is 
more ready to do so than I've ever seen it in my career.
    I mentioned the results; in OIF, we surged more than half the fleet 
to fight half a world away. The combined power of our forward presence 
forces and those that we were able to surge overseas helped keep our 
enemies on the run. This conflict and our analysis of future campaign 
scenarios make it apparent that the readiness of both our forward 
forces and the forces that must surge forward will be critically 
important to our future. It is no longer good enough to be able to 
surge just once every ten years or so.
    The war on terrorism and the unpredictability of the global 
security environment make this an immediate imperative. The nation 
needs a Navy that can provide homeland defense and be both forward and 
ready to surge forward to deliver overmatching and decisive combat 
power whenever and wherever needed. We are committed to do so.
    With this in mind, we launched the Fleet Response Plan (FRP) this 
past year. The FRP resets the force in a way that will allow us to 
surge about 50 percent more combat power on short notice and at the 
same time, potentially reduce some of the personnel strain of forward 
rotations.
    In simplest terms, rather than having only two or three CSGs 
forward-deployed and properly equipped at any one time--and an ability 
to surge only a maximum of two more--the FRP enables us to now 
consistently deliver six forward deployed or ready to surge Carrier 
Strike Groups (CSGs) almost immediately, plus two additional CSGs in 
the basic training phase in 90 days or less. This FRP capability is 
commonly known as six plus two.
    To do this, we have fundamentally reconfigured our employment 
policy, fleet maintenance, deployment preparations and fleet manning 
policies to expand the operational availability of non-deployed fleet 
units. We have shifted the readiness cycle from one centered solely on 
the next-scheduled-deployment to one focused on returning ships to the 
right level of readiness for both surge and deployed operations. The 
net result is a fleet that is more ready, with more combat power--more 
quickly--than was possible in the past.
    Our forward rotations remain critically important to our security, 
to strengthening alliances and coalitions, and to the global war on 
terrorism. But it is clear we must make these rotations with purpose, 
not just to fill the calendar.
    For example, implementing the new Proliferation Security Initiative 
to counter weapons of mass destruction as a tool for terrorists and 
their sponsors is likely to involve the use of forward naval forces in 
maritime interdiction. Additionally, we plan to be ready to establish 
Initial Missile Defense operations using forward-deployed ARLEIGH BURKE 
class guided missile destroyers and their AEGIS systems in Long-Range 
Tracking and Surveillance roles. And of course, we will continue to 
provide Combatant Commanders with the combat-credible, rapidly 
employable forward forces required for the nation's defense.
    But at the same time, we recognize that our ability to rapidly 
surge significant additional combat power and provide a range of joint 
employment options is critically important to the swift and decisive 
combat operations that must be our future. The FRP allows us to do just 
that.
    We have an obligation to accurately assess the readiness needs and 
create the resources necessary to support this FRP capability. This has 
also been a major focus this past year.
    Readiness is a complex process. It is much more than a count of our 
end strength, our ordnance and spares, and the number of hours and days 
spent training. It is the product of our ability to deliver the 
required effects needed to accomplish the mission. We know too that 
readiness at any cost is unacceptable; as leaders we must achieve and 
deliver the right readiness at the right cost.
    The Integrated Readiness Capability Assessment (IRCA) was developed 
for the fiscal year 2005 budget to more carefully examine our readiness 
processes. Starting with our new FRP operating construct, we took a 
hard look at everything that we needed to have on hand and what we 
needed to do to deliver the required combat readiness for the nation's 
needs.
    The IRCA assessment helped us understand the collective 
contributions of all the components of readiness, accurately define the 
requirements, align the proper funding and provide a balanced 
investment to the right accounts. It improved our visibility into the 
true requirements and it gave us a methodology to assess and understand 
both acceptable and unacceptable risks to our current readiness 
investments.
    The end result is this: we have carefully defined the readiness 
requirement. We have identified areas where we can streamline or cease 
activities that do not add to readiness. And we have requested the 
funds our commanders need to create the right readiness for fiscal year 
2005. I ask for your support of this year's current readiness request 
as we've re-defined these processes and already taken acceptable risks. 
We will deliver the right readiness at the right cost to the nation.
    These improvements to our operational availability of forces and 
the associated readiness elements will not be made on the backs of our 
people.
    We have a smart, talented cadre of professionals who have chosen a 
lifestyle of service. Our ability to challenge them with meaningful, 
satisfying work that lets them make a difference is part of our 
covenant with them as leaders.
    A new operating concept like the Fleet Response Plan could not be 
made if we still had the kind of manpower-intensive mindset to problem 
solving we had even five years ago. But today, thanks to your sustained 
investment in science and technology among others, we have already 
realized some of the advancements in information technology, 
simulators, human system integration, enterprise resource planning, 
web-enabled technical assistance and ship and aircraft maintenance 
practices that can reduce the amount of labor intensive functions, the 
training and the technical work required to ensure our readiness.
    These advances speak to our larger vision for our Sea Power 21 Navy 
and its Sea Warrior initiative. Our people are today's capital assets. 
Without them, all the advanced weaponry in the world would sit dormant. 
But at the same time, it is the effects they deliver that are the true 
measure of their contribution to readiness and capability.
    We have long had a force stove-piped into active and reserves, 
uniformed and civilian, sea and shore, and enlisted and officer 
components, all with work driven largely by the limits of industrial 
age military capabilities, personnel practices, technology and the 
organizational models of the day.
    In today's era, when we have whole corporations bought or sold just 
to capture the intellectual capital of an organization, we recognize 
that our human resource strategy must capture the talents and efforts 
of our capital as well. Our vision for the future is a more truly 
integrated workforce wholly committed to mission accomplishment. This 
must include a total force approach that can functionally assess 
missions, manpower, technology and training and produce an enterprise-
wide resource strategy.
    The principles of this strategy are clear. We will capture the work 
that contributes to mission accomplishment. We will define enterprise-
wide standards. We will leverage technology to both enhance and 
capitalize on the growth and development of our people. We will 
streamline organizational layers. We will instill competition. And we 
will incentivize the talents and behaviors needed to accomplish the 
mission.
    There is still much to study and discuss as we develop our total 
force approach in the months and years ahead, but we can already see 
that the application of these principles will help us more accurately 
define our manpower requirement and lead us to a smaller workforce in 
the future.
    The benefits are enormous. Our people will be powerfully motivated 
and better educated and more experienced in the coming years. They will 
be properly equipped to maintain, operate and manage the higher 
technology equipments that are our future. Our combat capabilities will 
continue to grow.
    We must be committed to building a Navy that maximizes the 
capability of its people while minimizing the total number in the 
manpower account. Manpower is never free; in fact, manpower we do not 
truly need limits both the true potential of our people and the 
investments needed to transform our combat capability for the future.
    Our developing human resource strategy will likely require changes 
in the way we recruit, assess, train, manage and balance the workforce 
in the years to come. Sea Warrior of course, is crucial here. Last 
year's authorization of the National Security Personnel System (NSPS) 
is very important to such an effort as well. The NSPS Act authorized a 
more flexible civilian personnel management system that allows DOD to 
be a more competitive and progressive employer. The Navy has 
volunteered to be in the first wave of conversions to NSPS because it 
will facilitate the kind of competition and performance we need in the 
21st century.
    In the near future, we will need to look at improving the two-way 
integration of our active and reserve force. At a time when our ability 
to surge is more important to the nation than ever, we must ensure our 
Navy reserves have the kind of future skills, front-line equipment, 
training standards and organizational support that will facilitate 
their seamless integration into required combat and support structures.
    Most importantly, I believe we will need the kinds of flexible 
authorities and incentive tools that will shape the career paths and 
our skills mix in a way that lets us compete for the right talent, not 
just within the Navy, but with all the nation's employers as well.
    In the months ahead, I will continue to discuss with you our 
developing human resource strategy and the kinds of authorities we'll 
need to deliver on it.
    We are beginning to realize the powerful war fighting capabilities 
of Sea Power 21. Our culture of readiness and our commitment to 
developing a 21st Century workforce will help us employ those 
transformational capabilities to achieve unprecedented maritime power.

                  OUR FISCAL YEAR 2005 BUDGET REQUEST

    This past year our Navy's budget request continued our effort to 
sustain our current readiness gains, deepen the growth and development 
of our people and invest in our transformational Sea Power 21 vision 
while harvesting the efficiencies needed to fund and support these 
three critical priorities. This year we intend to:
  --Deliver the right readiness at the right cost to support the war on 
        terror and the nation's war fighting needs,
  --Shape the 21st century workforce and deepen the growth and 
        development of our people,
  --Accelerate our investment in Sea Power 21 to recapitalize and 
        transform our force and improve its ability to operate as an 
        effective component of our joint war fighting team.
    At the same time, we will continue to pursue the Sea Enterprise 
improvements that make us a more effective Navy in both fiscal year 
2005 and beyond. Our Navy budget request for fiscal year 2005 and the 
future supports this intent and includes:
  --Nine new construction ships in fiscal year 2005, including 
        construction of the first transformational destroyer (DD(X)) 
        and the Littoral Combat Ship (LCS), the acceleration of a SAN 
        ANTONIO Class Amphibious Transport Dock Class ship from fiscal 
        year 2006 to fiscal year 2005, and one SSBN conversion and 
        refueling. Our request this year includes the following ships:
      --3 ARLEIGH BURKE Class Guided Missile Destroyers (DDG)
      --1 VIRGINIA Class submarine (SSN)
      --1 SAN ANTONIO Class Amphibious Transport Dock (LPD)
      --2 Lewis and Clark Class Dry Cargo and Ammunition ships (T-AKE)
      --1 21st Century Destroyer (DD(X))
      --1 Littoral Combat Ship (LCS), and
      --1 SSBN conversion/refueling
      The investment plan across the future year's defense plan (FYDP) 
        also includes three Maritime Prepositioned Force (Future) (MPF 
        (F)) ships and advanced procurement for an MPF (F) aviation 
        variant. While our build rate dips to six ships in fiscal year 
        2006, this is a reflection of a shift in focus to the next 
        generation surface combatants and sea basing capabilities. We 
        have also assessed the risks and divested several assets that 
        have high operating costs and limited technological growth 
        capacity for our transformational future; this includes 
        decommissioning two coastal mine hunter ships, and the 
        accelerated decommissioning of the remaining SPRUANCE-class 
        destroyers, SACRAMENTO Class Fast Combat Store Ships and the 
        first five TICONDEROGA-class guided missile cruisers in the 
        future year's plan.
  --Procurement of 104 new aircraft in fiscal year 2005, including the 
        F/A-18 E/F Super Hornet, the MH-60 R/S Seahawk and Knighthawk 
        Multi-mission Combat Helicopter, the T-45 Goshawk training 
        aircraft and the Marine Corps MV-22 Osprey among others. We 
        continue to maximize the return on procurement dollars through 
        the use of multi-year procurement (MYP) contracts for 
        established aircraft programs like the Super Hornet and we have 
        increased our research and development investment this year in 
        the Joint Strike Fighter (JSF), the EA-18G Airborne Electronic 
        Attack (AEA) aircraft and the broad area anti-submarine, anti-
        surface, maritime and littoral intelligence, surveillance and 
        reconnaissance (ISR) capable Multi-mission Maritime Aircraft 
        (MMA).
  --Investment in transformational unmanned underwater vehicles (UUV) 
        like the Long-Term Mine Reconnaissance System, and unmanned 
        aviation vehicles (UAV) such as the Broad Area Maritime 
        Surveillance UAV and the Joint-Unmanned Combat Air System. The 
        budget also requests funding for experimental hull forms like 
        the X-Craft, and other advanced technologies including the 
        Joint Aerial Common Sensor (JACS).
  --A 3.5 percent basic pay raise, and a reduction in average out-of-
        pocket housing costs from 3.5 percent to zero, allowing Sailors 
        and their families more of an opportunity to own their own 
        homes and have more of a stake in their communities.
  --Investment in housing and Public-Private Ventures that will help 
        eliminate inadequate barracks and family housing by fiscal year 
        2007 and enable us to house shipboard Sailors ashore when their 
        vessel is in homeport by fiscal year 2008.
  --Readiness investment that supports the Fleet Response Plan (FRP), 
        including sustained funding for ship and aircraft operations, 
        aviation depot maintenance, and precision guided munitions. 
        This includes improvements in ship maintenance and training 
        scheduling to maximize surge capabilities.

Delivering the Right Readiness at the Right Cost
    To me, the ``right readiness'' is the return on your investment in 
the Navy. Readiness is the catalyst that brings combat power to bear 
whenever it is needed. Achieving readiness at any cost however is not 
good for the nation. This year's request accurately defines our 
readiness needs, assesses the risks to our investment and--as 
requested--will deliver the resources necessary for leaders in the Navy 
to create the required readiness.
  --Ship Operations and Flying Hours requests funds for ship operations 
        OPTEMPO of 51.0 days per quarter for our deployed forces and 24 
        days per quarter for our non-deployed forces. We have properly 
        funded the flying hour account to support the appropriate 
        levels of readiness and longer employability requirements of 
        the FRP. This level of steaming and flying hours will enable 
        our ships and air wings to achieve the required readiness over 
        the longer periods defined by the Fleet Response Plan, and as a 
        result, it will improve our ability to surge in crisis and 
        sustain readiness during deployment.
  --Ship and Aviation Maintenance. We have made significant 
        improvements these last few years by reducing major ship depot 
        maintenance backlogs and aircraft depot-level repair back 
        orders; improving aircraft engine spares; adding ship depot 
        availabilities; ramping up ordnance and spare parts production; 
        maintaining steady ``mission capable'' rates in deployed 
        aircraft; fully funding aviation initial outfitting; and 
        investing in reliability improvements.
      Our fiscal year 2005 request continues to improve the 
        availability of non-deployed aircraft and meets 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. We are 
        making great strides in improving the visibility and cost 
        effectiveness of our ship depot maintenance program, reducing 
        the number of changes in work package planning and using our 
        continuous maintenance practices when changes must be made.
  --Shore Installations. Our Facilities Sustainment, Restoration and 
        Modernization (SRM) program remains focused on improving 
        readiness and quality of service for our Sailors. While our 
        fiscal year 2005 Military Construction and Sustainment program 
        reflects difficult but necessary trade-offs between shore 
        infrastructure and fleet recapitalization, the majority of the 
        SRM trends are very good. Facilities sustainment has increased 
        in fiscal year 2005. Our budget request keeps us on a course to 
        achieve the DOD goal of a 67-year recapitalization rate by 
        fiscal year 2008, achieve DON goals to eliminate inadequate 
        family and bachelor housing by fiscal year 2007 and provides 
        Homeport Ashore Bachelor Housing by fiscal year 2008. We are 
        exploring innovative solutions to provide safe, efficient 
        installations for our service members, including design-build 
        improvements, and BRAC land sales via the GSA Internet. 
        Additionally, with the establishment of Navy Installations 
        Command, we have improved our capability to manage our 
        dispersed facility operations, conserve valuable resources, 
        establish enterprise-wide standards and continue to improve our 
        facility infrastructure.
  --Precision Guided Munitions receive continued investment in our 
        fiscal year 2005 request with emphasis on increasing the Joint 
        Stand-Off Weapon (JSOW) baseline variant, Joint Direct Attack 
        Munition (JDAM), and Tactical Tomahawk (TACTOM) inventory 
        levels, while the JSOW penetrator variant enters full-rate 
        production. We have also entered into a Common Missile program 
        with the U.S. Army to replace the aging inventory of TOW, 
        Maverick and Hellfire missiles. Joint partnerships with the Air 
        Force and Army in several of our munitions programs continue to 
        help us optimize both our inventories and precious research and 
        development investments and will remain a focus for us in the 
        future.
  --Training Readiness. We continue to make significant strides in this 
        critical area. In fiscal year 2004, the Congress supported two 
        important programs to advance our training readiness. First, 
        you endorsed the Training Resource Strategy (TRS), to provide 
        more complex threat scenarios and to improve the overall 
        realism and value of our training. Additionally, you funded the 
        Tactical Training Theater Assessment and Planning Program to 
        provide for a comprehensive training range sustainment plan. 
        Our fiscal year 2005 budget continues this work. We are working 
        to make the Joint National Training Capability a reality. We 
        have established a single office to direct policy and 
        management oversight for all Navy ranges as well as serve as 
        the resource sponsor for all training ranges, target 
        development and procurement, and the Navy portion of the Major 
        Range Test Facility Base (MRTFB).
  --Environmental Readiness. In the last two years, Congress has 
        provided significant legislative relief from encroachment and 
        environmental requirements by amending the Endangered Species 
        Act, the Migratory Bird Treaty Act and the Marine Mammal 
        Protection Act. These amendments help to balance environmental 
        stewardships and realistic military training. We will continue 
        to focus the use of our ranges on military training, and remain 
        committed to our environmental obligations through integrated 
        natural resource management plans. We will make every effort to 
        protect marine mammals while ensuring our Sailors are properly 
        trained and our transformational systems are properly tested. 
        We look forward to demonstrating our ongoing commitment to 
        environmental stewardship.

Shaping the 21st Century Workforce
    At the heart of everything good in our Navy today is this: we are 
winning the battle for people. Higher quality recruits, historic 
retention rates, innovative incentive pay pilots, reduced attrition, 
competitive reenlistments and detailing, and outstanding leadership in 
the ranks has made this the highest quality workforce the Navy has ever 
seen.
    In 2003 specifically, we exceeded all of our aggregate retention 
goals for the third straight year; our recruiters reached their quotas 
for the 28th consecutive month; we reduced attrition another 10 percent 
from fiscal year 2002 levels; and, through decommissioning older, 
manpower-intensive platforms, improving training and employment 
processes, and more efficient infrastructure organization, we have 
reduced gaps at sea to less than 1,000, down from 18,000 gaps just six 
years ago.
    These accomplishments will help us develop the 21st Century 
workforce we'll need for our Sea Power 21 Navy. As our Navy becomes 
more high tech, so must our workforce. Our people will be a more 
educated and experienced group of professionals in the coming years, 
and we must properly employ their talents. We will spend whatever it 
takes to equip and enable these outstanding Americans, but we do not 
want to spend one extra penny for manpower we do not need.
    As part of that effort, we continue to pursue the kind of new 
technologies and competitive personnel policies that will streamline 
both combat and non-combat personnel positions, improve the two-way 
integration of active and reserve missions, and reduce the Navy's total 
manpower structure. To that end, we are proposing a fiscal year 2005 
Navy end strength reduction of 7,900 personnel.
    We will use existing authorities and our Perform to Serve program 
to preserve the specialties, skill sets and expertise needed to 
continue the proper balancing of the force.
    We intend to build on the growth and development momentum of the 
last three record-breaking years. We are fully committed to ensuring 
every Sailor has the opportunity and resources to successfully compete. 
Our goal remains attracting, developing, and retaining the most highly 
skilled and educated workforce of warriors we have ever had, to lead 
the 21st century Navy.
    As I testified last year, Sea Warrior is designed to enhance the 
assessment, assignment, training and education of our Sailors.
    Our fiscal year 2005 budget request includes the following tools we 
need to enhance mission accomplishment and professional growth:
  --Innovative personnel employment practices are being implemented 
        throughout the fleet. Optimal manning experiments in USS BOXER 
        (LHD-4), USS MILIUS (DDG 69) and USS MOBILE BAY (CG 53) 
        produced revolutionary shipboard watch standing practices, 
        while reducing overall manning requirements and allowing 
        Sailors to focus on their core responsibilities. The fleet is 
        implementing best practices from these experiments to change 
        Ship Manning Documents in their respective classes. Optimal 
        manning means optimal employment for our Sailors.
      We have our fourth crew aboard USS FLETCHER (DD 992) and our 
        third crew aboard USS HIGGINS (DDG 76) in our ongoing Sea Swap 
        initiative. This has saved millions of dollars in transit fuel 
        costs and increased our forward presence without lengthening 
        deployment times for our Sailors. FLETCHER and HIGGINS will 
        return to San Diego this year after a period of forward 
        deployed operations of 22 months and 17 months respectively. We 
        will continue to assess their condition and deep maintenance 
        needs to develop and apply lessons learned to future Sea Swap 
        initiatives.
  --Selective Reenlistment Bonus (SRB). Targeted bonuses such as SRB 
        are critical to our ability to compete for our highly trained 
        and talented workforce both within the Navy and with employers 
        across the nation as well. Proper funding, adequate room for 
        growth and the flexible authorities needed to target the right 
        skills against the right market forces are important to the 
        shape of the workforce. This program specifically targets 
        retention bonuses against the most critical skills we need for 
        our future. We ask for your continued support and full funding 
        of this program.
  --Perform to Serve (PTS). Last year, we introduced PTS to align our 
        Navy personnel inventory and skill sets through a centrally 
        managed reenlistment program and instill competition in the 
        retention process. The pilot program has proven so successful 
        in steering Sailors in overmanned ratings into skill areas 
        where they are most needed that the program has been expanded. 
        More than 2,400 Sailors have been steered to undermanned 
        ratings and approved for reenlistment since the program began 
        last February and we will continue this effort in 2005.
  --Assignment Incentive Pay (AIP) is a financial incentive designed to 
        attract qualified Sailors to a select group of difficult to 
        fill duty stations. AIP allows Sailors to bid for additional 
        monetary compensation in return for service in these locations. 
        An integral part of our Sea Warrior effort, AIP will enhance 
        combat readiness by permitting market forces to efficiently 
        distribute Sailors where they are most needed. Since the pilot 
        program began last June, more than 1,100 AIP bids have been 
        processed resulting in 238 Sailors receiving bonuses for duty 
        in these demanding billets. We ask for continued support of 
        this initiative.
  --Professional Military Education (PME). We are taking a more 
        comprehensive approach to the education of our people than we 
        have done in the past. We are in the process of developing a 
        PME continuum that integrates general education, traditional 
        Navy-specific Professional Military Education (NPME), and Joint 
        Professional Military Education (JPME) curricula. This will 
        allow us to develop a program that fully incorporates all 
        aspects of our professional and personal growth and development 
        training needs. Improvements so far include establishing 
        networks with civilian educational institutions, developing new 
        degree programs, and establishing partnerships with other 
        services' institutions. We are also expanding opportunity 
        through distance learning and the Internet. We are committed to 
        broadening the professional and intellectual horizons of both 
        our officers and our enlisted men and women to prepare them to 
        operate tomorrow's fleet and assume key naval and joint 
        leadership roles.
  --Human Performance Center (HPC) has been established to apply Human 
        Performance and Human System Integration principles in the 
        research, development and acquisition processes. In short, the 
        HPS will help us understand the science of learning. They will 
        ensure training is driven by Fleet requirements and they will 
        focus requirements on the performance needed to carry out our 
        missions. This will eliminate potential performance and 
        training deficiencies, save money and help us improve our 
        readiness.
  --The Integrated Learning Environment (ILE) is the heart of our 
        Revolution in Training. ILE is a family of systems that, when 
        linked, will provide our Sailors with the ability to develop 
        their own learning plans, diagnose their strengths and 
        weaknesses, and tailor their education to support both personal 
        and professional growth. They will manage their career 
        requirements, training and education records. It will match 
        content to career requirements so training is delivered at the 
        right time. Most importantly, these services will be provided 
        anytime, anywhere via the Internet and the Navy-Marine Corps 
        Intranet (NMCI).
    We are taking advantage of every opportunity to accelerate the 
tools we need to develop our 21st Century workforce. The improvements 
and pilots that Congress has supported--including bonuses, pay table 
adjustments, retirement reforms, better medical benefits, and our Sea 
Warrior initiatives--are having the desired impact.
    Your support of our fiscal year 2005 request for a 3.5 percent 
basic pay raise, for our efforts to transform our manpower structure in 
some fundamental ways, and for a reduction in average out-of-pocket 
housing costs from 3.5 percent to zero will have a direct effect on our 
ability to properly size and shape the 21st century workforce that is 
our future.

Accelerate Our Investment in Sea Power 21
    As I testified last year, Sea Power 21 defines the capabilities and 
processes that the 21st century Navy will deliver. We now have an 
opportunity to accelerate the advantages that our vision for a joint, 
netted and sea-based force provides this nation, thanks to the 
tremendous investments that you have made in our battle for people, in 
the quality of service for each of our Sailors, and in readiness.
    This year, we will pursue distributed and networked solutions that 
could revolutionize our capability. We will focus on the power of Sea 
Basing and our complementary capability and alignment with our number 
one joint partner, the U.S. Marine Corps. We will sustain a robust 
science and technology program, and we will exploit investments made in 
joint research and development wherever possible.
    For example, we are urgently pursuing technical advances to support 
our Sailors, Soldiers, Airmen and Marines in Iraq. The Naval Sea 
Systems Command and the Office of Naval Research are working closely 
with all services, government agencies, industry, and academic and 
government laboratories to identify, test, and deploy promising 
technologies that can counter improvised explosive devices (IEDs), 
snipers, suicide bombers and other force protection threats. We are 
also pursuing other quick-reaction technology initiatives such as 
persistent wide-area surveillance using small Unmanned Aerial Vehicles, 
blue force tracking technology, body armor and extremity protection. We 
are committed to ensuring that the joint force on the ground is as 
equipped as they possibly can be to accomplish their mission.
    Our highest priority programs within each of the core capability 
sets that define our Sea Power 21 vision.
    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 maximize our sea basing capability and minimize as 
much as possible our reliance on shore-based support nodes. To do this, 
we will make doctrinal, organizational and operational changes mandated 
by this concept and by the underlying technology that makes it 
possible. We have an opportunity here, along with the U.S. Marine Corps 
and the U.S. Army, to reexamine some of the fundamentals of not only 
how we move and stage ground forces, but how we fight ashore as well. 
Our highest priority Sea Basing investments include:
  --Surface Combatant Family of Ships. As I've already testified, the 
        power of joint forces in OIF was in the synergy of individual 
        service strengths. The same concept holds true within the Navy 
        itself. We seek the synergy of networks, sensors, weapons and 
        platforms that will make the joint force greater in combat 
        power than the sum of the individual parts. Development of the 
        next generation of surface combatants as ``sea frames''--
        analogous to ``air frames''--that are part of a modular system 
        is just such an endeavor.
      The surface combatant family of ships allows us to dramatically 
        expand the growth potential of our surface combatants with less 
        technical and fiscal risk. To bring these concepts to life and 
        to take them--and the fight--to the enemy, we have decided upon 
        three entirely new ship classes. The first to premier will be 
        the Littoral Combat Ship (LCS) in 2007. The advanced strike 
        destroyer (DD(X)) will follow in about 2011. And just a few 
        years after the first DD(X), the keel will be laid on the first 
        CG(X), the next class of cruiser designed from the keel up for 
        theater air and ballistic missile defense.
      Our research and development efforts and experimentation with 
        high speed and theater support vessels like SWIFT, and the X-
        Craft later this year, are helping us reduce our technical risk 
        and apply important lessons in hull design and mission 
        modularity to the development of the surface combatant family 
        of ships. DD(X) is the heart of the family and will spiral 
        promising technologies to both CG(X) and LCS in the future. I 
        will discuss each one of these ships in more detail below.
  --CVN 21 is the centerpiece of the Navy Carrier Strike Group of the 
        future. It will bring transformational capabilities to the 
        fleet, including a new electrical generation and distribution 
        system, the electro-magnetic aircraft launching system (EMALS), 
        a new/enlarged flight deck, weapons and material handling 
        improvements, and a crew reduction of at least 800 personnel. 
        It will be able to generate higher daily and sustained sortie 
        rates than our NIMITZ-class aircraft carriers. Our fiscal year 
        2005 request of $979 million in research and development and 
        procurement funding continues the development of CVN 21 and 
        several critical technologies in the lead ship, including the 
        EMALS prototype and testing already ongoing in Lakehurst, New 
        Jersey. Construction of the CVN 21 remains on track to start in 
        fiscal year 2007.
  --CVN 70 RCOH. The fiscal year 2005 budget provides advanced 
        procurement funds for the USS CARL VINSON (CVN 70) RCOH, now 
        scheduled to begin in fiscal year 2006. CVN 70 has sufficient 
        reactor fuel for one additional deployment. This action makes 
        the best possible use of CARL VINSON's remaining fuel capacity 
        and improves shipyard work loading.
  --MPF(F). These future Maritime Prepositioning Ships will serve a 
        broader operational function than current prepositioned ships, 
        creating greatly expanded operational flexibility and 
        effectiveness. We envision a force 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. Our fiscal year 
        2005 request accelerates the lead MPF(F) from fiscal year 2008 
        to fiscal year 2007 to reflect our emphasis on Sea Basing 
        capabilities.
    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 2005 priorities:
  --DD(X). The technology engine for the Fleet, DD(X) is the 
        centerpiece of a surface combatant family of ships and will 
        deliver a broad range of capabilities. This advanced multi-
        mission destroyer will bring revolutionary improvements to 
        precise, time-critical strike and joint fires and our 
        Expeditionary Strike Groups of the future.
      Transformational and leap ahead technologies include an electric 
        drive and integrated power system; an Advanced Gun System with 
        the high rate of fire and precision to reach almost 8 times 
        farther and command more than 110 times the area of our current 
        five inch 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. 
        DD(X) is an enabler both technically and operationally. This 
        seaframe will also reduce our seagoing manpower requirements 
        and will lower total ownership costs.
      This program will provide a baseline for spiral development of 
        technology and engineering to support a range of future 
        seaframes such as (CG(X)). It will also enable the 
        transformation of our operations ashore. Imagine an Army or 
        Marine rifleman on the ground and Navy Petty Officer at sea 
        looking at the same real-time picture of enemy troops encamped 
        at a municipal airport. With the push of a button, the rifleman 
        sends targeting coordinates to the Petty Officer in a DD(X) 
        more than 50 miles offshore. Within a few minutes, rounds from 
        the AGS start falling on the airport with incredible accuracy. 
        That kind of on-demand, persistent time-critical strike will 
        revolutionize our joint fire support and ground maneuver 
        concepts of operation and it will free our strike fighter 
        aircraft for more difficult targets at much greater ranges.
      DD(X)'s all-electric drive, called the Integrated Power System 
        (IPS), will not only drive the ship through the water, but will 
        also generate the kind of power capacity that will enable 
        eventual replacement of the Advanced Gun System (AGS). When 
        combined with the physical capacity and volume of the hull 
        form, DD(X) could lead us to revolutionary technologies from 
        the naval research enterprise like the electromagnetic rail gun 
        and directed energy weapons. The fact that rail guns do not 
        require any explosives will free up magazine space for other 
        mission areas. This capability is projected to be a reality in 
        the 2015 to 2018 timeframe. DD(X) will be in service for 
        decades after that; having the kind of growth potential to 
        install those kinds of technologies dramatically lowers our 
        future development costs.
      The funding profile for DD(X) supports the 14,000-ton design and 
        the S-Band Volume Search Radar (VSR). Lead ship detail design 
        and construction are planned to start in fiscal year 2005.
  --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 JSF has just completed the second year of a 10-
        11 year development program, and is experiencing a variety of 
        typical challenges that affect System Development and 
        Demonstration (SDD) program schedule and cost. Additional 
        design work is required to address technical issues, primarily 
        weight projections. The budget therefore realigns $5 billion 
        from procurement appropriations in fiscal year 2005 through 
        fiscal year 2009, and Low Rate Initial Production was deferred 
        one year to fiscal year 2007. The JSF remains vital to our 
        future. It will give us the range, persistence and 
        survivability needed to keep our strike fighters viable for 
        years to come.
  --SSGN. Funding is included in fiscal year 2005 to continue the SSGN 
        conversion program. Our future SSGN capability will provide 
        covert conventional strike platforms capable of carrying 150 
        Tomahawk missiles. The SSGN will also have the capacity and 
        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 vehicles to enhance the joint force commander's 
        knowledge of the battlespace. The inherently large capacity of 
        these hulls will enable us to leverage future payloads and 
        sensors for years to come. We still expect our first SSGN to be 
        operational in 2007.
  --EA-18G. Last year, you initiated funding at our request to replace 
        the aging EA-6B Prowler with the EA-18G Airborne Electronic 
        Attack aircraft. Increased EA-6B usage in 2003 has resulted in 
        wing center section or outer wing panel fatigue for some 43 EA-
        6B aircraft, making your support last year critical to our 
        ability to dramatically accelerate the recapitalization of the 
        nation's only joint electronic attack capability. Using the 
        demonstrated growth capacity of the F/A-18E/F, the EA-18G will 
        quickly recapitalize our Electronic Attack capability at lower 
        procurement cost, with significant savings in operating and 
        support costs; 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. We 
        begin purchasing airframes in fiscal year 2006 and will achieve 
        initial operating capability in 2009.
    Sea Shield is the projection of layered, global defensive power.
    Sea Shield will enhance deterrence and war fighting 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 power in the littoral 
and deep inland. 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:
  --Mine Warfare Programs. We intend to field a set of unmanned, 
        modular Mine Counter-Measure (MCM) systems employable from a 
        variety of host platforms or shore sites to minimize our risk 
        from mines and sustain our national economic and military 
        access to every corner of the globe. Our future MCM capability 
        will be faster, more precise and organic to both Expeditionary 
        and Carrier Strike Groups and will ultimately remove both the 
        man and our mammals from the minefield. Within the FYDP, we 
        expect to reduce the time that it takes to render sea mining 
        ineffective by at least half of the time that it takes us 
        today.
      Our fiscal year 2005 budget request includes funding to realize 
        organic mine warfare capabilities in one Strike Group this 
        year, while maintaining the funding necessary for a potent and 
        dedicated Mine Countermeasure (MCM) force. We have also 
        requested an increase of $167 million across the FYDP for mine 
        warfare programs, to include unmanned vehicles such as the 
        Long-Term Mine Reconnaissance System (LMRS) to provide a 
        clandestine mine reconnaissance capability from our LOS 
        ANGELES-class submarines, and the Remote Minehunting System on 
        ARLEIGH BURKE-class destroyers (DDGs 91-96). Both of these 
        programs are scheduled to reach Initial Operating Capability 
        (IOC) milestones this year. Future introduction of the Littoral 
        Combat Ship (LCS) with mine warfare mission modules will 
        improve the ability of Strike Groups to neutralize mine threats 
        in parallel with--not in sequence before--other operations.
  --Littoral Combat Ship (LCS). The role of LCS is to provide access to 
        joint forces in the littorals; a capability gap we identified 
        as a result of the 2001 Quadrennial Defense Review. During the 
        past year and a half, considerable campaign analysis and fleet 
        battle experiments have demonstrated that naval forces need 
        better ways to fight mines; small, fast, highly armed boats; 
        and quiet diesel and advanced air-independent propulsion 
        submarines operating in shallow waters. The performance of U.S. 
        Navy Patrol Craft and the experimental HSV-X1 JOINT VENTURE in 
        the Iraqi littoral was critical to the early detection and 
        destruction of the Iraqi mine threat. The same kind of 
        capability needs to be delivered in a fast, maneuverable, 
        shallow-draft platform that has the survivability to operate 
        independently. LCS will have these characteristics, along with 
        self-defense, navigation, and command-and-control systems.
      LCS will be built from the keel up to be a part of a netted and 
        distributed force, and will be the first ship designed with 
        FORCEnet as a requirement. The main battery of LCS will be its 
        off-board systems: manned helicopters and unmanned aerial, 
        surface and underwater vehicles. It is the off-board vehicles--
        with both sensors and weapons--that will enter the highest 
        threat areas. Its modular design, built to open-systems 
        architecture standards, provides flexibility and a means to 
        rapidly reconfigure mission modules and payloads. As technology 
        matures, the Navy will not have to buy a new LCS platform, but 
        will upgrade the mission modules or the unmanned systems.
      LCS also will have an advanced hull design and be significantly 
        different from any warship that has been built for the U.S. 
        Navy. Detail design and construction of the first LCS Flight 0 
        ship is planned in fiscal year 2005. The LCS requirements 
        process is tailored to support the rapid delivery of two 
        flights (Flight 0 and 1) of ships, using an evolutionary, 
        ``spiral'' acquisition approach. The spiral development process 
        allows time-phased capability improvement for ship and mission 
        systems. This incremental development and delivery strategy 
        supports the ship's accelerated acquisition schedule, diverse 
        threat and capability requirements, and dynamic levels of 
        technology push/pull. The ship's modular, open design will also 
        enable lifecycle adaptability and affordability. Four LCS's 
        have been added since last year's budget plan was submitted.
  --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. We are working 
        closely under the authority of the Missile Defense Agency (MDA) 
        to deliver this much-needed capability to the nation's 
        Combatant Commanders. Our sea-based missile defense programs 
        experienced tremendous success on the test range this year, 
        scoring two of three intercepts. Continued development and 
        testing will support Initial Defensive Operations beginning in 
        the fall of 2004, with select ARLEIGH BURKE-class destroyers 
        providing Long Range Surveillance and Tracking to the nation's 
        capability late this year.
  --Multi-mission Maritime Aircraft (MMA)--Broad Area Maritime 
        Surveillance (BAMS). We significantly increased this year's 
        research and development funding for the Multi-Mission Aircraft 
        to recapitalize our 1950's-era Lockheed ``Electra'' based P-3 
        force. Our acquisition plan was further refined this past year 
        with the integration of the Broad Area Maritime Surveillance-
        Unmanned Aerial Vehicle (BAMS-UAV) program into the overarching 
        Maritime Patrol and Armed Reconnaissance requirement. This 
        lethal combination of manned and unmanned reconnaissance 
        aircraft will recapitalize our maritime patrol anti-submarine 
        warfare, anti-surface warfare and armed intelligence, 
        surveillance and reconnaissance capability. We also developed a 
        robust sustainment plan for the current P-3 fleet that includes 
        special structural inspections (SSI) and kits that extend P-3 
        service lives by a minimum of 5,000 hours. This SSI program 
        will replace, correct or modify our current P-3 force to ensure 
        that they do not prematurely reach the end of their fatigue 
        life before we achieve Initial Operating Capability (IOC) of 
        the MMA in 2013.
  --VIRGINIA-class submarine (SSN-774). The first ship of this class 
        was christened last year and will commission in 2004. This 
        class will replace LOS ANGELES-class (SSN-688) attack 
        submarines and will incorporate new capabilities, including 
        unmanned vehicles, and the ability to support Special Warfare 
        forces. It will be an integral part of the joint, networked, 
        dispersed 21st Century Fleet. Our fiscal year 2004 budget 
        funded the first of five submarines under the multi-year 
        procurement (MYP) contract authorized by Congress last year. 
        The second submarine of the MYP contract is funded in fiscal 
        year 2005. Approximately $240 million in economic order 
        quantity advance procurement is funded in fiscal year 2005 in 
        support of this contract.
  --CG Modernization. Funding for the TICONDEROGA-class cruiser 
        modernization continues in fiscal year 2005. The Cruiser 
        Modernization 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 area air defense to the 
        joint force commander. These modifications include 
        installations of the Cooperative Engagement Capability, which 
        enhances and leverages the air defense capability of these 
        ships, and an ASW improvement package. These converted cruisers 
        could also be available for integration into ballistic missile 
        defense missions when that capability matures. Our first 
        cruiser modernization begins in fiscal year 2006.
    FORCEnet is the operational construct and architectural framework 
for naval warfare in the joint, information age. It will allow systems, 
functions and missions to be aligned in a way that will transform our 
situational awareness, accelerate speed of decisions and allow naval 
forces to greatly distribute its combat power in a unified, joint 
battlespace. FORCEnet provides the world-class IT tools that we need to 
continue to be the world-class Navy.
    Programs that will enable the future force to be more networked, 
highly adaptive, human-centric, integrated, and enhance speed of 
command include:
  --Navy Marine Corps Intranet (NMCI). NMCI is operational and 
        providing commercial IT services for more than 300,000 DON 
        employees and two Combatant Commanders. This initiative, as 
        part of our FORCEnet strategy, is providing a single, secure 
        shore-based network and will link with our tactical networks to 
        provide end-to-end collaboration within the DON and across the 
        joint community. Fiscal year 2005 funding of $1.6 billion 
        provides for NMCI operations and, at the same time, continues 
        transition of the remaining legacy IT networks to NMCI 
        enterprise network services. This past year, with the help of 
        the authorizing language you provided, the NMCI program 
        finalized a full partnership agreement with the Defense 
        Information Systems Agency for operations and provisioning.
  --Mobile User Objective System (MUOS). The new MUOS Satellite 
        Communications (SATCOM) program will increase DOD Narrowband 
        UHF SATCOM capacity by roughly 1,300 percent over current 
        capabilities. MUOS is a $6.4 billion joint interest program, 
        and it supports a particularly important ``Comms-on-the-Move'' 
        capability for handheld terminals, aircraft, missiles, and UAVs 
        in urban and heavily wooded terrain. We plan to reach the 
        Initial Operating Capability milestone in 2009, with Full 
        Operational Capability in 2013.
  --Joint Aerial Common Sensor (JACS). We have partnered with the Army 
        in the Joint Aerial Common Sensor development program in our 
        pursuit of a replacement for the aging EP-3 airborne 
        information warfare and tactical signals intelligence (SIGINT) 
        aircraft. JACS will provide multi-intelligence strike targeting 
        data and Signals Intelligence capabilities, and will include a 
        Synthetic Aperture Radar, Ground Moving Target Indicator, 
        Electro-Optical and Infrared Sights, and Measurements and 
        Signature capabilities. These will be coupled with automatic/
        manual data fusion. Our fiscal year 2005 request includes $25 
        million for this program.
  --Joint Tactical Radio System (JTRS). JTRS will be the wireless 
        ``last tactical mile'' component of the Global Information Grid 
        (GIG) and will transform Navy's tactical communications systems 
        by incorporating Internet Protocol (IP) communications over 
        multi-spectral radio frequency (RF) media. JTRS is a software 
        programmable, multi-band, multi-mode family of net-workable 
        radios, capable of simultaneous voice, data, video 
        communications and mobile ad hoc networking. Our fiscal year 
        2005 request includes $56 million for JTRS.
  --Deployable Joint Command Control System (DJC\2\). DJC\2\ is the 
        SECDEF and CJCS priority C\2\ transformation initiative. DJC\2\ 
        will provide a standing, fully deployable, scaleable, and 
        standardized command and control (C\2\) capability to the 
        Regional Combatant Commanders (RCC) and Joint Force Commanders. 
        DJC\2\ responds to the need for joint, deployable C\2\ 
        capability, with first RCC delivery to PACOM in fiscal year 
        2005. DJC\2\ is an enabler for the Standing Joint Force 
        Headquarters concept being developed by Joint Forces Command 
        (JFCOM). DON is Lead Component for the acquisition program, and 
        we ask your support for the $81 million we've requested in 
        fiscal year 2005.

Improving Effectiveness
    As I've testified, your Navy today is the most capable and most 
ready Navy in our history, thanks in large part to the support of the 
Congress and of the American people. But, I believe that we can do 
better--that, in fact, we must do better--as stewards of the public 
trust in determining not just how much we should spend on programs, but 
how those defense dollars are spent. This is especially true today 
because of the strategic challenges posed by the ongoing global war on 
terrorism, because of our need to recapitalize aging, Cold War-era 
infrastructure and capability, and because of the burgeoning 
technological and operational changes that will dramatically alter the 
way we fight. Revolutionizing the way in which our defense dollars are 
spent presents opportunities to increase our effectiveness, both now 
and in the future.
    Sea Enterprise is focusing headquarters leadership on outputs and 
execution, and is creating ideas that will improve our productivity and 
reduce our overhead costs. Its key objectives are to:
  --Leverage technology to improve performance and minimize manpower 
        costs.
  --Promote competition and reward innovation and efficiency.
  --Challenge institutional encumbrances that impede creativity and 
        boldness in innovation.
  --Aggressively divest non-core, under-performing or unnecessary 
        products, services and production capacity.
  --Merge redundant efforts.
  --Minimize acquisition and life-cycle costs.
  --Maximize in-service capital equipment utilization.
  --Challenge every assumption, cost and requirement.
    Department of the Navy senior leadership is actively engaged in 
tracking the execution of ongoing Sea Enterprise initiatives totaling 
approximately $40 billion, and identifying $12.4 billion in cost 
savings and requirements mitigation across the Future Years Defense 
Program (FYDP). We are committed to efficiency and productivity 
improvements that will generate the savings necessary to augment our 
investment stream and implement our Sea Power 21 vision--delivering the 
right force, with the right readiness, at the right cost. Specific 
highlights of these fiscal transformation initiatives include:
  --Right Readiness. Along with the Fleet Response Plan, we have also 
        initiated processes ashore that will generate a more effective 
        force. As just one example, we have established a single shore 
        installation management organization, Commander, Navy 
        Installations (CNI), to globally manage all shore 
        installations, promote ``best practices'' development, and 
        provide economies of scale, increased efficiency, 
        standardization of polices, and improved budgeting and funding 
        execution. This initiative is anticipated to save approximately 
        $1.2 billion across the FYDP.
  --Right Cost. We've taken a hard look at our ``level of effort'' 
        programs to maximize return on taxpayer investment. This year's 
        effort generated $2 billion in future savings in programs not 
        supported by specific performance metrics in force structure, 
        readiness or cost benefit. In addition, we focused on 
        streamlining our organizations and processes as a means to 
        harvest efficiencies and control costs. Innovative programs 
        like SHIPMAIN and the Naval Aviation Readiness Integrated 
        Improvement Program are aiding in developing and sharing best 
        practices, streamlining maintenance planning and improving 
        performance goals in shipyards, aviation depots, and 
        intermediate maintenance activities. We also reorganized the 
        Navy Supply Systems Command, including the establishment of the 
        Naval Operational Logistics Support Center to consolidate 
        transportation, ammunition and petroleum management. We will 
        continue to look for additional opportunities in this area 
        while leveraging the gains already made.
  --Right Force. We believe transformation to our future force must 
        include improving our buying power. To improve upon our force 
        structure, we're divesting non-core, redundant, under-
        performing, and outdated products and services. We are using 
        multi-year procurement contracts and focusing where possible on 
        economic order quantity purchase practices to optimize our 
        investments. An excellent example lies in the F/A-18E/F multi-
        year procurement contract that anticipates procurement of 210 
        aircraft while saving us in excess of $1.1 billion across the 
        FYDP. We also recognize the need to transform our single 
        greatest asymmetric advantage, our people. The upcoming year 
        will focus on ensuring we not only have the right number, but 
        the right mix of military, civilian, and contractor personnel 
        to accomplish the mission at the lowest possible cost. You've 
        given us a tremendous tool to enhance our flexibility in this 
        area, the National Security Personnel System, and we plan to 
        take full advantage of it.
    Building on prior efforts, I'm dedicating a significant amount of 
personal time to conducting execution reviews with leadership at the 
major commands across the Navy because, as I see it, leadership 
engagement in execution is an essential step to achieving our Sea 
Enterprise objectives. These reviews have provided me the opportunity 
to focus on the intricate details of the organizations while ensuring 
commanders are aligned with the vision and direction in which we are 
steaming. We focus on ways to swiftly move from strategy to 
implementation, as well as innovative ways to reduce costs and return 
resources to the enterprise for reinvestment.
    In 2005, the Navy will continue to pursue product and process 
efficiencies and the opportunities to be more effective while improving 
our war fighting capability. Harvesting the savings for 
recapitalization is a vital part of that effort, and we will continue 
to balance the benefits of new productivity initiatives against 
operational risks. Our intent is to foster a culture of continuous 
process improvement, reduce overhead, and deliver the right force 
structure both now and in the future.

                               CONCLUSION

    For us, winning the Global War on Terrorism remains our number one 
objective--and victory is the only acceptable outcome. To achieve this, 
we are accelerating the advantages we bring to the nation.
    The Fleet Response Plan will improve upon the operational 
availability of fleet units, providing forward deployed forces for 
enhanced regional deterrence and contingency response, while at the 
same time, retaining the ability to rapidly surge in times of crisis.
    We are investing in enhanced war fighting capability for the joint 
force, using the extended reach of naval weapons and sensors to reach 
farther and more precisely with striking power, and deliver broader 
defensive protection for joint forces ashore and fully leverage our 
command of the sea.
    We are creating a personnel environment that attracts, retains and 
relies upon creative, effective and competitive people. We are 
investing in the tools, the information technology and the training 
that delivers more meaningful job content to them because it is they 
who offer us our greatest advantage.
    The support of Congress is vital to our readiness today and to 
building the Navy of tomorrow--I thank you for your dedicated efforts 
and support.

STATEMENT OF GENERAL MICHAEL W. HAGEE, COMMANDANT, 
            UNITED STATES MARINE CORPS
    General Hagee. Chairman Stevens, Senator Inouye, and 
distinguished members of this committee, it is my privilege to 
report on the state of your Marine Corps.
    First, like Admiral Clark and Secretary England, I would 
like to thank you for your visits to our servicemen and women 
within and outside the United States. These trips always have a 
positive effect on individual morale. I would also like to 
thank this committee for its support of your marines and their 
families over the past few years. This support is critical to 
ensuring that we remain the expeditionary force that is most 
ready when the Nation is least ready.
    After we withdrew from Southern Iraq, in September of last 
year, we continued to have significant numbers of marines 
deployed to Afghanistan, Horn of Africa, Philippines, Japan, 
the Republic of Georgia, and other regions in support of the 
global war on terrorism. With these ongoing deployments, and in 
the midst of reconstituting our force and equipment, we were 
directed to have approximately 25,000 marines trained and 
prepared to deploy to Iraq within 4 months. Today, we have 
nearly completed, almost 2 weeks ahead of schedule, the 
movement of these marines and sailors to Kuwait and Iraq in 
support of Operation Iraqi Freedom II.
    Simultaneous with this major deployment, we have executed a 
short-notice deployment of over 1,400 marines and sailors to 
Haiti to conduct security and stability operations there. The 
immediate responsiveness, speed, flexibility, and adaptability 
of your marines demonstrate the continued relevance of naval 
expeditionary capabilities to our Nation's security.
    Your sustained commitment and support of the American 
people have been indispensable in my ability to report to you 
that your marines are well trained, well equipped, and highly 
motivated to meet the challenges vital to maintaining the 
Nation's security today and in the future.
    Let me assure you that the Marine Corps' first priority is 
and will continue to be warfighting readiness and excellence in 
support of our Nation. In the near term, the Marine Corps is 
focused on readiness to provide capable forces that meet the 
demanding needs of our Nation. For the long term, the Marine 
Corps and Navy are committed to developing a new 
transformational sea-basing capability that will provide a 
critical joint competency for assuring access and projecting 
combat power ashore worldwide.
    During Operation Iraqi Freedom, we used a combination of 
forward-deployed marine expeditionary units, maritime pre-
positioning squadrons, two large amphibious task force, and 
strategic air- and sealift to deploy a combat-ready and 
sustainable force of almost 70,000 marines and sailors in less 
than 60 days. No other fighting force in the world can do that. 
Exploding the operational speed, reach, and inherent 
flexibility of sea power, your Navy/Marine Corps team, closely 
integrated with joint and coalition partners and special 
operating forces, engaged in 26 days of sustained combat 
operations, fought ten major engagements, destroying eight 
Iraqi divisions before stopping north of Baghdad, in Tikrit, 
almost 500 miles inland.
    Today, marines are relieving the United States (U.S.) Army 
units in Western Iraq. In preparation for this deployment, we 
work closely with the U.S. Army in and out of Iraq, focusing on 
equipment, tactics, techniques, and procedures. We drew on 
analysis of our experiences in conducting security and 
stability operations last year in Southern Iraq, the tactics of 
the British, and our own extensive small-wars experience. We 
have assimilated these lessons through a comprehensive training 
package that includes rigorous urban operations and language 
and cultural education. We are paying particular attention to 
individual protective equipment, enhanced vehicle and aircraft 
hardening, and aviation survival equipment and procedures.
    However, we also continue to plan for the future. In close 
cooperation and collaboration with the U.S. Navy, as Admiral 
Clark has mentioned, we have developed operational concepts 
that will deliver increased capabilities for the Nation and the 
regional combatant commanders in 10 to 14 days for major 
contingencies, and 0 to 4 days for smaller contingencies, an 
increase in over 50 percent response time.
    The MV-22 Osprey, Expeditionary Fighting Vehicle, Joint 
Strike Fighter, Littoral combat ship, LHA(R), DD(X), and the 
Maritime Pre-positioning Force Future are in the 5-year defense 
plan and are critical to this effort. These platforms will 
comprise a system of systems that will significantly improve 
our warfighting capabilities by leveraging advancements in 
technology. The integration and interdependence of these 
transformational programs will enable us, as part of the joint 
force, to project more combat power ashore in less time with 
the same number of marines. We ask for your continued support 
of these important complementary and transformational programs 
and concepts.
    Your support for quality-of-life issues has been critical 
in our ability to recruit and retain the best young men and 
women America has to offer. The success in these programs is 
reflected in our ability to continue to meet our recruiting and 
retention goals even in these demanding times.

                           PREPARED STATEMENT

    Mr. Chairman, Senator Inouye, members of this committee, I 
would like to emphasize the magnificent performance of your 
individual marine, the most agile and lethal weapons system on 
today's battlefield. On behalf of all marines, I thank this 
committee for its steadfast support, 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 readiness of 
your United States Marine Corps. Your Marines are firmly committed to 
warfighting excellence, and the support of the Congress and the 
American people has been indispensable to our success in the Global War 
on Terrorism. Your sustained commitment to improving our Nation's armed 
forces to meet the challenges of today as well as those of the future 
is vital to the security of our Nation. On behalf of all Marines and 
their families, I thank this Committee for your continued support.

                              INTRODUCTION

    In the near-term, the Marine Corps' top priorities are to maintain 
our high state of readiness and to provide capable forces that meet the 
demanding needs of the Unified Combatant Commanders in order to 
prosecute the Global War On Terrorism in support of the Nation. For the 
long-term, the Marine Corps and Navy are committed to developing a 
Seabasing capability that will provide a critical joint competency for 
assuring access and projecting power that will greatly improve the 
security of the United States. The marked increase in our warfighting 
capability will be apparent as we introduce new systems such as the MV-
22 Osprey, the Expeditionary Fighting Vehicle, the Joint Strike 
Fighter, and the Lightweight 155 mm howitzer into our force structure, 
using them to enhance the already potent combat power of our Marine 
Air-Ground Task Forces as integral elements of our Nation's joint 
force.
    The Navy-Marine Corps team continues to play a critical role in the 
Global War On Terrorism and in the establishment of stability and 
security throughout the world. During this past year, the Marine Corps, 
both active and reserve, was engaged in operations from Afghanistan, to 
the Arabian Gulf, the Horn of Africa, Liberia, the Georgian Republic, 
Colombia, Guantanamo Bay, and the Philippines. Most prominent in 
highlighting the value and power of the Nation's naval expeditionary 
capability was the Marine Corps' participation in Operation IRAQI 
FREEDOM. Success in this operation underscored the unique contributions 
of our multi-dimensional naval dominance, our expeditionary nature, our 
flexibility to deal with complex situations and challenges, and the 
adaptability of our forces and individuals in order to defeat the 
challenges posed by adaptive, asymmetric enemies and long-term threats.
    Early last year, the I Marine Expeditionary Force deployed a combat 
ready force of almost 70,000 Marines and Sailors in less than 60 days 
using the full array of our complementary power projection 
capabilities. Forward deployed Marine Expeditionary Units (Special 
Operations Capable) again demonstrated their proven value for immediate 
response. Eleven strategically located Maritime Prepositioned Force 
ships were unloaded in 16 days to provide the equipment and sustainment 
for two Marine Expeditionary Brigades. A seven ship amphibious force 
from each coast embarked a total of 11,500 Marines, Sailors, and their 
equipment and within thirty days these fourteen ships began to arrive 
and offload in Kuwait. Strategic sea and air lift was also vital to our 
success in this effort. Exploiting the operational speed, reach, and 
inherent flexibility of seapower, the Navy-Marine Corps team achieved a 
rapid buildup of sustained warfighting power that was combat ready to 
support U.S. Central Command on March 1, 2003.
    Closely integrated with our joint and coalition partners, as well 
as Special Operations Forces, the I Marine Expeditionary Force provided 
the Combatant Commander with a potent combined arms force comprising a 
balance of ground, aviation, and combat service support elements all 
coordinated by a dynamic command element. This teamwork--the product of 
demanding and realistic Service and joint training--presented a multi-
dimensional dilemma for the Iraqi regime's forces and loyalists. It 
also greatly increased the range of options available to our leadership 
as they addressed each unique and complex situation. The integration of 
the 1st United Kingdom Division within the I Marine Expeditionary Force 
provides outstanding lessons for achieving merged coalition 
capabilities and consistent goals in the future.
    The combat power of I Marine Expeditionary Force generated an 
operational tempo that our enemy could not match. With short notice 
that operations would commence early, the Marines and their joint and 
coalition partners rapidly secured key strategic objectives. The I 
Marine Expeditionary Force then engaged in 26 days of sustained combat 
operations. Using the tenets of maneuver warfare, they executed four 
major river crossings, fought ten major engagements, and destroyed 
eight Iraqi divisions before stopping in Tikrit--almost 500 miles 
inland. In support of Joint Special Operations Forces Northern Iraq, 
the 26th Marine Expeditionary Unit inserted a Marine-Air Ground Task 
Force from the Eastern Mediterranean into Northern Iraq--almost 1,200 
miles distance. The sustained resources of the Marine force, which were 
derived primarily from our seaborne logistics, provided us unrivaled 
advantages. While our logistics were stretched by the operational 
commanders, our combat service support units demonstrated flexibility 
and resourcefulness.
    Highlighting the expeditionary mindset of Marines, our combined 
arms force successfully operated in desert, urban, swamp, and rural 
environments while effectively conducting combat, peacekeeping, and 
humanitarian operations--at times simultaneously. Marines also 
demonstrated the ability to re-task and reorganize to conduct 
unanticipated missions like the taking of the city of Tikrit. Following 
major combat operations, I Marine Expeditionary Force assumed 
responsibility for security and stability in five Central Iraq 
provinces until they were relieved of the last province by coalition 
forces this past September. Flexibility and adaptability are key 
characteristics of an expeditionary force, and they are critical 
advantages that we must seek to optimize for the future, particularly 
in this era of global uncertainty.
    Recent operations also emphasize the increased importance of access 
to key regions for projecting our Nation's power. With global 
interests, the United States must retain the capability to secure 
access as needed. Power projection from the sea greatly increases the 
range of options available to avert or resolve conflicts. A credible 
naval forcible-entry capability is critical to ensure that we are never 
barred from a vital national objective or limited to suboptimal 
alternatives.
    Since the end of major combat operations, the Marine Corps has been 
setting the force in order to enhance warfighting readiness for future 
contingencies. We are reloading combat equipment and materiel on the 
ships of the Maritime Prepositioned Squadrons while also ensuring that 
the requirements for Operation IRAQI FREEDOM II are fulfilled. We are 
using provided funding to repair, refurbish, and where necessary, 
replace equipment. During this period, Marines have continued to 
forward deploy. Marine Corps units are supporting Operation ENDURING 
FREEDOM in Afghanistan, operations in the Horn of Africa, exercises 
critical to supporting the Combatant Commanders' Theater Security 
Cooperation Plans, and counter-drug operations in support of joint and 
joint-interagency task forces. In addition, we have conducted a major 
program to identify and analyze lessons learned from the Iraqi 
campaign. We have also begun to assimilate these lessons and determine 
where and how our force should be rebalanced.
    As the last few years have demonstrated, the Marine Corps Reserve 
is a full partner in our total force. Reserve units participated in all 
aspects of the war in Iraq, providing air, ground, and combat service 
support as well as a large number of individual augmentees to Marine 
and joint staffs. Mobilized Marine reserve infantry battalions have 
also served as ready reaction forces, ``on call'' to support the 
Federal Emergency Management Agency's role in homeland security.

              BUILDING ON SUCCESS FOR IMMEDIATE OPERATIONS

    We continue to execute global operations and exercises with our 
joint and coalition partners. The Marine Corps is beginning to relieve 
the 3d Armored Cavalry Regiment and the 82d Airborne Division in 
Western Iraq in support of Operation IRAQI FREEDOM II. These forces 
will be deployed in two rotations of seven months each. This rotation 
policy will result in the least disruption for the long-term health of 
the Marine Corps, precluding stop-loss/stop-move and unnecessary 
interruptions in recruit training, career progression and development, 
professional military education, and other deployment requirements. The 
first rotation, from March until September 2004, will include 25,000 
Marines and their equipment and includes almost 3,000 reserve component 
Marines. A second rotation--of like size and composition--will overlap 
the first and ensure a smooth and stable transition.
    In preparation for Operation IRAQI FREEDOM II, I Marine 
Expeditionary Force has analyzed lessons learned from their experiences 
in conducting security and stability operations from March to September 
2003, and recent Army lessons learned. As they did last year, I Marine 
Expeditionary Force is working closely with the Army forces in Iraq; 
they have conducted a number of liaison visits with the Army units they 
will relieve. They have drawn from procedures used by the Los Angeles 
Police Department for neighborhood patrolling in gang dominated areas, 
the tactics of the British in Iraq--which reflect years of experience 
in low intensity conflicts and peacekeeping operations, as well as the 
Marine Corps' own extensive ``Small Wars'' experience. We have 
assimilated these lessons through a comprehensive training package that 
includes tactics, techniques, procedures for stability and counter-
insurgency operations. We have conducted rigorous urban operations 
training and exercises. Over 400 Marines are receiving Arabic language 
immersion training, and all deploying Marines and Sailors are receiving 
extensive cultural education. Our supporting establishment is focused 
on the equipment, logistics, and training requirements of this force--
paying particular attention to individual protective equipment, 
enhanced vehicle and aircraft hardening, and aviation survival 
equipment and procedures. This training and support are critically 
important as we send Marines back to war in a volatile, dangerous, and 
changing situation.
    During this next year Marine Expeditionary Units will still deploy 
as part of Naval Expeditionary Strike Groups in support of Combatant 
Commander requirements. Units will continue to rotate to Okinawa and 
Iwakuni Japan, and some of those forces will further deploy in support 
of Operation IRAQI FREEDOM II. While the operational tempo remains 
high, recruiting and retention continue to exceed our goals. We are 
monitoring the health of our Service, and we are focused on ensuring 
that the Marine Corps remains ready for all current and future 
responsibilities.

                         TAKING CARE OF OUR OWN

    Events of the past year continue to highlight the value of the 
individual Marine over all other weapon ``systems.'' While we always 
strive to provide our Marines with the best equipment and weapons, we 
never forget that people and leadership are the foundations of the 
Marine Corps' readiness and warfighting capabilities. Operation IRAQI 
FREEDOM demonstrated that the Marine Corps' recruiting, training, and 
education of the force are extremely successful in maintaining the high 
standards of military readiness our Nation requires. The Marine Corps 
remains committed to taking care of our Marines, their families, and 
our civilian Marines.
Marines
    End Strength.--The Marine Corps is assimilating the Congressionally 
authorized increase in Marine Corps end-strength to 175,000. The 
increase of 2,400 Marines previously authorized by Congress addressed 
an urgent need to train and maintain enough Marines for the long-term 
requirements associated with the Global War on Terrorism. It has been 
particularly important in enabling us to provide the Nation with a 
robust, scalable force option specifically dedicated to anti-
terrorism--the 4th Marine Expeditionary Brigade (Anti-Terrorism).
    The Marine Corps is expeditionary by nature and therefore 
accustomed to deploying in support of contingency and forward presence 
missions. We are structured in such a way as to satisfy our enduring 
requirements and meet operational contingencies as long as the 
contingencies are temporary in nature. While the force is stretched, we 
are meeting our current challenging operational commitments. Our high 
operational and personnel tempos have not negatively impacted 
accessions or retention efforts; however, we continue to monitor both 
very closely.
    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 eight years for enlisted recruiting and thirteen years for officer 
recruiting. This past year the Marine Corps recruited over 100 percent 
of its goal with over 97 percent Tier I High School graduates. In order 
to continue attracting America's finest youth, Recruiting Command 
provides its recruiters the best tools available to accomplish their 
mission.
    The Marine Corps Reserve achieved its fiscal year 2003 recruiting 
goals with the accession of 6,174 Non-Prior Service Marines and 2,663 
Prior Service Marines. With regard to our reserve component, officer 
recruiting and retention to fill out the requirements of our Selected 
Marine Corps Reserve units remains our most challenging concern. This 
is primarily due to the fact that we recruit Reserve officers almost 
exclusively from the ranks of those who have first served a tour as an 
active duty Marine officer and currently the Corps is experiencing a 
low attrition rate for company grade officers in our active force. We 
are attempting to alleviate this challenge. Two successful methods 
include increasing awareness of the benefits of service in the Reserves 
to the company grade officers who are leaving the active ranks and 
reserve officer programs for qualified enlisted Marines.
    Retention.--Retaining the best and the brightest Marines is a 
constant goal; history has proven that superb leadership in the staff 
noncommissioned officer ranks is a major contributor to the Corps' 
combat effectiveness. The ranks of this elite group of leaders can only 
be filled by retaining our best enlisted Marines. The Marine Corps has 
two retention measures and both clearly indicate healthy service 
continuation rates. Our First Term Alignment Plan (first tour) has 
consistently achieved its reenlistment requirements over the past nine 
years. With under one-half of the current fiscal year completed, we 
have achieved 82 percent of our first-term retention goal. Furthermore, 
our Subsequent Term Alignment Plan (second tour and beyond) reveals 
that we have already retained 66 percent of our goal for this fiscal 
year.
    Current officer retention is at a nineteen year high, continuing a 
four-year trend of increasing retention. Despite the increased 
retention overall, certain Military Occupational Specialties 
perennially suffer high attrition. We are attempting to overcome this 
challenge by offering continuation pay for those Marines with Military 
Occupational Specialties that include special qualifications and 
skills. 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.--In 2003, the Marine Corps Reserve rapidly 
mobilized combat ready Marines to augment and reinforce the active 
component. Marine Corps Reserve activations in support of Operation 
IRAQI FREEDOM began in January 2003, and peaked at 21,316 Reserve 
Marines on active duty in May 2003. This represented 52 percent of the 
Selected Marine Corps Reserve (SMCR). Of the over 5,400 Reservists 
currently on active duty, almost 1,300 Individual Mobilization 
Augmentees, Individual Ready Reserves, and Retirees fill critical joint 
and internal billets. As of January 2004, the Marine Corps Reserve 
began activating approximately 7,000 SMCR Marines in support of 
Operation IRAQI FREEDOM II. Judicious employment of Reserve Marines 
remains a top priority of the Marine Corps to ensure the Marine Corps 
Reserve maintains the capability to augment and reinforce the active 
component. Marine Corps Reserve units and individuals are combat ready 
and have rapidly integrated into active forces commands demonstrating 
the effectiveness of the Total Force Marine Corps.
    A strong Inspector-Instructor system and a demanding Mobilization 
and Operational Readiness Deployment Test program ensured Marine Corps 
Reserve units achieved a high level of pre-mobilization readiness. 
Marine Reserve Units continuously train to a C1/C2 readiness standard, 
eliminating the need for post-mobilization certification. Ninety-eight 
percent of SMCR Marines called up for duty reported for mobilization 
and less than one percent requested a deferment, delay, or exemption. 
The Marine Corps Reserve executed a rapid and efficient mobilization 
with units averaging six days from notification to being deployment-
ready, and 32 days after receiving a deployment order they arrived in 
theater. Many activated Marine Reserve units were ready to deploy 
faster than strategic lift could be provided.
    Building on the important lessons of the last year, the Marine 
Corps is pursuing several transformational initiatives to enhance the 
Reserves' capabilities as a ready and able partner with our active 
component. These pending initiatives include: increasing the number of 
Military Police units in the reserve component; establishing a Reserve 
Intelligence Support Battalion to include placing Reserve Marine 
Intelligence Detachments at the Joint Reserve Intelligence Centers; 
returning some of our Civil Affairs structure to the active component 
to provide enhanced planning capabilities to the operational and 
Service Headquarters; and, introducing an improved Individual Augmentee 
Management Program to meet the growing joint and internal requirements.
    When called, the Marine Corps Reserve is ready to augment and 
reinforce. Our Reserve Marines are a vital and critical element of our 
Total Force. The training, leadership, and quality of life of our 
reserve component remain significant Marine Corps priorities.
    Marine For Life.--The commitment to take care of our own includes a 
Marine's transition from active service back to civilian life. The 
Marine For Life Program's mission is to provide sponsorship for our 
more than 27,000 Marines who honorably leave active service each year. 
The program was created to nurture and sustain the positive, mutually 
beneficial relationships inherent in our ethos, ``Once a Marine, Always 
a Marine.'' In cities across the United States, Reserve Marines help 
transitioning Marines and their families get settled in their new 
communities. Sponsorship includes assistance with employment, 
education, housing, childcare, veterans' benefits, and other support 
services needed to make a smooth transition. To provide this support, 
Marine For Life taps into the network of former Marines and Marine-
friendly businesses, organizations and individuals willing to lend a 
hand to a Marine who has served honorably.
    Initiated in fiscal year 2002, the program will reach full 
operational capability in fiscal year 2004. In addition to 110 Reserve 
Marines serving as ``Hometown Links,'' an enhanced web-based electronic 
network, easily accessed by Marines worldwide, will support the 
program. The end state of the Marine For Life Program is a nationwide 
Marine and Marine-friendly network available to all Marines honorably 
leaving active service, that will improve their transition to civilian 
life.

Civilian Marines
    Civilian Workforce Campaign Plan.--Recognizing that our Civilian 
Marines are integral to the success of military operations, General 
James L. Jones, the 32nd Commandant of the Marine Corps, charged our 
senior Marine Corps officials with the development and implementation 
of a strategic 5-year plan for the recruitment, development, and 
retention of our Civilian Marines. The Civilian Workforce Campaign Plan 
(CWCP) consists of six strategic goals: (1) nurture, build, and grow 
Civilian Marines; (2) provide flexible career opportunities; (3) create 
leaders at all levels; (4) improve the performance evaluation system; 
(5) strengthen workforce management expertise; and (6) establish an 
integrated Total Force management approach. As Commandant, I have 
provided the following additional implementing guidance.
    Our vision is to make the Marine Corps the employer of choice for a 
select group of civilians imbued with the Marine Corps values of honor, 
courage, and commitment. Through implementation of the CWCP, we will 
not only define what the Marine Corps will offer its Civilian Marines, 
but what the Corps expects from them. We will attract, nurture, build, 
and grow Civilian Marines by providing innovative recruitment, 
development, retention, reward, and acculturation programs throughout 
the work-life cycle.
    National Security Personnel System.--We want to take this occasion 
to thank again the committee and the Congress for enacting the National 
Security Personnel System (NSPS) in the Fiscal Year 2004 National 
Defense Authorization Act. The Act authorized a more flexible civilian 
personnel management system for the Department that allowed the 
Department to be a more competitive and progressive employer at a time 
when our national security demands a highly responsive system of 
civilian personnel management. The legislation ensures that merit 
system principles govern any changes in personnel management, 
whistleblowers are protected, discrimination remains illegal, and 
veterans' preference is protected. The Department will collaborate with 
employee representatives, invest time to try and work out our 
differences, and notify Congress of any differences before 
implementation. In January, Department officials met with union 
representatives to begin the development of a new system of labor-
management relations. Later this year, following an intensive training 
program for supervisors, managers, human resources specialists, 
employees, as well as commanders and senior management, the Department 
plans to begin implementing NSPS. The Marine Corps, along with the 
entire Department of the Navy, expects to be in the first wave of 
implementation.
    Military-Civilian Conversions.--The Marine Corps will continue to 
actively pursue a review of all functional areas within the Marine 
Corps in an effort to return more Marines to the operating forces. 
Through fiscal year 2003, we have returned over 2,000 manned structure 
spaces to the operating forces, and we will return approximately 650 
more Marines in fiscal year 2004. The fiscal year 2005 President's 
Budget converts roughly an additional 1,400 more billets from Marines 
to Civilian Marines, which will provide us more options to increase 
manning in the operating forces.

Education
    Amid today's uncertain, volatile security environment, our most 
effective weapon remains the individual Marine who out-learns, out-
thinks, and out-fights any adversary. Such warfighting competence is 
secured only through intellectual development. Recent events 
demonstrated how quality education instills confidence in Marines. Our 
educational standards and programs produce innovative leaders who take 
initiative and excel during challenging situations involving 
uncertainty and risk. These high educational standards are inculcated 
by the Marine Corps University and are designed to target every rank in 
both our active and reserve forces. Each year the Marine Corps 
University student population includes members of the other armed 
services, various government agencies as well as dozens of 
international military officers from over thirty different countries.
    The Marine Corps endeavors to provide its Marines with ``lifelong 
learning'' opportunities through a variety of educational programs, 
college courses, and library services on our bases and stations. 
Furthermore, distance learning programs through the Marine Corps 
University make continuing education available to Marines regardless of 
their location. In addition, the Marine Corps will continue to fully 
fund the Tuition Assistance Program in accordance with the Department 
of Defense guideline--funding for 100 percent of tuition cost up to 
$250 per semester hour with a maximum of $4,500 per year. In fiscal 
year 2003, there were 25,454 Marines enrolled in almost 80,000 courses 
with the help of the Tuition Assistance Program.
    Joint Initiatives.--The Marine Corps synchronizes its educational 
objectives with those of the other armed services in order to provide 
Regional Combatant Commanders with the most capable joint force. We 
support the proposal for a Joint Advanced Warfighting School (JAWS) and 
for broadening Joint Professional Military Education (JPME) 
opportunities for the Total Force. By working closely with Joint Forces 
Staff College and our sister services, JAWS has the potential to 
empower future combatant commanders with talented officers who are 
experienced in campaign planning. Intent on broadening our joint 
experience base, the Marine Corps is pursuing an accredited advanced 
joint curriculum (JPME Phase II) at the Marine Corps War College and 
will continue to work to provide JPME opportunities for both active and 
reserve components.
    Senior Leader Development Program.--The Senior Leader Development 
Program was developed last year to address General Officer and Senior 
Executive Service career development and to link education 
opportunities to career progression. A study was commissioned to 
identify the competencies required in each of our general officer 
billets in an effort to link core and complimentary curriculum with the 
assignment process. Within the core curriculum, senior leaders will 
attend the Joint Warfare series of courses as prerequisites by rank and 
billet while they study innovation, business transformation, and 
resource management through complementary courses.

Quality of Life/Quality of Service
    The Marine Corps works to improve the quality of life for Marines 
and their families in order to continue the success of the all 
volunteer force. We provide excellent quality of life programs and 
services, while also helping new Marines to better understand what to 
expect in the military lifestyle. We continuously assess, through a 
variety of means, the attitudes and concerns of Marines and their 
families regarding their quality of life expectations. With 67 percent 
of our Marines deployed away from their home installations at the 
height of Operation IRAQI FREEDOM, we carefully captured lessons 
learned to ensure quality of life programs meet the needs of deployed 
Marines and families who remain at home. Community and Family 
Assistance Centers were established at Camp Lejeune, Camp Pendleton, 
Marine Corps Air Station Miramar, and Marine Corps Base Twentynine 
Palms to provide Marine family members and loved ones access to 
relevant information and referral services.
    To further help Marines and their families before, during, and 
after deployments, the Marine Corps implemented Marine Corps Community 
Services (MCCS) One Source, a Marine Corps-conducted, Department of 
Defense funded pilot program providing around-the-clock information and 
referral services. MCCS One Source is especially useful to our 
activated Marine Reserves and their families as they negotiate the 
requirements and procedures associated with utilization of military 
programs such as TRICARE and other benefit services. In recognition of 
the importance of the transition home after deployments for both 
Marines and their families, the Marine Corps developed a standardized 
return and reunion program consisting of a mandatory warrior transition 
brief for returning Marines, a return and reunion guidebook for Marines 
and family members, a caregiver brief, and briefs designed for spouses.
    We greatly appreciate the supplemental appropriations bills during 
2003, that contained additional help for deployed Marines and their 
families. In 2004, quality of life efforts will continue to focus on 
issues related to supporting deployed forces and their families.

Safety
    Safety programs are vital to force protection and operational 
readiness. Marine leaders understand the importance of leadership, 
persistence, and accountability in the effort to reduce mishaps and 
accidents. The fiscal year 2003 off duty and operational mishap rates 
were driven upward by the mishaps that occurred during and post 
Operation IRAQI FREEDOM, while the aviation mishap rate decreased. To 
meet the Secretary of Defense's challenge to all Services to reduce 
mishaps by 50 percent in two years, the Marine Corps is focusing on 
initiatives that deal particularly with the development of strategies 
and specific interventions to reduce all mishaps. Our leadership at 
every level understand the challenge, and we are actively involved in 
the effort to safeguard our most precious assets--Marines and Sailors.

                   BUILDING ON SUCCESS FOR THE FUTURE

    The Marine Corps, in partnership with our Navy brethren, provides 
our Nation with unrivaled maritime power to help secure peace and 
promote our national interests. The President's fiscal year 2005 
budget, together with your support, will provide a strong foundation 
for our continued success. The fiscal year 2005 budget--predicated on a 
peacetime operational tempo--sustains a high level of readiness and 
ensures our ability to rapidly respond to emerging situations. It also 
allows us to assimilate new technologies and explore new concepts that 
will help realize the full potential of our people and their equipment. 
We will continue to seek improved means to increase the efficiency of 
our investments and increase the combat effectiveness of our forces.

Technology and Experimentation
    The Marine Corps has a long history of innovation and adaptation. 
Experimentation is our principle means to explore new ideas and 
technologies in order to develop new capabilities to overcome emerging 
challenges. The Marine Corps Combat Development Command has realigned 
its experimentation program around the Sea Viking campaign. This 
campaign will explore both concept and prototype technology development 
pathways leading to the sea-based expeditionary capabilities envisioned 
for the future, to include forcible entry from the sea. The Sea Viking 
campaign is complementary to the joint concept development and 
experimentation campaign of Joint Forces Command and the Navy's Sea 
Trial experimentation process. As an integral part of this effort, the 
Marine Corps is refining the expeditionary combat capabilities best 
suited to participate in future Expeditionary Strike Group and 
Expeditionary Strike Force operations. It is also exploring the 
potential for an expanded Seabasing capability in support of future 
joint operations.
    The Marine Corps Warfighting Laboratory has experimented with 
several new pieces of equipment to enhance individual and small unit 
effectiveness. Based on successful experimentation, limited numbers of 
the M16A4 Modular Weapons System, Rifle Combat Optic, and the 
Integrated Intra Squad Radio were fielded for use during Operation 
IRAQI FREEDOM. The Marine Corps continues to seek enhanced capabilities 
for the future as we continue to improve and transform the force. In 
addition, we have procured sufficient quantities of the Outer Tactical 
Vest and its Small Arms Protective Insert plates to ensure all Marines 
participating in Operation IRAQI FREEDOM II are equipped with enhanced 
ballistic protection.

New Concepts and Organizations
    The Expeditionary Force Development System implemented this past 
year is a methodological process that is designed to facilitate the 
development and realization of military operational concepts. It is a 
streamlined and integrated system that covers all phases of concept 
development to the acquisition of necessary equipment and weapons 
systems. The Expeditionary Force Development System proved to be of 
great value to our forces engaged in combat operations and is proving 
to be a helpful means of ensuring that the Marine Corps quickly profits 
from recent operational experiences. The system is compatible with and 
supports naval and joint transformation efforts as it integrates 
transformational, modernization, and legacy capabilities and processes. 
Several emerging concepts and organizational structures are maturing 
that will benefit the Marine Corps and ensure we can meet the future 
demanding requirements of the Combatant Commanders.
    The Seabasing Concept.--Seabasing, envisioned as a National 
capability, is our overarching transformational operating concept for 
projecting and sustaining multi-dimensional naval power and selected 
joint forces at sea. As stated by the Defense Science Board in its 
August 2003 Task Force report: ``Seabasing represents a critical future 
joint military capability for the United States.'' It assures joint 
access by leveraging the operational maneuver of forces globally from 
the sea, and reduces joint force operational dependence upon fixed and 
vulnerable land bases. Seabasing unites our capabilities for projecting 
offensive power, defensive power, command and control, mobility and 
sustainment around the world. This will provide our Regional Combatant 
Commanders with unprecedented versatility to generate operational 
maneuver. Seabasing will allow Marine forces to strike, commence 
sustainable operations, enable the flow of follow-on forces into 
theater, and expedite the reconstitution and redeployment of Marine 
forces for follow-on missions. As the core of Naval Transformation, 
Seabasing will provide the operational and logistical foundation to 
enable the other pillars of Naval Transformation (Sea Strike, Sea 
Shield, Sea Base, and FORCEnet).
    This year, the Marine Corps has continued to refine plans for the 
Marine Expeditionary Brigade of 2015, in concert with our concept for 
sea-based operations. Similarly, the Analysis of Alternatives for our 
Maritime Prepositioning Force (Future), a critical component of 
Seabasing, will provide valid choices for achieving Seabasing 
capabilities. These initiatives will complement, rather than replace, 
the amphibious lift and forcible entry capacity of the LHA(R), LPD-17, 
and LHD, and will provide the Nation a deployment and employment 
capability unmatched in the modern world.
    Expeditionary Strike Groups.--The Marine Corps and Navy continue 
the series of experiments that will refine 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 enhanced Marine Expeditionary Units 
(Special Operations Capable) to provide greater combat capabilities to 
Regional Combatant Commanders. Navy combatants are incorporated within 
the existing training and deployment cycle of the Amphibious Ready 
Group. Further experimentation will also allow us to test command-and-
control arrangements for the Expeditionary Strike Group (ESG). The ESG-
1, composed of West Coast Navy and Marine forces, recently completed 
the pilot deployment in this series. The ESG-2, composed of East Coast 
Navy and Marine forces, will deploy later this year. Currently, the 
Marine Corps Combat Development Command is working with Navy and Marine 
operating forces to capture critical information from these 
experimental deployments to ensure that the ESG capability thoroughly 
integrates doctrine, organization, training, materiel, leadership, 
education, personnel, and facilities. Also, the Marine Corps Combat 
Development Command is working with the Navy to develop the concept for 
the employment of the additional capabilities that the ESG provides 
Regional Combatant Commanders. Finally, the Center for Naval Analyses 
is evaluating the series of experiments through embedded analysts 
deployed with both ESGs and will submit their consolidated reports to 
the Navy and Marine Corps in October 2004.
    Marine Corps--U.S. Special Operations Command Initiatives.--The 
Marine Corps continues to aggressively improve interoperability with 
Special Operations Forces. The U.S. Special Operations Command-Marine 
Corps Board has developed over 30 initiatives to support our 
interoperability goals. The Marine Corps and U.S. Special Operations 
Command are working to leverage existing pre-deployment and deployment 
training as a means to ``operationalize'' our relationship. Our 
deploying Marine Expeditionary Units (Special Operations Capable) 
exchange liaison officers with the Theater Special Operations Commands 
as the Marine Expeditionary Units deploy within the various theaters. 
On June 20, 2003, a Marine Corps ``proof of concept'' Detachment that 
is task organized to complement U.S. Special Operations Command mission 
areas in Direct Action, Special Reconnaissance, Coalition Support and 
Foreign Internal Defense formally stood up at Camp Pendleton, 
California. The Detachment transferred to the operational control of 
U.S. Special Operations Command last December, to facilitate joint pre-
deployment training and is scheduled to deploy in April 2004, with a 
Naval Special Warfare Squadron supporting U.S. Central Command. 
Finally, we are conducting joint training with U.S. Special Operations 
Command in the areas of fixed and rotary wing air support of special 
operation missions.
    Reestablishment of Air-Naval Gunfire Liaison Companies.--During 
this past summer the Marine Corps reestablished an Air-Naval Gunfire 
Liaison Company in I Marine Expeditionary Force and another in the II 
Marine Expeditionary Force. These companies provide teams that 
specialize in all aspects of fire support--from terminal control to 
support of division fire support coordination centers. They greatly 
enhance Marine Air-Ground Task Force Commanders' liaison capability--
with foreign area expertise--to plan, coordinate, employ, and conduct 
terminal control of fires in support of joint, allied, and coalition 
forces. Each company will be fully stood up by this summer, and a 
separate platoon will be stood up in III Marine Expeditionary Force in 
October 2004.
    Tactical Aircraft Integration.--Naval Tactical Aircraft (TacAir) 
Integration makes all Naval Strike-Fighter aircraft available to meet 
both Services' warfighting and training requirements. As part of the 
TacAir Integration plan, a Marine Fighter-Attack squadron will 
eventually be attached to each of the ten active Carrier Air Wings and 
will deploy aboard aircraft carriers. In addition, three Navy Strike-
Fighter squadrons will be assigned into the Marine Corps' Unit 
Deployment Program for land-based deployments. Force structure 
reductions associated with this plan should result in a total cost 
savings and cost avoidance of over $30 billion. The integration of the 
fifth Marine squadron into a Carrier Air Wing and the first Navy 
squadron into the Unit Deployment Program are scheduled for later this 
year.
    TacAir Integration retains our warfighting potential and brings the 
Naval Services a step closer to the flexible sea based force we 
envision for the future. A leaner, more efficient naval strike-fighter 
force is possible because of three underlying factors. The first factor 
is ``Global Sourcing''--the ability to task any non-deployed Department 
of Navy squadron to either Service's missions, allowing for a reduction 
in force structure. Second, ``Level Readiness''--applying the proper 
resources to training, maintenance, and modernization, will ensure the 
smaller force is always capable of responding to the Services' and 
Nation's needs. Third, the development of an operational concept that 
will efficiently manage the employment of this integrated strike-
fighter force within the naval and joint context. Support of readiness 
accounts, modernization programs, and our replacement of the F/A-18 and 
AV-8B with the Short Takeoff and Vertical Landing (STOVL) Joint Strike 
Fighter will ensure the potential promised by this integration.

Better Business Practices
    The Secretary of Defense and Secretary of the Navy have emphasized, 
and the Marine Corps is committed to, business transformation in order 
to optimize resource allocation. The Marine Corps is employing a 
variety of business transformation initiatives including: competitive 
sourcing of over 3,500 commercial billets to save $57 million annually; 
outsourcing garrison food service in our mess halls in the continental 
United States in to free up 594 Marines for other duties; using public-
private ventures to fund new family housing and to increase the 
quantity of safe, comfortable, and affordable homes; consolidation of 
equipment maintenance from five to three echelons in order to improve 
maintenance effectiveness and efficiency; and, regionalizing garrison 
mobile equipment to realign Marines and dollars with higher priorities. 
The Marine Corps continues to develop its activity based costing 
capability in order to support fact based decision making.
    In March 2003, the Marine Corps began participation in the Navy 
Marine Corps Intranet (NMCI)--a network outsourcing initiative that 
will provide a common end-to-end Department of Navy information system 
capability for voice, video, and data communications. By outsourcing 
information technology services not considered to be core competencies, 
the Marine Corps has been able to return 355 supporting establishment 
personnel structure spaces to the operating forces. As a result of this 
improved business practice, the NMCI operating environment will promote 
greater naval interoperability. The Marine Corps will continue to 
refine our business practices and increase the effectiveness of 
warfighting potential.

               OUR MAIN EFFORT--EXCELLENCE IN WARFIGHTING

Training
    Training at Eglin Air Force Base.--In anticipation of the cessation 
of naval expeditionary forces training in Vieques, Puerto Rico, efforts 
began in September 2002 to establish a new training capability at Eglin 
Air Force Base (AFB). Training at Eglin AFB is envisioned to provide a 
near term pre-deployment training capability for East Coast Navy 
Amphibious Ready Groups/Expeditionary Strike Groups and Marine 
Expeditionary Units (Special Operations Capable), with the potential to 
be part of the long-term solution. The training concept was designed 
for up to two 10-day training periods per year. The long-term objective 
is that during each 10-day event, the Expeditionary Strike Groups will 
be able to conduct the full spectrum of training required. The Marine 
Corps has invested approximately $4.2 million in environmental 
assessment/mitigation and infrastructure development required to 
establish an initial training capability at Eglin AFB.
    In December 2003, the Marine Corps completed its first 10-day 
training period at Eglin AFB, at an additional cost of approximately $1 
million. The Marine Corps is assessing the quality the training offered 
at Eglin AFB while continuing to explore and develop other options, 
both within the United States and abroad. While Eglin AFB has the 
potential for enhanced live fire and maneuver training, developing this 
capability will require a significant investment by the Department of 
the Navy and Department of Defense to upgrade existing facilities.
    Joint National Training Capability.--As described by the Deputy 
Secretary of Defense: ``The centerpiece of our Training Transformation 
effort will be a Joint National Training Capability.'' The Joint 
National Training Capability is one of the three pillars of Training 
Transformation, and will improve joint interoperability by adding 
certified ``joint context'' to existing Service training events. The 
Joint National Training Capability is a cooperative collection of 
interoperable training sites, nodes, and events that synthesizes 
Combatant Commander and Service training requirements with the 
appropriate level of joint context.
    The first in a series of pre-Initial Operational Capability Joint 
National Training Capability exercises was held in January 2004, 
linking a Marine Corps Combined Arms Exercise with live Close Air 
Support sorties, a Navy Stand-off Land Attack Missile Exercise, an Army 
rotation at the National Training Center, and an Air Force Air Warrior 
Exercise. The Marine Corps will be actively involved in future Joint 
National Training Capability exercises including Combined Arms 
Exercises and Marine Aviation Weapons and Tactics Squadron-1 evolutions 
scheduled for fiscal year 2005. The Marine Corps is fully engaged in 
the Joint National Training Capability program development, and is on 
track to enhance Service core-competency training with the appropriate 
level of joint context. In concert with the other Services, the Marine 
Corps is working with Joint Forces Command to refine the phrase ``joint 
context,'' certify ranges, and accredit exercises to ensure the force 
is training properly.

Infrastructure
    Blount Island Facility.--The acquisition of the Blount Island 
facility in Jacksonville, Florida, is critical to our Nation and to our 
Corps' warfighting capabilities. Blount Island's peacetime mission is 
to support the Maritime Prepositioning Force. Its wartime capability 
and capacity to support massive logistics sustainment from the 
continental United States gives it strategic significance. The Blount 
Island facility has a vital role in the National Military Strategy as 
the site for maintenance operations of the Maritime Prepositioning 
Force. The Marine Corps thanks Congress for your role in supporting 
this acquisition project. Phase II, funded by the $115.7 million 
appropriated in the Defense Authorization Act of 2004, gives the Marine 
Corps ownership of the leased maintenance area and supporting dredge 
disposal site consisting of 1,089 acres.
    Encroachment.--We are grateful to Congress for providing a tool to 
facilitate the management of incompatible developments adjacent to or 
in close proximity to military lands. We are working with state and 
local governments and with non-governmental organizations such as the 
Trust for Public Lands, The Nature Conservancy, the Sierra Club, and 
the Endangered Species Coalition to acquire lands buffering or near our 
bases including Camp Lejeune, Marine Corps Air Station Beaufort, and 
Camp Pendleton. In return for our investment, the Marine Corps is 
receiving restrictive easements that ensure lands acquired remain 
undeveloped and serve as buffer zones against future encroachment on 
our bases.
    We are also grateful to Congress for codifying legislation that 
gives us the opportunity to partner with the U.S. Fish and Wildlife 
Service and State fish and game agencies in order to manage endangered 
species present on military lands. Management via our Integrated 
Natural Resources Management Plans, which we prepare in partnerships 
with these agencies, allows us to protect and enhance populations of 
these species on our lands while allowing Marines to train. Finally, we 
support the Secretary of Defense's efforts to provide flexibility under 
the Clean Air Act and to clarify the governing authorities under which 
DOD would manage operational ranges. The Marine Corps strives to be a 
good environmental steward and the growing number of endangered species 
on our lands and their increasing populations are examples of our 
successes. We remain committed to protecting the resources entrusted to 
us by the American people.
    Base Realignment and Closures.--A successful Base Realignment and 
Closure process, resulting in recommendations in 2005, is critically 
important to the Nation, the Department of Defense, and the Department 
of Navy. By eliminating excesses and improving efficiencies, the armed 
services will achieve a transformation of our infrastructure in the 
same way we are achieving a transformation of our forces. 
Recommendations will be developed only after a thorough and in-depth 
review.

Command and Control
    Naval expeditionary warfare will depend heavily on the ability of 
the forces to share linked and fused information from a common source 
which will, in turn, ensure command and control of widely dispersed 
forces. Exploiting the use of space, ground and aerial platforms 
requires a networked, protected, and assured global grid of 
information. Leveraging command and control technology to improve our 
interoperability continues to be our focus of effort.
    Advances in technology and a need to leverage existing 
infrastructure requires us to establish a new Information Technology 
(IT) framework--one that is more reliable, efficient, secure, and 
responsive. This new IT framework must provide enhanced information 
access and improved information services to the operating forces. By 
streamlining the deployment of IT tools and realigning our IT 
resources, the Marine Corps Enterprise IT Services will shift the 
burden away from the operating forces by establishing a new IT 
environment. This IT environment will fuse and integrate Department 
wide, net-centric enterprise services to provide a common set of 
sharable IT services to the entire Marine Corps. By eliminating 
individual organizations providing duplicative and redundant services, 
we will reduce the IT burden on the operating forces through enterprise 
provided IT services, and improve our ability to process information 
and enhance the speed of decision-making.

Intelligence
    Our fiscal year 1996 through fiscal year 2004 enhancements to 
Marine intelligence improved the intelligence capability within Marine 
units and established a ``reach-back'' intelligence production 
capability between forward deployed units and our Marine Corps 
Intelligence Activity in Quantico, Virginia. These improvements are 
proving to be remarkably beneficial to our efforts in Operation IRAQI 
FREEDOM and Operation ENDURING FREEDOM. Marine intelligence is 
concurrently supporting ongoing operations, preparing for near term 
operations, and transforming our intelligence systems to meet future 
warfighting requirements. Marine Intelligence Specialists have provided 
significant contributions to ongoing operations in Iraq, Afghanistan, 
and Djibouti and will play a crucial intelligence role as Marine Forces 
return to Iraq in larger numbers this year. Before again deploying to 
Iraq, we will train over 400 Marines in basic Arabic to aid in our 
efforts to work with the Iraqis at the patrol level, and we will 
provide enhanced language training for some of our Arabic heritage 
speakers and others trained linguists to increase our operational 
influence and effectiveness. Meanwhile, we prepare for future conflicts 
by ensuring that our intelligence training and systems funded in the 
fiscal year 2005-2009 program incorporate the latest technological 
advances and become more capable of seamless interoperability with the 
systems used by other armed services and national agencies.

Mobility
    As preliminary assessments of operations in Iraq highlight, 
operational and tactical mobility are essential to overcome the current 
range of threats. The ability to rapidly respond and then flexibly 
adapt to a changing situation is critical to address future challenges. 
Increasing the speed, range, and flexibility of maneuver units that are 
enhanced by logistical power generated from the sea, will increase 
naval power projection. The following initiatives are vital to achieve 
greater operational mobility:
    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 range, speed, 
payload, and survivability will generate truly transformational 
tactical and operational capabilities. With the Osprey, Marine forces 
operating from a 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.--Continued replacement of our aging KC-130 fleet with KC-
130J aircraft is necessary to ensure the viability and deployability of 
Marine Corps Tactical Air and Assault Support well into the 21st 
Century. Acquisition of the KC-130J represents a significant increase 
in operational efficiency and enhanced refueling and assault support 
capabilities for the Marine Corps. The KC-130J provides the aerial 
refueling and assault support airlift resources needed to support the 
Osprey, the Joint Strike Fighter, and the Marine Air-Ground Task Force 
and Joint Force Commanders.
    Expeditionary Fighting Vehicle (EFV).--The EFV, formerly known as 
the Advanced Amphibious Assault Vehicle (AAAV), will provide Marine 
surface assault elements the requisite operational and tactical 
mobility to exploit fleeting opportunities in the fluid operational 
environment of the future. Designed to be launched from Naval 
amphibious shipping from over the horizon, the EFV will be capable of 
carrying a reinforced Marine rifle squad at speeds in excess of 20 
nautical miles per hour in sea state three. This capability will reduce 
the vulnerability of our naval forces to enemy threats by keeping them 
well out to sea while providing our surface assault forces mounted in 
EFVs the mobility to react to and exploit gaps in enemy defenses 
ashore. Once ashore, EFV will provide Marine maneuver units with an 
armored personnel carrier designed to meet the threats of the future. 
EFV will replace the aging Assault Amphibious Vehicle (AAV). With its 
high speed land and water maneuverability, highly lethal day/night 
fighting ability, and advanced armor and Nuclear Biological and 
Chemical protection, the EFV will significantly enhance the lethality 
and survivability of Marine maneuver units and provide the Marine Air 
Ground Task Force and Expeditionary Strike Group with increased 
operational tempo across the spectrum of operations.
    Power Projection Platforms.--Combined with embarked Marines, 
amphibious warships provide our Nation with both a forward presence and 
a flexible crisis response force. These power projection platforms give 
decision-makers immediately responsive combat options. As the Seabasing 
concept matures, enhanced naval expeditionary forces will be optimized 
to provide a full spectrum of capabilities.
    Inherent in the Sea Strike pillar of the Seabasing concept is the 
ability to both strike with fires from the sea base and from units 
maneuvering within the littoral region. The dilemma that these two 
offensive capabilities impose on an enemy and the multitude of options 
they create for our leadership increase our ability to achieve success 
effectively and efficiently. The built-in flexibility and survivability 
of amphibious ships coupled with their combat sustainment capability 
ensure the rapid achievement of a full range of offensive operations 
that either allow us to accomplish operational objectives directly or 
enable us to set the conditions for major joint operations. The ability 
to defeat an anti-access strategy--before it is completed or even once 
it is developed--is vital to our national security objectives.
    The LPD 17 class amphibious ships, currently planned or under 
construction, represent the Department of the Navy's commitment to a 
modern expeditionary power projection fleet. These ships will assist 
our naval forces in meeting the fiscally-constrained programming goal 
of lifting 2.5 Marine Expeditionary Brigade (MEB) Assault Echelons 
(AEs). The lead ship detail design has been completed and the 
construction process is over 80 percent complete with a successful 
launch in July 2003. Production effort is focused on meeting test 
milestones for a November 2004 delivery. Construction of LPD 23 has 
been accelerated from fiscal year 2006 to fiscal year 2005, leveraging 
fiscal year 2004 Advance Procurement resources provided by Congress. 
LPD 17 replaces four classes of older ships--the LKA, LST, LSD, and the 
LPD--and is being built with a 40-year expected service life.
    LHAs 1-5 reach their 35-year service life at a rate of one per year 
in 2011-15. LHD-8 will replace one LHA when it delivers in fiscal year 
2007. In order to meet future warfighting requirements, the Navy and 
Marine Corps leadership is evaluating LHA (Replacement)--LHA(R)--
requirements in the larger context of Joint Seabasing, power 
projection, the Global War On Terrorism, and lessons learned from 
Operations ENDURING FREEDOM and IRAQI FREEDOM. The resulting platform 
will provide a transformational capability that is interoperable with 
future amphibious and Maritime Preposition Force ships, high-speed 
connectors, advanced rotorcraft like the MV-22, Joint Strike Fighter, 
and Expeditionary Fighting Vehicles.
    Maritime Pre-positioning Force.--The leases on the current Maritime 
Prepositioning Ships begin to expire in 2009. The Maritime 
Prepositioning Force (Future)--MPF(F)--will be a key enabler to sea-
based operations. It will allow us to better exploit the maneuver space 
provided by the sea to conduct joint operations at a time and place of 
our choosing. When the MPF(F) becomes operational, the maritime 
prepositioning role will expand far beyond its current capability to 
provide the combat equipment for a fly-in force. MPF(F) will serve four 
functions that the current MPF cannot: (1) at-sea arrival and assembly 
of units; (2) direct support of the assault echelon of the Amphibious 
Task Force; (3) long-term, sea-based sustainment of the landing force; 
and (4) at-sea reconstitution and redeployment of the force. The 
enhanced capabilities of these ships will significantly increase the 
capability of the Sea Base--in the Seabasing concept--to provide 
unimpeded mobility and persistent sustainment. This enhanced sea base 
will minimize limitations imposed by reliance on overseas shore-based 
support, maximize the ability of the naval elements of the joint force 
to conduct combat operations from the maritime domain, and enable the 
transformed joint force to exploit our Nation's asymmetric advantage of 
our seapower dominance. The ability to rapidly generate maneuver forces 
from this sea base will augment our forward presence and forcible entry 
forces, increasing the overall power and effect of the joint campaign. 
Acceleration of the lead MPF(F) from fiscal year 2008 to fiscal year 
2007 in the fiscal year 2005 budget reflects an emphasis on Seabasing 
capabilities. The fiscal years 2005-2009 plan procures three MPF(F) 
ships and advanced construction for an MPF(F) Aviation variant.
    High Speed Connectors.--High Speed Connectors (HSC) possess 
characteristics that make them uniquely suited to support the Sea Base 
and sea-based operations. HSCs are unique in combining shallow draft, 
high speed and large lift capacity into a single platform. HSCs will 
help create an enhanced operational capability by providing commanders 
with a flexible platform to deliver tailored, scalable forces in 
response to a wide range of mission requirements. The range and payload 
capacity of HSCs, combined with their ability to interface with current 
and future MPF shipping and access austere ports greatly enhances the 
operational reach, tactical mobility, and flexibility of sea-based 
forces.
    Mine Countermeasure Capabilities.--There is a great need to 
continue the development of our mine countermeasure capabilities. A 
major challenge for the Navy-Marine Corps Team is ensuring the 
effective delivery of ground forces ashore when mines and other anti-
access measures are employed in the surf zone or ashore beyond the high 
water mark. We are currently exploring with the Navy how the technology 
of Joint Direct Attack Munitions (JDAM) promises a short-term solution 
and may lead to a better long-term solution to the challenge of mines 
in the surf zone. Using unitary bombs, fuses, and JDAM tail kits, we 
have designed a mine countermeasure known as the JDAM Assault Breaching 
System (JABS). Preliminary test results are showing promise as an 
interim solution for breaching surface laid minefields and light 
obstacles in the beach zones. Further testing and characterization of 
the JABS system is proceeding throughout fiscal year 2004 with tests 
against Surf Zone Mines and obstacles.
    Some aspects of JABS development may lead to a long-term solution 
to the mine threat. One possible solution that is envisioned includes 
developing bomb-delivered darts that physically destroy buried mines in 
the Beach Zone and Surf Zone region. In addition, the Navy has adopted 
the Marine Corp Coastal Battlefield Reconnaissance and Analysis (COBRA) 
mine sensor system for the beach zone with a planned product 
improvement enhancement for COBRA called the Rapid Overt Airborne 
Reconnaissance (ROAR) that extends detection to the very shallow water 
and the surf zone regions by 2015. In addition, the Marine Corps seeks 
to improve breaching capability beyond the high water mark by 
developing both deliberate and in-stride breaching systems. These 
include the Advanced Mine Detector program and the Assault Breacher 
Vehicle program.

Fires and Effects
    As events over the past year have demonstrated--and suggest for the 
future--the increased range and speed of expeditionary forces and the 
depth of their influence landward has and will continue to increase. To 
fully realize these capabilities the Nation requires a range of 
complementary, expeditionary lethal and non-lethal fire support 
capabilities. During Operation IRAQI FREEDOM, sixty AV-8B Harrier 
aircraft were based at-sea aboard amphibious shipping--minimizing the 
challenge of airfield shortages ashore. This prelude to future sea-
based operations was extremely successful with over 2,200 sorties 
generated--mostly in support of I Marine Expeditionary Force ground 
units. A key factor to this success was the employment of forward 
operating bases close to the ground forces which allowed the AV-8B to 
refuel and rearm multiple times before returning to their ships. In 
addition, the complementary capabilities of surface and air delivered 
fires were highlighted in this campaign. Further, the importance of 
both precision and volume fires was critical to success. Precision 
fires assisted in reducing both collateral damage and the demands on 
tactical logistics. I Marine Expeditionary Force also validated the 
requirement for volume fires in support of maneuver warfare tactics. 
These fires allow maneuver forces to take advantage of maneuver warfare 
opportunities before precision intelligence can be developed and 
precision fires can be employed against fleeting targets or rapidly 
developing enemy defensive postures.
    Short Take Off Vertical Landing Joint Strike Fighter (STOVL JSF).--
The STOVL JSF will be a single engine, stealth, supersonic, strike-
fighter capable of short take-offs and vertical landings. The aircraft 
is designed to replace the AV-8B and FA-18 aircraft in the Marine Corps 
inventory. The operational reliability, stealth, and payload capability 
designed into the STOVL JSF represents a great improvement in combat 
capability over existing legacy platforms. The aircraft is in the 
second year of a 10-12 year development program. The STOVL JSF force is 
integral to our future warfighting capabilities. Its design and 
capabilities will fulfill all Marine Corps strike-fighter requirements 
and better support the combined arms requirements in expeditionary 
operations. Continued support of the STOVL JSF is vital to the Marine 
Corps.
    Indirect Fires Support.--In response to identified gaps in our 
indirect fires capability, the Marine Corps undertook an effort to 
replace the aging M198 155 mm towed howitzers and provide a full 
spectrum all-weather system of systems fires capability. Operations in 
Iraq confirmed this requirement and the direction that the Marine Corps 
has undertaken. This system of systems will be capable of employing 
both precision and volume munitions.
    The Lightweight 155 mm howitzer (LW 155) is optimized for 
versatility, pro-active counter fire and offensive operations in 
support of light and medium forces. It supports Operational Maneuver 
from the Sea and replaces all M198's in the Marine Corps, as well as 
the M198's in Army Airborne, Light Units and Stryker Brigade Combat 
Teams. Compared to the current system, the LW 155 is more mobile, 
capable of more rapid deployment, more survivable, and more accurate. 
Initial operational capability is expected during fiscal year 2005, and 
a full operational capability will be reached three years later.
    The High Mobility Artillery Rocket System (HIMARS) fulfills a 
critical range and volume gap in Marine Corps fire support assets by 
providing twenty-four hour, all weather, ground-based, responsive, 
General Support, General Support-Reinforcing, and Reinforcing indirect 
fires throughout all phases of combat operations ashore. HIMARS will be 
fielded in one artillery battalion of the active component and one 
battalion of the reserve component. An initial operational capability 
is planned for fiscal year 2007 with a full capability expected during 
fiscal year 2008. An interim capability of one battery during fiscal 
years 2005-2006 is also currently planned.
    The Expeditionary Fire Support System (EFSS) is the third element 
of the triad of ground firing systems, and it will be the principal 
indirect fire support system for the vertical assault element. EFSS-
equipped units will be especially well suited for missions requiring 
speed, tactical agility, and vertical transportability. The estimated 
Approved Acquisition Objective is eighty-eight systems. Initially, this 
provides eleven batteries to support our Marine Expeditionary Units 
(Special Operations Capable). Initial operational capability is planned 
for fiscal year 2006 and full operational capability is planned for 
fiscal year 2008.
    Naval Surface Fire Support.--An important element of our fires and 
effects capability will continue to be surface ships that provide 
direct delivery of fires from the sea base. 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. In the critical 
period of the early phases of the forcible entry operations when 
organic Marine Corps ground indirect fires are not yet or just 
beginning to be established, the landing force will be even more 
dependent on the complementary capability required of naval surface 
fire support assets. To date, no systems have been introduced or are 
being developed which meet near or mid-term Naval Surface Fire Support 
requirements. The DD(X) destroyer--armed with two 155 mm Advanced Gun 
Systems--continues to be the best long-term solution to satisfy the 
Marine Corps' Naval Surface Fire Support requirements. Our Nation's 
forcible entry, expeditionary forces will remain at considerable risk 
for want of suitable sea-based fire support until DD(X) joins the fleet 
in considerable numbers in 2020. Currently, the lead ship of this class 
will not be operational until fiscal year 2013. In addition, the Marine 
Corps is closely monitoring research into the development of electro-
magnetic gun technology to support future range and velocity 
requirements. Electro-magnetic guns could potentially provide Naval 
Surface Fire Support at ranges on the order of 220 nautical miles, and 
could eventually be incorporated into ground mobile weapon systems like 
the future Expeditionary Fighting Vehicles as size, weight, and power 
technology hurdles are overcome.
    H-1 (UH-1Y/AH-1Z).--The current fleet of UH-1N utility helicopters 
and AH-1W attack helicopters is reaching the end of their planned 
service life and face a number of deficiencies in crew and passenger 
survivability, payload, power availability, endurance, range, airspeed, 
maneuverability, and supportability. The Department of the Navy has 
determined that the H-1 Upgrade Program is the most cost effective 
alternative that meets the Marine Corps' attack and utility helicopter 
requirements until the introduction of a new technology advanced 
rotorcraft aircraft. The H-1 Upgrade Program is a key modernization 
effort designed to resolve existing safety deficiencies, enhance 
operational effectiveness of both the UH-1N and the AH-1W, and extend 
the service life of both aircraft. Additionally, the commonality gained 
between the UH-1Y and AH-1Z (projected to be 84 percent) will 
significantly reduce life-cycle costs and logistical footprint, while 
increasing the maintainability and deployability of both aircraft. On 
October 22, 2003, the program to enter Low-Rate Initial Production 
(LRIP), and on December 29, 2003 the LRIP Lot 1 aircraft contract was 
awarded to Bell Helicopter.
    Information Operations.--The Marine Corps is exploring ways to 
ensure Marines will be capable of conducting full spectrum information 
operations, pursuing the development of information capabilities 
through initiatives in policy and doctrine, career force, structure, 
training and education, and programs and resources. Marine forces will 
use information operations to deny, degrade, disrupt, destroy or 
influence an adversary commander's methods, means or ability to command 
and control his forces.
    New Weapons Technologies.--The Marine 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 to potentially support a tactical gunship high 
energy laser weapon, (2) Active Denial System--a high-power millimeter-
wave, non-lethal weapon, (3) Free Electron Lasers for multi-mission 
shipboard weapons application, and (4) various promising Counter 
Improvised Explosive Device technologies.

Logistics and Combat Service Support
    Logistics Modernization.--Since 1999, the Marine Corps has 
undertaken several logistics modernization efforts to improve the 
overall effectiveness of our Marine Air-Ground Task Forces as agile, 
expeditionary forces in readiness. Some of these initiatives have 
reached full operational capability or are on track for complete 
implementation. Applying the lessons learned from Operation IRAQI 
FREEDOM resulted in new initiatives concerning naval logistics 
integration, naval distribution, and the integration of the Combat 
Service Support Element with Marine Corps Bases.
    The Marine Corps' number one logistics priority is the re-
engineering of logistics information technology and the retirement of 
our legacy systems, which is described in the next section. The Marine 
Corps is working to enhance the integration of its distribution 
processes across the tactical through strategic levels of warfare, 
providing the warfighter a ``snap shot'' view of his needed supplies in 
the distribution chain to instantly locate specific items that are en 
route. This capability, described in the following section, will result 
in increased confidence in the distribution chain and will reduce both 
the quantity of reorders and the amount of inventory carried to support 
the war fighter.
    Logistics Command and Control.--The Global Combat Support System-
Marine Corps is the Marine Corps' portion of the overarching Global 
Combat Support System Family of Systems as designated by the Joint 
Requirements Oversight Council and the Global Combat Support System 
General Officer Steering Committee. It is a Marine Corps acquisition 
program with the responsibility to acquire and integrate commercial off 
the shelf software in order to satisfy the information requirements of 
commanders, as well as support the Marine Corps Logistics Operational 
Architecture. The Global Combat Support System-Marine Corps program 
will provide modern, deployable information technology tools for all 
elements of the Marine Air-Ground Task Force. Existing Logistics 
Information Systems used today in direct support of our Marine Air 
Ground Task Forces are either not deployable (mainframe based) or are 
deployable with such limited capability (tethered client server) that 
our commanders lack in-transit and asset visibility. Global Combat 
Support System-Marine Corps requirements include a single point of 
entry, web based portal capability to generate simple requests for 
products and services, logistics command and control capability to 
support the Marine Air Ground Task Force, and back office tools to 
assist in the management of the logistics chain. These capabilities 
will improve warfighting excellence by providing commanders with the 
logistics information they need to make timely command and control 
decisions. The key to improving the accuracy and visibility of materiel 
in the logistics chain is to establish a shared data environment.
    End-to-End Distribution.--The Marine Corps is aggressively pursuing 
standardization of the materiel distribution within the Marine Corps to 
include interfacing with commercial and operational-level Department of 
Defense distribution organizations. Furthermore, distribution processes 
and resources used in a deployed theater of operations need to be the 
same as those used in garrison. We strongly support United States 
Transportation Command's designation as the Department of Defense's 
Distribution Process Owner. In this capacity, United States 
Transportation Command can more easily integrate distribution processes 
and systems at the strategic and operational levels and provide the 
Department of Defense a standard, joint solution for distribution 
management. Materiel End-To-End Distribution provides Marine commanders 
the means to seamlessly execute inbound and outbound movements for all 
classes of supply while maintaining Total Asset and In-transit 
Visibility throughout the distribution pipeline.

                               CONCLUSION

    The Marine Corps remains focused on organizing, training, and 
equipping our forces to best support combatant commanders throughout 
the spectrum of combat. Incorporating recent experiences, increasing 
our forces' integration with joint capabilities, exploiting the 
flexibility and rapid response capabilities of our units, and 
preserving the adaptability of our Marines, will collectively lead to 
more options for the combatant commanders. The Marine Corps' commitment 
to warfighting excellence and the steadfast support we receive from 
this Committee will lead to success in the Global War On Terrorism 
while helping to ensure America's security and prosperity.

                                 ______
                                 
            Biographical Sketch of General Michael W. Hagee

    General Hagee graduated with distinction from the U.S. Naval 
Academy in 1968 with a Bachelor of Science in Engineering. He also 
holds a Master of Science in Electrical Engineering from the U.S. Naval 
Postgraduate School and a Master of Arts in National Security and 
Strategic Studies from the Naval War College. He is a graduate of the 
Command and Staff College and the U.S. Naval War College.
    General Hagee's command assignments include: Commanding Officer 
Company A, 1st Battalion, 9th Marines (1970); Platoon Commander, 
Company A and Commanding Officer Headquarters and Service Company, 
First Battalion, First Marines (1970-1971); Commanding Officer, 
Waikele-West Loch Guard Company (1974-1976); Commanding Officer, Pearl 
Harbor Guard Company (1976-1977); Commanding Officer, 1st Battalion, 
8th Marines (1988-1990); Commanding Officer, 11th Marine Expeditionary 
Unit (Special Operations Capable) (1992-1993); Commanding General, 1st 
Marine Division (1998-1999); and Commanding General, I Marine 
Expeditionary Force (2000-2002).
    General Hagee's staff assignments include: Communications-
Electronics Officer, 1st Marine Air Command and Control Squadron 
(1971); Assistant Director, Telecommunications School (1972-1974); 
Training Officer, 3d Marine Division (1977-1978); Electrical 
Engineering Instructor, U.S. Naval Academy (1978-1981); Head, Officer 
Plans Section, Headquarters Marine Corps (1982-1986); Assistant Chief 
of Staff, G-1, 2d Marine Division (1987-1988); Executive Officer, 8th 
Marines (1988); Director Humanities and Social Science Division/Marine 
Corps Representative, U.S. Naval Academy (1990-1992); Liaison Officer 
to the U.S. Special Envoy to Somalia (1992-1993); Executive Assistant 
to the Assistant Commandant of the Marine Corps (1993-1994); Director, 
Character Development Division, United States Naval Academy (1994-
1995); Senior Military Assistant to the Deputy Secretary of Defense, 
Washington, D.C.; Executive Assistant to the Director of Central 
Intelligence (1995-1996); Deputy Director of Operations, Headquarters, 
U.S. European Command (1996-1998); and Director Strategic Plans and 
Policy, U.S. Pacific Command (1999-2000).
    His personal decorations include the Defense Distinguished Service 
Medal with palm, Defense Superior Service Medal, Legion of Merit with 
two Gold Stars, Bronze Star with Combat ``V'', Defense Meritorious 
Service Medal, Meritorious Service Medal with one Gold Star, Navy 
Achievement Medal with one Gold Star, the Combat Action Ribbon, and the 
National Intelligence Distinguished Service Medal.

    Senator Stevens. Well, gentlemen, those are some of those 
finest statements I have heard in my period on this committee, 
and I thank you all very much for the depth of your comments 
and for the reports you've made.

                          FLEET RESPONSE PLAN

    Admiral, could you explain a little bit more about this 
Fleet Response Plan?
    Admiral Clark. Absolutely, Mr. Chairman.
    Fundamentally, it goes like this. We had deployed--I like 
the word ``surge''--Operation Iraqi Freedom, we surged over 50 
percent of the fleet. One of our tasks was to--our business, 
was telling our people, ``Look, our job is to make sure that we 
get the most bang for the buck for the taxpayers of America. 
And is there any way we can put this back together when we 
bring it home that will make it more effective than it is 
today?'' And, fundamentally, Mr. Chairman, what we've done is 
this. We put a group of sailors in the room, and asked them, 
``Are there things that we can do that will make us better?'' 
They came back with an approach, and said, ``If we look at 
different ways to phase our training, if we look at new ways we 
can put maintenance concepts together that will increase the 
operational availability of our units, we will be able to 
provide 50 percent more operational capability in response to 
the President if a national emergency occurs.''
    And what that means today is this. We analyzed the risk and 
the requirement for naval forces. As the major combat phase of 
Operation Iraqi Freedom wound down, the Secretary of Defense 
looked at where we were. And I said, ``If we bring these forces 
home now--the risk looked like we can bring the principal naval 
force home--we will put this back together in a way that makes 
it more ready than ever before.'' And, Mr. Chairman, I can tell 
you, this morning, if the requirement came today, I could surge 
that force forward again, the exact same force that we sent 
forward for Operation Iraqi Freedom. It is ready to go this 
morning. And what we have done is give the Nation a more 
responsive Navy that can respond to a crisis and an emergency 
anywhere in the world.
    Senator Stevens. Thank you very much.

                                  V-22

    General Hagee, I thank you, again, for the opportunity to 
fly the V-22. It was an experience of a lifetime. I enjoyed 
being in the aircraft. But I understand now that there's been 
flight restrictions placed upon the V-22. Could you tell us 
what's caused that?
    General Hagee. Yes, sir, I can. And we appreciate you 
coming down and flying in that truly transformational platform.
    Back in December, when one of the--it happened to aircraft 
number ten, which is instrumented, was flying towards the edge 
of the envelope in an area where we're normally not going to 
conduct flight operations, an input at the control caused some 
yawing in the aircraft. We brought the aircraft down. It took 
us some time to reproduce that particular phenomena. It was not 
uncontrolled. There was no effect on safety of flight. This 
aircraft happened to have a new flight control software package 
put into it. So we believe it is a problem in the software. We 
are investigating that right now. We haven't come to complete 
closure on how to solve that. We are very confident that we 
can.
    We have put no flight restrictions on any of the 
instrumented aircraft. We have put some flight restrictions on 
the uninstrumented aircraft. We believe that we'll have a 
solution to this software, possibly hardware solution, by May 
of this year. We do not see that impacting the continued 
evaluation of the aircraft, sir.
    Senator Stevens. Will it affect the period for testing? It 
this going to prolong the period of testing the V-22.
    General Hagee. Sir, I think on the operational tests we're 
not quite sure on that. But, as you know, this is not a time-
driven evaluation; this is an event-driven evaluation. We'll 
have a much better feel for that in about April or May, sir.
    Senator Stevens. Well, again, I think it was a joy to be 
able to fly that airplane. It does things that one would never 
expect to be able to do, and particularly because of the 
software that you've adapted into it. I would appreciate it if 
you'd keep me posted on that if there's anything additional we 
can do. I would like to be sure that we do keep the schedule 
for putting that aircraft really into full operation, as far as 
the marines are concerned.
    General Hagee. We will keep this committee informed, Mr. 
Chairman.
    Senator Stevens. Thank you.

                                 DD(X)

    Admiral Clark, the DD(X) includes transformational 
technologies that bring what my staff believes are 
revolutionary capabilities to the fleet. Can you accomplish the 
acquisition strategies for the DD(X) within the cost and 
schedule that is currently outlined, in view of those new 
technologies?
    Admiral Clark. Well, Mr. Chairman, I agree completely with 
your staff and their assessment of what DD(X) is all about. It 
is a revolutionary platform. And I believe that when we have 
DD(X), it is going to change the way we do everything. And what 
I think is going to happen is that when we realize these 
capabilities, it will set us on a path to spiral to our other 
platforms, as well.
    Let's talk about cost and schedule. As you know, we 
received permission to fund this ship in Research and 
Development. There are certainly risk areas in the development 
of something that is this revolutionary, including an all-
electric platform, an advanced gun system that will fire, with 
precision, at a [deleted]. You know, this will give us the 
ability to support General Hagee and all of his marines, and 
cover [deleted] more area in support of them than we can do so 
today with a gun system. And I have great confidence in that 
path that we're on, because there have been mitigation 
strategies put in place to address the new technologies that 
we're bringing on. However, I would not be so bold as to say 
that any of us can predict the future. But I have great 
confidence in the team that is putting the plan together to 
create the future. And what does that mean? Well, it means 
this. One of the reasons that we asked to put this platform in 
research and development is that we wanted to have the same 
kind of tools to do this kind of new development that we have 
with other combat systems, and we haven't done that with ships 
before. And we believe that this was the right way to go at 
this.
    So I don't see any cause for concern on the horizon. I'm 
confident with where we are in the reports that I'm getting 
from the acquisition community. But I also believe that the 
path that we set on last year to fund this in research and 
development (R&D) is absolutely the right approach.

                        END STRENGTH REDUCTIONS

    Senator Stevens. Mr. Secretary, I am informed that there 
are plans to reduce the end strength of the Navy by 7,900 
sailors, and another 8,700 sailors over the next 4 years. We're 
told, to be on the safe side, that that is premature. What do 
you say to that?
    Mr. England. Well, let me reiterate, to some extent, the 
opening comments that Admiral Clark made regarding our 
manpower. We do want the very best-trained force, but we also 
do not want an extra force. We do not want people that we do 
not need in this great Navy, frankly. And as we have made 
improvements, in terms of our ships, in terms of our manning--
for example, if you go back, Senator, to the ships, Senator 
Inouye, that are sitting out in Hawaii, the U.S.S. Missouri, it 
had almost 2,000 sailors when it was active. Now we have about 
350 sailors on our destroyers. That will go down, on DD(X), to 
about 150 sailors. So our manpower demands are less. A lot of 
our older ships, we are retiring, where most of the manpower 
has the highest demands. Also, our maintenance is better, our 
reliability is better on these ships, technology is helping us.
    So we are not stressed, in terms of our force, Senator. I 
mean, we have efficiencies in the system, effectiveness, in 
terms of better performance, that we can reduce the size of our 
force. So this is a planned program, and we are not doing this 
in advance. I mean, we clearly understand the forces we need, 
and we are taking them down after we have new processes and new 
technology in place. So this reflects, frankly, the 
effectiveness, the efficiency of the Navy and our plans, in 
terms of staffing this great naval force.

                       JOINT STRIKE FIGHTER (JSF)

    Senator Stevens. Could you briefly--I've got a minute 
left--briefly tell us about the Joint Strike Fighter? Just an 
update on the Joint Strike Fighter?
    Mr. England. First, I hope one day you'll be able to fly 
the Joint Strike Fighter, Senator. But, look, it is a very, 
very important program. There are three development programs 
going on simultaneously. As you may know, we delayed the 
program 1 year because we wanted to keep them together, and we 
wanted to make sure that we solved all the problems early as we 
transitioned from the prototypes into development. So we did 
delay the program deliberately 1 year because our feeling is, 
by doing this now, we will save a lot of money and time later 
on. These are very important programs to us. There is an Air 
Force version and a Navy version. They are both, frankly, 
overweight, but not to the point that they will miss their key 
performance parameters. So we know we will realize significant 
improvement there.
    The short take-off and vertical landing (STOVL) version, 
which is now both for the Marine Corps and also for the U.S. 
Air Force, also is experiencing a weight problem, because it is 
the most difficult design challenge. On the other hand, it 
provides us the greatest advantage, and it will replace the AV-
8B, which is currently becoming long in the tooth and having 
difficulty in the Marine Corps. So it provides us the very 
greatest step forward, in terms of capability. It is harder to 
do, but I am absolutely convinced the design is on track and we 
will achieve the key performance parameters for these three 
airplanes.
    This program also has a large international content. We 
have about $4.5 billion funded by our friends and allies around 
the world, who are also relying on these three airplanes. This 
is a highly integrated program. It is technically challenging, 
but it is also very achievable, and the results will be 
dramatic for the entire military and for our friends and allies 
around the world.
    I would encourage full support for this program, because it 
is so crucial to so many services. And, Senator, I can tell 
you, from my own personal experience, I am convinced that these 
three airplanes will all be of significant value, major value, 
to our military forces.
    Senator Stevens. I'm smiling, Mr. Secretary, because 
someone the other day asked me why do people use that phrase 
``long in the tooth,'' as when we get older, our teeth get 
shorter.
    Senator Inouye.

                       SUBMARINE FORCE STRUCTURE

    Senator Inouye. Mr. Secretary, your stated submarine force 
structure calls for 55 boats, but it appears that by 2020, we 
may have about 30. You have indicated that this would be 
unacceptable. Do you have alternative programs or platforms to 
adjust this force structure?
    Mr. England. Senator, right now, as you probably recall, we 
start a multi-year--last year, we were authorized to go into a 
multi-year, so we have a five-submarine multi-year program that 
will continue for 5 years. So we are, frankly, fixed at this 
rate of one a year for the next 5 years. That was the program 
authorized by the Congress. At the same time, you are right, if 
we continue at that level, our submarine force will, indeed, 
shrink. So, recognizing that, we have initiated a study to 
better understand the size of our submarine force and how we 
might afford a larger force as we go forward. That study will 
be part of our 2006 deliberations. So we will come to the 
Congress next year with our submarine program, in terms of 
recommendations. We are working that now. We will be briefing 
that shortly within the Department of Defense, and that will be 
part of our whole development of the fiscal year 2006 budget. 
So, with your permission, I would like to defer a final answer 
on that. Frankly, for the next 5 years, next 4 years now, we 
are locked into this one submarine a year because of the multi-
year program. So it does give us some time to work, and we will 
have that resolved in fiscal year 2006.
    Senator Inouye. Well, we'll wait for your study.

                              END STRENGTH

    Admiral Clark, the Secretary spoke of how your end strength 
may be reduced. As the operational chief here, do you agree 
with that?
    Admiral Clark. I certainly do, Senator. And, in fact, you 
can blame me for this, or give me credit, whichever way you 
choose to do so. I have been--I want to report publicly, I have 
been under no pressure from anybody senior to me in the chain 
of command to affect my manning.
    What we have been doing is this. Actually, I've learned a 
lot from working with Secretary England. He worked in the big-
business world. And, you know, I grew up driving destroyers and 
haven't run an operation nearly as big as we're now given the 
task to operate. Part of our journey, Senator, is that we 
have--as I said in my opening statement, we have come to grips 
with the cost of manpower. And I've made a commitment to our 
people that goes like this. ``We will invest in your growth and 
development if you promise to serve and support and defend the 
Constitution of the United States and be part of the Navy. We 
are going to invest in you. And we're going to make sure that 
you have opportunities to make a difference in our Navy.'' 
That's what I promised them. But I've also asked my leaders, 
the Senior Executive Service (SES) civilians and the admirals 
in this organization, that are given the task to function as 
executives, ``Look, we've got to figure out how to run this 
business more effectively. This is for the taxpayers. How do we 
give them the most return on their investment?'' And I will 
tell you that we are actively seeking ways to learn how to 
operate this organization more effectively and more 
efficiently. We are making great progress, and that is the 
result of the 7,900 you see today.
    My objective is this. I've learned that 10,000 people 
equals $1.5 billion a year, and I'm turning that money into 
recapitalization. The year I got to this job--and, Mr. 
Chairman, you indicated this is my fourth visit to see you 
all--the year I got here, the investment in shipbuilding was 
$4.7 billion. The investment today is $11.1 billion, and I've 
been shooting to get toward a goal of $12 billion a year. We 
have done this fundamentally by redirecting resources inside 
the Navy and becoming more effective. And so we intend to 
continue working toward that, and I want to promise you that 
part of this is because the technology insertion is allowing us 
to do tasks with fewer people. As he said, DD(X) is going to 
have far fewer people, the CVN 21 is going to have a 900-person 
reduction in the crew, and these kinds of things make these 
savings possible. And our investments make it possible. We 
intend to keep looking for ways to operate more effectively and 
put that money in tomorrow's Navy.

                          SHIP FORCE STRUCTURE

    Senator Inouye. Mr. Secretary, I'm certain you recall that 
about 10 years ago, when we discussed warfare, they spoke of 
major war, regional war, guerrilla war, et cetera, and you 
needed so many ships for that, and so many men for that. Is the 
force structure that you're proposing for regional war or 
global war?
    Mr. England. Senator, it's for whatever the Navy is called 
upon, sir. I mean, I believe as we go forward, and particularly 
what is in the 2005 budget, with our new ships, our Littoral 
combat ship and DD(X), along with LHA, the new LHA(R) we're 
looking at and the new ships that we'll have, in terms of pre-
positioning, the future ships, there are concepts there that 
provide us significantly greater flexibility, in terms of 
projecting power forward. As General Hagee said, we believe 
this is a 50-percent improvement, in terms of response time to 
put power forward, which is very, very important, in terms of 
affecting the outcome of whatever events may be occurring.
    I think my judgment--and I believe I can speak for the CNO 
and the Commandant here--it's our judgment we have approaches 
now that allow the Navy and the Marine Corps, our naval force, 
to respond to any type of threat to America, whether it be 
regional or a larger war. I mean, we are prepared now to 
respond and do this very, very quickly. That's our objective--
very, very quick response.

                             FORCIBLE ENTRY

    Senator Inouye. General Hagee, the Department, last year, 
announced that it had initiated a study on forcible entry 
options. And we've been told that this study may have an impact 
upon programs like the LPD-17, the LHA(R), and the 
Expeditionary Fighting Vehicle. What is the status? And what 
can we expect?
    General Hagee. Thank you for that question, sir.
    First, there are two studies, really. There is a joint 
forcible-entry study that the Navy and the Marine Corps took 
the lead on and conducted last year. That is going to inform a 
much larger joint study on joint forcible entry that's being 
led by the joint staff right now. We hope to have the results 
of that study sometime late spring, early summer. I think it's 
really important to look at forcible entry from a joint 
standpoint.
    As I mentioned in my opening statement, the joint forcible-
entry study that we did within the Navy and the Marine Corps, 
the analysis of alternatives that we received on LHA(R), and 
the analysis of alternatives that we have just received a 
preview on for the maritime pre-positioning force has helped 
inform us on how we can project combat power faster, more 
combat power ashore faster, in the future. And what you're 
going to see Admiral Clark, myself, and the Secretary talk 
about is the integration of these platforms. They are 
complementary platforms. The maritime pre-positioning ship, the 
new maritime pre-positioning ship, the new LHA(R), which--we 
want to leverage the Joint Strike Fighter and the MV-22 
capabilities; we want to make that ship more aviation-capable--
the LPD-17, the connectors between those platforms, the DD(X), 
the Littoral combat ship, all will come into play, and we are 
starting to inform ourselves on what the advantages and 
disadvantages of having one platform versus the other. For 
example, on your maritime pre-positioning-ship future, if that 
has a well deck, or if that has what we're calling an 
integrated landing platform, which is platform external to the 
ship, where the ship can put that platform on the leeward side 
and actually do offloads onto that platform in a higher-state 
sea, this could impact the ultimate design of other amphibious 
ships and what we would be carrying on those amphibious ships.
    So we are trying very hard and, I think, somewhat 
successfully, in looking at how all of these platforms come 
together to deliver a better capability, a more agile 
capability to the regional combatant commander.
    Senator Inouye. And this is realistic?
    General Hagee. Yes, sir. We have talked with scientists, we 
have talked with physicists. This is not a physics problem; 
this is an engineering problem. It's also a finance problem, or 
an issue. And that's why the Secretary of the Navy and Admiral 
Clark and myself have urged support of the fiscal year 2005 
budget, sir.
    Senator Inouye. I thank you very much, General.
    Admiral Clark. Mr. Chairman, may I comment on that 
question?
    Senator Stevens. Yes, sir, Admiral.
    Admiral Clark. Senator Inouye, I'd just like to say that 
our task is to deliver the Marine Corps to the fight. And I see 
the integration between MPF(F), Maritime Pre-Positioned Force 
Future, and the LHA(R) as a critical intersection of new 
capability unlike what we have today. I absolutely do not 
believe that LHA(R) is just a repeat of the LHDs that we have 
today. It is going to be a much better, more capable platform 
that optimizes the aviation capability we are investing in. And 
that, coupled with the new concepts that we are pushing forward 
on MPF future, will give the marines much more surgeable 
capability. We talked about surging the Navy; it will improve 
the Marine Corps' surgeable capability, too, which is why the 
future will see General Hagee and the marines producing combat 
capability faster anywhere in the world we have to. And these 
two new capabilities are going to make that happen.
    Senator Inouye. Thank you very much. I'll be waiting for 
your report.
    Admiral Clark. Yes, sir.
    Senator Stevens. Thank you very much.
    Senator Cochran.

                LHA(R) AND SHIPBUILDING INDUSTRIAL BASE

    Senator Cochran. Mr. Chairman, thank you.
    Mr. Secretary, I notice, in the budget submission, the 
construction of the LHA(R) has been delayed 1 year from what 
was planned in last year's 2004 budget, and that you've 
identified $250 million for the construction of the LHA(R) as 
an unfunded requirement. I understand that a delay in the 
construction of this ship is likely to lead to an increase in 
the cost of the ship. Can you discuss the need to maintain the 
shipbuilding industrial base associated with the construction 
of the LHA(R)?
    Mr. England. Senator, I'd be happy to. You raised a valid 
issue here. We originally had LHA(R) proposed for fiscal year 
2007, in terms of our planning in the Future Years Defense 
Program (FYDP). We moved that out to fiscal year 2008, and we 
did it, frankly, because of funding issues. We are required, as 
you know--to fully appropriate the money, fund the ship 
immediately, on day one. That would have required, in fiscal 
year 2007, that we fund the full value of the ship in fiscal 
year 2007. Frankly, we did not have the resources to do that, 
so we've moved it to fiscal year 2008, where it was affordable, 
in terms of our projection on fiscal year 2007 and on fiscal 
year 2008. It does leave us with a problem right now, in terms 
of the yard, because we would like to start at least advanced 
procurement, some incremental funding, I guess you would call 
it, at that point in time. But, at this point, we are required 
to fund the full ship. Now, as we go forward in 2006 and 2007, 
we're going to have to look at those funding profiles to see 
how we can handle that situation. But, frankly, that was--your 
point is valid--it was strictly a decision we had to make based 
on what we saw as the funding profiles in those years.
    Senator Cochran. Thank you.

                LARGE DECK AMPHIBIOUS SHIPS REPLACEMENT

    General Hagee, can you discuss the need to replace the 
large-deck amphibious ships that have exceeded their designed 
service life?
    General Hagee. Yes, sir, Senator. Thank you, also, for that 
question. And it really goes back to my answer to Senator 
Inouye.
    I don't think that we can look at one individual ship. As 
Admiral Clark talked about, we're looking at the LHA(R), which 
is going to be, as I mentioned, an increased aircraft-capable 
ship. We're going to leverage the Joint Strike Fighter and the 
MV-22 capabilities. It's also going to complement the Maritime 
Pre-Positioning Force Future ship, and will complement the LPD-
17. So as we build the LHA(R), and as we build MPF future, I 
believe that you will see some of the equipment that has, in 
the past, been carried on these large amphibs, move over to the 
Maritime Pre-Positioning Force Future ship.
    What we want is the capability to operate from the sea base 
in a state-four sea. We want to be able to do to the reception, 
staging, onward movement, integration, the arrival and 
assembly, at sea. Today, we cannot do that, because we--as 
Admiral Clark mentioned, we dense-pack our maritime pre-
positioning ships, so we cannot do a selective offload. So as 
we replace the amphibs, we're looking at how LHA(R), LPD-17, 
LHD, which is going to be around for some time, thank goodness, 
and Maritime Pre-Positioning Force Future are going to 
integrate with one another.

                       TILT-ROTOR PILOT TRAINING

    Senator Cochran. Mr. Secretary, last year's appropriations 
bill and the accompanying report indicated the importance of 
training student pilots in the same type aircraft that they 
would eventually be called on to fly in the fleet after they 
graduate from pilot training. The report required the 
Department of the Navy to submit a tilt-rotor pilot training 
roadmap to the committee prior to the submission of this year's 
budget request, although this report has not been submitted. I 
wonder if you have any information about whether we can expect 
this report or whether you can share with us now what the 
response of the Navy is to this provision in last year's bill 
directing the Department to consider tilt-rotor pilot training 
at an existing naval training site?
    Mr. England. Senator, my apologies. The report is somewhat 
late, because, frankly, it's gone through some revision. But we 
are about to publish that report, and we should have that 
report to you here, I would expect, in about 1 week. So we're 
very close to having that out.
    And if you don't mind, I'm going to defer the question to 
General Hagee, since it's his V-22 and his pilots, I believe 
he's probably better able to answer this question for you.
    But we will have the report to you in about 1 week, sir.
    [The information follows:]

                           Information Paper

    Subject: V-22 Tilt-rotor pilot training roadmap

1. Purpose
    The Defense Appropriations Bill, 2004, directed the Secretary of 
the Navy to submit a Tilt-rotor pilot training roadmap before the 
presentation of the fiscal year 2005 budget estimate.

2. Key Points
    The MV-22 Student Undergraduate Pipeline Training and Fleet 
Replacement Squadron Analysis, Final Report, 1999, was conducted by 
Logicon, Inc.
    The purpose of the study was to examine the MV-22 pilot, aircrew 
and maintainer training pipelines and determine if the planned training 
could meet the demands of an increased aircraft delivery rate. If the 
planned training was insufficient to meet the demand, alternatives must 
be developed to increase the throughput. If the demand could be met 
with planned resources, the recommendations for improving the training 
in order to produce more capable personnel in the most efficient and 
cost effective manner must be provided.
    The study's recommendations have been included and expanded on in 
the V-22's training plan. Interactive Media Instruction (IMI), state of 
the art procedural trainers and simulators as well as the activation of 
an Aircrew Training Systems (ATS) command to address the intricacies of 
the training continuum are some examples.
    The current tilt-rotor pilot training roadmap represents a non-
material solution to implement the study's recommendations. A powered 
lift trainer for Undergraduate Pilot Training would address the 
inefficiencies in the current roadmap, increase the number of trainable 
tasks, and decrease time to train while increasing throughput.
    The current tilt-rotor pilot training roadmap has three major 
elements: Primary, Advanced and Fleet Replacement training (Figure 1). 
Each element contains academics, simulator and aircraft phases.
  --Undergraduate Pilot Training (UPT).--UPT for tilt-rotors begins 
        with primary flight training in the TC-34C. Pipeline selection 
        occurs upon completion primary training.
    --Students selected for the tilt-rotor training pipeline will 
            continue advanced training in the TC-12B.
    --Following training in the TC-12B tilt-rotor UPT students will 
            complete their advanced training in the TH-57B/C.
    --Upon completion of the advanced training students are designated 
            Naval aviators and are assigned to the Fleet Replacement 
            Squadron for training in the MV-22.
  --Fleet Replacement Squadron (FRS).--Provides combat capable tilt-
        rotor training for selected aircrews.
    --Combat capable training consists of the completion of the 100 
            level training tasks listed in Marine Corps Order P3500.34A 
            (Aviation Training and Readiness Manual, MV-22).
    --Advanced Tilt-rotor Training Unit (ATTU). The ATTU is resident in 
            the FRS and trains selected aircrew in advanced tactics 
            instruction (200 level and above as specified in the Marine 
            Corps Order P3500.34A). The ATTU provides transitioning 
            squadrons the experience base to complete the transition as 
            a core capable squadron per the MV-22 T&R.
    The Deputy Commandant for Aviation has submitted a Universal Needs 
Statement (UNS) for a powered lift trainer for Undergraduate Pilot 
Training. Successful incorporation of the UNS in the requirements 
generation process will form the basis for an Analysis of Alternatives 
at Milestone A.




    Senator Cochran. Okay.
    General Hagee, do you have any comments?
    General Hagee. Yes, sir, I do. First off, we are absolutely 
committed to having a joint training site. Any service that's 
going to fly the MV-22, we think we could get a lot of synergy 
by having one training site. We have initially stood up the 
training squadron down at New River, North Carolina. But I can 
tell you, Senator, we are open to looking at any and all sites 
that might work better.

                            MISSILE DEFENSE

    Senator Cochran. Admiral Clark, we've talked before about 
the plans that you envision for the Navy participation in 
missile defense. We have the near-term ballistic missile threat 
to the homeland that has attracted the attention of planners. 
Could you update the committee on the progress the Navy is 
making in the area of ballistic missile defense and how it fits 
in your overall sea-shield strategy?
    Admiral Clark. Yes, sir. Thank you, Senator. That's a very 
important question for the future, and clearly the kind of 
things that General Hagee and I envision the Navy/Marine Corps 
team doing in the future requires our ability to climb in the 
ring with an enemy, and to be able to defend ourselves, and 
project defense and offense. And so ballistic missile defense 
capability is crucial to the future, no doubt about it.
    The way, of course, as you well know, it is unfolding, the 
acquisition--the development responsibility and acquisition 
responsibility, has been given to the Missile Defense Agency 
(MDA). What that suggests is that--General Kadish has been 
given the responsibility to develop what's best for the Nation. 
And this year has been an exciting year in the Navy. Under MDA, 
we have participated in several tests this year. All but one 
have been fully--completely successful, and one had a problem 
in a late-guidance phase of the test. But what that suggests to 
us is this, sea-based missile defense is going to be a part of 
the interim missile defense capability that has been called 
down by the President. That will stand up in fiscal year 2005, 
this budget year that we're talking about here this morning.
    And I would just also report to you, Senator, that during 
Operation Iraqi Freedom, we had prototype capability 
functioning in the Arabian Gulf, and operating from one of our 
Aegis DDGs. They experienced significant success tracking 
missiles that were fired by the Iraqis at our forces, and we 
were connected in an integrated way. We could not--we were not 
equipped to fire, but detect and track; and that detect and 
track algorithm functioned very successfully.
    And so the bottom line of the status report is that we 
anticipate modifying a number of our Aegis destroyers to bring 
this kind of capability to the Nation by the end of this 
calendar year, and we will be a part of that interim 
capability.
    Senator Cochran. Thank you.
    Thank you, Mr. Chairman.
    Senator Stevens. Thank you.
    Senator Burns.
    Senator Burns. Thank you, Mr. Chairman. I think we have--
I've already submitted my statement. And thank you, gentlemen, 
for your service to your country and for coming today.
    I will probably focus on some of the things that interest 
me. My main interest is the troops on the ground, our enlisted 
people that are in harm's way, and especially like an operation 
like we have in Iraq, who are most vulnerable to being hurt 
very badly, and most vulnerable in a hostile action.

                          SHIPBUILDING PROGRAM

    But I wanted to ask Admiral Clark--since you've increased 
the funds on shipbuilding from the $4.7 billion to the $11.1 
billion, with what has happened in the world and the changing 
landscape, have you changed the thrust of your investment to 
meet those times? And could you give me an example on the 
challenges you face, now that the landscape does change from 
time to time?
    Admiral Clark. Well, absolutely.
    Here's the way I would lay it out. And Senator Inouye asked 
this question of the Secretary, do we have the numbers right? 
And, you know, where do we need to go? This morning, we have 
295 ships in the Navy. Is this enough? I don't believe it is. I 
have said that for 3 years and 8 months.
    Having said that, I believe we're on the right track. We 
can't undo history. And we didn't buy enough ships in the 
1990s. Over the decade of the 1990s, our shipbuilding budget 
averaged just slightly over $6 billion a year. And in order to 
have the Navy--when I got to this job, the Congressional Budget 
Office (CBO) had just put out a study that said you had to 
invest $12 billion a year to sustain yourself, and that's why 
$12 billion was my target.
    How does it stack out in priorities? And, by the way, I 
have said I think we need about 375. I've never said it's 
exactly 375. We have to move toward the capability of the 
future, and capability is more important than numbers. But 
there's a fact here--is that--we've studied this long and hard, 
Senator; I haven't figured out how to defy the laws of physics 
and make a ship be in more than one place at a time. You know, 
it's a fundamental reality.
    I want to say that the Secretary has allowed me to speak to 
that number. It's not a number that has been sanctioned by the 
Department. It is the CNO's view. My view this morning is that 
we're continuing to learn.
    Let me give you an example. We are completing, as I speak, 
an experiment that I've had going on for 2 years. I have had a 
destroyer, forward deployed, has been in Operation Iraqi 
Freedom every step of the way, for 2 years. I have been 
rotating crews to that ship. That's a Pacific-based ship, and a 
Pacific-based ship spends at least one-third of its 
deployment--because it's a vast area, of course--one-third of 
its 6-month deployment, is spent in transit. I've had it over 
there 2 years, rotated four crews. It'll be home soon. We're 
going to put the technical people onboard, and we're going to 
learn the lessons from that. But I'll tell you what it's 
already shown me is that that's a concept I need to exploit. It 
gives me more operational availability for the investment.
    What have I learned about the priorities? Senator Cochran 
asked about missile defense. It absolutely is a requirement for 
the future. We do not have money in the budget yet, but I have 
spoken openly, and it's in my written testimony, that CG(X), a 
ship designed from the ground up to do that missile-defense 
mission, is going to have to be built. It has to be built when 
we know exactly what the size and shape of the future missile 
defense systems are going to be.

                       LITTORAL COMBAT SHIP (LCS)

    More importantly, the Littoral combat ship that is at the--
down-select--in the next 2 months, this new class ship is 
designed to do one principal thing: take on the enemies where 
they're going to take us on. No Navy is going to take us on toe 
to toe. We are too big and too strong. They're going to come 
after us in the littorals, they're going to come after us 
asymmetrically. Senator, I need that ship tomorrow morning. I 
cannot get it fast enough. I need the ability to take on the 
way they're going to come at us, anti-submarine warfare in the 
near-land arena, anti-surface attacks, mine warfare. And we're 
going to build this ship from the ground up to be optimized to 
handle unmanned vehicles, and we're going to change the 
calculus on the enemy. This is going to be a much smaller ship, 
and we're going to have to build it in numbers. And I think we 
need 50 or 60 of them. But the reason I don't know the exact 
number is that I'm still working the manning concept, and am I 
going to be able to keep them forward, like I've just done with 
this ship for 2 years. And if I can, I will need not as many as 
if I had to rotate them every time. So those are the way I see 
the priorities. Coupled with what we described with General 
Hagee in the new Navy/Marine Corps team and the capability that 
we will project with MPF Future, which I believe should be 
considered as an integral part of the fighting force. Today's 
MPF maritime pre-positioned ship is a warehouse, floating 
warehouse. Tomorrow's MPF isn't going to be like that. It will 
have command and control spaces in it, it will have aviation 
decks on it to surge aircraft forward and so forth. That's the 
way I see the future, Senator.

                       RECRUITMENT AND RETENTION

    Senator Burns. General Hagee, give me an idea--recruitment 
and retention of our troops, are you making your quotas? Are 
you getting the kind of people that you want? I would ask all 
three of you that. Are there areas of concern or--how are we 
doing?
    General Hagee. Sir, thank you for that question. I am happy 
to report to you that we are doing very well in both areas. 
Last November, we had 100 straight months of meeting mission, 
recruiting, and we are getting the right type of young American 
man and young American woman, and I think you saw that in 
Operation Iraqi Freedom. Unbelievable quality. Just had a 
report yesterday, we are on track to make mission this month. 
But we are doing very well on recruiting.
    As far as retention is concerned, for this fiscal year we 
are about 80 percent of attaining our first-term re-enlistment 
goal, and we are about 85 percent of achieving our second-term 
re-enlistment goal. And, of course, we have all the way to 
September to accomplish those two missions.
    So I am very happy with where we are right now. I have to 
be--I'll be frank with you, sir, we are putting a lot of 
demands on our marines. The sun never sets on the Marine Corps. 
It is around the world, and they are doing a magnificent job. 
And I have asked all the commanders to keep a good feel on the 
pulse of the marines and their families for any indication that 
retention or recruiting is going to turn in the wrong 
direction. Right now, we do not have those signals, sir.
    Senator Burns. Admiral Clark, do you want to comment about 
that?
    Admiral Clark. Yes, I sure do. Highest retention in the 
history of the Navy, ever, 38 or 39 straight months. Quality, 
we have increased quality 4 percent, to the 94 percent level 
last year, and our goal was 95 percent high-school graduates. 
Quality is high. It's fundamentally because of the things the 
Congress has done. And at the end of my opening statement, I 
said that they're reading the signals of the citizens of 
America. They're listening. They're watching. And the support 
that America is sending to our people is resonating with them. 
They believe in their cause, and they're committed to making a 
difference.
    Now, here's one concern I have. Because we're successful, 
please don't take my tools away. The tools that I've got are 
the things that are allowing me to reshape my force, and I need 
them. And our people are responding to this challenge we're 
giving them. ``We're going to give you a chance to make a 
difference, and we're going to invest in your growth and 
development,'' and that's what they're responding to, Senator.
    Senator Burns. Mr. Secretary, do you want to make a 
comment? Because I have another question and comment.
    Mr. England. Just one comment. When I first testified, we 
were recruiting 58,000 a year, in terms of sailors, and now we 
are recruiting about 40,000 because our retention is so high. 
So it's an indication, just in terms of numbers that we're 
recruiting, much lower than we were in the past.

                   AIRSPACE AVAILABILITY FOR TRAINING

    Senator Burns. We lost our ability to train into--at 
Vieques, as you well know, down in Puerto Rico. It continues to 
be a problem among all our services that have a flight wing to 
them, or whatever. And I noticed that, in your statement, you 
mention Eglin as a joint place where you're training. I would 
just make a comment that we, in Montana, are--when you look at 
this country, and the airspace that we have in which to train, 
it continues to shrink. And I think we should look at some 
areas where we have airspace in which to train, and also the 
infrastructure in which to hold those people that are in 
training, and their aircraft. So we would visit with you about 
that.

                   IMPROVISED EXPLOSIVE DEVICE (IED)

    And then I have some other questions about detecting these 
explosives in Iraq. I know--you know, that's why I say, our men 
and women are in a most vulnerable position. They are the 
target, and they're unprotected, and I'm concerned about body 
armor. Are they protected? Can we detect those roadside bombs, 
General Hagee? And is there new technology which allows us to 
do that? And if not, are we looking into maybe some 
unconventional areas to gain that technology?
    General Hagee. Yes, sir. That is, without a doubt, our 
highest priority right now, is to ensure that all of our 
servicemen and women overseas are protected. I can tell you 
that the 25,000 marines and sailors that are going into 
Operation Iraqi Freedom, they all have the so-called Small Arms 
Protective Inserts (SAPI) plates. Everyone will be wearing it.
    There is no magic answer, there is no one solution for the 
improvised explosive device. It is a combination of 
technologies and tactics and procedures. We have worked very 
closely with the United States Army to learn everything that we 
can from them. The Army has stood up a task force called Task 
Force IED, improvised explosive device. It is a joint task 
force that is focused on this particular problem. What 
technologies we can bring to bear, what are the tactics, 
techniques, and procedures that we need to use on the 
battlefield, and, probably most importantly, where do we have 
gaps? Because every time that we come up with a solution, the 
opposing side is looking for a way to get around that 
particular solution. So we are working very hard in those 
particular three areas.
    We're going to have about 3,000 vehicles of various kinds--
Humvees, 5 ton, 7 ton--on the road and in harm's way. Every one 
of those vehicles, before it goes out on patrol in Iraq, will 
be hardened. We have a few of the so-called up-armored Humvees, 
but not very many of those. So what we have done is, we have 
purchased kits, we have cut steel, and we have sufficient 
quantity to harden every single one of those vehicles.
    We have done the same with our aircraft. We have put on the 
most modern aircraft survivability equipment that this Nation 
has produced. We have also taken our pilots, every single one 
of them that will be going over there, they've gone through a 
2-week very intensive training course down in Yuma, Arizona, 
flying against the type of threat that we believe is over 
there. Once again, marrying the technology and the tactics, 
techniques, and procedures.
    Once again, to be frank, sir, it's still a dangerous place 
over there. We are aware of that, and all of us are working 
very hard in that area.
    Senator Burns. Well, you know, my father was always 
criticized for working mules. You know, everybody else worked 
horses. This was back in the old days, and they said, ``Why do 
you work them darn mules? You know, they'll kick you, bite you, 
and everything else.'' And Dad would kind of say, under his 
breath--he said, ``Well, you've got to be smarter than the 
mule.'' So we've got to be a little bit smarter, too, and a 
jump ahead. And I thank you for your thoughts.
    Senator Stevens. Senator McConnell.

                                  MK45

    Senator McConnell. Thank you, Mr. Chairman.
    Let me begin by thanking all three of you for your 
extraordinary contributions to the war on terrorism, which has, 
so far, been successful beyond anyone's expectations. It's been 
a great American success story, and it continues.
    Mr. Secretary, despite the efficiencies and cost savings 
achieved by the privatization of the Louisville Naval Ordnance 
Station, the Navy has relied heavily on congressional add-ons 
in order to meet its requirements for overhauls and for 
procurement of large-caliber guns. This committee has provided 
sufficient additional funding for the MK45 gun overhaul orders 
to extend the life of this important weapon. And several of us 
have sought funding for modifications that allow the Navy to 
modernize this gun so that it can bridge the gap between the 
Navy's budget for this program and its requirements until the 
Navy's cruiser modernization and DD(X) destroyer programs 
actually begin production.
    It's my understanding the Navy's request today contains no 
provision for MK45 gun modifications to support cruiser 
modernization, and despite Congress' efforts to restore this 
program last year and this committee's expression of the 
importance of the MK45 gun modernization. The so-called cost 
savings associated with this move are not particularly 
impressive with cutting these modifications, particularly given 
the negative impact this will have on the Navy's industrial 
base, the Marine Corps' requirement for naval surface-fire 
support, and the costs associated with restarting the 
production line for the DD(X) advanced gun system.
    That having been said, General Hagee, it's my understanding 
that the Marine Corps supports the modernization of the MK45 
gun to improve its capacity for precision fire support. Would 
reinvesting in the modernization of this gun improve the Navy's 
ability to provide the kind of fire support you need for your 
marines onshore?
    General Hagee. Sir, I think Admiral Clark and I have 
discussed this. We like that gun. But it's an affordability 
issue, as you mentioned. And what we have to do is balance the 
weapon systems that we have out there with the risks. We've got 
DD(X) coming on, which is going to have a significant 
capability. The aviation fires is, of course, a part of this 
particular equation, and moving the lightweight 155 and the 
expeditionary fire-support system ashore is also a part of the 
fires equation. So it's integrating all of the fires that we're 
going to have.
    I would repeat, would we like to have that gun? Yes, sir. 
But when you look at the affordability, the risk, and then look 
at all the other fire systems that we have out there, I support 
Admiral Clark in his decision.
    Senator McConnell. So then are you telling me that the 
marine's near-term need for precision naval surface fire 
support is adequate?
    General Hagee. No, sir, I'm not. It is not.
    Senator McConnell. Therefore, Secretary England, I hope you 
will reconsider the decision to cut funding for this important 
modification to the MK45 gun system. It seems to me, clearly, 
you need this, at least on an interim basis, until you get to 
the next weapon. Do you have any observations about this?
    Mr. England. Just one, and then I would turn it over to the 
CNO--all right, go ahead----
    Admiral Clark. Why don't I----
    Senator McConnell. Jump right in.
    Admiral Clark. All right. We're excited about the extended 
range guided munition (ERGM) development, and the round that is 
going to give us extended-range precision capabilities for the 
marines. Senator, General Hagee's got it exactly right. When I 
sit down at the end of the day, I don't have all the resources 
I'd like to have; I've got more than I've ever had before, but 
technology costs money. And so I made this judgement that, with 
the cruisers, who would be primarily focused on operations near 
the carrier, and not in the near-land scenario supporting the 
marines, I would not do the modification for the cruisers, but 
I would focus that money on the DDGs. So that's the decision 
that we made. If we had unlimited resources, we absolutely 
would have procured this modernization for every one of the 
guns that we have. We would.
    We expect this--even though AGS, the advanced gun system, 
is coming, we expect that this gun is going to be around for a 
long time. And, frankly, when you look at future warfare, the 
ability to provide precision on the battlefield to the Marine 
Corps is what is going to help us transform the way we fight.
    So it's an affordability issue. We made the judgement based 
upon where the cruisers will spend most of their life, and 
that's, you know, more in the deep-blue environment instead of 
the near-land brown-water environment.
    Senator McConnell. Summing it up, if you had the resources, 
you'd like to do what I suggest.
    Admiral Clark. That is correct.
    Senator McConnell. I thank you.
    Thank you, Mr. Chairman.

                                 CG(X)

    Senator Stevens. Thank you very much.
    Admiral, I went to the archives to look up the CG(X) that 
you presented in May 2003, a long-range shipbuilding plan, that 
indicated that those would be procured sometime after the end 
of this first decade. As a matter of fact, it looks like the 
first procurement would be 2018. The description you just gave 
it indicates that it probably is going to be needed sooner. Are 
you going to revise the plan?
    Admiral Clark. I would tell you that the far-out plan 
doesn't have great granularity to it yet, Mr. Chairman. I 
believe that this is contingent totally upon the way the 
technology develops and the size missile system that MDA 
decides that this platform is going to have to carry--all of 
that work is still ongoing.
    I do believe that 2018 is likely to be too far away. I have 
not refined it because we're outside the FYDP--this platform I 
expect to be fundamentally built upon the hull and the 
technology that exists in DD(X), so that we will spiral the 
technology from DD(X) to CG(X). And I would like to tell you 
that I don't have great confidence in the date that is in that 
extended projection, and it is one of the issues that we have--
that we are analyzing as we move forward with the Missile 
Defense Agency.
    Senator Stevens. Well, is the DD(X) to be designed so that 
it could be evolved into the CG(X)?
    Admiral Clark. It is my intention to recommend that we do 
just that, and that is what our intent has been. But I would 
reserve this point, Mr. Chairman, that it might have to be 
scaled up to do the kinds of things that may be required. So 
what I'm really trying to say is, we will spiral the technology 
in DD(X), and that's all of the pieces, including all electric 
and the hull form. You know, we kind of stopped talking about 
how advanced this platform really is. I mean, let me just give 
you one fact as an example. This ship, in its size, is going to 
have the radar cross-section of a fishing boat because of the 
advanced design, stealthy design, of the platform. That's the 
kind of technology we want for the future. We want the 
technology that gives us the ability to man it with fewer 
people.
    So I expect it to be built upon the frame of a DD(X). It 
might have to be made a little bit larger.
    Senator Stevens. Do you have money in the research budget 
now for that CG(X)?
    Admiral Clark. I do not have that money in the budget yet. 
No, sir, I do not.
    Senator Stevens. Is any additional money needed for the 
DD(X) to evolve into the CG(X)?
    Admiral Clark. We have placed the emphasis on the research 
and development to do the risk mitigation that I spoke about in 
my earlier answer, to develop DD(X). And, you know, when we're 
2 to 3 years into this, into the construction, I believe we're 
going to know the things that we need to know, where we need to 
put the follow-on research and development.
    It is fundamentally going to be an issue of the hull form, 
and scaling it up, and we do need to get started on that 
development.

                       ADVANCED RADAR TECHNOLOGY

    Senator Stevens. What about the development of the radar 
suite and the other air-to-air missile defense research? Is 
that in the budget?
    Admiral Clark. There are resources against advanced radar 
technology. We have resources against digitalizing the new 
Aegis architecture. I could take, for the record, the specifics 
to--I want to make sure I'm telling you that we've got the 
right levels there, because, frankly, this interfaces with MDA 
and their budget, and I need to go check that out.
    [The information follows:]

    The Navy is already conducting solid-state S-Band 
prototyping and we have requested $220 million in additional 
research and development funding in the fiscal year 2005 
budget. This solid-state active phased array radar would allow 
increased capability against cruise missile and air-breather 
threats, as well as simultaneous performance of long-range 
Ballistic Missile Defense missions.
    Our current plan puts us on a path for initiation of radar 
system development in fiscal year 2008 and ultimately, 
integration with the CG(X) platform in the 2020 timeframe. It 
is important to note that we are continually analyzing the rate 
and evolution of future threats to refine the pace of our own 
capabilities development. As we gain fidelity in the timeline 
for CG(X), we will likely need to adjust future budget 
submissions to appropriately align the schedules.
    The nexus of this capability will greatly enhance the 
forward, credible, assured access of our Naval forces through 
mid-century.

    Senator Stevens. Well, I was just going to ask whether that 
interface has taken place yet. The National Missile Defense 
System has a substantial amount of research money. Are you 
included in that?
    Admiral Clark. Absolutely. For example, I indicated that by 
the end of this year I expect to have 15 ships modified to our 
existing Aegis systems, with advanced algorithms in the 
software to do the detect and track, and the funds for that 
activity are coming from MDA.
    Senator Stevens. Well, I think we'd like to visit with you 
later, in a classified situation, to discuss this. At least I 
would. Because I would like to make sure, during our watch, 
that this thing is moving forward as rapidly as possible.
    Admiral Clark. Yes, sir. We'd be very--I absolutely believe 
that would be very helpful.
    Senator Stevens. Senator Inouye.
    Senator Inouye. Thank you very much.

                          SUPPLEMENTAL FUNDING

    General Hagee, you have a significant contingent of marines 
in Haiti, and this deployment was not accounted for in fiscal 
year 2004. And now you are going to be deploying a large 
contingent to Iraq. Can you fund this without a supplemental?
    General Hagee. Sir, as you know, the Department did receive 
a supplemental for fiscal year 2004, and we are capturing those 
costs, both the costs that we're starting to incur with the 
deployment of marines down into Haiti, and we are most 
definitely capturing those costs of deployment into Iraq. And 
we are reporting those costs up to the Office of the Secretary 
of Defense (OSD), and we expect to be reimbursed for those 
funds.

                               BODY ARMOR

    Senator Inouye. Mr. Secretary, Senator Burns brought up a 
very interesting, but tragic, matter. Unofficially, I've been 
advised that in Operation Iraqi Freedom, there are 
disproportionately more amputees than chest or stomach 
injuries. For one thing, you have body armor that cover your 
chest and stomach area, but nothing for the legs and arms. Are 
we doing any research to, for example, protect the foot and 
ankle or the hands and wrists?
    Mr. England. Senator, there's a lot of work underway. And 
I'd like to, if I can, get together with you separately on this 
subject, because there is work, but I'd rather not discuss it 
here, if we can. But there's definitely work underway to expand 
the type of coverage we have, in terms of protection for our 
men and women in combat. But, if we can, we can bring some 
people in and have that discussion with you, sir.
    Senator Inouye. All right. I appreciate that, sir.
    Thank you very much, Mr. Chairman.

                       AMPUTEE MEDICAL TREATMENT

    Senator Stevens. On that subject, Mr. Secretary, I was 
talking to some of the surgeons out at Walter Reed, and they 
tell me that a lot of the people that they need to deal with, 
the problems that Senator Inouye is discussing, are in theater, 
but are really not used there, because people are injured with 
this type of situation, in arms and legs, are being brought 
home. Are you familiar with that?
    Mr. England. I'm not familiar with that subject at Walter 
Reed. No, sir, I'm not.
    Senator Stevens. I would ask that you look into it, because 
they tell me that they have not enough at Walter Reed, and 
there are people that are over there, that are reservists that 
have been called up, and they don't have the facilities to do 
the work. It's long-term work, and not emergency work, in 
theater. I would urge you to take a look at that. That, from 
one of the most senior and trusted surgeons in Walter Reed, 
tells me that they're hard-pressed. I'd like to see if you'd 
look into that, please.
    Senator Cochran.
    Mr. England. We will do so, Senator.
    [The information follows:]

    The Department of the Navy is not in a position to comment 
on the staffing of Army medical treatment facilities, or their 
concept of operating and staffing medical treatment facilities 
in direct support of operating forces.
    What Naval Medicine can comment on is its current 
deployment status as relates to orthopedic surgeons and its 
ongoing process of tracking medical services in the military 
treatment facilities. Currently, there are 4 orthopedic 
surgeons deployed with U.S. Marine Corps Surgical Companies in 
Iraq. On a monthly basis, or more frequently as required, the 
Naval medical treatment facilities provide a Medical Service 
Availability Report that details the services that they can 
offer to their beneficiaries. Should an event like this 
deployment interrupt a military treatment facility's ability to 
provide specific services, it is determined early so that the 
Bureau of Medicine and Surgery (BUMED) can apply mitigating 
strategies utilizing resources from across all of Naval 
Medicine to minimize the impact from the loss of services. In 
this case, no Naval medical treatment facilities have reported 
an inability to provide orthopedic services.
    The Department of the Navy would respectfully defer comment 
on the level of staffing at Walter Reed Army Medical Center to 
the Army Surgeon General.

                       MARITIME NORAD CAPABILITY

    Senator Cochran. Admiral Clark, you've indicated that 
you're convinced of the necessity to build a maritime aerospace 
defense command for North America. I understand that the 
littoral surveillance system, which is part of the distributed 
common-ground station, may already be able to accomplish many 
of these mission requirements. I also understand that Northern 
Command and the Pacific Command are looking at this capability 
for separate initiatives in the Gulf of Mexico and Pacific Rim. 
In your opinion, is there an opportunity to leverage existing 
capabilities of the littoral surveillance system to reduce 
research and development costs and to expedite delivery of a 
maritime NORAD capability?
    Admiral Clark. Well, I absolutely believe--while I'm not 
expert on the system, I absolutely believe that there's 
potential to help us have a system with much better information 
in it, that would be akin to what I have dubbed the Maritime 
North American Aerospace Defense Command (NORAD). And here's 
the way I look at it--and, by the way, I have discussed this 
extensively with the Commandant of the Coast Guard, who, I 
believe, fundamentally has this responsibility, but that we 
understand that we've got to be a great partner to the Coast 
Guard. And I believe that we are partnering better than we ever 
have before. We, just the other day, completed another 
headquarters-level cooperation talk so that we can better align 
our efforts.
    Having said that, and that the littoral surveillance system 
will improve the process, I do believe that ultimately--and I 
would say that the Commandant of the Coast Guard agrees with 
me--that what makes the NORAD system so effective is the 
transponder system that exists in aircraft, so that they are 
actively transmitting who they are and where they are. The 
reason I believe that this is the kind of capability that we're 
going to have to have, is that people that don't have anything 
to hide are going to be anxious to tell you that they don't 
have anything to hide, and here they come.
    I believe we have the technology today to advance our 
knowledge to better protect ourselves. Where I had an 
opportunity to talk about ways that we could better defend the 
United States of America, I made these recommendations. I'm 
happy to report to you that the Commandant of the Coast Guard 
is working through his channels in Homeland Security--and this 
is an international challenge, of course--that they are 
actively working toward how we would put together such a 
capability.

                     UNMANNED AERIAL VEHICLES (UAV)

    Senator Cochran. As we all know, unmanned aerial vehicles, 
such as Global Hawk, are proving to be very valuable to current 
operations. I'm informed that the Navy broad-area maritime 
surveillance UAV is not scheduled for operational capability, 
until fiscal year 2010, but the Air Force's Global Hawk program 
is on track for fiscal year 2006 for initial operating 
capability. It seems there is an opportunity to achieve the 
desired capability ahead of schedule with interoperability with 
the Air Force. Can you tell us what the likelihood is that the 
Navy may choose to delay a decision on the Navy broad-area 
maritime surveillance UAV and to accelerate the program by 
selecting a joint platform?
    Admiral Clark. Well, I cannot talk about the acquisition 
decision, because the acquisition authority rests with the 
Secretary and the Assistant Secretary, who make those 
decisions. But let me just say what I can talk about.
    I agree with the foundation of your question. Your question 
suggests, well, you know, ``Admiral Clark, why aren't you 
exploiting what the Air Force is doing?'' And that's where we 
are. We laid money in the budget this last year and this year, 
in execution--to get started in this direction, because we 
desperately need this kind of capability. And so we funded and 
let the contract recently to buy Global Hawks as initial 
demonstrators for us to then mature this capability in the 
maritime domain.
    I'm happy to report to you, Senator, that we'll get our 
first platform about 1 year from now. I believe it's scheduled 
for April 2005. And then we will get the second platform in 
late 2005. The acquisition executive will have to make a 
determination if we can build upon that or if we will be 
required to compete from that point, and I can't--I will not be 
the one that makes a decision on that.
    We have taken this direction because I want to be as joint 
as I can, I want to partner and capitalize on the research and 
development of the United States Air Force in this case every 
time I get an opportunity, instead of spending R&D of my own, 
of our own. And so I'm very excited about the rapid 
introduction of this capability. And, frankly, what we looked 
at is--we redefined that program in the 2005 submit to you, 
because we said--we had more money in the demonstration phase 
of it, and said, ``The Air Force has already done a lot of this 
demonstration, so why do we need to do that?'' And, in the 
process, we saved several million dollars. And so the future--
the decision is that in the future, I'm very happy with where 
we are in buying these two demonstrator vehicles, which will 
deliver 1 year from now.
    Senator Cochran. Thank you.
    Mr. Secretary, do you have any comments, views on that 
subject?
    Mr. England. Only, Senator, that there are some competition 
issues as we go forward, in terms of, do we sole-source? Do we 
have competition? But what the CNO said is right, we are buying 
some Global Hawks. As we go forward, though, the discussion 
we're having now is, Is there going to be a competition for 
follow-on vehicles, and what will that be?

                                SEABEES

    Senator Cochran. Mr. Secretary, I understand that Seabees 
have played a very important role during our combat operations 
in Iraq, and they continue to be an important resource. In 
fact, I think there were two individuals from the Navy 
construction regiment, based down in Gulfport, the Navy 
Construction Battalion Center, that were awarded Bronze Star 
Medals for their recent actions. Could you tell us something 
about the work that Seabees have performed and the important 
contributions that they've made in Iraq?
    Mr. England. Senator, thanks for the opportunity to 
recognize the Seabees, because I can tell you, we are 
tremendously proud of the men and women in the Seabees. They 
have served with distinction in Operation Enduring Freedom, 
supporting the Marine Corps, and also the Navy, ashore. They 
were deployed with the IMEF. There were approximately 5,000 
Seabees, and almost 2,000 from the reserve, that supported that 
effort. And today we have well over 500 Seabees, active duty, 
and about 500 Seabees, reserved, who are deploying with the 
marines on this deployment to Iraq. And they will be tasked 
with force protection, doing structures and facilities, and 
also for reconstruction of some of the civilian infrastructure 
in Iraq. So the Seabees have been very important, very 
instrumental. Like I say, we're tremendously proud of their 
effort.

                           UPARMORED HUMVEES

    Senator Cochran. There has already been a question about 
the problem with the improvised explosive devices. I understand 
that, in the case of the marines, there is an effort being made 
to upgrade the deployment of Humvees with armor that would 
provide additional protection. And I know there are other 
things that are being done in this area that can't be discussed 
in open session. But will the Marine Corps have adequate 
numbers of up-armored Humvees to help deal with this situation?
    General Hagee. Sir, we won't have the up-armored Humvees. 
As I mentioned, we're going to have about 3,000 vehicles in 
Iraq, a combination of Humvees, 5 tons, 7 tons, and other 
moving stock. Any of those vehicles that will go in harm's way 
on patrol will be hardened. They're not the M1114, which is the 
up-armored Humvee, but they will be hardened, either with kits 
or with steel that we have cut to fit the platforms.

                    LIGHTWEIGHT 155 HOWITZER PROGRAM

    Senator Cochran. There is a request in the budget for funds 
for 97 Lightweight 155 Howitzers. Could you provide us with 
your assessment of how this program is progressing?
    General Hagee. Sir, the Lightweight 155 is going very well. 
There was a minor problem here a month or so ago with the weld 
on the tail of the 155. That's been resolved. We are very 
confident that we'll be able to go to a full-rate production, 
and we'll have a positive decision in January 2005.
    Senator Cochran. Thank you very much, General.
    Thank you, Mr. Chairman.

                              GLOBAL HAWK

    Senator Stevens. Secretary England, I noted the comments of 
the Senator from Mississippi about the Global Hawk. And, 
Admiral Clark, we have done some work with the Coast Guard in 
trying out the Predator for long-range activities along the 
maritime border off Alaska. And they've reported that that has 
been fairly successful. I do hope there's going to be some 
competition, because I see the Global Hawk as one platform; the 
Predator and some of these other smaller ones are different 
platforms, and they have different utilities as we go along. 
Are you exploring all of these possibilities for competition 
with the Global Hawk?
    Mr. England. Yes, we are. That was really the gist of my 
comment, that we're now talking specific platforms. We are 
specifically looking at the competitive environment and who 
should compete in this. But we will definitely compete if there 
are systems that meet the requirements, Senator.
    Senator Stevens. As a matter of fact, I was out at Stanford 
Research Institute recently, and one of them you could hold in 
your hand. Very interesting derivation of the concept of 
unmanned aircraft. But I do think the future is in utilizing a 
whole series of them, and I hope we stay current with the whole 
concept, and not just one.
    Mr. England. No, actually, we agree. I mean, this is not 
only in the air, but this is on the surface of the Earth, it's 
on the surface of the water, it's undersea. We're working a 
wide variety of unmanned, across a full spectrum of utility in 
combat. And, Senator, I agree with you, I think there's far 
more utility in the future than we expect.
    Senator Stevens. Not that I have anything against Global 
Hawks. They're a very sound platform. But it's high-altitude, 
long-range, and long-endurance. I think it's a very vital 
portion of our system, but there are other challenging areas 
where it just cannot fit in. And so I hope we pursue them all.
    Yes, Admiral?
    Admiral Clark. If I can add, Mr. Chairman, I think this is 
really something for us to collectively consider. The 
technology is moving so fast. We are going to send the marines 
over, and, at the Naval Research Laboratory (NRL), we have 
developed a hand-launched UAV that they're taking with them. 
It's called Silver Fox. The marine will launch it like this. It 
will link directly to him. The marine will be carrying a 
computer. He won't be bothering with the satellites and all 
this stuff. We've got to have mechanisms to be able to tap into 
this technology and turn it in a hurry. And by the time we 
finish our demonstrations, it's impossible to say today how 
much the technology is going to have moved in this area. And so 
we need the acquisition system to be agile enough for us to be 
able to exploit.
    This is our asymmetric advantage, Mr. Chairman. We'd like 
to think of this enemy that we're fighting, that they're the 
ones with the asymmetric advantage; ours is that we can turn 
technology faster than anybody in the world. And the marines 
are going with this brand-new system.
    General Hagee. If I could pile on for a minute, Mr. 
Chairman. I could not agree more with both the Secretary and 
Admiral Clark. We're also bringing a UAV called Dragon Eye, 
which is a hand-launched UAV, that can give the company 
commander visibility over the next hill. And, of course, we 
have Pioneer.
    To me, what is critical is the ability to link all of these 
platforms--whether they're tactical, whether they're 
operational, or whether they're strategic--that we have the 
communication architecture down there to where that company 
commander, battalion commander, or ship driver, can get that 
information, and it's not stove-piped down to one ground 
station. I think that's where our concentration needs to be.
    Senator Stevens. And it's going to be linked up to the 
cockpit of the manned aircraft, too. So I think this is the 
future, and I hope you are doing what we're doing, and that is, 
visiting some of those people in graduate school who are 
thinking out of the box and trying to really push the 
envelope----
    Mr. England. Actually----
    Senator Stevens [continuing]. On the whole subject.
    Mr. England. I'm sorry, Senator. But, you know, a lot of 
this is operational. I mean, even in the war that we're 
conducting, in Operation Enduring Freedom (OEF) and, before, 
Operation Iraqi Freedom (OIF), we actually had unmanned tied in 
with manned aircraft. And it's interesting, when you listen to 
the conversation, you don't know if the pilot's on the ground 
or in the airplane. So it's quite interesting how this all ties 
together. We have made, I think, giant strides in this area.
    Senator Stevens. Well, the three of you make us proud.
    Do you have any further questions, Senator?

                     ADDITIONAL COMMITTEE QUESTIONS

    Without any question, we've seen a lot of teams at that 
witness table, in my time on this subcommittee; I think you're 
the finest we've seen, and we appreciate what you're doing. 
You've got a grand group of young men and women serving our 
country under your command. So we couldn't be more pleased with 
the way you're conducting your activities. And I do hope that 
we can find ways to work together and make sure that we deliver 
the funds to you in the areas that they're needed.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
             Questions Submitted to Hon. Gordon R. England

            Questions Submitted by Senator Pete V. Domenici

                       WATER PURIFICATION PROGRAM

    Question. Mr. Secretary, as you know the Office of Naval Research 
(ONR) has begun a water purification research program in southern New 
Mexico.
    The goal of this program is to study techniques in reverse osmosis 
that will lead to the production of a transportable water purification 
unit.
    In turn, these units would be used by Marines engaged in 
humanitarian and disaster relief efforts. They would also help meet the 
water demands of our expeditionary war-fighters.
    What is the schedule to produce the first water purification system 
with the upgraded technology being developed by the Navy?
    Answer. The Office of Naval Research (ONR) is the program 
coordinator for the Expeditionary Unit Water Purification (EUWP) 
program. The EUWP program is in the near term building state of the art 
demonstrators, and for the long term is investing in significant 
science and technology enhancements.
    In the near term, the EUWP program is designing a 100,000 Gallon 
Per Day (GPD) system. This system is transportable by C-130 aircraft 
and encompasses state of the art commercially available technology. It 
will ultimately be fielded to the Tularosa Basin National Desalination 
Research Facility (TBNDRF), Alamogordo, New Mexico, and is on schedule 
with delivery planned for January 2005.

                     NAVY HIGH ENERGY LASER TESTING

    Question. What is the status of the Navy high energy laser testing 
against anti-ship missiles at White Sands?
    Answer. The Navy is in the process of upgrading the Sea-Lite Beam 
Director (SLBD) acquisition and tracking systems from its circa 1970s 
technology to more state of the art technologies. The name of this 
program is High Energy Laser Precision Acquisition and Track (HEL-PAT). 
At present, two new cameras, mid wave infrared, and long wave infrared, 
have been purchased and are on site. A new Automatic Aimpoint Selection 
and Maintenance (AUASM) telescope and Hot Spot Tracking (HST) optics 
are being manufactured. A new Tracking Processor Unit (TPU) has been 
procured and the associated tracking software is being developed. The 
new TPU will allow object oriented tracking as opposed to edge tracking 
currently employed.
    Starting in April 2004, the TPU and one of the new cameras are 
being installed and integrated with the SLBD using a surrogate AUASM 
telescope. This will ensure that the TPU can properly control the SLBD 
for tracking. First tests will be on a stationary target board. Later 
tests will track military aircraft. The goals of the SLBD upgrades are 
to allow the tracking and engagement of low contrast targets against a 
clutter background and to maintain the high energy laser beam on 
target. In addition, tracking through the full aperture will be 
utilized. Low power laser engagements will begin in June 2004 and high 
power engagements in November 2004.
    Question. Is the Navy interested in developing laser weapons for 
the all-electric ship?
    Answer. The Navy is interested in high-energy lasers as a future 
concept, but does not consider the technology to be mature enough for 
inclusion in an acquisition program. Adequate power generation is a 
limiting factor in the development of these weapons. We continue to 
invest in Science and Technology programs to attain methods for 
generating the required power levels. One example is the ongoing 
program in free electron laser development sponsored by the Office of 
Naval Research. Additionally, we continue to coordinate with other 
Services and Agencies on related high energy laser development 
projects.

                          JOINT STRIKE FIGHTER

    Question. The success of the Joint Strike Fighter (JSF) program is 
vital to the future of tactical aviation of all the services, 
especially the fighter bases in New Mexico.
    What is the status of the JSF program, especially the problem of 
being over-weight? Do you expect any significant impact on the 
schedule?
    Answer. The Joint Strike Fighter (JSF) program has completed two 
years of an 11-year development program. To date, the development of 
all three variants has gone very well in propulsion, subsystems, 
avionics, and autonomic logistics areas. The Air System Preliminary 
Design Review was completed in June 2003, and the F-135 First Engine to 
Test was successfully completed in October 2003.
    The Department does have concerns regarding the aircraft's airframe 
design. At this time, the airframe design is heavier than the 
established goal. Reducing the weight of the airframe is an important 
step in meeting performance requirements. We believe current weight 
issues are solvable within normal parameters of design fluctuation, and 
we are re-planning JSF System Development and Demonstration (SDD) to 
make sure we succeed. Specifically, our SDD plan recognizes that Short 
Takeoff and Vertical Landing (STOVL) performance is absolutely vital 
and is focusing upfront efforts to ensure STOVL viability for our war 
fighters. In addition, we are aggressively pursuing trade studies to 
improve performance by reducing weight, as well as aggressively 
pursuing propulsion enhancements to improve performance. Additionally, 
the Department has formed an independent review team to look at the 
entire program, including a near-term engineering view, assessing the 
present design, with specific emphasis on weight, aircraft structural 
design, and other technical risk areas.
    Additional design work required to address technical issues, 
primarily weight projections, will result in an SDD schedule delay and 
a one-year slip to starting Low Rate Initial Production to fiscal year 
2007 vice fiscal year 2006. In addition, Initial Operational Capability 
(IOC) dates will be extended as a result of adjusting the program with 
the STOVL variant's IOC moved from fiscal year 2010 to fiscal year 
2012, the Conventional Takeoff and Landing (CTOL) variant moved from 
fiscal year 2011 to fiscal year 2013, and the Carrier Variant (CV) 
moved from fiscal year 2012 to fiscal year 2013.
                                 ______
                                 
             Question Submitted to General Michael W. Hagee
               Question Submitted by Senator Thad Cochran

                              M4 CARBINES

    Question. General Hagee, I noted with some concern an unfunded 
requirement of $4.9 million for the procurement of 5,400 M-4 Carbines 
to be used by forward deployed Marines. Also, I recently became aware 
of a new technology for coating weapons that could enable weapons such 
as the M4 Carbine to operate without lubrication. I understand that 
this technology could greatly improve the reliability of the weapons 
concerned while decreasing the workload of the Marine.
    Could you update the Committee on your small arms shortfall, and 
are you aware of this technology? If so, are you investigating the 
feasibility of its application to Marine Corps weapons?
    Answer. As the result of lessons learned in recent operations, 
certain Marines are inappropriately armed with the M9 pistol or the 
M16A4 rifle. The M4 carbine is a shorter, lighter version of the 
standard M16A2 service rifle and is deemed a better weapon for specific 
applications due to its smaller profile. Therefore, the Marine Corps 
recently established a 10,119 Table of Equipment (T/E) requirement for 
the M4 carbine variant of the Modular Weapon System (MWS). The M4 
carbine replaces some of the current M16A2 rifles and M9 pistols. This 
increase of 4,420 weapons raises the MWS requirement to 69,883 weapons. 
This is comprised of 59,764 M16A4 rifles and 10,119 M4 carbines. The 
$4.9 million will procure 5,400 M4 carbine variants.
    The Marine Corps Infantry Weapons and Weapons Maintenance program 
is actively investigating coating technology for small arms. A 
Universal Chemical Technologies, Inc. product will increase wear and 
corrosion resistance and reduce friction. The Marine Corps will 
continue to investigate coating technology sources to reduce weapons 
lifecycle costs.

                          SUBCOMMITTEE RECESS

    Senator Stevens. Our next Defense Subcommittee meeting is 
scheduled for Wednesday, March 24, at 10 a.m.
    Thank you very much.
    [Whereupon, at 11:42 a.m., Wednesday, March 10, the 
subcommittee was recessed, to reconvene at 10 a.m., Wednesday, 
March 24.]
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