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



 
       MILITARY CONSTRUCTION APPROPRIATIONS FOR FISCAL YEAR 2005

                              ----------                              


                        TUESDAY, MARCH 30, 2004

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10 a.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Kay Bailey Hutchison (chairman) 
presiding.
    Present: Senators Hutchison, Stevens, Burns, and Feinstein.

                         DEPARTMENT OF DEFENSE

                        Office of the Secretary

STATEMENT OF RAYMOND F. DUBOIS, DEPUTY UNDER SECRETARY 
            OF DEFENSE, INSTALLATIONS AND ENVIRONMENT


           OPENING STATEMENT OF SENATOR KAY BAILEY HUTCHISON


    Senator Hutchison. Our hearing will be called to order, and 
I am very appreciative that we could start with Mr. Dubois on 
the Military Construction Appropriations Subcommittee for the 
2005 budget request. Today we will focus on the Department of 
Defense in general, and the Air Force construction programs. 
Navy and Army to follow. I'd like to start with my statement 
and then I will turn it over to Senator Feinstein.
    This year's military construction request is up slightly 
over last year's at $9.49 billion, compared to $9.1 billion. 
Certainly this is encouraging, but it is still $1.4 billion 
below what the Department projected last year for the 2005 
fiscal year. I'm encouraged that the funding request for the 
National Guard and Reserve components, at $620 million, is a 
rise considerably from last year's request. It is still less 
than the amount enacted last year in support of the Guard and 
Reserve in our final bill, and we all know what a tremendous 
burden in the Global War on Terror our Guard and Reserve units 
are under. However, this is going in the right direction and 
we're pleased to see that.
    One item of continuing interest to the subcommittee is the 
investment of our scarce MILCON dollars in our overseas bases. 
Clearly the Department has more carefully focused its request 
for overseas construction this year, bringing it down from over 
$1 billion in its initial fiscal year 2004 request to $823 
million this year. I hope that we will be able to see the 
overseas master plan soon, so that we will have a better idea 
of what is considered to be ongoing and what is going to be 
closed.
    We're making progress toward providing a better working 
environment and better quality of life for our military 
personnel and their families. Certainly in the area of family 
housing privatization we are able to get more people in better 
housing, more quickly than we could under the traditional 
military construction approach. And I will say that we will be 
working with you on the lifting of the cap for the privatized 
housing.
    But I would ask you, Mr. Dubois, to be looking long term at 
the rise in the O&M costs that we have when there is privatized 
housing versus the initial costs, and I know there's a tradeoff 
there, but in the out years when we are providing stipends for 
off base housing for people it goes into O&M, and I'd like for 
there to be a look at whether that is--maybe after we get 
caught up if that is in our long term best interest.
    But I certainly agree with the priority that we've got to 
do better fast, and that lifting the cap on privatization is a 
way to do that.
    Let me just end my formal remarks by saying I really 
appreciate the Department's updating us so well and frequently 
on what your priorities are. Certainly on the overseas basing, 
I think you have been very forthcoming about what you're going 
to be doing. I hope we can get better information on a real 
master plan quickly, and I'd like to have a time table on that.
    But I think as compared to last year we are way ahead of 
the game. I think your focus on overseas basing is better, but 
I still want to make sure we are not wasting one dollar for the 
welcoming back of troops you will be sending back and you've 
already made that public announcement. So I thank you for the 
communication, I think it's been terrific this year. I 
appreciate it very much.
    And now I'd like to turn to my distinguished vice chairman 
and just say for the record how much I appreciate our working 
relationship. There couldn't be a closer relationship and a 
better give and take than we have had on this committee, and 
it's my hope that this lasts for a long time. Senator 
Feinstein.


                 STATEMENT OF SENATOR DIANNE FEINSTEIN


    Senator Feinstein. Thank you very much, Madam Chairman, and 
I'd like to echo those words, it's a very special privilege to 
have you as a friend as well as a colleague, and we have worked 
together easily and well and I too appreciate that, and it is 
going to go on. So thank you very much, and thank you for your 
leadership on this committee.
    Mr. Dubois, I want to welcome you, we look forward to 
hearing from you today. I think it's clear that it appears at 
the top line of the military construction budget request is 
that it changed very little from last year's request. However, 
last year's budget request was reduced by over 12 percent at a 
time when we were preparing for war on a major scale. The low 
request came at an unusual time and the committee had hoped to 
see a more robust request this year, in light of the military's 
ongoing war efforts.
    As our missions increase our service members deserve 
quality facilities, and their families deserve quality housing 
in which to live and work. And in fact over the past 2 years 
the requested amounts were substantially decreased. Taking a 
closer look at this request, individual accounts appear to have 
changed dramatically.
    Now, even given the Navy's ability to use land sale profits 
to assist with BRAC environmental clean up, I'm very concerned 
that the BRAC remediation request is reduced again this year. 
The overall BRAC clean up budget request has dropped 56 percent 
in the last 2 years, taking a $125 million cut this year alone. 
It was only 2 years ago when the services badly underestimated 
their environmental clean up requirements and came to the 
committee for help. And we provided that help.
    So I am hopeful that you will be willing to re-look at that 
account because the clean up needs are vast. I mean, I can say 
in California alone we can probably use the whole budget, plus. 
And that doesn't take into consideration the other 49 States.
    I would like to commend the Department for keeping its 
promise to the Reserve components to steadily increase funding 
for their infrastructure needs. Although the request for 
Reserve components is down 15 percent from last year's enacted 
amount, it is still 68 percent higher than last year's 
requested amount, so that's some good news.
    The quality of our military infrastructure impacts the 
ability of our forces, as we all well know, to train, to 
maintain their equipment, to do their jobs. Adequate 
infrastructure in terms of housing and family support 
facilities is the overriding quality of life issue for service 
members and their families. Where investment in military 
construction is needed, this committee wants to meet that need. 
But it's up to the Defense Department and to you, Mr. Dubois, 
and to the individual services to come before this committee 
and tell us what the Department needs.
    We all recognize that infrastructure is an essential 
element of readiness, it's also an easy target for cuts in the 
face of competing demands. And I think that's happened for the 
past two years and I really hope it doesn't happen again. So we 
look forward to your testimony. Thank you very much for being 
here.
    Senator Hutchison. Okay. We will have----
    Senator Stevens. Madam Chairman.
    Senator Hutchison. Oh, I'm sorry.
    Senator Stevens. Yes. Thank you. I'm invisible.
    Senator Feinstein. Not really.
    Senator Hutchison. I'm going to pay a heavy price for that. 
Mr. Chairman.


                    STATEMENT OF SENATOR TED STEVENS


    Senator Stevens. I just stopped by, I have another hearing, 
but I do want to echo what you said and to make a request. It's 
obvious that we're going to go into a new era now in terms of 
installations and bases, and I want to reaffirm the request 
made by the Chair to have us fully informed as to the impact of 
those plans on this subcommittee.
    Last time we went through a base closure round we found we 
had put money into bases that were listed on the base closure 
list, and at the request of the Department. I don't think that 
should happen. I think we're going into this era with both eyes 
open, and the demands, particularly for overseas relocation, 
are going to be rather extensive, as well as demands at home to 
be prepared for the relocation that's been announced.
    Some of us were briefed recently by SACEUR when we were 
visiting with him, and the extent of those relocations in 
Europe are going to be immense.
    So I would not want to be in a position we were in before 
of responding to requests for improvements of bases that we are 
going to close, or installations we're going merge. I would 
hope that we'd find some way to really program the budget out 
further than we currently have it, as far as overseas 
construction and the construction at home.
    I encourage you, Madam Chair, to make certain that we 
conserve this military construction money to the maximum extent 
possible and use it for the future--although I share the 
Senator from California's position with regard to the cost of 
base closure, installation closure, and merger from the 
environmental point of view. Those have to be factored into 
these decisions too.
    As far as I'm concerned, I do think that the worldwide 
strategy that has been discussed so far is going to have 
enormous impact on this subcommittee. I think we must be 
prepared and not get off on the wrong track again. Thank you 
very much.
    Senator Hutchison. Well, thank you, Mr. Chairman. Those are 
excellent points and in my questioning I am going to ask when 
they will start factoring into their MILCON budget request, the 
troops they've announced they're bringing home so that we can 
have a smooth transition. That's got to be a part of it.
    Senator Stevens. Well, base closure and remediation costs 
have to be part of this figure too. That's the problem.
    Senator Hutchison. That's right.
    Senator Stevens. Thank you very much.
    Senator Hutchison. That's exactly right. Well, thank you 
very much for coming. We appreciate it. Our first witness is 
Raymond Dubois, the Deputy Under Secretary of Defense for 
Installations and Environment. Mr. Dubois, your full statement 
will be a part of the record, if you could summarize. I want 
you to cover fully--you have quite a long statement, and it 
covers a lot of territory. If you can summarize, we will submit 
the full statement for the record, and then we will be able to 
ask the questions. Thank you.


                     STATEMENT OF RAYMOND F. DUBOIS


    Mr. Dubois. Thank you, Madam Chairman, Senator Feinstein. 
The questions that you have posed in your opening statements, 
along with those of Chairman Stevens, are needless to say 
extremely important, both in terms of how we build this year's 
MILCON budget, as well as how we are looking at the out years.
    Let me take the opportunity just to briefly highlight some 
of the remarks that I've made in my written statement, because 
I think it's worth--they're worthy of emphasis. Clearly we 
believe that we have a strategy for our real property asset 
management as well as the important environmental stewardship 
obligations which we hold dearly.
    Now, I do want to thank this particular committee. As you 
know, I testify probably almost as many times as the Secretary 
of Defense himself before various committees before the House 
and the Senate. But in particular this committee has evidenced 
over the years strong support for the quality of life for our 
troops, as well as the healthy infrastructure so necessary to 
that quality of life.
    We believe that we have defined a strategy to address those 
conditions of our installations and facilities, which were 
inadequate when we came into office. Now, for many years, as 
you have pointed out, both today and in the past our facilities 
had declined. Had declined in a miserable sense due to 
competing priorities. And we can't get around that, can't get 
away from that, but it also, we think declined--those 
facilities declined due to a poor understanding of how to 
properly fund sustainment and recapitalization in particular.
    Now, we all remember that at the outset of this 
Administration, President Bush and Secretary Rumsfeld 
identified military housing as a central priority of the 
Department. We have significantly improved that housing as well 
as the military infrastructure through attention to best 
business practices and using models that we have taken from the 
private sector to improve our facilities.
    Now, full facilities sustainment is in our view the 
foundation pillar of the Department's infrastructure investment 
strategy. As you know, the Department is requesting $6.5 
billion for sustainment now, and in most respects that bill is 
not a Military Construction Appropriation per say, it comes out 
of the O&M account. But it is important to recognize that we 
are spending a considerable amount on our infrastructure and we 
are obtaining a 95 percent sustainment rate based on standard 
commercial benchmarks. 2008 is our goal to achieve full 
sustainment.
    What does full sustainment do? It prevents the 
deterioration and it does preserve the performance of the life 
of the facility, and all facilities by category have a useful 
life. Managing those sustainment costs and funding to the 
appropriate levels is in the long run less expensive than 
repairing and replacing unusable facilities.
    However, sustainment alone will not keep facilities from 
becoming obsolete. We must continue to recapitalize our 
facilities to coincide with the military mission and the needs 
of our services. The quality of our infrastructure directly 
affects their training and readiness, as you have pointed out 
in your statement.
    The Department is requesting $4.4 billion for the 
recapitalization of our facilities, which is the second pillar 
of our infrastructure investment strategy. The third pillar is 
the quality of life pillar in many respects, because if we do 
not focus on those issues we will reap the negative benefits, 
if you will, in terms of recruitment, retention, readiness, and 
morale. Now, to that end the Department is committed to 
providing quality housing. As you have pointed out, how are we 
approaching this quality housing dilemma?
    We have, one, increased the basic allowance for housing. 
Two, we have eliminated the out-of-pocket expense for off base 
housing. Three, we have increased the housing privatization 
projects, and four, we are maintaining, and with your help we 
will continue to maintain, appropriate military construction 
funding.
    We think that the Department has used privatization in a 
skillful manner to advance this goal and obtain maximum 
benefits from the Congress' appropriated levels for housing 
investment. Now, our policy requires that privatization 
projects yield at least three times the amount of housing as 
traditional military construction for the same amount of 
appropriated dollars. And we believe our housing privatization 
efforts have now achieved unqualified success, with the 
installation commanders and service members of all ranks 
welcoming privatization efforts to revitalize their family 
housing.
    There will be at the end of this month in excess of 55,000 
military family housing units privatized, and we are continuing 
to accelerate our effort and project by the end of 2005 fiscal 
year, to have awarded over 136,000 privatized units.
    Now, it is important at this juncture I think in my opening 
remarks to reprise, if you will, your comment, Madam Chairman, 
about the issue of the so-called cap. Due to the rapid 
acceleration of the program over the last 3 years we have used 
about 70 percent of the $850 million budget authority provided 
by our original authorities for housing privatization.
    That means by the end of this calendar year we will have 
used the remaining 30 percent. We have submitted to Congress a 
legislative proposal to increase our authority by an additional 
$1 billion, that is to say to a level of $1.85 billion, 
allowing us to fully implement the President's management 
agenda to eliminate all inadequate military family housing 
through contractual privatization by the year 2007. And I thank 
you for your commitment to help us in that regard.
    Another issue that needs to be put on the table I think 
today is the importance of our access to needed test and 
training ranges, and the fact the Department over the last 
several years has asked for Congress' assistance in terms of 
mitigating the effects of encroachment in and around our 
facilities.
    No one would deny the fact that realistic live fire 
training is an enormously important aspect to our military 
readiness. But that requires substantial natural resources--
air, land, water, brown water, blue water--those natural 
resources where the military can train as they would fight. 
Those resources must replicate to the extent that we can the 
challenges, the stresses, the discomfort, physical and 
psychological, the actual conditions of combat.
    Now, as we have discussed over the last several years, 
encroachment comes from many sources, it's not just an 
environmental issue or an endangered species issue, it is also 
urban and suburban sprawl. It is also appropriate land use, or 
on the negative side, inappropriate land use in and around our 
military installations. Air space restrictions, frequency 
spectrum competition, all of these issues tend to restrict 
somehow, both in and around our installations, our training 
opportunities.
    The Department appreciates, as I indicated, the action of 
Congress in adopting several provisions from our fiscal year 
2003 and fiscal year 2004 requests, and the National Defense 
Authorization Act of those 2 years now embrace some of the 
requests that we have made. These provisions are key enablers 
of what we call range sustainability.
    And I also want to point out something that was in last 
year's bill that I think was very important because it connects 
to a request in this year's bill, and that is section 2811 of 
the 2003 Act, which allows the services, the military 
departments, to take a proactive role in developing programs to 
protect installations and ranges from urban sprawl by working 
with the States and local organizations, non-governmental 
organizations, to promote sound land use.
    The fiscal year 2005 budget request includes a new 
initiative of $20 million targeted on our new authority to 
assist in developing those partnerships with the local 
communities. The Department is very proud in this regard of our 
environmental programs at our military installations, and we're 
committed to pursuing a comprehensive environmental program. As 
you know, we have the responsibility to manage over 30 million 
acres of land. They are important to military training and 
readiness. We have completed integrated resource management 
plans, as required by the Sikes Act, at 95 percent of our 
installations.
    As you know, INRMPs, Integrated Natural Resource Management 
Plans, provide a management framework to protect threatened and 
endangered species while providing for no net loss of test and 
training opportunities.
    I think I'll stop here, Madam Chairman, and again thank you 
for this opportunity to highlight some of our initiatives that 
may come up in the questioning as it has in your opening 
statements, relative to our BRAC effort.
    The BRAC effort is extremely important. I've testified to 
this on numerous occasions, as has the Secretary, and with 
respect to both your question and that of Chairman Stevens, it 
is no doubt true that the overseas rationalization, both of 
force structure and of infrastructure, will have a tremendous 
impact on domestic BRAC.
    The Secretary I know has briefed you, and Chairman Stevens 
received a briefing I believe this week. The Secretary intends 
to finalize, he and the Chairman of the Joint Chiefs, finalize 
their decisions on these, what I call major building blocks of 
our overseas force structure and infrastructure in the May 
timeframe of this year.
    He knows that he has to do that in order to appropriately 
inform the domestic BRAC process and give the military 
departments and the joint cross service groups enough time, 
i.e. between May and June of next year, to use those decisions 
to define and design where that force structure will return, in 
terms of the base structure in the United States.
    Thank you again, Madam Chairman, and I look forward to your 
questions.
    [The statement follows:]

                Prepared Statement of Raymond F. Dubois

    Madam Chairman and distinguished members of this Subcommittee, I 
appreciate the opportunity to discuss the President's Budget request 
for fiscal year 2005 and the plan of the Department of Defense for 
improving its infrastructure and facilities. The Department is 
continuing with its efforts to transform the force structure to meet 
new security challenges and the way we do business. In Installations 
and Environment, this translates into a renewed emphasis on taking care 
of our people, providing facilities to support the warfighter by 
eliminating facilities we no longer need and improving those that we 
do, and modernizing our business practices--all while protecting the 
environment and those assets for which we have stewardship 
responsibility.
    At the outset, I want to express the Department's appreciation for 
the strong support of this Subcommittee for our initiatives. With 
regard to infrastructure, the Department has a defined strategy to 
address the condition of our installations and facilities. These issues 
are an integral component of readiness. Installations are the 
``platforms'' from which our forces successfully deploy to execute 
their diverse missions. Over many years, our facilities declined due to 
competing priorities and poor understanding of funding requirements, 
but we are significantly improving our military infrastructure through 
focused attention to best practices drawn from standard business 
models. Continuing to improve our facilities and military readiness is 
a priority of the Secretary of Defense.
    The Department currently manages nearly 600,000 buildings and 
structures with a plant replacement value of $630 billion, and over 
46,000 square miles of real estate. As you know, we have developed 
models and metrics to predict funding needs and have established goals 
and performance measurements that place the management of Defense 
infrastructure on a more data driven business basis. We accelerated our 
goal to eliminate nearly all inadequate housing from fiscal year 2010 
to 2007. By the end of fiscal year 2005, we will reduce the number of 
inadequate housing units by 66 percent (61,000) from our fiscal year 
2001 level of 180,000 inadequates. The Department's facilities 
sustainment budget funds annual maintenance, predictable repairs and 
normal component replacements. We have increased funding for facilities 
sustainment consistently since fiscal year 2002, sustaining facilities 
at an average of 89 percent, and this year's budget request raises that 
rate to 95 percent for each of the Military Services, TRICARE 
Management Activity and the Department of Defense Education Activity.
    Restoration and modernization--i.e. recapitalization--funds 
unpredictable repairs, improvements and total facility replacements. We 
have continued to improve our management of the recapitalization of the 
inventory. The budget request improves the recapitalization rate to 107 
years and we anticipate achieving our 67 year recapitalization goal in 
fiscal year 2008.

                   INFRASTRUCTURE INVESTMENT STRATEGY
    The Department's recent successes were made possible through 
effective management and prudent budgeting. Our investment strategy 
links the asset management plan to actual funding.
    The traditional view of the Military Construction and Family 
Housing appropriation funding requests for fiscal years 2004 and 2005 
shows a slight increase in this year's request. The Military 
Construction and Family Housing top-line is but one indicator of the 
health of our program. However, it does not represent a comprehensive 
approach to our management practices for the infrastructure as a whole.

     COMPARISON OF MILITARY CONSTRUCTION AND FAMILY HOUSING REQUESTS
      [President's Budget in Millions of Dollars--Budget Authority]
------------------------------------------------------------------------
                                            Fiscal Year     Fiscal Year
                                           2004 Request    2005 Request
------------------------------------------------------------------------
Military Construction...................           4,574           4,877
NATO Security Investment Program........             169             166
Base Realignment and Closure............             370             246
Chemical Demilitarization...............         ( \1\ )              82
Family Housing Construction/Improvements           1,251           1,625
Family Housing Operations & Maintenance.           2,780           2,547
Homeowners Assistance...................  ..............  ..............
Family Housing Improvement Fund.........             0.3             0.3
                                         -------------------------------
      TOTAL.............................           9,144           9,460
------------------------------------------------------------------------
Note: Fiscal year 2004 Request column represents the fiscal year 2004
  Amended Budget Submission.
\1\ Chem-Demil included in Military Construction totals for fiscal year
  2004. For fiscal year 2005 Chem-Demil has a separate Treasury code.

Facilities Support Investment and Operating Expenses
    Managing our facilities assets is an integral part of asset 
management. Facilities are the ``platforms'' from which our forces 
deploy and execute their missions. The quality of our infrastructure 
directly affects training and readiness. In addition, from a purely 
financial perspective, it is more cost effective in the long term to 
fully fund the general upkeep of facilities than to allow them to 
deteriorate and replace them when they are unusable.

                SUSTAINMENT AND RECAPITALIZATION REQUEST
               [President's Budget in Millions of Dollars]
------------------------------------------------------------------------
                                            Fiscal Year     Fiscal Year
                                           2004 Request    2005 Request
------------------------------------------------------------------------
Sustainment (O&M-like \1\)..............           6,382           6,531
Restoration and Modernization (O&M-like)           1,012           1,243
Restoration and Modernization (MilCon)..           2,350           3,161
                                         -------------------------------
      TOTAL SRM.........................           9,744          10,935
------------------------------------------------------------------------
\1\ Includes O&M as well as related military personnel, host Nation, and
  working capital funds.

    Facilities sustainment, using operations and maintenance-like \1\ 
appropriations, fund the maintenance and repair activities necessary to 
keep an inventory in good working order. It includes regularly 
scheduled maintenance and major repairs or replacement of facility 
components that are expected to occur periodically throughout the life 
cycle of facilities. Sustainment prevents deterioration and preserves 
performance over the life of a facility.
---------------------------------------------------------------------------
    \1\ Includes O&M as well as related military personnel, host 
nation, and working capital funds.
---------------------------------------------------------------------------
    To forecast funding requirements for sustainment, we developed the 
Facilities Sustainment Model (FSM). FSM uses standard benchmarks drawn 
from the private and public sectors for sustainment costs by facility 
type and has been used to develop the Service budgets since fiscal year 
2002 and for several Defense Agencies beginning in fiscal year 2004.


    Full funding of sustainment is the foundation of our long-term 
facilities strategy, and we have made significant progress in achieving 
this goal. The fiscal year 2004 budget request funded sustainment at an 
average of 94 percent of the FSM benchmarks across the Services, 
TRICARE Management Activity, and the Department of Defense Education 
Activity. The fiscal year 2005 budget request of $6.5 billion improved 
this by standardizing sustainment funding at 95 percent for each of the 
Components, and we plan to achieve full sustainment in the near term.
    Restoration and modernization, together called recapitalization, 
provides resources for improving facilities and is funded with either 
operations and maintenance or military construction appropriations. 
Restoration includes repair and replacement work to restore facilities 
damaged by inadequate sustainment, excessive age, natural disaster, 
fire, accident or other causes. Modernization includes alteration of 
facilities solely to implement new or higher standards, to accommodate 
new functions, or to replace building components that typically last 
more than 50 years.
    Recapitalization is the second step in our strategy. Similar 
private sector industries replace their facilities every 50 years, on 
average. With the types of facilities in the Defense Department, 
engineering experts estimate that our facilities should have a 
replacement cycle of about 67 years on average.


    As with sustainment, we have improved the corporate 
recapitalization rate for the third straight year. The budget request 
includes funding of $4.4 billion for fiscal year 2005. The request 
improves the recapitalization rate from 136 years last year to 107. 
When we began our focused attention on this matter, the Department's 
recapitalization rate stood at 192 years. Our out-year budget plan 
would realize the target rate of 67 years in fiscal year 2008.
    Even with full sustainment and a 67-year recapitalization rate, it 
will take time to restore the readiness of our facilities from C-3 and 
C-4 status to C-2. Sustainment stops deterioration and a 67-year 
recapitalization rate stops obsolescence, but more is needed to restore 
readiness in the near term. Thus, the third step in our plan is to 
accelerate the recapitalization rate to restore existing facilities to 
at least C-2 readiness, on average, by the end of fiscal year 2010.
Improving Quality of Life
    One of our principal priorities is to support military personnel 
and their families and improve their quality of life. Our Service 
members deserve the best possible living and working conditions. At the 
outset of this Administration, the President and Secretary Rumsfeld 
identified military housing and privatization of that housing as a 
central priority for the Department. Sustaining the quality of life of 
our people is crucial to recruitment, retention, readiness and morale. 
To that end, the Department is committed to providing quality housing 
using our ongoing approach--increasing the basic allowance for housing 
and eliminating the out-of-pocket expense for off-base housing (where 
over 60 percent of our Service members live); increasing the number of, 
and accelerating the pace of, housing privatization projects; and 
maintaining military construction funding for family housing where 
necessary.
    The fiscal year 2005 budget keeps the Department on track to 
eliminate nearly all its inadequate military family housing units by 
fiscal year 2007, with complete elimination of some inadequate housing 
overseas in fiscal year 2009. The budget continues the Department's 
extensive use of privatization to advance this goal and to obtain 
maximum benefit from its housing budget.
    As I noted earlier, in January 2001, the Department had about 
180,000 inadequate family housing units (out of a total of 300,000 
housing units worldwide). At the start of fiscal year 2004, through 
traditional construction and improvement projects, housing 
privatization and demolition, we have reduced that number to roughly 
120,000. The President's fiscal year 2005 budget includes funding to 
allow us to reduce that number further--by the end of fiscal year 2005, 
we will have reduced the number of inadequate housing units to roughly 
61,000 inadequate.
    The fiscal year 2005 budget request will eliminate the out-of-
pocket housing costs for the average military member through changes in 
the basic allowance for housing, a key component of the Department's 
approach to quality housing. The fiscal year 2005 budget request 
includes necessary funding to ensure that the typical Service member 
living in the private sector, where approximately two-thirds of our 
members live, will have zero out-of-pocket housing expenses. 
Eliminating out-of-pocket expenses is good for military personnel, but 
also serves to strengthen the financial profile of the housing 
privatization program by providing members the ability to pay 
appropriate market rents.
    Privatizing military housing is a priority for the President and 
the Secretary and is an integral part of the Administration's 
Management Plan. The Department has skillfully used privatization to 
advance this goal and obtain maximum benefit from its housing 
investment. Our housing privatization program is crucial to providing a 
decent quality of life for our service members.
    We believe our housing privatization efforts have now achieved 
identified success, with installation commanders and Service members 
welcoming privatization efforts to revitalize their family housing. As 
of March 22, 2004, the Department has closed out awards on 29 projects, 
which include 58,503 military family housing units (a 50 percent 
increase over our privatized units as of January 2003). We project by 
the end of fiscal year 2005 DOD will privatize more than 136,000 family 
housing units
    We project 20 more privatization awards in fiscal year 2004, and 
over 25 in 2005--bringing our cumulative total end of year fiscal year 
2005 to about 136,000 units privatized. We project by the end of fiscal 
year 2007 that we will privatize over 160,000 units or more than 70 
percent of our domestic family housing.
    During fiscal year 2005, we expect several other bases to have 
their renovations and construction completed or close to completion, 
including those at Fort Carson, Colorado. Our policy requires that 
privatization projects yield at least three times the amount of housing 
as traditional military construction for the same amount of 
appropriated dollars. Recent projects have demonstrated that leveraging 
is normally much higher. The 29 projects awarded thus far reflect an 
average leverage ratio of over 1 to 1. Tapping this demonstrated 
leveraging potential through our 29 awarded projects to date has 
permitted the Department, in partnership with the private sector, to 
provide housing for about $550 million of military construction funding 
that would otherwise have required over $6.7 billion for those awarded 
projects if the traditional military construction approach was 
utilized.
    The Department has achieved privatization successes by simplifying 
the process, accelerating project execution, and institutionalizing 
best practices in the Services deals with the private sector. Many of 
our projects require use of appropriated funds when subsidies are 
provided to the projects, especially as investments, loans and limited 
loan guarantees. The amount of such appropriated funds was limited in 
Section 2883 of Title 10, United States Code, to $850 million for 
military accompanied (family) housing and $150 million for military 
unaccompanied housing. Due to the rapid acceleration of the program 
over the last three years, we are now in position where almost 70 
percent (about $600 million) of the $850 million cap has been used. We 
project the remaining 30 percent of the cap will be used up by the 
beginning of fiscal year 2005; thus impeding the full implementation of 
the President's Management Agenda initiative to eliminate all 
inadequate military family housing by 2007. The Administration has 
requested that our budget authority for privatized family housing be 
increased by $1 Billion so that we can continue to improve housing 
options for our military families. We ask your support for this 
proposal.
    Military construction is another tool for resolving inadequate 
military housing. In fiscal year 2005, we are requesting $4.1 billion 
in new budget authority for family housing construction and operations 
and maintenance. This funding will enable us to continue operating and 
maintaining the Department's family housing as well as meeting the goal 
to eliminate inadequate housing by 2007--three years earlier than 
previously planned.
    We recognize that a key element in maintaining the support of the 
Congress and of the private sector is the ability to define adequately 
the housing requirement. The Department's longstanding policy is to 
rely primarily on the private sector for its housing needs. Only when 
the private market demonstrates that it cannot provide sufficient 
levels or quality of housing should we consider the construction, 
operation, and maintenance of government-owned housing.
    An improved housing requirements determination process, following 
the Deputy Secretary's January 2003 memorandum, combined with increased 
privatization, is allowing us to focus resources on maintaining the 
housing for which we have a verified need rather than wasting those 
resources duplicating private sector capabilities. The improved housing 
requirement process is being used by the Department to better determine 
the number of family housing units needed on installations to 
accommodate military families. It provides a solid basis for investing 
in housing for which there is a verified need--whether through direct 
investment with appropriated funds or through a privatization project.
    By aligning the housing requirements determination process more 
closely with the analysis utilized to determine basic allowance for 
housing rates, the Department is better positioned to make sound 
investment decisions necessary to meet the Secretary's goal to 
eliminate nearly all inadequate housing by 2007. Further, as more 
military families opt to reside in the private sector as housing out-
of-pocket expenses decrease for the average member, the Services on-
base housing requirement should generally also decline. This migration 
should permit the Services to better apply scarce resources to those 
housing units they truly need to retain.
Range Sustainment
    Another key initiative is our effort to ensure access to needed 
test and training ranges and installations to support both current and 
future requirements. This involves mitigating the effects of 
encroachment around these facilities, and posturing our test and 
training infrastructure for sustainable operations.
    Training provides our soldiers, sailors, airmen and marines the 
combat skills they need to win and return safely to their families. 
Experience has taught us that realistic training saves lives. Training, 
however, requires substantial resources; air, land and water where 
military forces can train as they would fight--replicating the 
challenges, stress, discomfort, physical and psychological conditions 
of actual combat.
    Encroachment at installations, training ranges and test sites, 
however, interferes with the ability of our military to train and 
execute their missions. Encroachment comes from many sources--
environmental, urban and suburban sprawl, airspace restrictions, and 
the frequency spectrum. Endangered species and their critical habitats 
in or near gunnery or bombing ranges also can reduce test and training 
access. As access is restricted due to encroachment, training 
opportunities for our men and women in uniform become increasingly 
limited in terms of time, scope, or realism with cumulative impact on 
military readiness.
    The Department deeply appreciates the action of Congress in 
adopting key provisions in both the fiscal year 2003 and fiscal year 
2004 National Defense Authorization Acts that were part of the 
Administration's Readiness and Range Preservation Initiative (RRPI). 
These provisions are key enablers of range sustainability. For example, 
one of the most useful provisions for countering physical encroachment 
due to incompatible development is Section 2811 of the 2003 Act. This 
provision allows the Services to take a proactive role in developing 
programs to protect installations and ranges from urban sprawl by 
working with states and non-governmental organizations to promote sound 
land use.
    To assist the Services in implementing this authority and forming 
compatible land use partnerships at the state and local level, the 
President's fiscal year 2005 Budget request includes a new initiative 
of $20 million targeted to our new authority--to assist in developing 
new policies, partnerships, and tools to assist communities and other 
interested stakeholders in executing compatible land use partnerships 
around our test and training ranges and installations. The new request 
is intended to build upon on-going efforts--innovative win/win 
partnerships with our neighbors to enhance conservation and compatible 
land use on a local and regional basis
    Last year, the National Defense Authorization Act for fiscal year 
2004 included important clarification of the Marine Mammal Protection 
Act's (MMPA) definition of harassment. This action allows the Navy to 
continue to test and train with active sonar, by clarifying regulatory 
criteria that were previously based on imprecise statutory language in 
the Act's definition of harassment. The Congress also added a national 
security exemption to the MMPA for military activity in time of 
national emergency, an exemption provided in other major environmental 
legislation that was not present in the original and reauthorized 
versions of the act. The fiscal year 2004 National Defense 
Authorization Act also authorized the use of Integrated Natural 
Resource Management Plans (INRMPs) in lieu of Critical Habitat 
designation, if approved by the Secretary of the Interior, thereby 
allowing ranges and installations to effectively manage their natural 
resources while supporting military readiness.
    Another significant environmental accomplishment is in the area of 
natural resources, where we are working to ensure continued access to 
our critical test and training ranges, supporting our readiness 
mission. The Department currently manages more than 30 million acres of 
lands which are important to military training and readiness. We have 
completed integrated natural resource management plans (INRMPs), as 
required by the Sikes Act, at 95 percent of our installations. INRMPs 
provide a management framework for our resources for no net loss of 
test and training opportunities. Legislation in The National Defense 
Authorization Act for fiscal year 2004 authorized the use of INRMPs to 
substitute for critical habitat designation under the Endangered 
Species Act, if those plans meet certain preparation and implementation 
requirements and the Secretary of the Interior determines that the DOD 
INRMP provides a benefit to the relevant species. DOD is preparing an 
INRMP strategic plan to ensure that its installations coordinate with 
all interested stakeholders, complete in a timely manner the next round 
of updates to our existing INRMPs due in 2006, and fund all required 
projects.
    Clearly, to protect our military we must also protect our all 
important test and training ranges. Substantial urban growth and other 
``encroachment'' around previously isolated ranges have strained our 
ability to conduct necessary testing and training essential to 
maintaining readiness. In response to this challenge, we are working to 
expand efforts to sustain our training mission and protect the valuable 
natural resources entrusted to our care. Both are required as we 
endeavor to ensure that our men and women in uniform get the best 
training available. Our troops deserve the best.
Improving Environmental Management
    The Department continues to be a leader in every aspect of 
environmental management. We are proud of our environmental program at 
our military installations and are committed to pursuing a 
comprehensive environmental program.

              ENVIRONMENTAL PROGRAM--SUMMARY OF REQUEST \1\
      [President's Budget in Millions of Dollars--Budget Authority]
------------------------------------------------------------------------
                                            Fiscal Year     Fiscal Year
                                           2004 Request    2005 Request
------------------------------------------------------------------------
Environmental Restoration...............           1,273           1,305
BRAC Environmental \2\..................             412             322
Compliance..............................           1,603           1,665
Pollution Prevention....................             173             168
Conservation............................             153             169
Technology..............................             190             186
International...........................               3               4
                                         -------------------------------
      TOTAL.............................           3,807           3,819
------------------------------------------------------------------------
\1\ Includes operations and maintenance, procurement, RDT&E, and
  military construction funding.
\2\ Funding levels reflect total BRAC environmental requirement planned
  for execution. Funding levels are higher than the PB request (see page
  4 chart) as a portion will be financed with BRAC land sale revenues.

    In fiscal year 2005, the budget request includes $3.8 billion for 
environmental programs. This includes $1.3 billion for cleanup, $0.3 
billion for BRAC environmental, $1.6 billion for compliance; about $0.1 
billion for pollution prevention, and about $0.1 billion for 
conservation.
    By the end of fiscal year 2003, we reduced the number of new 
Federal and State Notices of Violations (NoVs) by 80 percent from the 
1992 baseline. The Department's success is due to an aggressive self 
audit program, which includes root cause analysis and corrective action 
plans. While the number of new NoVs decreased, the number of regulatory 
inspections increased by 12 percent in fiscal year 2003. Even as 
regulators are increasing their oversight, they are finding more 
installations in full compliance. In fiscal year 1994, every 100 
inspections resulted in 37 new enforcement violations. In fiscal year 
2003, every 100 inspections resulted in only 8 new enforcement 
violations.
    In calendar year 2002, we provided drinking water for over 2 
million people worldwide and less than 5 percent of the population 
received notices that the water exceeded a drinking water standard at 
some point during the year. To further protect people, assets, and 
mission, DOD is conducting vulnerability assessments and developing 
emergency response plans for all systems serving 25 consumers or more; 
far beyond the requirement in the Safe Drinking Water Act to assess 
systems serving a population greater than 3,300 persons.
    We reduced the amount of hazardous waste we dispose of by over 68 
percent since 1992, reducing the cost to manage these wastes. The 
Department diverted over 41 percent of all the solid waste generated 
from landfills to recycling; thereby avoiding over $138 million in 
landfill costs. These pollution prevention techniques continue to save 
the Department needed funds as well as reduce pollution. We increased 
the number of alternative fueled vehicles that we acquire to 77 percent 
of all non-tactical vehicles acquired, exceeding the requirement in the 
Energy Policy Act of 75 percent.
    The Department's commitment to its restoration program remains 
strong as we reduce risk and restore property for productive use by 
future generations. We are exploring ways to improve and accelerate 
cleanup with our regulatory and community partners. Achieving site 
closure and ensuring long-term remedies are challenges we continue to 
face. Conducting environmental restoration activities at each site in 
the program requires accurate planning, funding, and execution of plan.
    The Department must plan its activities years in advance to ensure 
that adequate funding is available and used efficiently. As an example, 
instead of waiting for Federal and State regulation to determine 
cleanup standards before beginning planning for perchlorate 
restoration, in September 2003 the Department required the Military 
Components to assess the extent of perchlorate occurrence at active and 
closed installations, and Formerly Used Defense sites. We will use the 
data collected to determine priorities and funding requirements for our 
cleanup responsibilities. As soon as perchlorate standards are 
determined, the Department will be ready to request the appropriate 
funding and begin execution. In addition, the Department has invested 
$27 million to research potential health effects, environmental 
impacts, and treatment processes for perchlorate. The remediation 
technologies we are testing in several states continue to increase the 
effectiveness of treatment. We are putting ourselves in the best 
possible position to respond to any new requirement established by 
regulatory agencies.
    The Defense Environmental Restoration Program goals assist the 
Components in planning their programs and achieving funding for 
activities. We achieved our goal to reduce 50 percent of high risk 
sites at active installations by the end of fiscal year 2002 and are on 
track to achieve 100 percent by the end of fiscal year 2007. At the end 
of fiscal year 2003, 83 percent of BRAC sites requiring hazardous waste 
remediation have a cleanup remedy constructed and in place, and 78 
percent have had all necessary cleanup actions completed in accordance 
with Comprehensive Environmental Response, Compensation, and Liability 
Act (CERCLA) standards.
    We also are working to mitigate unexploded ordnance (UXO) on our 
military ranges. Our operational ranges are designed to train and make 
combat-ready our Nation's warfighters and prepare them for combat. UXO 
on ranges is a result of our military preparedness training activities. 
However, we are actively developing ways to minimize the amount of UXO 
on our operational test and training ranges. The Department is 
developing policies on the periodic clearance of UXO for personnel 
safety and to ensure chemical constituents do not contaminate 
groundwater.
    To address UXO problems at locations other than operational ranges, 
Formerly Used Defense Sites, some BRAC installations, and closed ranges 
on active installations--we have the Military Munitions Response 
Program (MMRP). We are currently developing goals and metrics for the 
program to track our progress to completion and finishing the 
prioritization protocol that will allow us to sequence sites by risk. 
We have an inventory of our munitions response sites, which we shared 
with the states and EPA, and have made available to the public. This 
inventory is being updated as we reconcile our list with the states. 
Even though the UXO cleanup program is in the early stages of 
development, considerable progress has been made in cleaning up MMRP 
sites at our BRAC installations and Formerly Used Defense Sites (FUDS). 
As of the end of fiscal year 2003, DOD has fulfilled its cleanup 
obligations at over 120 of the approximately 195 identified MMRP sites 
at BRAC installations, and has cleanup actions underway at 27 sites. 
These sites were identified prior to fiscal year 2001 as having UXO 
contamination and the Department has been making steady progress to 
eliminate their hazards--almost 65 percent of the BRAC MMRP inventory 
has been addressed. A similar situation can be found at FUDS sites, 
where 45 percent of the MMRP sites identified have had all cleanup 
actions completed. Over, 790 of the 1,753 FUDS sites with currently 
identified UXO contamination have been addressed, and another 36 are 
undergoing cleanup actions.
    In addition, we are developing new technologies and procedures 
through the Environmental Security Technology Certification Program and 
the Strategic Environmental Research and Development Program. Over 60 
percent of the investments in these programs focus on projects to 
sustain ranges and range operations. These, along with the Army and 
Navy's Environmental Quality Technology Programs, have helped us make 
tremendous strides for realizing our goal to reduce current and future 
environmental liability.
    Across the Department, we are actively implementing environmental 
management systems based on the ``plan-do-check-act'' framework of the 
international standard for environmental management systems (ISO 
14000). Our objective is to transform environmental management in the 
Department of Defense from an activity external to the mission to a 
systematic process that is fully integrated with mission planning and 
execution. This transformation is essential for the continued success 
of our operation at home and abroad. Our new management systems target 
reduction in our day-to-day compliance costs and long-term 
environmental liabilities by increasing environmental awareness and 
mobilizing all Defense organizations and employees to reduce 
environmental impacts through improved control of day-to-day mission 
activities. The Military Departments and Defense Logistics Agency 
reported plans to implement environmental management systems at roughly 
625 installations. Over 50 percent of these installations have 
environmental management system policies in place--the first step 
toward full scale implementation. To date, 33 installations have fully 
implemented environmental management systems.
Utilities Privatization and Energy Management
    The Department seeks to reduce its energy consumption and the 
associated costs, while improving utility system reliability and 
safety. To accomplish this, the Department of Defense is developing a 
comprehensive energy strategy that will continue to optimize utility 
management by conserving energy and water usage, improve energy 
flexibility by taking advantage of restructured energy commodity 
markets when opportunities present themselves and modernize our 
infrastructure by privatizing our deteriorated and outdated utilities 
infrastructure where economically feasible.
    With approximately 2.2 billion square feet of facilities, the 
Department is the single largest energy user in the nation. Conserving 
energy in today's high-priced market will save the Department money--
money that can be better invested in readiness, facilities sustainment, 
and quality of life. Our efforts to conserve energy are paying off; in 
fiscal year 2003 military installations reduced consumption by 1 
percent resulting in a 2.7 percent decrease in the cost of energy 
commodities from fiscal year 2002. With a 26.1 percent reduction in 
fiscal year 2003 from a 1985 baseline, the Department has, thus far, 
maintained a positive track to achieve the 2005 and 2010 facility 
energy reduction goals stipulated by Executive Order 13123.
    The comprehensive energy strategy will support the use of meters to 
manage energy usage at locations where the monitoring justifies the 
cost of installing, maintaining and reading the meter. Metering in 
itself does not save energy, however use of meters can be beneficial to 
determine accurate billing, perform diagnostic maintenance, and enhance 
energy management by establishing baselines, developing demand 
profiles, ensuring accurate measurement for reporting, and providing 
feedback to users.
    The Department has a balanced program for energy conservation--
installing energy savings measures using appropriated funding and 
private-sector investment--combined with using the principles of 
sustainable design to reduce the resources used in our new 
construction. Energy conservation projects make business sense, 
historically obtaining about $4 in life-cycle savings for every dollar 
invested. The fiscal year 2005 budget contains $60 million for the 
Energy Conservation Investment Program (ECIP) to implement energy 
saving measures in our existing facilities. This is a 20 percent 
increase from the fiscal year 2004 congressionally appropriated amount 
of $50 million, partly because of the performance of the program to 
date and because of the focused management effort for continued 
success. The Department will also continue to pursue renewable energy 
technologies such as fuel cells, geo-thermal, wind, solar, and purchase 
electricity from these renewable sources when it is life-cycle cost-
effective. In fiscal year 2003 military installations used 3.2 trillion 
British Thermal Units of renewable energy, and project an increase in 
fiscal year 2004. The pursuit of renewable energy technologies is 
critical to the Department's and Nation's efforts in achieving energy 
flexibility.
    The Department has reaffirmed its preference to modernize military 
utility systems through privatization. Following on revised guidance 
signed by the Deputy Secretary of October 2002, the DOD Utilities 
Privatization Program has made solid progress. The Services have 
greatly simplified and standardized the solicitation process for 
obtaining industry proposals. The Request for Proposal templates have 
been clarified to improve industry's ability to obtain private sector 
financing and manage risks. Of 2,602 utility systems serving the DOD, 
435 systems have been privatized and 739 were already owned by other 
entities. Over 900 systems are currently under solicitation as each 
Service and the Defense Logistic Agency continue aggressive efforts to 
reach privatization decisions on all systems by September 2005.

                      BASE REALIGNMENT AND CLOSURE
    In accordance with the authorizing legislation, the Secretary 
certified on March 23, 2004, that the need exists for the closure or 
realignment of additional military installations and that the 
additional round of closures and realignments authorized for 2005 will 
result in annual net savings for each of the Military Departments, 
beginning not later than fiscal year 2011. This certification is 
contained in the report that was provided to Congress last week.
    The Secretary's certification of the need for BRAC is a direct 
result of the changed world in which we live. The conclusion that an 
additional round of BRAC is needed is shared not just by the 
Department's civilian leadership but also by the Chairman and Joint 
Chiefs. Changes in the threats we face, how we prepare for those 
threats, and changes in technology require that we reconfigure our 
force structure to most effectively and efficiently support our forces. 
Our force structure and the way we employ it is already transforming 
and this will continue. BRAC has proven to be the most effective and 
comprehensive tool to position our base structure to accommodate and 
facilitate this transformation. Therefore, an additional base 
realignment and closure (BRAC) round is essential to the Department's 
efforts to transform the Armed Forces to meet the threats to our 
national security and to execute our national strategy.
    The Secretary's certification that there is a need for BRAC also 
reflects the fact that the Department retains excess infrastructure 
capacity, even after the previous four BRAC rounds. Excess capacity 
diverts scarce resources from recapitalization. The report we have 
provided includes a ``discussion of the categories of excess 
infrastructure and infrastructure capacity'' as required by the 
legislation. Elimination of excess capacity is an important goal of 
BRAC because it is important to the Department's stewardship of the 
taxpayer's dollar and to its application of taxpayer resources to 
achieve their maximum effect. I must note, however, that the Department 
is focused on the elimination only of truly excess capacity--that which 
is not important to preserving military value. The Secretary has not 
established any quantitative capacity reduction targets for BRAC and 
the Department will not eliminate assets, even if only used marginally, 
wherever these assets are important to the preservation of the 
capabilities the Department must retain and enhance. This was a key 
consideration in the previous rounds and is even more important now.
    BRAC 2005 will be a capabilities-based analysis. The Department 
recognizes that the threats our Nation now faces are difficult or even 
impossible to forecast through conventional analysis. That realization 
compels us to review our facilities in BRAC within the context of the 
capabilities they offer instead of viewing our facilities against 
definitive requirements. Because it is critically important for the 
Department to retain the infrastructure necessary to accommodate its 
ability to ``surge'', the Department is gauging its installations 
against the range of threats faced by our Nation so that it can 
differentiate among and capitalize on those that offer needed 
capabilities, and reconfigure, realign or close those that do not. The 
previous BRAC rounds demonstrated that DOD has, in fact, focused on the 
elimination of assets that are ``reconstitutable,'' that is, available 
through construction or purchase in the private sector, while retaining 
difficult to reconstitute assets like land maneuver areas and airspace 
for training.
    The Secretary has directed that BRAC must: further transformation 
by rationalizing infrastructure to force structure; enhance joint 
capabilities by improving joint utilization; and convert waste to war 
fighting by eliminating excess capacity. I know that you share the 
Department's goal that BRAC 2005 must result in a base structure 
configured to most effectively and efficiently support the capabilities 
necessary to meet the threats of today and tomorrow. I also know that 
this Subcommittee appreciates the fact that every dollar wasted on 
unnecessary infrastructure is a dollar diverted from improving Defense 
capabilities. That is why Congress authorized BRAC 2005--it is the only 
process that uses a rigorous, objective process rooted in military 
value to rationalize the Department's infrastructure.

                               CONCLUSION
    The Department is transforming its installations and business 
practices through an asset management strategy, and we are beginning to 
see the results of that transformation. We are achieving the 
President's goal to provide quality housing for our service members and 
their families, and we have made positive progress toward our goal to 
prevent deterioration and obsolescence and to restore the lost 
readiness of our facilities. We also are transforming our environmental 
management to become outcome oriented, focusing on results. We are 
responding vigorously to existing encroachment concerns and are putting 
a long-term installation and range sustainment strategy into effect.
    The Base Realignment and Closure effort leading to the delivery of 
the Secretary's recommendations to the independent Base Closure 
Commission in May 2005 is a key means to transform our infrastructure 
to be more flexible to quickly and efficiently respond the challenges 
of the future. Together with the Global Defense Posture Review, BRAC 
2005 will make a profound contribution to transforming the Department 
by rationalizing our infrastructure with Defense strategy.
    In short--we have achieved significant accomplishments over the 
last 3 years, and we are well on our way to achieving our goals across 
the Installations and Environment Community.
    In closing, Madam Chairman, I sincerely thank you for this 
opportunity to highlight our successes and outline our plans for the 
future. I appreciate your continued support of our installations and 
environment portfolio, and I look forward to working with you as we 
transform our plans into actions.

    Senator Hutchison. Well, thank you, Mr. Secretary, let me 
just start right there with your last point and ask you again 
to clarify. First of all, apparently you're looking at a May 
deadline for the global imprint to know where we're going to be 
bringing troops home, where we're going to keep them, where 
we're going to add.
    Tell me again your time table for getting that information 
to the requisite Secretaries for the determination of where 
those troops will be deployed back.
    Mr. Dubois. Uh-huh.
    Senator Hutchison. And in conjunction with the BRAC, will 
there be plenty of overlap for the BRAC to be able to consider 
where the recommendations are for the returning troops to 
return?
    Mr. Dubois. As I indicated----
    Senator Hutchison. You said May of next year, but----
    Mr. Dubois. No, no, May of this year.
    Senator Hutchison. I was talking about----
    Mr. Dubois. May of this year would be--excuse me, I'm 
sorry. May of this year would be the time that the Secretary 
would finalize his decisions as to what force structure would 
return from overseas.
    That gives us a year to plan for where that force structure 
would go in the United States.
    Senator Hutchison. Well, what is the time table for the 
Base Closing Commission to start its deliberations in 2005?
    Mr. Dubois. The President of the United States must 
nominate, and I believe the Senate must confirm by March 17th 
of 2005, the members of the nine member commission. The 
Secretary of Defense must report to that commission no later 
than May 16th.
    Now, I would predict that as soon as the Senate confirms 
the nine members, the Secretary is going to be very close to 
making his final and formal recommendations. So the timing, 
while this President must do it no later than March, and the 
Secretary must report no later than May, I suspect that the 
report of the Secretary will come prior to that deadline of May 
16th.
    Senator Hutchison. Well, let me just try to firm that up 
and say, will you make it your goal to assure that before the 
first BRAC beginning organizational meeting that you will have 
in place the plan for where the troops will go so that can be 
part of their deliberations, as well as your own 
recommendations for what is to be closed?
    Mr. Dubois. Many of the meetings that we've had to date, 
internally at the Pentagon, of the infrastructure steering 
group, and the joint cross steering groups, and the military 
services themselves, has focused principally on process. 
Principally on how we would apply the selection criteria which 
has been published, as you know.
    The issues pertaining to specific deliberations of which 
infrastructure would be needed to accept or receive overseas 
force structure will happen beginning, as I indicated, in May 
of this year. Now, it is true that, in terms of Europe, the 
Army is facing the largest potential, potential return of force 
structure. And I know that the Army, the Vice Chief of Staff of 
the Army, the Assistant Secretary of the Army for installations 
and environment, and the Deputy Assistant Secretary of the Army 
for infrastructure issues have already begun to lay out a 
process by which if--sort of the what-if situations, where the 
Secretary and the President decide that a given force structure 
is to return, what is the implications for our analytic 
process.
    So I feel very confident that in this case, the Army has 
established a process and they are poised, if you will, to 
accept the Secretary and the President's decision on the return 
of force structure in order to insert those decisions into 
their domestic BRAC deliberations.
    Senator Hutchison. Okay. I'm taking that as a yes, it will 
be our goal to----
    Mr. Dubois. Yes, ma'am.
    Senator Hutchison [continuing]. Make sure those time tables 
meet. Okay, I'm going to finish this, and then I'm going to let 
my colleagues question. Then I do have a number of other 
questions, but I want to try to give everyone a chance.
    But again, on this overseas re-stationing, in your 
testimony you referred to the bases that will be on the 
recommendation list for being maintained, our domestic bases. 
It must have a surge capacity, because I think you rightly 
point out that we now know that we're probably going to add 
maybe 30,000 more Army troops, maybe 40 for a short period of 
time. That's a surge. Then likely they would be able to be 
winnowed back.
    My question is, how are you going to determine the keeping 
of bases with surge capacity. What are the factors that go into 
that as one of the points that you're going to have as your 
criteria for maintaining a base?
    Mr. Dubois. The issue of surge, is in our view encompassed 
in criteria number 3, under the Military Value Selection 
Criteria, and I quote, the ability to accommodate contingency, 
mobilization, future total force requirements at both existing 
and potential receiving locations to support operations and 
training.
    It is absolutely critical that in this BRAC in particular 
that the rationalization of our infrastructure, the realignment 
and in some cases the closure of infrastructure, in no way 
diminishes our capability to train. That is to say that you 
cannot get rid of impossible to reconstitute assets. And what 
falls into that category? Unrestricted airspace, maneuver 
training areas, land. These are very much in the forefront of 
the minds of those individuals in the Defense Department who 
have to wrestle with the notion of what to rationalize, what to 
realign and what not to.
    Senator Hutchison. Let me just ask you to add into your 
factors that if you're going to have surge capacity in bases, 
we're going to need to look at the traditional military housing 
construction, as opposed to the privatized housing that 
requires then the lease-back through stipends for people to be 
there.
    I would think that you'd be looking at that--if we're going 
to have the ability to house people on a quick basis off and 
on, it can't be privatized housing that has to pay leases to 
keep our commitments. It's going to have to be more of the 
traditional MILCON. So I would hope you would be considering 
that.
    Mr. Dubois. It is certainly a consideration, Madam 
Chairman. I want to point out, though, an oftentimes overlooked 
factor today. The United States Army today, has on active duty, 
in terms of active duty forces, Reserve components, Army 
National Guard, Army Reserves, almost 645,000 people. We have 
surged for Operation Enduring Freedom, and Operation Iraqi 
Freedom. Now we have surged to the battlefield. We have taken 
care of our infrastructure needs in the battlefield.
    The question is, and you have raised an important issue, 
what do we need to maintain within CONUS, within the United 
States, in terms of surge and contingencies.
    Well, we're living that right now, we're in many ways 
getting lessons learned right now, as to what kinds of 
infrastructure need to be maintained in this surge that we're 
living through. So it is something that we take into 
consideration.
    Senator Hutchison. Okay. One last question on this, and 
then I'm going to turn to my vice chairman. The budget request 
for BRAC is $246 million. But it does not reflect an additional 
$115 million of land sales which the Navy intends to obligate 
for BRAC this year. So you've basically taken about a third off 
last year's request for BRAC, but probably are trying to 
compensate for that with what the Navy expects to get in land 
sales.
    My question is, is that the case and what assurances then 
do we have that money will go for the other third of BRAC costs 
that I assume we are going to need for cleanup. And if the land 
sales result in more money, will that also accrue to the BRAC 
account?
    Mr. Dubois. Madam Chairman, the--any funds derived from 
public sale of BRAC properties must go into the BRAC 
Environmental Remediation account. It cannot be stripped away, 
stolen from or otherwise diverted. My understanding and I would 
defer to H.T. Johnson, the Secretary of the Navy for I&E, but I 
will certainly talk to him after this hearing is over.
    My understanding is a substantial amount of that money is 
already in the BRAC Environmental account, coded to the Navy. 
In other words, the BRAC Environmental account is a DOD wide 
account, but we actually have three separate accounts for each 
of the military departments. And my understanding is that much 
of that money is already sitting in that account.
    Therefore on both of your questions, can we be assured that 
monies that enter into it will be spent, the answer is yes. Can 
we be assured that the monies yet to enter into it will in 
point of fact enter into it? My understanding is that those are 
conservative estimates, on the basis of GSA's appraisal of the 
value of the land and what would happen under an auction.
    Senator Hutchison. Thank you, I will have further 
questions.
    Mr. Dubois. Yes, ma'am.
    Senator Hutchison. But I would like to give my colleagues a 
chance to pursue their interests. Senator Feinstein?
    Senator Feinstein. Thank you very much, Madam Chairman. 
Just on that subject.
    Mr. Dubois. Yes, ma'am.

                              PERCHLORATE

    Senator Feinstein. It's my understanding that the Air Force 
took a big hit and still is with respect to environmental 
cleanup, and particularly McClellan Air Force Base, a major 
problem that I'd like to talk to you a little bit about 
separately if I might. Twenty-nine States have perchlorate 
contamination. This has been a major interest of mine now for 
the last 3 years. Perchlorate is now showing up in fresh 
produce. Reports are now surfacing where produce grown in 
California, and particularly dairy products sold in Texas has 
perchlorate in it. The State has just passed its regulation of 
six parts per billion.
    In the last 2 years, in the MILCON Appropriations Report, 
we directed the Department of Defense to provide two reports to 
the Congressional Defense Committees regarding perchlorate. The 
first encompassing the activities of the Department's 
Perchlorate Steering Committee was due December 31, 2003. We 
have not received it.
    The second report which requires the Defense Department to 
identify sources of perchlorate on BRAC properties and to 
develop a plan to remediate perchlorate contamination on BRAC 
sites is due April 30th. Now, the fact that the Committee has 
not received the December report, doesn't seem to bode well for 
the April report. Can you give me the status of each report and 
let the Committee know when we can expect to receive them?
    Mr. Dubois. Yes, ma'am, on the issue of perchlorate, just 
let me say in--as an introduction. You made me extremely aware 
of the issue of perchlorate almost within months of getting 
this job 3 years ago. And quite frankly it had not been on my 
radar screen. I took your involvement and concerns very 
seriously.
    We have, we think, made some substantial investments in 
perchlorate remediation and cleanup, perchlorate detection, as 
well as the science of perchlorate health. And I can get into 
that in a minute.
    But I do want to answer specifically your questions about 
those reports. It is true that under the NDAA for fiscal year 
2004 you required the DOD to provide a report of activities on 
the Interagency Perchlorate Steering Committee by December 31, 
2003.
    My understanding was that we had discussions with your 
staff, quite frankly, Senator, to say that that was in our view 
a little bit of an unachievable deadline. Having said that, 
last--yesterday in preparation for this hearing I asked the 
question, that I presumed that you would ask and I said, all 
right, where is the report? Recognizing that we couldn't meet 
the December 31 deadline.
    It is now prepared in draft form, and we are about to send 
it to OMB. As you know, we have to go through our own OMB 
clearance process, for the interagency review before submission 
to Congress.
    This like other issues, but in particular perchlorate. As 
you know, there are a number of Federal agencies that have 
serious equities here, not the least of which is EPA. We're 
going to send it to OMB very shortly within a few days I am 
told. And how long that interagency clearance process--comment 
process takes is, as you appreciate, something that's totally 
out of my control.
    However, I am in--a week doesn't go by when I don't talk 
about perchlorates with OMB and EPA. In fact Governor Leavitt 
of EPA came over to visit with the Secretary of Defense 
recently at my request and this is one of the issues that they 
discussed. They know about your concerns, and many Americans' 
concerns.
    Senator Feinstein. And it's getting worse, Mr. Dubois. The 
contamination is spreading and the levels in many places are 
now higher, and it's permeating the food chain. And that makes 
it serious.
    Can you give me a--I mean, if--you couldn't make the 
December date, are you going to have it to us within weeks, or 
is it going to take months?
    Mr. Dubois. I would--cannot answer that question 
definitively, Senator, the only answer----
    Senator Feinstein. Well, could I get an answer from----
    Mr. Dubois. I will call OMB tomorrow, or when I get back to 
the office today and I will say, we're going to submit this 
report to you for clearance, can you give me some indication as 
to how long it might take. It's the best I can----
    Senator Feinstein. All right. How about the report due 
April 30th?
    Mr. Dubois. The report--wherein Congress required the 
Department of Defense to provide data collected from BRAC 
installations, the report is being consolidated by our lead 
executive agency, the Department of the Air Force, and we 
expect to have that report to Congress by it's due date of 
April 30, 2004.
    Senator Feinstein. April 30th, could you--I missed that.
    Mr. Dubois. The report I believe is due on April 30th.
    Senator Feinstein. April 30th.
    Mr. Dubois. And we anticipate being able to provide that 
report by April 30th.
    Senator Feinstein. Good. Good. That's some good news. Now, 
in the background--a GAO report published in December, 
recommended that DoD revise its plans, first, on the deadlines 
for completing its site inventory and initial evaluations. 
Secondly, reassess the time table proposed for completing its 
reevaluation of sites using the new risk assessment procedures, 
and third establishing interim goals.
    What I'm interested in, is what progress has been made on 
the identification of perchlorate contaminated sites, and how 
is DoD planning and prioritizing cleanup activities?
    Mr. Dubois. The Department has undertaken what we believe, 
and in no small measure because of your resolute position on 
this issue, the Department has undertaken an aggressive 
environmental sampling program wherein we require--as I say, 
the office of Secretary of Defense requires the services, the 
Military Service, to sample for perchlorate anyway--anywhere 
that there is a reasonable expectation that perchlorate may 
exist and there is--and this is critical and there is a pathway 
to a human receptor. That is to say, into drinking water. Now, 
we have invested approximately $20 million to do that through 
fiscal year 2005.
    In particular, in California, we formed an ad hoc working 
group, with the California regulatory officials, to jointly 
prioritize the sampling activities in the State. We've also 
directed that our Munitions Action Plan, which you and I have 
talked about, the Defense Planning Guidelines, that the 
Secretary signs, that components, Military Services, assess the 
hazards of off range migration of munitions constituents, 
including perchlorate, in their range assessments.
    There is, in addition to that sampling, we have invested 
approximately $25 million in the development of potential 
ground water treatment technologies for perchlorate through our 
SERDP and ESTCP programs. Now, these demonstration and 
certification treatment projects for perchlorate are in several 
key places in California, as well as in other places around the 
country. Edwards Air Force Base being one of them.
    There's another issue here. In fact, it's something that 
you brought up I think last year in this very hearing, and I 
looked into it, that is to say what are possible alternatives 
to perchlorate. It's one thing to address the perchlorate 
issues today. It's another thing to look down the road. And the 
Department of Defense has invested so far $9 million into 
possible alternatives to perchlorate.
    And finally, as you know, the Department along with EPA, 
NASA and the Department of Energy have with the Office of 
Science and Technology advisor to the President, and OMB asked 
the National Academy of Sciences to assess the science to date 
and where possible, either certify or comment on the varying 
standards quotes.
    And remember what California did recently was to publish a 
public health goal of six parts per billion. And that goal--but 
they also said we--we the State of California as well as the 
Department of Defense await the results of the National Academy 
of Science panel study to determine what is the proper 
scientific basis for contaminant limits.
    EPA and the Department of Defense and others have a 
disagreement as to what those levels are, based on scientific 
evidence. And we hope that the NAS, an objective independent 
body, will bring us to conclusion in that regard.
    Senator Feinstein. Are you aware that it is entering the 
food chain? Specifically in dairy, and lettuce?
    Mr. Dubois. I have read in--I have read in the papers that 
the--that they're finding perchlorate traces in lettuce and--
but again--
    Senator Feinstein. And dairy.
    Mr. Dubois. Dairy products.
    Senator Feinstein. And California's the largest dairy 
State. The milk goes all over the country. And the particular 
population at risk are small children, and pregnant women. And 
some of the studies have shown substantial levels in milk, 
substantial levels being over six parts per billion.
    So I'm sending out an alarm to you. I believe that the 
Department of Defense has a responsibility here and that we 
really have to get cracking and get this stuff cleaned up and 
out of our water supply.
    And I'm sorry, Madam Chairman, this has been, as you know, 
3 years now of trying to push and I'm running out of patience. 
I can tell you the concern in my State is very broad. Drinking 
wells are contaminated. Certain cities are without half to 
three-quarters of their water supply.
    Mr. Dubois. Again, Senator, if--when the State of 
California, when the Federal Government determines the maximum 
contaminant levels for perchlorate in other constituents, the 
Department of Defense intends fully to abide by--by the way, 
whichever is lower, EPA can come out with----
    Senator Feinstein. So in other words, California's 
standard, you're not going to abide by that, I recognize it's a 
goal. But that--you're not going to abide by that in the 
interim.
    Mr. Dubois. We are awaiting, as is EPA and the State of 
California, the NAS--the completion of the NAS study, which I 
have been told will be early fall of this year. But whatever 
contaminant level is lower, that is what the DoD will abide by, 
as is legally required as you know under the Safe Drinking 
Water Act.
    This is clearly an important issue, and I don't mean in 
anyway to diminish our intense focus on this and the amount of 
money that we've put behind this. We would only ask that the 
interested parties, not the least of whom are the Congress of 
the United States and Governor Schwarzenegger's staff in 
Sacramento with whom I have discussed this, let--and we all 
agree that is a determination that must be made by an 
independent body, an NAS study.
    We don't know what the contaminant level is that will 
impact varying segments of the population. It is something that 
is of importance to us.
    Senator Feinstein. Well, I've taken this as far as I 
should, at this time. But perhaps we can sit down separately, 
and I can perhaps use my other questions in the second round. 
Thank you, Madam Chairman.
    Mr. Dubois. I would like to add, if I might, Madam 
Chairman, the importance of this issue. I became seized with it 
some time ago. I searched quite frankly around the Federal 
Government for experts in water remediation and perchlorates in 
particular, water remediation in general. And I have just hired 
one of the leading experts from the Department of Interior to 
our staff at Defense and she and Alex Beeler on my right here, 
the new Environmental Deputy at the Department have this 
clearly on the top of their agenda.
    Senator Feinstein. I really appreciate that, Mr. Dubois, 
this is really serious. And I think you know that now, and 
we've really got to work fast so that those levels do not build 
up. That's one of the problems that we're finding is the 
buildup of the level of contamination. Now two States are the 
largest in terms of contamination, one is Texas, and one is 
California. So we both have a very serious interest in seeing 
that you take some aggressive steps.
    Senator Hutchison. Thank you, Senator Feinstein. Senator 
Burns.

                   STATEMENT OF SENATOR CONRAD BURNS

    Senator Burns. Thank you very much. I was interested in 
your comments today, Mr. Secretary, on the ability to train, 
especially within the Air Force. Urban sprawl yes, airspace, 
yes, spectrum, yes, and so on. And the infrastructure on the 
ground. Hang a shingle out there and put Montana on it, would 
you?
    Mr. Dubois. Yes, sir.
    Senator Burns. I've got a--I was going to bring that chart 
this morning, and I just turned everything over in my office 
trying to find it. It is a chart of 5 hours of air traffic 
activity in this country. And it illustrates that, wherever 
we've got installations where we're training both tactical and 
everything else you're out of airspace, you've got little bitty 
holes down there in the southwestern part of this country and--
which commercial uses of airspace, spectrum and this type of 
thing, and we just happen to have a lot of airspace and we've 
got spectrum, and we've got the infrastructure on the ground to 
do that kind of stuff.

                           ENVIRONMENTAL WORK

    I hope to hear your thoughts on this. And I like 40 percent 
of this appropriation in environmental work. Forty percent of 
$9 billion appropriation, and you've almost got $4 billion 
appropriated to deal with environmental issues. I'm interested 
in that because whenever we start talking about going into 
another BRAC round, how many installations are we now still in 
the process of environmental cleanup before it's ready for 
sale, or to do something else with?
    Mr. Dubois. The cost to complete is currently estimated for 
environmental remediation to the standards with the local 
redevelopment authority and the military service have agreed 
to, for BRAC properties, BRAC to date properties, but not yet 
disposed, is approximately $3.9 billion. That's a significant 
amount of money, I don't deny it.
    But it is--remember, too, that the Department of Defense 
even when we close a property, and we've disposed of the 
property, we do retain the legal liability to clean it up if 
something happens that we were not aware of. It's not like we 
push this off on the State, or we push this off on the local 
redevelopment authority or the developer who might take it 
over, or another Federal agency for that matter.
    It's an issue that we live with, and one could ask do we 
put enough money behind this every year, it is going down year, 
over year, over year.
    Senator Burns. I would just like to say that, in the past, 
the BRAC Commission has underestimated the cost of cleanup 
whenever they made their recommendations of closure or 
realignment.
    I don't want history to repeat itself because I used to 
chair this committee and I know what we had to go through when 
that happens. And sometimes I think it's good money thrown 
after bad to be honest with you, in some of these activities.
    But I just come this morning, I wanted to look at the 
housing thing, and I know that they've got more concerns than I 
have, but environmental cleanup is something that's very 
important to me. I--perchlorate is a problem to those States, 
should be looked at very seriously, and of course as we move 
down this next round of BRAC, I think we better have some 
pretty realistic figures on our obligation in the area of 
environmental remediation, once we decide to close a facility.
    And I thank you this morning for your report.
    [The statement follows:]

               Prepared Statement of Senator Conrad Burns

    Thank you for coming to brief this subcommittee on military 
construction, and for your service to our great Nation. Your work is 
critical to developing and maintaining the facilities for our soldiers, 
sailors, airmen, and marines around the world. I intend to honor our 
men and women serving and those who have made the ultimate sacrifice 
for our country by ensuring that our active, reserve, and national 
guard have the resources they need to support current and future 
requirements.
    I am encouraged to learn that our services remain strong in this 
time of extended deployments to austere and often hazardous bases 
around the world. It speaks well of the character of our airmen, who 
accept this duty, who often choose to continue their voluntary service 
to our Nation. We must ensure that we provide the resources they need 
for their installations while deployed overseas as well as here in the 
states.
    I am convinced that replacing dangerous and outdated facilities 
improves morale for our forces worldwide, contributing to better-
trained service members who can complete the mission more effectively 
and safely. Investing in facilities to support the fielding, training, 
operations, and quality of life of our forces pays great dividends in 
combat effectiveness and lives saved.
    This commitment must not end with the active forces. We will also 
continue to support essential infrastructure improvements for our 
National Guard forces, which have shouldered an increasingly 
significant role in the security of our Nation, alongside our active 
duty forces.
    While not engaged in our current operations against terrorists 
worldwide, our strategic forces remain a critical component of national 
security. I strongly encourage the investment in training and quality 
of life improvements we need to maintain the proficiency, readiness, 
and morale of these airmen, whom this Nation relies on to steward the 
strategic deterrence capability.
    I urge you to judiciously execute the efforts appropriated by this 
subcommittee. We must ensure the facilities we invest in overseas are 
aligned with our long-term defense posture, and that those investments 
in shorter-term bases are balanced against our overall posturing 
strategy.
    I have seen that the Department of Defense intends to re-align our 
forces deployed overseas, and can see the relation between the 
realignments overseas and the closures in this country. While I contend 
that it may be premature to consider closing bases in this country 
until our strategic repositioning overseas is completed, I support 
efforts to eliminate excess infrastructure where we are sure we see no 
requirement for these facilities in the future. Again, I thank you for 
being here today and look forward to the discussion this morning. Thank 
you.

    Mr. Dubois. Thank you, sir.
    Senator Hutchison. Thank you, Senator Burns. Follow-up 
questions. Housing privatization is moving obviously more of 
our military families off base. Now, in some cases I know 
privatization is being done on base. But the bottom line is the 
impact on local school districts is an issue that we also have 
to keep in mind.
    We asked for a report from the Department of Defense by 
March 15 of this year on the impact of privatization on local 
school districts. We haven't gotten that report, but I think 
again it should be very much a factor in our overall military 
budgets and our support for school districts that are in our 
military base towns. Could you look into that, and determine if 
we are going to get that report shortly?
    Mr. Dubois. Yes, ma'am, I certainly will.
    Senator Hutchison. Thank you. The Central Command 
installations. Earlier this month General Abizaid testified to 
the House Appropriations Committee that he had $531 million in 
urgent unfunded MILCON requirements in theater, plus $340 
million in MILCON which Congress has already provided. The 
conference report accompanying last year's supplemental 
appropriations bill required a report to this Committee on 
CENTCOM's master plan for facilities in its area of 
responsibility.
    General Abizaid has also said that he wants to move U.S. 
troops out of Saddam's palaces and consolidate the 44 
installations that we have in Iraq in the Baghdad area to 11. 
So I have two questions, one is: we were supposed to have a 
report again on the CENTCOM master plan due last December which 
we haven't received. When could we expect to see that?
    Secondly, how are you going to propose the MILCON for the 
consolidation that General Abizaid is suggesting that he would 
like to do?
    Mr. Dubois. The so-called CENTCOM master plan has been in 
the works for sometime, it is overdue I recognize that, Madam 
Chairman. It is a plan that I'm not--I'm not directly 
responsible for.
    However, the--the Undersecretary of Defense for Policy, the 
Joint Chiefs, or the Joint Staff, OSD installations and 
Enviro--my portfolio, and General Abizaid's command all hold a 
piece of this report, and we owe it to you. Needless to say it 
has been somewhat difficult given the situation, the emerging--
the evolving situation in Iraq in particular as to what kinds 
of infrastructure was going to be needed, and for how long.

                               O&M BUDGET

    I read recently a remark by a brigadier general out there 
that unfortunately he used the term enduring, which has meaning 
to you and me and apparently it has a different meaning to the 
brigadier general. This also pertains to the issue that has 
been discussed between Congress and the Executive Branch on 
contingency construction. And what parts of--so called 
contingency construction ought to be in the military 
construction budget and what parts are legitimately an 
emergency compelling need now. And therefore, in the O&M 
budget.
    As you know, the Comptroller of the Department, Dr. 
Zakheim, laid out some pretty strict guidelines when the 
Congress pointed out that certain O&M dollars were being spent 
on arguably, and I underline that word, installations that were 
for a longer term use than a short term use. And I've been to 
Iraq, I've actually spent the night in a palace, I've also 
spent the night in a tent, with the troops. I am not certain 
quite frankly exactly where our installations are going to end 
up in Iraq, it is as you pointed out a continuing--as I pointed 
out a continuing discussion.
    The important thing that we owe you, it seems to me, that 
General Abizaid, and the Secretary of Defense owe you is, if we 
predict that we're going to remain in Iraq for a period of 
time, 2, 3 years, with a substantial level of infrastructure, 
what does that mean in terms of the kind of infrastructure 
we're going to need.
    Now, it gets back to what's temporary and what's not 
temporary. I don't think anyone would argue with the fact that 
if we build something that clearly has a life for the next year 
or two, that's temporary. Should that then be a military 
construction appropriation? If we can predict it, and in place 
certain, I would agree with you that it ought to come before 
this committee.
    When General Abizaid, however, says, I've got $500-plus 
million of immediate construction requirements, new--repairing 
runways, or laying concrete slabs for field hospitals. I think 
that one has to conclude that that's probably a construction, 
or contingency construction requirement that he legitimately 
can pull from the O&M accounts of the services. I don't know 
how we end off on this.
    I do know this, however. That Dr. Zakheim has been very 
clear, that when the combat commander, in this case General 
Abizaid, can predictably state I need the following 
infrastructure for the foreseeable future, something in excess 
of several years, then we've got to--we have the obligation to 
come back to the MILCON committees.
    But there is also probably a substantial amount of 
contingency construction. I need it today. It's temporary, I 
won't need it 3 years from now, that's probably an O&M related 
matter. But it is a matter of discussion between your staff and 
my staff.
    Senator Hutchison. Well, you're talking about a significant 
portion of overseas MILCON budgeting. I for one favor temporary 
as long as we can do it so that we have lower costs, and can 
reuse much of that temporary equipment. On the other hand, we 
also need some way to budget rather than just supplemental and 
emergency appropriations.
    So we're looking at a huge number there, and the sooner you 
can get us something that we can plan with the better, because 
that would be a mighty big supplemental if that's the way you 
were going to go, which I really don't think is as responsible.
    Mr. Dubois. Yes, ma'am.
    Senator Hutchison. On sustainment. Your testimony says and 
you said that you're going to fund at a 95 percent rate. 
However, some of the services are indicating that a significant 
amount of those funds are going to be diverted from facility 
sustainment to base operation support and that sustainment will 
be significantly lower.
    Now, I think--your priority is exactly right, on 
sustainment. I see us tearing down buildings and building new 
ones when just basic maintenance would have made these 
buildings last a longer time. As you know, we're in old 
buildings all over our government, and I think we should be in 
old buildings longer than just tearing things down and 
rebuilding them when they're perfectly good buildings. So I 
like your priority. However, is it realistic?
    Mr. Dubois. When the Army established the Installation 
Management Agency, and the Navy has a similar agency, it 
recognized the fact that sustainment dollars are often stolen. 
Let's face it. Diverted.
    Senator Hutchison. Sure.
    Mr. Dubois. To use another term, a nicer term, in order to 
give appropriate visibility into how sustainment dollars are 
budgeted, and how they're actually spent, the Army and the Navy 
took this management action. Air Force in a similar fashion 
watches it carefully but I don't defend taking dollars out of 
that account and using them for other things.
    But when it comes to base operating services, when you have 
the notion that I've got a roof that just started leaking, and 
I've got so many dollars to sustain the infrastructure on my 
installation, and I'm the installation commander, I've got to 
use the dollars where they're immediate--the immediate need is 
required.
    Now, interestingly enough, I am the installation commander 
of a place called the Pentagon Reservation, a 280-acre campus 
if you will. A building that has in excess of 6 million square 
feet. We are re-capitalizing the Pentagon today, 60 plus years 
after it was originally built. It was reasonably well 
maintained over those years.
    But what has happened? The building itself as the national 
command center of the United States military has become 
obsolete, in terms of electronics, in terms of computers, in 
terms of communications, and in terms of how best to use that 
space. That's an example of why sustainment is important but 
recapitalization is also important.
    In any event, I do watch, and continue to watch carefully, 
as do my three colleagues in the Military Departments, the 
three assistant service secretaries for I&E, how those dollars 
are being spent well.
    Senator Hutchison. Well, I thank you, and I would hope that 
your services would look at the fact that you're operating out 
of a 60 year old building and you're going to upgrade it rather 
than tearing it down and starting all over. I think that could 
be well used in the Services as well.

                       SPECIAL OPERATIONS FORCES

    Last question, for me, and this will be my final question. 
Special Operations Forces. Our staff has been visiting several 
of the facilities this year, and found them overflowing with 
equipment, seriously short on space, and yet with all of the 
added requirements and the proposals to add more in Special 
Operations Forces, there doesn't seem to be anything in the 
budget that indicates you're asking for military construction 
to house the added needs. Are you addressing this segment, or--
--
    Mr. Dubois. Let me address--I'm sorry.
    Senator Hutchison [continuing]. Do you have plans that we 
don't see? How are you going to meet these demands?
    Mr. Dubois. The Special Operations Forces worldwide are a 
special focus of the Secretary's integrated global presence and 
basing strategy work.
    As a matter of fact, this very issue, not just where SOF 
Forces are positioned, but how to appropriately support them in 
terms of infrastructure has been teed up by--in particular, 
Admiral Fargo in the Pacific Command, and General Jones in the 
European Command. I've been present at meetings with those two 
gentlemen and the Secretary of Defense, it is--it always comes 
up in no small measure because of some of the things, and some 
of the observations that your staff has made, as well as I have 
made in my travels around the world to now in excess of 100--
nearly 120 installations some of which are the SOF 
installations.
    It is a concern, we believe, that the SOF infrastructure 
needs to be rationalized and realigned with the SOF Force 
presence.
    And again, if we're going to bring back some of that SOF 
Force structure to the United States, we want to make sure that 
we've made the appropriate investments--military construction 
investments in bases in the United States to accept and receive 
it.
    It's also true about overseas, we're looking at 
consolidation. Those small bases that your staff and I have 
gone to look at are crowded and they are--and we're trying to 
figure out does this make the most sense, is this the best 
expenditure of our dollars, both MILCON and O&M dollars. We 
have kind of concluded that it probably isn't and that's why 
it's been put on the table with respect to this global 
presence, and this global basing study.
    Senator Hutchison. Okay. Well, we need to address that, and 
provide for it if in fact it's as bad as we think it is.
    Mr. Dubois. Uh-huh.
    Senator Hutchison. Well, thank you very much. Senator 
Feinstein.
    Senator Feinstein. Thanks very much, Madam Chairman. While 
you were speaking about the CENTCOM request I was reading 
General Abizaid's testimony to the House MILCON Committee, 
which he said and I quote, ``CENTCOM has prioritized another 44 
projects at an estimated cost of $531 million, in urgent and 
unfunded contingency construction requirements. We submitted 
these requests to the Joint Staff in January 2004, we expect 
that other requirements will emerge due to changes in the 
situation, new missions and the evolution of our basing 
strategy.''
    And so he's saying that there will be additional ones, and 
this $531 million appears nowhere. Now you say you'll take it 
out of O&M in the Defense budget, in other places, is that 
correct?
    Mr. Dubois. Well, when a combat commander such as General 
Abizaid comes to the Secretary of Defense and the Joint Chiefs 
and the Joint Staff with a request in January, clearly it 
couldn't have entered into our 2005 budget request. The extent 
to which these projects are prioritized by CENTCOM, and yet to 
be prioritized, and I have to underline this, yet to be 
prioritized by the Military Services, there is a shared 
responsibility overseas for installations and infrastructure, 
it is not entirely the combat commander's priorities.
    Senator Feinstein. So you're saying, and I don't want you 
to spend a lot of time on this.
    Mr. Dubois. Yes, ma'am.
    Senator Feinstein. But you're saying it will not be in the 
O&M of the Defense budget this year, is that correct?
    Mr. Dubois. I see----
    Senator Feinstein. It means we leave it for another 
supplemental?
    Mr. Dubois. I suspect that some will, but there will be the 
question--the question is on the table, will there be a 
supplemental and if so, when? I think the Secretary of Defense 
has indicated that he believes because of the uncertainties of 
OIF and OEF that there will be a supplemental. The question is 
timing, as you know, and the question is size.
    We're dealing with a set of uncertainties. Abizaid 
himself--General Abizaid, while he comes in with his wish list, 
that wish list has already been adjusted by virtue of what's 
happened in the last 60 to 70 days.
    Senator Feinstein. Well, this was his testimony as of March 
3rd, of this year, before the House MILCON Committee, it 
appears on page 40 of the----
    Mr. Dubois. Yes, ma'am, I'm aware of it.
    Senator Feinstein. Well, I think one of the problems that I 
have, is when you can include projects in the budget, they're 
not there, and therefore the cost of the war has essentially 
been taken up by a supplemental appropriation which I find not 
the most optimum situation.

                             EUROPEAN BASES

    But let me go into the issue of our European bases. The 
request includes $428 million for MILCON in Europe and I think 
it's based on the assumption that several existing bases 
Grafenwoehr, Ramstein, Spangdahlem, Vicenza, Aviano, 
Lakenheath, and Mildenhall will be enduring bases.
    So my question is, has a final decision on the future of 
these bases been made, and has the Secretary of Defense 
designated these specific bases to be enduring installations?
    Mr. Dubois. I'm not sure that the Secretary has actually 
stated it in such definitive terms, Senator, but let me say on 
his behalf that the military construction requests for those 
European bases that you mentioned in our view reflect critical 
military requirements. And yes, we believe those bases are 
enduring in the sense that they may not--the force structure on 
those bases today may not be--the same force structure on those 
bases today, may not be the same force structure on those bases 
in a year or two or three.
    But clearly bases like Ramstein, bases like Vicenza, bases 
like Sigonella, bases like Rota in Spain, are bases that are in 
our plan for the future.
    Senator Feinstein. Okay. So the intent is to make them 
enduring bases. Has the President approved the designation of 
these bases as enduring installations?
    Mr. Dubois. I'll have to just say I don't know whether the 
President has used the term enduring. All I know is that the 
Secretary in his discussions with me and my understanding is 
with the President, although the final, final decision has not 
been made, clearly has set aside, places as I mentioned like 
Ramstein, that you mentioned Grafenwoehr, as places where we 
will remain, we the United States Military will remain. I don't 
know whether the President's----
    Senator Feinstein. So the answer is no, he has not approved 
the designation at this point?
    Mr. Dubois. I would have to say you're correct in that 
regard.
    Senator Feinstein. Okay. Has the Defense Department 
calculated the overall cost of the proposed overseas basing 
realignment and when will you have a comprehensive cost 
estimate for the Congress?
    Mr. Dubois. The--we have looked at various alternatives 
should the Secretary and the President decide that they'll 
bring back, shall we say force package A, what would be the 
cost to not just bring it back, but to build to bring it back. 
We're looking at various alternatives in this regard.
    But as it is the case with BRAC, domestic BRAC, there must 
be an upfront investment in building--military construction 
investment in building facilities at the receiving locations. 
We as you know, are very forthright in what we estimate that 
cost to be. But we also are forthright in saying the savings 
derived from that BRAC adjustment, realignment, and closure 
will also in our view--the estimates, we have made those 
estimates too.
    Senator Feinstein. Could you give us the cost estimate, you 
said you're very forthright in those cost estimates.
    Mr. Dubois. When we--yes, ma'am.
    Senator Feinstein. What is the cost estimate of the 
overseas base----
    Mr. Dubois. I have not finished that calculation at this 
time. Now, it is--please remember it is dependent upon what 
decisions the Secretary and President ultimately make. If they 
say bring back one division, that has a cost estimate. If they 
say bring back another division that has another cost estimate. 
If they say bring back an F-16 squadron, that has a cost 
estimate.
    We are building--I use the term building blocks. We are 
trying to assess the individual building block estimates so 
that when the Secretary and the President make those final 
determinations, which as I indicated I anticipate to be in May, 
we will be able to bring to you those cost estimates.
    Senator Feinstein. As you know, we spent a lot of time last 
year on these European bases, and Grafenwoehr and Ramstein and 
Vilseck, and Aviano there new ones added this year, but you're 
asking essentially for $218,553,000 for the German bases, and 
we don't know whether they're going to be enduring bases. And 
this is the second year now that we still don't know. And yet 
we'll most likely appropriate the money, and I guess the 
problem is, do we appropriate the money and then the plans 
change?
    Mr. Dubois. I think that the discussion that we've had over 
certainly beginning last year--and what I--I don't want to 
mislead this Subcommittee in any way shape or form. My view is 
the Secretary has indicated that these bases which we have 
asked for a military construction appropriation are enduring. 
You've asked me a question, since I haven't talked to the 
President whether he has said, oh yes they are enduring, I 
believe that the Secretary of Defense has concluded that they 
are enduring.
    Senator Feinstein. Can we therefore--well, I guess we can't 
conclude they're enduring.
    Mr. Dubois. Well, as I said, he intends to make that 
final--you know, there are a lot of moving parts here, Senator. 
And he wants to make that recommendation to the President 
ultimately and discuss it with the Congress.
    Senator Feinstein. The frustration we have is there were 
moving parts last year too.
    Mr. Dubois. Right. And we also cut back----
    Senator Feinstein. It took us a long time to come together 
on this.
    Mr. Dubois. We cut back seriously on what we've asked for 
in terms of Europe.
    Senator Feinstein. I know you did.
    Mr. Dubois. Because of these very reasons.
    Senator Feinstein. All right. So we're no further--we're no 
clearer.
    Mr. Dubois. Well, I wouldn't--I don't think I can agree 
with that. I think we are substantially clearer. The question 
is will the Secretary of Defense make decisions and discuss 
them with Congress prior to your markup? That's the question at 
hand, and my understanding is depending upon when your markup 
is, that is his intention. He knows that you will have a 
difficult time making these appropriations and decisions absent 
a certainty to the extent that we can be, on these overseas 
bases. He appreciates that.

                                 KOREA

    Senator Feinstein. No, I think you know, we don't want to 
waste money. I went to Korea and saw some new facilities, but 
the plan for Korea proposed essentially to do away with them. 
And we don't want to get into that.
    Mr. Dubois. But as you well know many of those new 
facilities that you saw were MILCON appropriations from several 
years ago. And rightly so, Korea had suffered for a number of 
years with not very many dollars for----
    Senator Feinstein. I understand that, I don't want to 
belabor it. We've spent $15 million on a community center 
expected I think to last for a while.
    Mr. Dubois. Uh-huh.
    Senator Feinstein. And that's the point I want to make. And 
the new housing as well.
    Mr. Dubois. In terms of Korea of course, we've only asked 
for military construction on bases and land that we control in 
concert with our announced strategy with respect to our 
reconfiguring force structure on the peninsula.
    Senator Feinstein. Well, can you, give us a progress report 
on moving out of Seoul and moving south. Where is that?
    Mr. Dubois. The two governments, our government and the 
Korean government have concluded that we will move out of the 
Yongsan Garrison to Camp Humphrey, the Camp Humphrey Osan 
footprint. South of the Han. The question quite rightly is, how 
long will it take, and does the Korean government agree that 
the monies derived from their use of Yongsan, no longer the use 
of the United Nations command, and the United States--the 
Eighth Army. And the United States forces of Korea to be 
reinvested in infrastructure in the Camp Humphreys Osan 
footprint. The decision has been made we're moving out.
    Senator Feinstein. Is there an approved agreement?
    Mr. Dubois. My understanding is there is.
    Senator Feinstein. That has been approved by the 
legislature? Or by the Korean government?
    Mr. Dubois. That's my understanding and I will clarify that 
for you when I get back to the Pentagon.
    Senator Feinstein. I appreciate that very much.
    Mr. Dubois. Now, with respect to the land purchases as we 
discussed this last year, around Camp Humphreys and around 
Osan, that has been approved by the Korean legislature, and the 
monies have been appropriated and they're in the process of 
actually buying the parcels, because they were owned by 150 
different farmers, but we didn't ask for military construction 
on those properties, until they are assembled and transferred 
to our use.
    Senator Feinstein. But there is agreement on Yongsan, and 
the price?
    Mr. Dubois. There is agreement on Yongsan and the 
concurrent cost to build new for that garrison and our troops, 
headquarters troops to move south.
    Senator Feinstein. Well, I would certainly, and I think the 
Chairman would certainly be very interested in knowing the 
details of that agreement. I notice there's nothing in this 
budget.
    Senator Hutchison. Madam Vice Chairwoman, I would agree 
with you totally on wanting to know how much of the agreements 
have been made on costs and cost sharing, but there's one 
little semantic thing, we don't need the permission of Korea to 
leave a base or any other country.
    Senator Feinstein. No, I understand. I understand.
    Senator Hutchison. But the terms certainly do require 
agreements and I would be interested in that as well.
    Senator Feinstein. Thank you, Madam Chairman, Mr. Dubois.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Hutchison. Mr. Secretary, we do appreciate your 
time, and the updates that you have given us along the way. I 
think we are moving in the right direction, but there's still a 
lot to be done on both of our parts. Thank you very much.
    Mr. Dubois. Thank you very much, Madam Chair.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]

          Questions Submitted by Senator Kay Bailey Hutchison

                          OVERSEAS BASING/BRAC
    Question. Mr. Dubois, have decisions been made on redeployment of 
specific units and/or numbers of forces to the United States? If so, of 
what size?
    Answer. Decisions have not been made. The Department of Defense is 
formulating a set of recommendations based on Combatant Commander and 
Service input. Per the President's instruction, the State and Defense 
Departments are consulting closely with our allies and conducting site 
surveys to determine feasibility of initial proposals. The Department 
has frequently briefed members of Congress and their staffs on the 
proposals under consideration. A report to Congress will be provided 
during Summer 2004.
    Question. Mr. Dubois, to what extent do you envision that costs 
associated with redeploying any forces from overseas to stateside 
locations (movement, military construction, etc.) would be paid for out 
of the designated BRAC account or provided for separately?
    Answer. The BRAC statute limits how the Department may spend money 
in the BRAC account. Basically, the BRAC account can only be used to 
fund the implementation of approved closure and realignment 
recommendations. To the extent that redeploying forces from overseas to 
stateside locations is part of an approved BRAC closure and realignment 
recommendation, the Department may fund that action from the BRAC 
account.
    Question. Mr. Dubois, what is the restationing of overseas forces 
going to cost? If we don't yet know, when will we know?
    Answer. Current working cost estimate is continually being updated, 
but represents less than half of 1 percent of the FYDP. As a rough 
estimate, it will be refined as more detailed plans are developed. This 
reflects the worldwide scope of global reposturing and the evolving 
nature of this initiative due to the relatively large number of 
locations and the diplomatic, cost and savings variables involved.
    Question. Mr. Dubois, if the return of forces to the United States 
will be accomplished as part of the BRAC process, and we don't know how 
much that restationing effort will cost, how can the Secretary have 
certified this month that BRAC will result in a savings by 2011? Do the 
calculations on which the Secretary's certification was based include 
the costs of accommodating troops returning from overseas? Other Due 
Outs: Perchlorate Report; School Impact Report; CENTCOM Master Plan; 
Land and Cost-Sharing Agreements with Korea; and Information on C-17 
Basing decisions, specifically with reference to Dyess AFB and Kelly 
USA.
    Answer. As required by statute, the Secretary's certification was 
based on the force structure plan, infrastructure inventory, and 
economic analysis provided to Congress pursuant to Section 2912 of the 
BRAC statue. That economic analysis was based on the experience of 
previous BRAC rounds, which suggests that each military department will 
achieve annual net savings beginning not later than fiscal year 2011, 
the 6 year of implementation. The actual costs and savings from BRAC 
2005 actions will depend on the specific recommendations adopted.
    Perchlorate (BRAC) Report and Land and Cost Sharing Agreements with 
Korea will be submitted to Congress in July 2004. The Department is in 
the final stages of report development on the CENTCOM Master Plan and 
School Impact Report and plans to submit a final report to Congress in 
August 2004.
                                 ______
                                 

               Question Submitted by Senator Ted Stevens

                         UTILITY PRIVATIZATION
    Question. Mr. Dubois, what is the status of utility privatization 
within the Department? What problems do you see in the future with 
utility privatization?
    Answer. Through the Utilities Privatization (UP) Program, the 
Department of Defense (DOD) will take advantage of industry 
innovations, efficiencies, financing and economies of scale to obtain 
safe, environmentally sound and reliable utilities services. The 
Defense Components are actively pursuing a privatization evaluation of 
the utility systems at every Active Duty, Reserve, and Guard 
installation, within the United States and overseas, that is not 
already designated for base closure.
    Of the 1,867 DOD utility systems that are eligible for 
privatization, the Defense Components have privatized 446 systems and 
exempted 244 systems for economic or security reasons. Within a 5 
percent range DOD is on track to complete evaluations on the remaining 
systems by September 30, 2005. Of those systems with active 
solicitations, RFPs have been issued and are pending closure on 95 
systems; and RFPs have closed and are under evaluation on over 860 
systems.
    The ongoing solicitations are normally receiving adequate interest 
to achieve competition. This follows a successful effort by the 
Services to share lessons learned and industry feedback to improve 
solicitation templates and better align the program with industry 
practices.
    Many systems included in earlier solicitations, which closed prior 
to March 2003 did not receive adequate interest. Most of these systems 
were located on small Reserve or National Guard sites. Utilities had 
not been interested in participating in the privatization of these 
systems for a variety of reasons. In general, they perceived that the 
cost of developing a proposal in a competitive arrangement did not 
provide a cost effective business opportunity. With the improved 
templates and engagement with industry representatives, interest has 
improved. The Services are continuing discussions with industry to 
identify barriers and develop resolutions.
                                 ______
                                 

              Questions Submitted by Senator Conrad Burns

                                  BRAC
    Question. Mr. Dubois, what role will the availability of training 
ranges play in determining realignment at Air Force installations?
    Answer. The BRAC process is the means by which the Department can 
reconfigure its current infrastructure into one in which operational 
capacity maximizes both warfighting capability and efficiency. The BRAC 
2005 process is intended to ensure a comprehensive analysis of all 
military installations in the United States and Territories, on an 
equal footing. Training ranges are an important part of this 
installation inventory, and will be evaluated using the final selection 
criteria published in the Federal Register on February 16, 2004. As 
required by law, military value will be the primary consideration in 
analyzing and making recommendations for the closure or realignment of 
military installations. Training capabilities, as reflected in criteria 
two (one of the four military value criteria), are essential to 
maintaining military capability.
    Question. Mr. Dubois, there has been discussion of placing Air 
Guard units within the boundaries of active installations for cost 
savings and security purposes--to what extent will this be considered 
by the Department in the upcoming closure and realignment process?
    Answer. The Department will analyze all installations by the same 
process, to include consideration of movement of National Guard forces 
to active bases and active duty people to National Guard bases. 
Military value will be the primary consideration for making 
recommendations for base closures and realignments, as required by 
statute.
    Question. Mr. Dubois, what steps will be taken in the base closure 
and realignment process to ensure consistency with the Strategic 
Capabilities Assessment (SCA)? Will the current policy be adjusted to 
reflect the Department's closure and realignment needs or is it the 
intent to continue the policy of retention of 500 land-based missiles?
    Answer. The Strategic Capabilities Assessment is a periodic review 
of progress in implementing the December 2001 Nuclear Posture Review 
(NPR). The NPR recommended that the planned strategic nuclear force in 
2012 would comprise 14 Trident II SSBNs, 500 Minuteman III ICBMs, 76 B-
52H bombers, and 21 B-2 bombers. The Strategic Capabilities Assessment 
was recently completed and the results are being reviewed within the 
Department. At this time there is no action underway to change the 
planned strategic nuclear force structure for 2012.
                                 ______
                                 

            Questions Submitted by Senator Dianne Feinstein

                       BRAC ENVIRONMENTAL CLEANUP
    Question. Mr. DuBois, the fiscal year 2005 budget request for BRAC 
environmental cleanup is $246 million, down nearly 36 percent from the 
$370 million requested in fiscal year 2004. No funding has been 
requested for the cleanup of Navy BRAC installations because the Navy 
is expected to finance its fiscal year 2005 BRAC cleanup requirements 
out of the revenue from land sales.
    Can you explain why the Department has chosen to reduce its 
request, rather than using the proceeds from land sales to supplement 
funding and accelerate necessary cleanup?
    Answer. The Navy opted to finance its prior BRAC fiscal year 2005 
program with land sales revenue in lieu of seeking appropriated funds 
because it believed that proceeds from the sale of El Toro and Oak 
Knoll properties would be available in sufficient time to pay for 
caretaker and environmental cleanup costs, thus allowing the Navy to 
use appropriated funds for other needs. The Navy used conservative 
estimates in its fiscal year 2005 land sale revenue projection, and has 
successfully sold a number of prior BRAC properties in the last few 
years that have generated $230 million in revenue that is being used to 
accelerate cleanup at prior BRAC locations.
    Question. Could the Services execute a larger BRAC environmental 
cleanup program in fiscal year 2005 if additional funds were made 
available?
    Answer. We believe the Services can execute a larger program if 
additional funds were made available by Congress. However, we have 
sufficient funds to meet our legal/regulatory obligations and believe 
the requested level of funding is an appropriate balance between 
environmental and other DOD mission requirements.
    Question. Did the Navy request any funding from the Office of the 
Secretary of Defense in its fiscal year 2005 budget submission? Was it 
a Navy decision or an OSD decision for the Navy to self-finance its 
entire BRAC cleanup program out of land sale revenues?
    Answer. The Navy did not request any funding from the Office of the 
Secretary of Defense for its fiscal year 2005 budget submission. It was 
a Navy decision to self-finance its BRAC cleanup program out of land 
revenue.
    As you know, I am extremely concerned about the BRAC environmental 
cleanup program because so many communities in California are impacted 
by environmental contamination on closed bases that will take many 
years and cost many millions of dollars to remediate.
    Question. Can you assure me that the fiscal year 2005 BRAC round 
will not delay or in any way divert resources from the environmental 
cleanup of installations closed under previous BRAC rounds?
    Answer. Based on resources currently available, the Services have 
sufficient capacity and capability to execute a new round of BRAC while 
finishing requirements associated with the previous rounds. The 2005 
round of BRAC will not divert funds specifically appropriated for 
restoration projects supporting previous BRAC rounds.
    Question. What lessons have you learned from the previous BRAC 
rounds that you plan to apply to environmental cleanup associated with 
the 2005 round?
    Answer. We are evaluating lessons learned over the past four round 
of BRAC and developing options associated with environmental processes. 
Some considerations are:
  --Should cleanup be done by DOD or the new owner?
  --How do we maximize property value?
  --Use of early transfer authority (ETA) should be optimized to get 
        property in the hands of new owners faster.
  --Use of environmental services cooperative agreements (ESCAs) should 
        be encouraged to help the Military Components fulfill their 
        environmental cleanup responsibilities and integrate cleanup 
        with redevelopment. For example, at Bayonne Military Ocean 
        Terminal in New Jersey, the Army transferred both property and 
        the responsibility for cleanup to the Bayonne Local Reuse 
        Authority under ETA and an ESCA. The ESCA effectively put the 
        local reuse authority in charge of their own destiny in terms 
        of both cleanup and property reuse. This action saved the Army 
        approximately $5 million and successfully defused on-going 
        frustrations over the pace and scope of cleanup actions and 
        changing reuse plans. The action was a win-win for all parties.
  --The environmental condition of the property could be documented 
        early in the process for potential transferees.
  --Work closely with Local Reuse Authorities (LRAs) and developers 
        earlier in the process to return property to productive reuse 
        faster.
  --Increased use of performance-based contracting will contribute to 
        improved cleanup and property transfer. The Department 
        currently has 15 BRAC installations where performance-based 
        contracting is setting the pace for cleanup.
  --Increased use of the Conservation Conveyance Authority where it 
        presents the best option for transfer and reuse. For example, 
        Honey Lake, a section of Sierra Army Depot in California, was 
        DOD's first land transfer using the conservation transfer 
        authority. Over 57,000 acres were transferred to four public 
        and private entities which make up the Honey Lake Conservation 
        Team. The team is completing the restoration and conservation 
        efforts.
                           RESERVE COMPONENTS
    Question. The Department is finally showing that it is concerned 
with the infrastructure needs of the reserve components. Although this 
year's overall request is 15 percent less than last year's enacted 
amount, as compared to the requested amount, the reserve components 
request amount has increased by 67 percent.
    Several facilities for the National Guard and Reserves are 
considered Federal facilities--rather than state-owned facilities. It 
is my understanding that these federally designated reserve component 
facilities may be subject to the upcoming BRAC consideration. Is this 
true--and if so, will criteria such as distance to training ranges, 
jointness, and community need be considered?
    Answer. The Department is approaching BRAC with an eye toward the 
Total Force--Active, Reserve, and Guard. This approach reflects the 
importance of accommodating Guard and Reserve training, basing, and 
quality of life needs by incorporating them into the comprehensive 
analyses of all military installations. This comprehensive analysis 
will use the final selection criteria published in the Federal Register 
on February 16, 2004, for making closure and realignment 
recommendations.

                       RENEWABLE ENERGY RESOURCES
    Question. Mr. DuBois, the fiscal year 2002 Military Construction 
Appropriations report mandated an assessment of renewable energy 
resources, including solar, wind, and geothermal, on U.S. military 
installations. As I have watched gasoline prices climb steadily in 
recent weeks, I am becoming increasingly concerned that spikes in 
electricity costs cannot be far behind. I have not for a moment 
forgotten the energy crisis of 2002 that hit California so hard, and 
that in part prompted this subcommittee's requirement for an assessment 
of renewable energy resources.
    I am interested in how OSD views the importance of this assessment, 
to what degree OSD supports the study, and whether OSD is actively 
requiring each of the Services to participate fully in the assessment. 
Can you assure me that this assessment is in fact a priority of OSD and 
that no foot-dragging or lack of cooperation will be tolerated?
    Answer. OSD considers the renewables assessment very important. We 
are fully committed to developing and executing an action plan with 
Congress's help, according to the requirements set forth in the 
Department's May 2002 Interim Report to Congress. This action plan will 
address the full range of issues for instituting a renewable energy 
program at DOD.
    Under the Air Force lead, we are moving forward now, trying new and 
different approaches to acquiring renewable energy and developing 
institutional approaches to simultaneously serve the military mission, 
reduce costs to the Services and the taxpayer, educate the military 
about renewable products and services, and streamline procurement.
    Question. The Committee earmarked $2.5 million in the fiscal year 
2004 Senate report to continue the renewables assessment. Can you tell 
me when this funding will be released?
    Answer. The Air Force, designated as the renewable study program 
lead, is in the process of drafting an investment plan for the fiscal 
year 2004 $2.5 million Energy Conservation Investment Program (ECIP) 
appropriation consistent with the Congressional intent to continue the 
renewable study effort. Once their plan is finalized, it will be 
coordinated with the other services and OSD will release the funding.

                     MINOR CONSTRUCTION THRESHOLDS
    Question. Mr. DuBois, in discussions with the Services, we have 
heard strong support for increasing the minor military construction 
ceiling from $1.5 million to $3 million for all minor construction 
projects, not just those involving life, safety and health.
    Would OSD support raising the limit on minor construction projects 
to $3 million, and if so, do you intend to submit proposed legislation 
to Congress to achieve this change?
    Answer. This year's fiscal year 2005 legislative proposals' 
submission includes language to raise the limit of minor construction 
projects to $3 million.
                      Department of the Air Force

STATEMENTS OF:
        HONORABLE NELSON F. GIBBS, ASSISTANT SECRETARY OF THE AIR 
            FORCE, INSTALLATIONS, ENVIRONMENT, AND LOGISTICS
        MAJOR GENERAL DEAN FOX, CIVIL ENGINEER, UNITED STATES AIR FORCE
ACCOMPANIED BY:
        BRIGADIER GENERAL DAVID BRUBAKER, DEPUTY DIRECTOR, AIR NATIONAL 
            GUARD
        BRIGADIER GENERAL WILLIAM M. RAJCZAK, DEPUTY TO THE CHIEF, AIR 
            FORCE RESERVE
    Senator Hutchison. Now we have the Honorable Nelson Gibbs, 
the Assistant Secretary of Air Force for Installations, 
Environment and Logistics, Major General Dean Fox, the Air 
Force Civil Engineer, Brigadier General David Brubaker, the 
Deputy Director of the Air National Guard, Brigadier General 
Rajczak, the Deputy to the Chief of Air Force Reserve. I 
understand there is a joint statement that will be given by Mr. 
Gibbs.
    While you all are getting seated, I'll just tell you a 
little story that I came away with from Albania in the early 
stages of our presence there.
    Several years ago we went to the two sides of the airfield 
in Tirana, and we visited with the Army side first where they 
were just beginning to set up the airfield and I talked to the 
soldiers and the Army guys. I asked, how are things going here? 
They said, ``well except for the mud, the bugs, the food, 
taking showers with hoses, everything's really pretty good.''
    I go to the Air Force side, where they have air conditioned 
tents for food, and they have really nice setups with air 
conditioned tents for the soldiers. We said, ``well how are 
things going.'' They said, ``well, you know, it's rough over 
here. We don't even have cable TV.''
    So with that, I welcome all of you from the Air Force, and 
welcome your testimony, Mr. Secretary.
    Mr. Gibbs. Thank you very much, Madam Chairman, Mrs. 
Feinstein, it's a pleasure to appear before you to talk about 
the Air Force military construction program for fiscal year 
2005. I have with me, the Air Force Civil Engineer for his 
first appearance before this Committee, General Fox. Generals 
Brubaker and Rajczak have been here before so they're prepared 
to answer any of your questions
    But we've made one slight modification. I've asked General 
Fox to do the opening statement to give him at least a minute 
or two to be able to speak and therefore feel comfortable with 
the Committee. But then when he's completed, we look forward to 
your questions.
    Senator Hutchison. So he will be giving the only statement, 
you will not be giving a statement.
    Mr. Gibbs. That's correct. You have a copy----
    Senator Hutchison. Just questions.
    Mr. Gibbs [continuing]. Of my prepared statement.
    Senator Hutchison. I do.
    Mr. Gibbs. I think that was submitted for the record.
    Senator Hutchison. Yes, I do have that.
    Mr. Gibbs. But he'll make the general opening remarks on 
behalf of the Air Force.
    Senator Hutchison. Thank you very much, General Fox.

                  STATEMENT OF MAJOR GENERAL DEAN FOX

    General Fox. Madam Chairman and Senator Feinstein, good 
after--good morning. I appreciate this opportunity to appear 
before you to discuss the Air Force fiscal year 2005 military 
construction program. We sincerely thank you for the support 
you've given the Air Force missions, and our people around the 
world.

                        MILITARY FAMILY HOUSING

    Our military construction and military family housing 
programs are absolutely essential to the Air Force mission 
whether it's on the flight line, in the workplace, or in the 
home.
    Although higher priorities have not always allowed us to 
address all our facility needs, the Air Force certainly 
recognizes the importance of investing in our facilities. We 
fight from our bases, whether from expeditionary locations as 
has been previously discussed, or otherwise, which makes our 
facilities critical to our mission.
    The importance our senior leaders place on our facilities 
is seen in recent budget submissions. Our military construction 
and housing facility budget has increased in fiscal year 2003, 
and 2004, and increased further in this year's program request. 
We sincerely appreciate your great support for our programs.
    In addition to the military construction and the housing 
request, we're continuing an upward trend in our operations and 
maintenance sustainment, restoration, and modernization 
accounts. The Air Force is committed to taking care of our 
people and their families. Quality of life projects such as our 
dormitories, and military family housing help support them.
    As our members are more frequently deployed away from home, 
knowing their families are well taken care of, helps our airmen 
keep focused on the Air Force's and our Nation's task. With a 
$1.7 billion request for military family housing we're able to 
maintain our good housing and continue on our path to eliminate 
inadequate housing in the Air Force by 2007 in the Continental 
United States (CONUS), and 2009 overseas.

                             PRIVATIZATION

    Through privatization initiatives and traditional housing 
construction funds, we plan to invest in more than 10,000 
housing units in fiscal year 2005 alone.
    Providing adequate housing does not stop with families. 
We're investing over $128 million to provide 1,104 rooms this 
fiscal year in our dormitories, keeping us on track to 
eliminate our inadequate dorms for our junior enlisted 
personnel both in the United States and overseas. The quality 
of our overseas installations remains a priority. Our airmen 
are sent to foreign lands from their homes in the United States 
to protect our Nation's interest. It is essential we provide 
them with the right tools and facilities for them to carry out 
their role.
    With 20 percent of our airmen stationed overseas, it is 
extremely important to make sure we continue to invest in those 
installations supported as enduring locations by our combat 
commanders.
    Our budget request of $140 million for these locations 
consists of the most essential facility needs to ensure our 
airmen can efficiently perform their task and we ask for your 
support of both the operational and quality of life projects.
    Our military construction budget also consists of projects 
to support the Air Force's new weapons systems which will 
provide our combatant commanders the capabilities to meet our 
security needs.
    In conclusion, Madam Chairman, we thank the committee for 
its strong support of Air Force military construction and 
family housing. As Mr. Gibbs mentioned, this is my first year 
I've had the honor and privilege of bringing our program before 
your committee and I look forward to appearing before you again 
in the future. We'll be happy to address any questions you may 
have.
    [The statement follows:]

                 Prepared Statement of Nelson F. Gibbs

    Madam Chairman and distinguished members of the committee, the 
strength and flexibility of airpower and our joint warfighting success 
in the Global War on Terrorism is directly enabled by three 
interdependent factors; outstanding men and women in uniform, superior 
weapons platforms, and an agile support infrastructure. The Air Force 
fiscal year 2005 military construction (MILCON) budget request reflects 
our commitment to ensuring the Air Force's continued ability to execute 
the full range of air and space missions. In turn, the Air Force 
continues to maintain the commitments made last year to invest wisely 
in installations from which we project air and space power, take care 
of our people and their families with adequate housing and quality of 
life improvements, and to sustain the public trust through prudent 
environmental management.

                              INTRODUCTION
    Air Force facilities, housing, and environmental programs are key 
components of our support infrastructure. At home, bases provide a 
stable training environment and a place to equip and reconstitute our 
force. Overseas bases provide force projection platforms to support 
combatant commanders.
    As such, the Air Force has developed an investment strategy focused 
on sustaining and recapitalizing existing infrastructure, investing in 
quality of life improvements, continuing strong environmental 
management, accommodating new missions, optimizing use of public and 
private resources, and reducing infrastructure wherever we can.
    Total Force military construction, family housing, sustainment, 
restoration, and modernization programs each play vital roles 
supporting operational requirements and maintaining a reasonable 
quality of life for our men and women in uniform.
    While the Air Force has always acknowledged the importance of 
proper funding for facility sustainment and recapitalization, too often 
competing priorities have not permitted us to address all the problems 
we face with our aging infrastructure. Despite competing priorities, 
you supported our request last year. The Air Force sincerely 
appreciates your support.
    Continuing a positive trend into fiscal year 2005, the Air Force 
military construction program included in the Presidents Budget request 
is approximately the same as last year with an increase in the military 
family housing program. The requested $2.6 billion for Total Force 
military construction and Military Family Housing is a $200 million 
increase over last year's request. This request includes $664 million 
for Active military construction, $127 million for Air National Guard 
military construction, $84 million for Air Force Reserve military 
construction, and more than $1.7 billion for Military Family Housing.
    The Air Force has also increased Operations and Maintenance (O&M) 
sustainment, restoration, and modernization (SRM) funding. This year, 
the amount dedicated to SRM is more than $200 million greater than in 
the 2004 request. With the fiscal year 2005 budget request, more than 
$2.2 billion will be invested in critical infrastructure maintenance 
and repair through our O&M program. This year's request is up almost 11 
percent from last year, to continue to move to the Air Force goal of a 
facility recapitalization rate of 67 years by 2008.
    Considering the level of effort across the entire infrastructure 
spectrum (military construction, MFH, and O&M SRM), the overall Air 
Force fiscal year 2005 budget request is more than $4.8 billion.
Overseas Military Construction
    Even though the majority of our Air Force personnel are assigned in 
the United States, 20 percent of the force is permanently assigned 
overseas, including 29,000 Air Force families. Old and progressively 
deteriorating infrastructure at these bases requires increased 
investment. While a new Global Basing Strategy is under development by 
the Office of the Secretary of Defense, the Air Force fiscal year 2005 
military construction request invests in overseas installations 
supported as enduring locations by the combatant commanders. The 
request for overseas construction in the Pacific and European theaters 
of operation is $140 million for 13 projects. The program consists of 
infrastructure and quality of life projects in the United Kingdom, 
Germany, the Azores, Italy, Spain, Japan, and Korea. I also want to 
thank you for the essential overseas MILCON funding you approved in the 
fiscal year 2004 Supplemental Appropriations Bill for construction 
projects in Southwest Asia as well as at critical en route airlift 
locations, needed to directly support ongoing operations in that 
region.
Planning and Design/Unspecified Minor Construction
    This year's request includes planning and design funding of $160 
million. These funds are required to complete design of the fiscal year 
2006 construction program, and to start design of the fiscal year 2007 
projects so we can be prepared to award these projects in the year of 
appropriation. This year's request also includes $24 million for the 
unspecified minor construction program, which is the primary means of 
funding small, unforeseen projects that cannot wait for the normal 
military construction process.

           SUSTAIN, RESTORE, AND MODERNIZE OUR INFRASTRUCTURE
Operations and Maintenance Investment
    To sustain, restore, and modernize infrastructure, there must be a 
balance between military construction and Operations and Maintenance. 
Military construction restores and recapitalizes facilities. O&M 
funding is used to perform facility sustainment activities necessary to 
prevent facilities from failing prematurely. Without proper 
sustainment, facilities and infrastructure wear out quickly. O&M 
funding is also used to directly address many critical restoration and 
less-expensive recapitalization needs. These funds enable commanders in 
the field to address the facility requirements that impact their near-
term readiness.

                 INVEST IN QUALITY OF LIFE IMPROVEMENTS
    The Air Force recognizes a correlation between readiness and 
quality of life. Quality of life initiatives acknowledge the sacrifices 
our Airmen make in support of the Nation and are pivotal to recruiting 
and retaining our country's best and brightest. When Airmen deploy, 
they want to know their families are safe, and secure. Their welfare is 
a critical factor in our overall combat readiness. Family housing, 
dormitories, and other quality of life initiatives reflect the Air 
Force commitment to provide the facilities they deserve.
Family Housing
    The Air Force Family Housing Master Plan provides the road map for 
our Housing military construction, O&M, and privatization efforts, and 
it is designed to meet the goal of ensuring safe, affordable, and 
adequate housing for our members. The fiscal year 2005 budget request 
reflects an increase of more than $180 million over the fiscal year 
2004 budget for family housing. With the exception of four northern-
tier locations, inadequate housing will be eliminated in the United 
States by 2007. The inadequate units at those four northern-tier 
locations will be eliminated by 2008. For fiscal year 2005, the $847 
million requested for housing investment will provide over 2,200 units 
at 16 bases, improve more than 1,300 units at six bases, and support 
privatization of over 6,800 units at six bases. An additional $864 
million will be used to pay for maintenance, operations, utilities and 
leases to support family housing.
Dormitories
    Just as we are committed to provide adequate housing for families, 
we have a comprehensive program to house our unaccompanied junior 
enlisted personnel. The Air Force is well on its way in implementing a 
Dormitory Master Plan. The plan includes a three-phased dormitory 
investment strategy. The three phases are: (I) fund the replacement or 
conversion of all permanent party central latrine dormitories; (II) 
construct new facilities to eliminate the deficit of dormitory rooms; 
and (III) convert or replace existing dormitories at the end of their 
useful life using an Air Force-designed private room standard to 
improve quality of life for Airmen. Phase I is complete and we are now 
concentrating on the final two phases of the investment strategy.
    The total Air Force requirement is 60,200 dormitory rooms. The Air 
Force Dormitory Master Plan achieves the Office of the Secretary of 
Defense's (OSD) fiscal year 2007 goal to replace all inadequate 
permanent party dormitory rooms and the Air Force goal to replace all 
inadequate technical training dormitories by fiscal year 2009. This 
fiscal year 2005 budget request moves us closer to those goals. The 
fiscal year 2005 dormitory program consists of seven dormitory 
projects, 1104 rooms, at both stateside and overseas bases in direct 
support of unaccompanied personnel, for a total of $128 million.
Fitness Centers
    Fitness centers are a critical component of the Air Force quality 
of life program. The growing expeditionary nature of our activities 
requires that Airmen increasingly deploy to all regions of the world, 
in extreme environments and therefore must be physically prepared to 
deal with the associated challenges. In other words, Airmen must be 
``fit to fight.'' Our new fitness program directs Airmen to devote more 
time and energy to being physically fit, and the use of our fitness 
centers has dramatically increased to support this reorientation in our 
culture. The fiscal year 2005 military construction program includes 
three fitness centers: Lajes Air Base, Azores; Hill Air Force Base 
(AFB), Utah; and Elmendorf AFB, Alaska.

                   CONTINUE ENVIRONMENTAL LEADERSHIP
    The Air Force continues to ensure operational readiness and sustain 
the public trust through prudent environmental management. As part of 
the overall military transformation program, we actively seek and 
employ smarter solutions to long-standing environmental challenges. We 
are applying lessons learned in terms of how, and the extent to which, 
pollution can be prevented and contamination can be controlled. We are 
investing in more efficient contracting methods as a key element in our 
approach to future environmental restoration. Additional use of 
performance based contracting will focus on cleanup performance goals 
and thereby reduce process requirements. Finally, we are establishing 
systems to better identify the equity value of our installations' 
environmental resources to the surrounding community. For example, land 
that provides habitat for an endangered species may be valuable as open 
space in a community's redevelopment plan. That value should be 
identified and understood.
    In addition to ensuring our operations comply with all 
environmental regulations and laws, we are dedicated to enhancing our 
existing relationships with both the regulatory community and the 
neighborhoods around our installations. We continue to seek 
partnerships with local regulatory and commercial sector counterparts 
to share ideas and create an atmosphere of better understanding and 
trust. By focusing on our principles of ensuring operational readiness, 
partnering with stakeholders, and protecting human health and the 
environment, we remain leaders in environmental compliance, cleanup, 
conservation, and pollution prevention.
    The $3.3 million environmental project in the fiscal year 2005 
military construction program will allow Shaw AFB to meet current 
Environmental Protection Agency (EPA) standards for wastewater 
discharge.

                        ACCOMMODATE NEW MISSIONS
    As indicated earlier, joint warfighting success in the Global War 
on Terrorism has been possible in part due to superior weapons 
capabilities. New weapon systems are the tools of combat capability 
that enable our combatant commanders to respond quickly to conflicts in 
support of national security objectives. The fiscal year 2005 Total 
Force new mission military construction program consists of 45 
projects, totaling more than $403 million. These projects support a 
number of weapons systems; two of special significance are the F/A-22 
Raptor and the C-17 Globemaster III.
    The F/A-22 Raptor is the Air Force's next generation air 
superiority and ground attack fighter. F/A-22 flight training and 
maintenance training will be conducted at Tyndall AFB, Florida, and 
Sheppard AFB, Texas, respectively. Our fiscal year 2005 military 
construction request includes two F/A-22 projects at Tyndall AFB for 
$19 million, and one F/A-22 project at Sheppard AFB totaling $21 
million.
    The C-17 Globemaster III aircraft is replacing the fleet of C-141 
Starlifters. C-17s will be based at Elmendorf AFB, Alaska; Travis AFB 
and March Air Reserve Base (ARB) in California; Dover AFB, Delaware; 
Hickam AFB, Hawaii; Jackson Air National Guard Base, Mississippi; 
McGuire AFB, New Jersey; Altus AFB, Oklahoma; Charleston AFB, South 
Carolina; and McChord AFB, Washington. Thanks to your support, 
construction requirements for Charleston and McChord were funded in 
prior-year military construction programs. The request for fiscal year 
2005 includes two projects for $15 million at Elemendorf AFB, two 
facility projects for $15 million at Travis AFB, two projects for $10 
million at March ARB, and five facility projects for $26 million at 
Hickam AFB.
    Other new mission requirements in fiscal year 2005 include the 
Global Hawk beddown at Beale AFB, California; Predator force structure 
changes at Indian Springs Air Force Auxiliary Field, Nevada; Combat 
Search and Rescue aircraft beddown at Davis-Monthan AFB, Arizona; C-
130J simulator facility at Little Rock AFB, Arkansas; F-35 Joint Strike 
Fighter test facilities at Edwards AFB, California; and various 
projects supporting Homeland Defense, such as the Air Sovereignty Alert 
missions flown by the Air National Guard at Andrews AFB, Maryland; 
Duluth International Airport, Minnesota; Atlantic City International 
Airport, New Jersey; and Truax Field, Wisconsin.

              OPTIMIZE USE OF PUBLIC AND PRIVATE RESOURCES
    In order for the Air Force to accelerate the rate at which we 
revitalize our inadequate housing inventory, we have taken a measured 
approach to housing privatization. We started with a few select 
projects, looking for some successes and ``lessons learned'' to guide 
the follow-on initiatives. The first housing privatization project was 
awarded at Lackland AFB, Texas, in August of 1998, and all 420 of those 
housing units have been constructed and are occupied by military 
families. Since then, we have completed three more projects (Elmendorf 
AFB, Alaska; Robins AFB, Georgia; and Dyess AFB, Texas) and have three 
more under construction (Wright-Patterson AFB, Ohio; Patrick AFB, 
Florida; and Kirtland AFB, New Mexico). Once these three projects are 
complete, there will be nearly 5,500 privatized units. We are on track 
to privatize 60 percent of our U.S. based family housing by 2007. The 
fiscal year 2005 budget request includes $83 million to support the 
privatization of nearly 7,000 units at six bases: Tyndall AFB, Florida; 
Scott AFB, Illinois; Columbus AFB, Mississippi; Keesler AFB, 
Mississippi; Holloman AFB, New Mexico; and Fairchild AFB, Washington.

   CONTINUE DEMOLITION OF EXCESS, UNECONOMICAL-TO-MAINTAIN FACILITIES
    For the past 8 years, the Air Force has pursued an aggressive 
effort to demolish or dispose of facilities that are unneeded and no 
longer economically feasible to sustain or restore. From fiscal year 
1998 through fiscal year 2003, we demolished 15.5 million square feet 
of non-housing building space at a total cost of $200 million. This is 
equivalent to demolishing more than three average size Air Force 
installations. For fiscal year 2004 and beyond, we will continue to 
identify opportunities for demolition and facility consolidation. In 
general, the facility demolition program has been a success, enabling 
us to reduce the strain on infrastructure funding by getting rid of 
facilities we don't need and can't afford to maintain.

                               CONCLUSION
    The near and long term readiness of our fighting force depends upon 
this infrastructure. We will continue to enhance our installations' 
capabilities, remain good stewards of the environment, and ensure Air 
Force infrastructure is properly distributed to maximize military 
readiness.

    Senator Hutchison. Well, thank you, and thank all of you 
for being here. I want to start, General Fox, or Mr. Secretary, 
with the issue of privatization. I think we discussed it fully 
with Mr. Dubois and the need to raise the cap. And I have 
certainly a great interest in the Air Force privatization 
projects at Lackland and Sheppard Air Force Base. There are 
others. And I will be working to lift the cap so that those can 
stay online.

                    BUILD-TO-LEASE HOUSING OVERSEAS

    But my question is really on build-to-lease housing 
overseas. The Air Force is requesting $44 million for family 
housing this year at RAF Lakenheath, and an additional $131 
million would be requested over the next four years, it 
obviously will be an enduring base. And it includes $58 million 
for family housing at Ramstein this year, with another $10 
million in the out years.
    The state of Rheinland-Pfalz has proposed a build-to-lease 
program for military family housing in the Ramstein AB area, an 
approach which has met with success in other places in Germany. 
My question is, are you aware of this and have you considered 
build-to-lease in lieu of traditional family housing at 
Ramstein and could this be a more prominent part of your 
building housing overseas at other bases including Lakenheath 
where you're going to make a substantial investment.

                                GERMANY

    Mr. Gibbs. Yes, I am aware of those proposals in Germany 
for the build-to-lease. That is a potential solution. We have 
had other build-to-lease projects in Germany previously. But 
they currently have a--they have not reached resolution with 
the Federal Government. The difficulties there is----
    Senator Hutchison. Federal government of Germany?
    Mr. Gibbs. Federal government of Germany. Their proposals 
there would be to build on the--on Federal land, and they don't 
currently have permission to do that. So they have some more 
work to do internally within their governments, federal and 
state level, to allow those projects to move forward.
    To my knowledge, and this was through last week, they 
hadn't made any proposals to do any of those activities on 
private land at this point. But certainly----
    Senator Hutchison. He said that, however----
    Mr. Gibbs. Certainly.
    Senator Hutchison. Is it something that you would consider?
    Mr. Gibbs. Oh, absolutely.
    Senator Hutchison. Are you really looking at it seriously. 
I'm sure that they will get over the hump and there would be 
other options to look at if it's working so well in the United 
States, is it something that we ought to be looking at 
overseas?
    Mr. Gibbs. Absolutely. We would encourage them to go beyond 
the build-to-lease, to go into--to what effectively would be a 
private--more closely--would look more similar to the 
privatization that we do here. Which would be for them to 
construct housing and effectively put it at our disposal in 
exchange for the allowance for quarters over there. Which would 
not give us a long-term commitment as a build-to-lease does.
    We have had some preliminary discussions with them about 
that. They've been a little apprehensive because of the 
increased risk. One of the things that we want to talk with 
them further about is the success it has enjoyed here. Try to 
convince them to consider that in addition to the build-to-
lease.
    Senator Hutchison. Well, since you are making commitments 
to enduring bases, which I certainly support because it will 
mean that we can do no military construction at bases that will 
not be designated right now as enduring, I hope that you will 
factor that in as quickly as possible as we are looking at some 
pretty substantial investments in traditional housing. And 
perhaps prioritize the traditional housing that you know would 
be best on base whether it's general, officer, or----
    Senator Hutchison [continuing]. Or whatever would be right. 
So that we can save any dollars that might be able to be saved 
down the road.
    Mr. Gibbs. Absolutely.

                           GUARD AND RESERVE

    Senator Hutchison. I'd like to ask General Brubaker and 
General Rajczak. In past Base Realignment and Closure (BRAC) 
rounds our Guard and Reserve forces have not been treated as 
well, and perhaps you can say, well, we haven't used them to 
the extent that we are now using Guard and Reserve units. 
However, would you just make a brief statement about where you 
think we are now in the planning for BRAC and in military 
construction ongoing, as it relates to assuring that our Guard 
and Reserve units have the capacity and the military 
construction that they need.

                           AIR NATIONAL GUARD

    General Brubaker. If I may start, I would just say that 
first of all we are, I think, very fairly and well represented 
in the BRAC process. From the National Guard perspective we are 
a sitting member of the Air Force Base Closure Executive Group 
(BCEG). And I'm very pleased with our interaction and our 
ability to express any concerns from the National Guard 
perspective.
    As far as how we will play in BRAC and whether or not that 
will be considered, I think again we will be equally 
represented in that process as the Air Force works its way 
through the BRAC and makes its formal recommendations.

                                RESERVE

    General Rajczak. I agree with General Brubaker's comments. 
We are also a representative, or also a member of the Base 
Closure Executive Group, for the Air Force. And to address your 
second point about new construction, or being able to get 
adequate support for our construction requirements, most of the 
new construction that is in our fiscal year 2005 budget request 
as a matter of fact is for new mission support. Including 
installations and activities in Texas and California both, as 
well as in Ohio, and in Oregon.
    Again, we compete very well through the Air Force budgeting 
process and I think we're very fairly represented both in the 
BRAC and in new construction requirements.

                                  C-17

    Senator Hutchison. Mr. Gibbs, I read in your testimony the 
commitment and the military construction that you're asking for 
to support the F/A-22 and the C-17. And I just wanted to ask 
you and perhaps you can answer this for the record, because 
it's somewhat parochial.

                              C-17 BASING

    But in looking at all of the places that there would be 
basing for the C-17, I would just like to ask you to look at a 
couple of places in Texas, where there might be some savings in 
military construction. Either Dyess, where there is excess 
capacity still, ramp space. And of course for the B-1s, and 
Kelly where there is significant space, hangar space still 
available and could take C-17s. If any of those would be able 
to save military construction in the other basing, I would 
appreciate your just looking at that.
    Senator Feinstein. You know they're going to California.
    Senator Hutchison. Well, some aren't.
    They're going to California, Alaska----
    Senator Feinstein. I'm shocked at you, Madam Chairman.
    Senator Hutchison. California, Alaska, Delaware, Hawaii, 
Mississippi, New Jersey, Oklahoma, South Carolina, and the 
State of Washington. I'm not suggesting that we mess with 
California, but I'm just wondering if with all of the bases 
that are in the works here, if there would be some savings. 
That's what I'm asking you to----
    Senator Feinstein. Texas doesn't have enough--no, never 
mind.
    Senator Hutchison. Well, we have capacity that is unused. 
And particularly Dyess, and then for repairs and maintenance 
would be the only place that Kelly would work. But there is 
significant space--hangar space there because of the losses.
    Mr. Gibbs. The short answer to your question is yes. The 
longer answer, if I could take about 2 or 3 minutes. What you 
just described to a great extent is the beauty of the BRAC 
round. There are a lot of numbers that are thrown around as to 
excess capacity and what it is and it's obviously in the eye of 
the beholder.
    But in the eye of this beholder it's a substantially 
different environment that we have today, than we had in all of 
the preceding rounds that considered Base Closure and 
Realignment. In all of those previous periods, what we had were 
a number of bases that were significantly underused. They were 
using only 20 or 30 percent of their capacity. So the BRAC was 
approached at, well, if we have this base that's 30 percent 
used and this space that's 30 percent used, let's just close 
one and move that mission to the other one, and that was easily 
done.
    We don't have that condition existing today to any 
substantial extent. Certainly not in the Air Force. What we 
have is a lot of bases that are 60 to 90 percent used. When we 
come out of this BRAC round, the task, the goal to be achieved 
here is to get the utilization on the remaining bases up into 
the 85 to 90 percent range.
    So we will no longer have the luxury of keeping bases, all 
bases at a mission unique category. We cannot afford to have a 
70 percent utilized base. We have to find a mission to take it 
up to 85 or 90. So that's exactly what we are attempting to do 
in the analysis leading up to the BRAC round, to make sure that 
we as effectively use as we possibly can, making allowances--to 
respond to a question you asked to the previous panel--for the 
ability to surge and also to look out for the unknown unknowns 
that will be occurring over the next 20 years, the time period 
that the Congress has directed that we look to for sizing this 
base structure.
    Senator Hutchison. Well, certainly placement is a big part 
of it. The facilities that you are looking at for this year's 
MILCON would be Alaska, Hawaii and California. But there are a 
lot of other smaller bases that you're saying are going to take 
C-17s, and I would hope that you might look at an enduring base 
which would be Dyess as a possible recipient of some the C-17s 
when there is that excess capacity.

                        GENERAL OFFICER QUARTERS

    Just a last question. On the general officer quarters. The 
Air Force rating for adequacy apparently according to the 
Defense Department IG is different from the other services. And 
therefore there's a significant difference in the Air Force 
declaration that 82 percent of its general officer quarters are 
inadequate, while Army and Navy deem all of theirs adequate.
    My question is, should everybody be coming up to your 
standards, or should you be looking at it in a more uniform 
way, and are you addressing those issues that the IG has 
raised?
    Mr. Gibbs. I'll ask General Fox to answer it both from an 
Air Force, and a personal perspective, I think.
    General Fox. Madam Chairman, I would tell you that we have 
set goals for family housing, military family housing of 2007 
across the continental United States, and 2009 overseas and 
we're meeting those goals. We're doing a terrific job through 
privatization and our housing MILCON program of upgrading 
quarters for our troops.
    Since Mr. Gibbs said, let me give you the personal 
anecdote. I can tell you that at Bolling Air Force Base here in 
Washington we are well along with taking care of quarters for 
our airmen and our non-commissioned officers. And we're 
developing those quarters to commercial standards, the same 
thing that they would be able to rent or buy downtown. That's 
the standard.
    Similar for senior officers, the goal is commercial 
standards. What we live in at Bolling Air Force Base is 70 year 
old quarters, that are very rundown. We have put those quarters 
at the end of the cycle to upgrade taking care of our troops 
first. As we get towards the goal of 2007, the people who will 
be left remaining to have quarters fixed to a commercial 
standard, to a decent standard that they would rent or buy 
downtown will be the senior officers.
    Senator Hutchison. Thank you. Senator Feinstein.
    Senator Feinstein. Thanks very much, Madam Chairman, and 
thank you gentlemen for your service. I just want to assure 
that the bed down costs for the C-17 and the C-5 transformation 
are in the FYDP, aren't they?
    Mr. Gibbs. To the extent that we know them, yes, ma'am.

                        BEDDOWN FOR C-17 AND C-5

    Senator Feinstein. Okay. To the extent that you know them, 
right. So the commitment is to put them in the Future Years 
Defense Program (FYDP). I recognize that in the 2005 bill we 
have two facility projects, two at Travis for $15 million, and 
two projects for $10 million at March. So I think that 
California is going to be very happy about that, and we thank 
you for that.
    Mr. Gibbs. That's one of the earlier locations.
    Senator Feinstein. Pardon me?
    Mr. Gibbs. That's one of the earlier locations from the 
list that the Chairman read.
    General Fox. Senator Feinstein, if I can answer. The way 
that we prioritize our military construction program, when we 
bring in a new weapon system like the C-17 to California we 
will ensure that those requirements are funded up front in our 
President's budget submission.

                       VANDENBERG AIR FORCE BASE

    Senator Feinstein. Good, that's what I really wanted to 
hear. Thank you very much. Appreciate it very much, General. 
Last year we were unable to fund the consolidated fitness 
center requested by the Air Force for Vandenberg. However, we 
included language in the conference report supporting the 
project and urging its inclusion in the 2005 budget request. 
And it's not in the 2005 budget request. Could you tell us what 
the reason is? It's not even in the future, in the FYDP, any 
longer.
    Mr. Gibbs. I think it's----
    Senator Feinstein.--and it was requested.
    Mr. Gibbs. I think it's out about 4 years, 3 or 4 years.
    General Fox. 2008.
    Mr. Gibbs. 2008. It's a--I'll give you an answer that I 
know when I give it to you before I start, it's going to be 
inadequate from your perspective. Putting together the military 
construction budget for the Air Force, since there are always 
needs, and there are always more needs than there are resources 
to fill them. So we plan out over a period of time, and the 
military construction funds are held quite dearly and the 
competition is severe within the Air Force to obtain those.
    When the Congress eliminates something that the Air Force 
had put into its budget, it makes it very difficult to get that 
thing back into the budget in the near term. Because there are 
too many people that have the competing needs and say the 
Congress has already told you you don't need it, if you put it 
again, you stand the chance of losing it again.
    So it--it becomes very difficult to get those back in 
shortly after they're taken out.
    Senator Feinstein. Well, let me just say what the signal 
was, we had some major problems fitting in the European basing 
towards the end. And we had many protracted negotiations and it 
turned out that I had to give up a project, so we gave up 
Vandenberg with the commitment that it would be funded this 
year. And we put the report language in the bill saying that we 
would fund it this year. So----
    Mr. Gibbs. Ma'am, I'm not aware of any discussions like 
that.
    Senator Feinstein. Well, you should be aware, respectfully, 
of the report language.
    Mr. Gibbs. Yes, ma'am, I am.
    Senator Feinstein. It was in the bill which says that we 
would fund it. So you're saying it isn't a necessity any 
longer, or you would have submitted it to us.
    Mr. Gibbs. No, ma'am, I think I said it the way I believe 
it, that in fact when the Congress takes something out of the 
budget, it's very difficult to get it back within the process.
    Senator Feinstein. So that is for all the overseas basing? 
Several were eliminated last year, and they were included in 
the President's 2005 budget. I think that's somewhat 
disingenuous. I mean, we deleted things in Europe last year.
    So how can you come back and say, you know, it's--true, it 
is a fitness center. But that also was a priority in your 
opening statement, the commitment to fitness.
    Mr. Gibbs. Absolutely.
    Senator Feinstein. Let me just ask you----
    Mr. Gibbs. The same amount of money is going into fitness 
centers in 2005 as was--if you'll go back and look at the 2004 
plan for 2005, those projects are still there and the same 
amount of money is committed to fitness centers as we had said 
there would be the previous year.
    Senator Feinstein. But you just are putting them somewhere 
else?
    Mr. Gibbs. No, they're the ones that were in for 2005. 
They're the same ones.
    Senator Feinstein. But you're not applying the same 
standards to the fitness center that you apply in Europe, where 
a project denied last year comes back this year.
    Mr. Gibbs. No, I think what I just said was that the same 
amount of money is included in 2005 request for fitness centers 
as we told you in the 2005 plan would be applied to fitness 
centers. And without looking at each one individually and I 
will go back and confirm that for you, but I think it's the 
same ones we said a year ago were going to be in 2005.
    Senator Feinstein. Well, in my view, Mr. Secretary, you're 
splitting hairs. You clearly didn't put the money in for the 
Vandenberg fitness center, right?
    Mr. Gibbs. That's correct.
    Senator Feinstein. And we clearly said in our report 
language that if you did, we'd fund it this year.
    And--okay. I have no other questions, Madam Chairman.

                       VANDENBERG AIR FORCE BASE

    Senator Hutchison. Okay. Well, I would just like to follow-
up and ask General Fox, would you say that Vandenberg is still 
a priority, as it was last year?
    General Fox. Madam Chairman, we have a lot of priorities 
that we weren't able to get into the fiscal year 2005 
President's budget. I would tell you even from Secretary 
Dubois' comments about how the Department of Defense is 
beginning to build back its military construction program, we 
believe that the Secretary of Defense, the Secretary of the Air 
Force are very committed to building back the military 
construction program, such that we'll be able to bring a 
healthier MILCON program to you in following years after this 
submittal in fiscal year 2005.
    To answer your question specifically, I believe the 
Vandenberg fitness center is a very viable project. There were 
actually three projects that we were unable to have headroom in 
our military construction submittal to get into the fiscal year 
2005 program. When we buy our new mission requirements for C-
17, and other aircraft, then buy the must do legal requirements 
for environmental compliance, and look at the dormitories as a 
priority, we were constrained in 2005.

                     ADDITIONAL COMMITTEE QUESTIONS

    But I believe the major command that owns the requirement 
for the Vandenberg fitness center will push it very very hard 
in the near term.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing.]

          Questions Submitted by Senator Kay Bailey Hutchison

                            FITNESS CENTERS
    Question. Your written testimony notes the Air Force's new emphasis 
on fitness. Our staff just visited a number of Air Force bases in 
Europe and found that even brand new fitness centers, such as the one 
that just opened at Aviano, are overcrowded because of the new fitness 
emphasis. Is the Air Force adjusting its design guidelines for fitness 
centers to account for the increased demand, and are the three fitness 
centers in this year's budget adequately sized to accommodate that 
demand?
    Answer. Yes, the Air Force is changing the Fitness Center Facility 
Design Guide to accommodate the impact of the ``Fit to Fight'' 
initiative; increased use of fitness centers by both individual users 
and larger groups. Proposed changes include the addition of indoor 
running lanes, adjustments in size requirements for locker rooms, group 
exercise areas, and equipment areas, and the addition of parent-child 
workout area.
    The three fitness center projects in the fiscal year 2005 
President's Budget (Elmendorf AFB, AK; Hill AFB, UT; and Lajes AB, 
Portugal) all are currently under design based on the current guide. 
Elmendorf AFB is developing a companion O&M project to improve their 
facility. The combination of MILCON and O&M work will meet immediate 
needs. Hill AFB's only major scope concern is an indoor running track, 
which they identified as an optional bid item. If construction bids are 
favorable, they will include the indoor running track in the fiscal 
year 2005 project. The Lajes fitness center project will provide an 
additional 1,300 SM of space to greatly improve their existing 
conditions.

                        GENERAL OFFICER HOUSING
    Question. The Air Force has an elaborate system for rating the 
adequacy of its General Officer Quarters and is to be commended for 
establishing a systematic approach to this question. However, the 
system has resulted in the Air Force declaring 82 percent of its 
General Officer Quarters as ``inadequate'' while the Army and Navy deem 
all of theirs to be adequate. The Defense Department Inspector General 
issued a memorandum in January noting significant issues in the Air 
Force's approach and suggesting steps to improve it. What are you doing 
to address the issues raised by the IG?
    Answer. The Air Force uses the Condition Assessment Matrix (CAM) to 
assess/rate the condition of its Military Family Housing (MFH) 
inventory, including the existing General Officer Quarters (GOQ) 
inventory. This system rates the condition of each component of the 
house and evaluates its functional adequacy with regard to Air Force 
standards. The goal of these standards is to construct and maintain 
housing that is comparable to what Airmen can rent or buy downtown.
    Through this systematic approach, the Air Force developed the GOQ 
Master Plan. This plan identifies 82 percent of the GOQ inventory as 
requiring a one-time MILCON project. These whole-house improvement 
projects would address all deficiencies, conditional and functional. 
For the remaining 18 percent of the GOQ inventory, deficiencies can be 
addressed through routine MFH operations and maintenance cycles.
    The Air Force non-concurred with the Department of Defense 
Inspector General (DOD IG) memorandum regarding the GOQ Master Plan, 
stating: ``We appreciate the efforts of the DOD IG during the past 4 
years regarding the Air Force GOQ Master Plan and agree that there are 
minor administrative procedures that may warrant improvements. However, 
in reviewing the assumptions and findings contained in the audit 
memorandum, Air Force policy is misstated and there are factual errors 
that warrant a response.'' The Air Force provided a 45-page, detailed 
response, which addressed assertions contained in the DOD IG 
memorandum.
    Prior to the completion of the DOD IG audit, the Air Force 
independently took action to refine and improve the Condition 
Assessment Matrix (CAM) definitions. The Air Force also proactively 
corrected administrative errors found within the GOQ Master Plan.
    The Air Force fully supports the Condition Assessment Matrix (CAM) 
process and the GOQ Master Plan as excellent planning tools for 
managing its GOQ inventory. The GOQ Master Plan methodology is 
supported by the Office of the Secretary of Defense (OSD AT&L). The OSD 
AT&L Housing and Competitive Sourcing director endorsed the GOQ Master 
Plan methodology in a November 20, 2003 memorandum to the DOD IG. 
Furthermore, the American Planning Association Federal Division 
recognized the GOQ Master Plan as the ``Outstanding Federal Program of 
the Year'' for 2004.

                          C-17 BASING DECISION
    Question. Information on C-17 Basing decisions, specifically with 
reference to Dyess AFB and Kelly USA
    Answer. The Air Force briefed a comprehensive Mobility Roadmap to 
Congress on 15 April 2002. The roadmap was part of a detailed force 
structure plan that included 33 states and 53 bases and identified the 
beddown plan for 180 C-17s, 112 C-5s, and the remaining C-130 fleet 
following the reduction of 56 C-130s. The roadmap development 
considered numerous options while building a plan that balanced 
requirements and fiscal constraints.
    Given the current and authorized mobility force structure, the Air 
Force plan is to maintain the C-130 mission at Dyess AFB and the C-5 
mission at Lackland AFB (Kelly Field). Additionally, the Air Force will 
transfer the C-5 Flying Training Unit mission to Lackland AFB in fiscal 
year 2007.
                                 ______
                                 

            Questions Submitted by Senator Dianne Feinstein

                            REDUCED REQUEST
    Question. When comparing the active component military construction 
funding requests, the Air Force, by far, asked for much less funding 
this year than in previous years. For example, this year's request is 
20 percent less than last year's requested amount, and 36 percent less 
than the enacted amount. With the recapitalization rate of your 
infrastructure climbing, how do you justify this reduced request?
    Answer. The Air Force has a balanced program and we continue to 
concentrate on our backlog and achieving OSD's 67-year recap rate goal 
by 2008.
    Although the active portion of the Air Force's fiscal year 2005 
military construction request ($664 million) is 14 percent less than 
the fiscal year 2004 request ($773 million), the total force (active, 
Guard, and Reserve) request of $876 million is $89 million greater than 
our fiscal year 2005 projection in the fiscal year 2004 President's 
Budget (PB) request and near the same level as the fiscal year 2004 PB 
request of $878 million. Also, our fiscal year 2005 recapitalization 
rate of 148 years is better than the 180 years of last year's budget 
request, putting us on track to achieve and maintain a 67-year rate by 
2008. Although we are taking some near-term risk in our facilities, we 
expect our outyear investment increases will help us make significant 
improvements.

                        FAMILY HOUSING REQUESTS
    Question. This year your request for funding family housing is 16 
percent greater than last years request. Conversely, the Navy's request 
has decreased by almost 19 percent from last year's requested amount. 
It is my understanding that the Navy attributes this decrease to family 
housing privatization. As your testimony states, the privatization 
concept allows the services the opportunity to leverage through 
contractors, private funds, that will get military families into 
modern, adequate housing more quickly.
    Initially, the Air Force was more reluctant to use privatization to 
fill this housing deficit. However, now, at least in the continental 
United States, the Air Force program is well underway. Could you 
describe the Air Force's current position on family housing 
privatization?
    Answer. With over 40,000 housing units requiring revitalization, 
the Air Force recognizes housing privatization as a key part of OSD's 
three-pronged strategy of using local community housing, privatization, 
and MILCON to provide adequate housing for our Airmen. Privatization 
allows the Air Force to attract private sector capital and expertise to 
provide quality housing for Air Force members, thereby leveraging our 
construction dollars. As of March 2004, the Air Force has privatized 
6,092 units by contributing $122.3 million for a total development cost 
of $647.3 million--a leverage of 6.28:1. Eight more projects are 
planned for award by June 2004 to privatize 10,027 units for a leverage 
of 22.85:1. With housing privatization providing quality housing sooner 
and at less cost, the Air Force has budgeted $39.1 million in fiscal 
year 2005 to develop privatization concepts and acquire 48 projects 
valued at over $5.6 billion. Besides leveraging Air Force construction 
dollars, housing privatization is proving to be more cost effective 
than traditional MILCON. Of seven awarded projects, privatization is 
6.5 percent less costly than traditional MILCON over the 50-year life 
cycle; and of six projects pending award, privatization is 14.5 percent 
less. Succeeding with housing privatization, the Air Force is 
considering every base with housing areas not yet privatized for 
privatization during updates to the Family Housing Master Plan (FHMP) 
to revitalize remaining inadequate housing units. Currently, 
feasibility studies are on going at 25 separate installations. 
Privatization will be selected when payback meets OSD criterion and the 
life cycle cost analysis indicates privatization to be cheaper than 
continued government ownership. With continued support from the budget 
authority for military family housing privatization and on-going 
successes in housing privatization, the Air Force's FHMP will meet the 
Secretary of Defense's 2007 goal.

                             DERF FUNDS USE
    Question. The Committee has become extremely frustrated by the 
poorly planned use of Defense Emergency Response Funds (DERF) to 
implement physical security measures. It appears that neither the Air 
Force, nor any of the other services for that matter, has adopted a 
standardized plan regarding certified and tested physical security 
measures and the products used to ensure these measures.
    The Department of State has a long-standing physical security 
program including product testing and certification. Time-proven 
security measures could be adopted immediately by each of the services. 
Has the Air Force made efforts to explore standardized measures for 
security enhancement and to immediately adopt products and measures 
that are proven?
    Answer. The Air Force employs a multi-pronged approach to the 
acquisition of physical security technologies. This approach includes 
capitalizing on Research and Development (R&D), and operational testing 
efforts, as well as tapping into existing governmental and commercially 
available solutions. Several entities including the Electronic Systems 
Center at Hanscom AFB MA, the Force Protection Battlelab at Lackland 
AFB TX, and the DOD Physical Security Equipment Action Group (PSEAG) 
are integral to this effort.
    The PSEAG is a Joint-service R&D program that supports the Physical 
Security Equipment requirements of the four Services. The PSEAG selects 
or designs, evaluates, and acquires the most efficient and productive 
security equipment at the most reasonable cost to ensure the effective 
protection of DOD resources, including personnel, classified 
information, material, and readiness assets. The PSEAG provides 
programming, planning, and funding support for both near and long term 
requirements, and eliminates duplication of R&D while ensuring 
interoperability between essential elements of security systems fielded 
by the DOD components to ensure Joint Interest/Joint Capability. The 
acquisition of SmartGate technology is an example of a successful 
product and operational development.
    In addition, the Air Force is fully engaged with the Technical 
Support Working Group (TSWG). The TSWG, the U.S. national forum that 
includes the Department of State, identifies, prioritizes, and 
coordinates interagency and international R&D requirements for 
combating terrorism. The TSWG rapidly develops technologies and 
equipment to meet the high priority needs of the combating terrorism 
community, and addresses joint international operational requirements 
through cooperative R&D with major allies. Since 1986, the TSWG has 
pursued combating terrorism technologies in the broad context of 
national security by providing a cohesive interagency forum to define 
user based technical requirements spanning the Federal interagency 
community.
    The Air Force recently fielded the Integrated Base Defense Security 
Systems (IBDSS) contract which provides a critical line of defense for 
all critical assets, fixed, temporary or mobile by way of electronic 
detection, alarm assessment, access control, communications and 
command, control and display capabilities to support an effective 
response. The intent of this effort is to provide security personnel 
with standardized and integrated security systems that neutralize or 
mitigate anticipated threats while reducing manpower levels wherever 
possible.
    IBDSS acquisition is a contract vehicle for satisfying all of the 
Force Protection Command and Control Directorates acquisition 
requirements for the next 5 years. This contract supports quick 
reaction temporary and permanent fixed site deployments as well as 
multiple installations at different locations in parallel throughout 
the world. It will also be the vehicle of choice for providing 
standardized material solutions to combat mission need statements in 
support of the global war on terrorism, after appropriate approvals are 
obtained, if required.
    From a MILCON standpoint, construction guidance supports security 
operational and acquisition development. The Air Force recently fielded 
an Antiterrorism/Force Protection (AT/FP) Facility Investment Strategy 
(FIS) to effectively manage AT/FP facility requirements. To get the 
most for our AT/FP facility investment, FIS assigns highest priority to 
securing our perimeters. Once perimeters are secure, we can ``move in'' 
to take care of critical and mass gathering facilities. Combined with 
new Air Force entry control facility design standards and SmartGate 
acquisition, FIS succeeds making the most of our construction funds to 
protect our installations.

                             AIR FORCE BRAC
    Question. The Air Force's budget request for BRAC environmental 
cleanup took a $53 million (-27 percent) cut. Only 2 years ago, under 
my Chairmanship, the Air Force was desperately short funding for BRAC 
environmental remediation, and Senator Hutchison and I added an 
additional $25 million to assist you. Now, only 2 years later, the 
request is on a downward glide slope while the needs are equally, or 
maybe even more pressing.
    Six of the Air Force's National Priority list sites are in 
California. With cleanup at McClellan AFB estimated to continue until 
2034, it's inconceivable to me that 27 percent less funding is 
required. How do you justify this greatly reduced request?
    Answer. The fiscal year 2005 Air Force BRAC environmental 
President's Budget request was not a result of a program cut. As our 
overall program matures, we move from high cost construction projects 
to lower cost system operation and maintenance projects. The shift to 
system operation and maintenance requirements will be reflected in more 
level funding requests in this and in future years.
    As the BRAC environmental program moves forward, we are taking 
advantage of remedial system optimization efforts to reduce our overall 
program long-term costs in order to deal with our challenges and meet 
our commitments at McClellan and other bases.

                             MC CLELLAN AFB
    Question. Air Force representatives, and representatives of 
McClellan Park met the week of March 22nd to negotiate the early 
transfer of McClellan. I was happy to add funding to the Defense Bill 
last year to advance to sewer replacement which I understand will begin 
construction this summer. Could you please describe the progress that 
has been made in these negotiations and which items remain open?
    Answer. Regarding the sewer project, we have budgeted $3.0 million 
in fiscal year 2004 to augment the OEA grant of $4.9 million to begin 
the replacement project. The Air Force portion of the sewer project is 
the removal of contaminated soil encountered during the sewer trenching 
operation. The Air Force, Sacramento County, along with McClellan Park 
are working to finalize an Environmental Services Cooperative 
Agreement. Project is on track to begin July 2004.
    Regarding privatization, the Air Force, County, California State 
regulators, EPA Region IX, and McClellan Park met on March 25, 2004 to 
initiate the project. The meeting was considered a success by all 
attendees; agencies committed to completing general action items and 
agreed on delivery dates, and to move ahead on the privatization 
proposal. The County is preparing a project for a specific parcel of 
land for the agencies to consider. This project, which is due by the 
end of April 2004, will provide the basis for developing the required 
agreements and documents to execute privatization.

                          SUBCOMMITTEE RECESS

    Senator Hutchison. Okay. Well, we'll work with you and with 
Senator Feinstein. Thank you very much for your time, we 
appreciate it. Thank you.
    Mr. Gibbs. Thank you very much, Madam Chairman.
    [Whereupon, at 12:05 p.m., Tuesday, March 30, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]
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