[Senate Hearing 108-129]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 108-129

       MILITARY CONSTRUCTION APPROPRIATIONS FOR FISCAL YEAR 2004
=======================================================================

                                HEARINGS

                                before a

                          SUBCOMMITTEE OF THE

            COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                                   on

                           H.R. 2559/S. 1357

    AN ACT MAKING APPROPRIATIONS FOR MILITARY CONSTRUCTION FOR THE 
 DEPARTMENT OF DEFENSE FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2004, 
                         AND FOR OTHER PURPOSES

                               __________

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                      COMMITTEE ON APPROPRIATIONS

                     TED STEVENS, Alaska, Chairman
THAD COCHRAN, Mississippi            ROBERT C. BYRD, West Virginia
ARLEN SPECTER, Pennsylvania          DANIEL K. INOUYE, Hawaii
PETE V. DOMENICI, New Mexico         ERNEST F. HOLLINGS, South Carolina
CHRISTOPHER S. BOND, Missouri        PATRICK J. LEAHY, Vermont
MITCH McCONNELL, Kentucky            TOM HARKIN, Iowa
CONRAD BURNS, Montana                BARBARA A. MIKULSKI, Maryland
RICHARD C. SHELBY, Alabama           HARRY REID, Nevada
JUDD GREGG, New Hampshire            HERB KOHL, Wisconsin
ROBERT F. BENNETT, Utah              PATTY MURRAY, Washington
BEN NIGHTHORSE CAMPBELL, Colorado    BYRON L. DORGAN, North Dakota
LARRY CRAIG, Idaho                   DIANNE FEINSTEIN, California
KAY BAILEY HUTCHISON, Texas          RICHARD J. DURBIN, Illinois
MIKE DeWINE, Ohio                    TIM JOHNSON, South Dakota
SAM BROWNBACK, Kansas                MARY L. LANDRIEU, Louisiana
                    James W. Morhard, Staff Director
                 Lisa Sutherland, Deputy Staff Director
              Terrence E. Sauvain, Minority Staff Director
                                 ------                                

                 Subcommittee on Military Construction

                 KAY BAILEY HUTCHISON, Texas, Chairman
CONRAD BURNS, Montana                DIANNE FEINSTEIN, California
LARRY CRAIG, Idaho                   DANIEL K. INOUYE, Hawaii
MIKE DeWINE, Ohio                    TIM JOHNSON, South Dakota
SAM BROWNBACK, Kansas                MARY L. LANDRIEU, Louisiana
TED STEVENS, Alaska                  ROBERT C. BYRD, West Virginia
  (ex officio)                         (ex officio)

                           Professional Staff
                              Dennis Ward
                       Christina Evans (Minority)
                         B.G. Wright (Minority)










                            C O N T E N T S

                              ----------                              

                         Tuesday, March 4, 2003

                                                                   Page
Department of Defense:
    Office of the Secretary......................................     1
    Department of the Navy.......................................    47
    Department of the Army.......................................    59
    Department of the Air Force..................................    71

                        Tuesday, March 18, 2003

Nondepartmental Witnesses........................................   113
Department of Defense: Office of the Secretary...................   137

                        Tuesday, April 29, 2003

Department of Defense............................................   195












 
       MILITARY CONSTRUCTION APPROPRIATIONS FOR FISCAL YEAR 2004

                              ----------                              


                         TUESDAY, MARCH 4, 2003

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 2:35 p.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Kay Bailey Hutchison (chairman) 
presiding.
    Present: Senators Hutchison, Stevens, Feinstein, and 
Johnson.

                         DEPARTMENT OF DEFENSE

                        Office of the Secretary

STATEMENT OF HON. DOV S. ZAKHEIM, UNDER SECRETARY OF 
            DEFENSE (COMPTROLLER)
ACCOMPANIED BY RAYMOND F. DuBOIS, DEPUTY UNDER SECRETARY OF DEFENSE FOR 
            INSTALLATIONS AND ENVIRONMENT


           OPENING STATEMENT OF SENATOR KAY BAILEY HUTCHISON


    Senator Hutchison. Good afternoon. I am pleased to call to 
order this hearing to review the President's fiscal year 2004 
budget for Military Construction. I welcome all of you, and 
look forward to serving this year with Senator Feinstein again. 
We have worked on the committee together. We have now gone both 
ways, and I think that we certainly work together well as a 
team, and I'm looking forward to that.
    We will hear testimony this afternoon on Military 
Construction, family housing, BRAC, and Guard and Reserve 
programs for the Department of Defense. We have two panels with 
us today. The first panel will have representatives from the 
Office of the Secretary of Defense, Dr. Zakheim, the Department 
of Defense Comptroller, and Mr. Ray DuBois, the Deputy Under 
Secretary of Defense for Installations and Environment. The 
second panel consists of the Assistant Secretaries of the Army, 
Navy, and Air Force. I am going to ask you to summarize your 
statements, although we certainly want the whole thing for the 
record.
    We have reviewed the 2004 budget request, and I note that 
the budget request is down again from the amount appropriated 
in 2003 almost 14 percent from the enacted level and 6.5 
percent from last year's budget request. This is a downward 
trend that is of concern to us, and certainly we would like to 
explore how we are going to revitalize our infrastructure, 
which has been an early goal, with this downward spiral.
    Of more concern is the amount allocated for overseas bases 
in the budget request. The overall number continues to increase 
every year. Last year, it constituted 16 percent of the 
proposed budget for military construction. For 2004 it 
comprises approximately 19 percent of the total amount 
requested, and that is $1.74 billion. Meanwhile, funding 
directed to modernize and revitalize our domestic bases is 
decreasing. We would like to talk about those two numbers.
    We understand that there are major review efforts currently 
underway to assess force structure and base infrastructure in 
Europe and Korea. It may be premature to move forward with some 
of the funding requested in the budget until those reviews are 
complete. We will take a hard look at the specific projects 
over the next several months.
    The committee is still waiting for the overseas basing 
master plan which was due to Congress last April. It has been 
almost a year, and we still do not have that report. That 
report was requested in the 2003 bill.
    So I look forward to exploring some of these issues with 
you, and looking forward to hearing from you, and now I would 
like to turn to my Ranking Member, Senator Feinstein.


                 STATEMENT OF SENATOR DIANNE FEINSTEIN


    Senator Feinstein. Senator, thank you very much. I very 
much share your comments and think you are right on. I find 
this a somewhat puzzling budget. It keeps going down when our 
military activity is going up, and this budget probably is more 
closely related to military quality of life than virtually 
anything else.
    I cannot help but note that for the active components, the 
MILCON cut is 16 percent, or $850 million, and for the reserve 
components the aggregate cut is 46 percent, or $368 million. If 
I recall, although we added back last year, it was a 45 percent 
cut last year, and the BRAC cleanup account--and I really 
think, in looking over some of the bases that need cleanup, 
that Texas and California can use the whole account itself, 
that there are so many bases that need cleanup, and this is 
down 34 percent. And family housing, which is the 
Administration's flagship MILCON program, has slipped almost 5 
percent, so I am very interested, Madam Chairman, and I hope 
that the distinguished people before us today will indicate 
what the thinking is for the continued decline of the MILCON 
account, whether we are going to see this again next year and 
the year after, because then at some point we are going to have 
real problems as to how we provide adequate housing and other 
facilities for our military, so thank you, and I look forward 
to it.
    Senator Hutchison. Thank you, Senator. Senator Stevens, any 
opening statement?
    Senator Stevens. I have no opening statement.
    [The statement follows:]

               Prepared Statement of Senator Tim Johnson

    Madame Chairwoman, I would like to thank you and Ranking Member 
Feinstein for calling today's hearing. I would also like to thank you 
for your continued leadership on this subcommittee and for your 
outstanding commitment to the men and women serving in the U.S. Armed 
Forces.
    In addition, I would like to thank today's witnesses for taking the 
time to appear before this subcommittee. Your professionalism and 
dedicated service to our Nation is greatly appreciated. As I have said 
in the past, the military construction budget does not fund flashy 
projects like the latest high-tech weapons, aircraft carriers, or 
tanks.
    The results of prudent investments in military construction are not 
always evident. However, to think that the work of this subcommittee is 
not important to the overall strength of our military is a mistake. 
This subcommittee funds the training facilities that help keep our 
service members the best-trained force in the world. This subcommittee 
funds the maintenance shops that keep our military hardware ready for 
use at a moments notice. And this subcommittee funds the construction 
of the medical facilities that care for our military personnel and 
their families. Simply put, the military construction budget is a vital 
part of maintaining our military's readiness.
    I would like to take a moment to express my personal gratitude to 
our servicemen and women for all they do to keep our Nation safe. In 
South Dakota, we are particularly proud of all those who serve our 
Nation in uniform. South Dakota is home to one active duty 
installation, Ellsworth Air Force Base. As a Lead Wing for the 
Aerospace Expeditionary Force, the 28th Bomb Wing at Ellsworth Air 
Force Base has played a leading role in the war on terrorism. In fact, 
the B-1s and their crews from Ellsworth have recently been deployed for 
possible action in the Middle East. I am very thankful for the men and 
women who are stationed at Ellsworth, and was pleased to have the 
opportunity recently to tour the facility and get a first-hand look at 
their operations and housing needs. I look forward to working with my 
colleagues to address these issues.
    I am also extremely grateful for the work of the men and women 
serving in the South Dakota National Guard, they are playing an 
increasingly important role in defending our Nation. South Dakota's 
Guard and Reserve units consistently rank in the highest percentile of 
readiness and quality of its recruits. This is demonstrated by the fact 
that 21 percent of the state's Guard and Reserve units have been called 
to active duty. The nation-wide average is only 16 percent, which 
places South Dakota as 11th in the Nation in the percentage of call-
ups. As we look to our Guard and Reserve components to supplement our 
active duty forces, we must also make corresponding investments in the 
infrastructure needed for their training and support.
    Given the strain we are putting on our military personnel--both 
active duty and reserve--and their families, I was surprised that the 
President's fiscal year 2004 budget request included a $1.5 billion cut 
for military construction activities. I am particularly concerned about 
the effect this cut will have on family housing. Madame Chairwoman, as 
a father with a son serving in the Army, I understand the importance of 
quality of life issues. All of the best weapons and all the best 
facilities in the world will be rendered useless if our military 
personnel and their families are not afforded a good quality of life.
    When asked, our military personnel consistently say good family 
housing is one the most important quality of life issues they face. 
Attempts to improve family housing are being made. For example, 
Congress is working with the Department of Defense to provide funding 
for a project to eliminate 163,000 inadequate family housing units by 
fiscal year 2007. As a part of this effort, the budget includes $16.24 
million to replace 75 family housing units at Ellsworth in fiscal year 
2004. However, improving family housing is in jeopardy if we do not 
provide the necessary funding. I was disappointed that the President's 
budget includes a $200 million cut in family housing spending. This is 
simply unacceptable. At a time in which we are asking our military to 
make even greater sacrifices, we should not be cutting funds for family 
housing.
    It is my hope that we will work together to restore this vital 
funding and recommit ourselves to ensuring quality housing for all of 
our military personnel. As we begin to work on the fiscal year 2004 
Military Construction Appropriation bill, I look forward to working 
with the members of this subcommittee to address the construction and 
infrastructure needs of our military. Once again, Madame Chairwoman, 
thank you for calling today's hearing. I look forward to working with 
you and to hearing from our witnesses.

    Senator Hutchison. If not, then I would ask Dr. Zakheim for 
his opening statement.

                    STATEMENT OF HON. DOV S. ZAKHEIM

    Dr. Zakheim. Thank you, Madam Chairwoman. First of all, I 
have a much longer statement. I would like to submit that for 
the record, please.
    Senator Hutchison. Without objection.
    Dr. Zakheim. Madam Chairwoman, Senator Feinstein, Senator 
Stevens, I am honored to present the military construction 
appropriations component of President Bush's fiscal year 2004 
defense budget request. I am joined today by my colleague, Ray 
DuBois, who will have a statement right after I make one.
    The new Department of Defense budget balances three 
competing demands; winning the war on terrorism, sustaining 
high quality people and forces, and transforming the American 
military and defense establishment. It funds the most pressing 
military construction and family housing requirements and keeps 
us on track to achieve the Department's ambitious facilities 
goals in the coming years.
    It will improve the quality of life for our military 
through better working and living conditions. It will support 
strong sustainment and modernization for existing facilities, 
fund critical new construction, replace facilities that are no 
longer economical to repair, address environmental compliance 
requirements, and continue caretaker efforts at closing bases.
    As you know, our military construction appropriations 
request totals $9 billion in budget authority, and it includes 
the funding for military construction, family housing, and base 
realignment and closure accounts. Our program funds 299 
construction projects at 195 locations. Complementing this $9 
billion request is $1 billion for restoration and modernization 
funded from the operations and maintenance, military personnel, 
and working capital funds accounts.
    The Department is also requesting $6.4 billion for 
facilities sustainment. Although we had to make some really 
difficult choices because of escalating demands resulting from 
the war on terrorism, especially within the operations and 
maintenance title, we were able to fund 94 percent of the 
Services' facilities maintenance requirements. That is slightly 
higher than our 93 percent achievement last year, and it is 
significantly higher than in fiscal year 2000, when the 
Department met only 78 percent of the Services' requirements. 
It is arguable that 94 percent is reaching up to where one 
would ideally wish to be.
    Fiscal year 2004 funding is sufficient to construct new 
facilities that are absolutely critical, most notably for new 
weapons systems being fielded. Our new construction funding and 
emphasis on sustainment, restoration, and modernization, which 
we call SRM, reflects a multiyear management plan to revitalize 
DOD facilities.
    A critical component of our plan is the congressionally 
approved 2005 BRAC round, which we hope will achieve a needed 
20 to 25 percent reduction in DOD infrastructure. With a 
successful BRAC round, our plan funding through fiscal year 
2008 should be sufficient to achieve by that date Secretary 
Rumsfeld's strong goals for facilities recapitalization. We 
remain at our objective of 67 years, on average, as that goal.
    The fiscal year 2004 request keeps the Department on track 
to eliminate inadequate family housing by 2007, except for the 
Air Force, which will not reach that goal at four stateside 
installations until 2008, and at its overseas bases until 2009. 
The Department's brightest housing story, which is not 
reflected in our raw budget numbers, is the ongoing and very 
substantial privatization of family housing units.
    As of February 2003, 18 privatization projects have been 
awarded. Last year, we estimated a DOD investment in 
privatization projects was leveraged at about 8 to 1. That is 
to say, for every dollar we spent, we would have had to spend 
$8 in order to achieve the same facility that we got through 
the privatization program. This year, based on our most recent 
analysis of awarded projects, we estimate that leverage factor 
to be 10 to 1. Applying a 10 to 1 leverage factor, this year's 
$346 million investment should yield nearly $3.5 billion in top 
quality housing.
    Let me summarize our privatization progress as projected 
through fiscal year 2004. Prior to fiscal year 2003, we 
provided 26,166 privatized units to our military families. That 
was based on an investment of $276 million. For fiscal year 
2003, we are on track to provide at least 30,200 privatized 
units, and my colleague Ray DuBois' office estimates that it 
could be more than 38,000 units, based on an investment of $240 
million.
    For fiscal year 2004, we expect to provide at a minimum an 
additional 36,262 privatized units at 22 military bases based 
on an investment of $346 million, almost all of it coming from 
prior year funding. Again, my colleagues consider this to be a 
conservative estimate. So by the end of fiscal year 2004, we 
expect to have provided at least 92,600 high quality privatized 
units based on a total investment of $862 million.
    I have to repeat that the projections I am giving you are 
conservative projections. The Office of the Deputy Under 
Secretary of Defense for Installations and Environment, namely 
Ray DuBois's office, believes--is convinced, I should say; 
believes is probably too soft a word--is convinced that the 
Department can and will do more, and my staff will certainly 
support efforts to do so.
    Looking ahead, our fiscal year 2004 budget request for 
privatization totals $174.9 million for 10 new privatization 
projects, totalling another 12,204 units. We plan to execute 
these projects in fiscal year 2004. However, if there are 
delays, we will carry the funds into our next fiscal year, when 
more privatization opportunities will become available.
    So to sum up, privatization is enabling the Department to 
multiply the benefits of its budget dollars and get more 
military families into top quality accommodations far more 
quickly than would otherwise have been the case. This is 
therefore no longer some side project, or merely an incremental 
project, as I think was originally envisaged, or somehow an 
add-on to what we were doing. This is now central to our entire 
effort.
    Let me turn next to a subject that I know all of you are 
terribly concerned about, and that is overseas construction. In 
keeping with congressional direction, new construction in 
overseas areas is being requested only where construction 
requirements are of high priority, when absolutely essential to 
U.S. overseas basing needs, and after all burden-sharing 
opportunities have been explored and found to be unworkable.
    We are currently conducting a critical review of fiscal 
year 2003 and 2004 projects in the European Command and Korea, 
and we have asked the new combatant commanders in those 
theaters to determine if projects previously requested continue 
to be supportable. At the appropriate time, we will brief you 
on the outcome of this review, and I may say that this will be 
sooner rather than later. We may request a budget amendment to 
address the fiscal year 2003 projects and reprioritize the 
fiscal year 2004 projects.
    Regarding construction for our chemical demilitarization 
program, the Department continues to make steady progress. The 
2004 budget includes $119.8 million for the construction of 
chemical demilitarization facilities. This funding is not in 
the $5 billion military construction request because the 
Department has consolidated all funding for the chemical 
demilitarization program, including construction, into a single 
account, and this is in conformity with the fiscal year 2003 
National Defense Authorization Act. The single account is 
called Chemical Agents and Munitions Destruction, Army, which 
is the DOD appropriations request under the ``Other DOD 
Programs'' title.
    In closing, I thank you for this opportunity to describe 
Department of Defense plans to sustain and revitalize its 
facilities. I thank you also for the ongoing support that we 
know we have been getting from you in the past and continue to 
get from you on some of the key and not uncontroversial issues 
that we have to face in this changing world environment.

                           PREPARED STATEMENT

    The President's fiscal year 2004 budget will enhance the 
quality of life of our Service members and our families, it 
will strongly support current requirements and missions, and it 
will enable the needed long term streamlining and 
recapitalization of DOD facilities. I urge your approval of our 
request. Our Department and I are ready to provide whatever 
details you may need to make these important decisions and 
again, I repeat, we want to work with you as we review some of 
the decisions we have already made.
    Thank you.
    [The statement follows:]

               Prepared Statement of Hon. Dov S. Zakheim

    Madam Chairwoman, Senator Feinstein, members of the committee, I am 
honored to present the Military Construction Appropriations component 
of President Bush's fiscal year 2004 defense budget request.
    The new Department of Defense (DOD) budget balances three competing 
demands: winning the war on terrorism, sustaining high quality people 
and forces, and transforming the U.S. military and defense 
establishment. It funds the most pressing military construction and 
family housing requirements and keeps us on track to achieve the 
Department's ambitious facilities goals in the coming years. It will 
improve the quality of life for our military through better working and 
living conditions. And it will support strong sustainment and 
modernization for existing facilities, fund critical new construction, 
replace facilities that are no longer economical to repair, address 
environmental compliance requirements, and continue caretaker efforts 
at closed bases.

                     FUNDING AND PROGRAM HIGHLIGHTS

    The Military Construction Appropriations request totals $9.0 
billion in budget authority and includes funding for Military 
Construction, Family Housing, and Base Realignment and Closure (BRAC) 
accounts. Our program funds 299 construction projects at 195 locations. 
The following table summarizes funding (budget authority in billions) 
in fiscal year 2003 and in our fiscal year 2004 request:

                                              [Billions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                    Fiscal year
                                                  2003 requested    Fiscal year       Change        Fiscal year
                                                        \1\        2003 enacted                   2004 requested
----------------------------------------------------------------------------------------------------------------
Military Construction...........................             4.2             5.7            -1.1             4.6
BRAC............................................             0.6             0.6            -0.2             0.4
                                                 ---------------------------------------------------------------
      Subtotal..................................             4.8             6.3            -1.3             5.0
                                                 ===============================================================
Family Housing..................................             4.2             4.2            -0.2             4.0
                                                 ---------------------------------------------------------------
      Total.....................................             9.0        \2\ 10.5            -1.5            9.0
----------------------------------------------------------------------------------------------------------------
\1\ Does not include $565 million requested in the Defense Emergency Response Fund (DERF). Of this request, $540
  million was appropriated in Military Construction accounts, partly accounting for the high fiscal year 2003
  enacted total.
\2\ Includes $157.6 million for Chemical Demilitarization construction. The fiscal year 2004 request of $119.8
  million for this construction is funded in the Chemical Agents and Munitions Destruction, Army account, which
  is in the DOD Appropriations request under the Other DOD Programs title.

    Complementing this $9.0 billion request is $1.0 billion for 
restoration and modernization (R&M) funded from Operation and 
Maintenance (O&M), Military Personnel, and Working Capital Funds 
accounts. The Department is also requesting $6.4 billion for facilities 
sustainment. Although we had to make difficult choices because of 
escalating demands resulting from the war on terrorism, especially 
within the O&M title, we were able to fund 94 percent of the Military 
Services' facilities maintenance requirements. That is slightly higher 
than our 93 percent achievement last year and significantly higher than 
in fiscal year 2000, when the Department met only 78 percent of the 
Services' requirements.
    Fiscal year 2004 funding is sufficient to construct new facilities 
that are absolutely critical, most notably for new weapon systems being 
fielded. Our new construction funding--and emphasis on Sustainment, 
Restoration, and Modernization (SRM)--reflects a multiyear management 
plan to revitalize DOD facilities. A critical component of our plan is 
the congressionally approved 2005 BRAC round, which we hope will 
achieve a needed 20-25 percent reduction in DOD infrastructure. With a 
successful BRAC round, our planned funding through fiscal year 2008 
should be sufficient to achieve--by that date--Secretary Rumsfeld's 
strong goals for facilities recapitalization.
    The fiscal year 2004 request keeps the Department on track to 
eliminate inadequate family housing by 2007--except that the Air Force 
will not reach that goal at four stateside installations until 2008 and 
at its overseas bases until 2009.
    The Department's brightest housing story--not reflected in our raw 
budget numbers--is the ongoing, substantial privatization of family 
housing units. As of February 2003, 18 privatization projects have been 
awarded. Last year we estimated that DOD investment in privatization 
projects was leveraged at about eight to one. This year, based on our 
most recent analysis of awarded projects, we estimate that leverage 
factor to be ten-to-one. Applying this 10:1 leverage factor, this 
year's $346 million investment should yield nearly $3.5 billion in top-
quality housing.
    Let me summarize our privatization progress, as projected through 
fiscal year 2004:
  --Prior to fiscal year 2003, we provided 26,166 privatized units to 
        our military families--based on an investment of $276 million.
  --For fiscal year 2003, we are on track to provide at least 30,200 
        privatized units--based on an investment of $240 million--and 
        perhaps more than 38,000 units.
  --For fiscal year 2004, we expect to provide at a minimum an 
        additional 36,262 privatized units at 22 military bases--based 
        on an investment of $346 million, almost all of it from prior-
        year funding. Again, my colleagues view this as a conservative 
        estimate.
  --Thus by the end of fiscal year 2004, we expected to have provided 
        at least 92,600 high quality privatized units--based on a total 
        investment of $862 million.
    Let me repeat, these projections for fiscal year 2003 and 2004 
privatization are conservative. In fact, the office of the Deputy Under 
Secretary of Defense (Installations and Environment) believes the 
Department can do more, and my staff will support efforts to do so.
    Looking ahead, our fiscal year 2004 budget request for 
privatization totals $174.9 million for 10 new privatization projects 
totaling 12,204 units. We plan to execute these projects in fiscal year 
2004. However, if there are delays we will carry funds into the next 
fiscal year, when more privatization opportunities will become 
available.
    In sum, privatization is enabling the Department to multiply the 
benefits of its budget dollars and get more military families into top 
quality accommodations much sooner than would otherwise be possible.

                     MILITARY CONSTRUCTION ACCOUNTS

    The following are key elements of our $5.0 billion fiscal year 2004 
request for Military Construction accounts:
    Active Forces and Defense-Wide.--The $4.1 billion budgeted for 
Active Forces and Defense-Wide programs is targeted towards improving 
readiness, quality-of-life, DOD work places; restoring the most 
seriously degraded facilities; and providing facilities to support new 
weapons systems. The request includes $1.2 billion for barracks 
projects; $1.1 billion for operational and training facilities; $518.9 
million for maintenance and production facilities; $229.7 million for 
community facilities; $161.7 million for medical facilities; $99.4 
million for utility facilities; $86.2 million for supply facilities; 
$82.2 million for administrative facilities, and $73.0 million for 
research and development facilities.
    Guard and Reserve Facilities.--The $369.6 million requested in 
fiscal year 2004 for the Reserve Components is balanced both to provide 
the necessary facilities to support current and new missions and to 
replace aging facilities that are no longer economical to repair. The 
request is $318.3 million less than the fiscal year 2003 enacted level, 
but $72.3 million higher than the fiscal year 2003 request of $297.3 
million. The fiscal year 2004 program includes 53 major construction 
projects as well as planning and design work and minor construction. 
Most projects are training centers, maintenance facilities, and 
operational facilities in support of the Reserve Components' mission.
    Quality-of-Life.--A significant portion of the military 
construction program--$1.2 billion--will be for new or improved 
barracks for unaccompanied military personnel. This will fund 46 
projects to construct or modernize barracks and to provide 
approximately 13,000 new or improved living spaces. The Army, Navy and 
Air Force are continuing to build to the ``1+1'' design (one soldier to 
a room with a shared bathroom) for personnel permanently assigned to a 
base. The Marine Corps is building to the ``2+0'' design (two EI-E3s to 
a room, each room with its own bathroom) in an effort to improve living 
conditions of Marines sooner than if they followed the 1+1 design 
standard. In addition, the fiscal year 2004 program will allow the 
Department to construct or modernize six schools for dependents, seven 
physical fitness centers, one child development center, and one 
community support center.
    Overseas Construction.--In keeping with congressional direction, 
new construction in overseas areas is being requested only where 
construction requirements are of high priority, when absolutely 
essential to U.S. overseas basing needs, and after all burden-sharing 
opportunities have been explored and found to be unworkable. The fiscal 
year 2004 program provides $703.7 million for specific overseas 
projects that meet these criteria. Of the $703.7 million, $128.7 
million is for Korea, $288.1 million for Germany, $155.0 million for 
Italy, $55.6 million for other European sites, and $76.3 million for 
various locations overseas. We are currently conducting a critical 
review of fiscal year 2003 and 2004 projects in the European Command 
and Korea and have asked the new Combatant Commanders in those theaters 
to determine if projects previously requested continue to be 
supportable. At the appropriate time, we will brief you on the outcome 
of this review and may request a budget amendment to address the fiscal 
year 2003 projects and reprioritize the fiscal year 2004 projects.
    Medical Projects.--Consistent with the Department's emphasis on 
quality-of-life improvements and readiness, the fiscal year 2004 budget 
reflects the high priority placed on health care. It requests $161.7 
million for seven medical projects, including $71.6 million for the 
fifth phase of a $215 million replacement hospital at Ft. Wainwright, 
Alaska; $21.5 million for a hospital addition at the U.S. Air Force 
Academy, Colorado; $6.4 million for a dental clinic replacement in 
Connecticut; $15.7 million for a medical/dental clinic renovation in 
Washington, D.C.; $9.0 million for a hospital energy plant addition at 
Walter Reed Medical Center in Washington, D.C.; $12.6 million for a 
dental clinic addition in Grafenwohr, Germany; and $24.9 million for a 
dental clinic replacement at Anderson AFB, Guam.
    Chemical Demilitarization Construction.--The Department continues 
to make steady progress in its chemical demilitarization efforts. To 
that end, the fiscal year 2004 budget includes $119.8 million for the 
construction of chemical demilitarization facilities. This funding is 
not in the $5 billion Military Construction request because the 
Department has consolidated all funding for the chemical 
demilitarization program, including construction, into a single 
account--comforming with the fiscal year 2003 National Defense 
Authorization Act. The single account is Chemical Agents and Munitions 
Destruction, Army--which is in the DOD Appropriations request under the 
Other DOD Programs title.
    Energy Programs.--This Administration is committed to energy 
conservation. Reflecting that commitment, the budget includes 
approximately $70 million in fiscal year 2004 for projects that will 
result in energy savings and support long-standing goals to reduce 
energy demand. Last year the Congress appropriated $34.5 million.
    Minor Construction/Planning and Design.--The request contains $75.5 
million in fiscal year 2004 for minor construction, alterations, and 
modifications to existing facilities. These funds are essential to meet 
unforeseen construction requirements that can impair the health, 
safety, and readiness of our forces. In addition, we are requesting 
$386.6 million for planning and design. These funds are urgently needed 
to complete the design of fiscal year 2005 projects and initiate design 
of fiscal year 2006 projects, and we seek your support for this request 
so we can proceed with these construction requirements.

                  BASE REALIGNMENT AND CLOSURE (BRAC)

    In the past, the BRAC process has been a major tool for reducing 
our domestic base structure. Between 1988 and 1995, four BRAC 
Commissions proposed the closure or realignment of 152 major 
installations and 235 smaller ones. Implementation of the last round of 
the four approved BRACs was completed on July 13, 2001. Once all 
funding is complete, the Department will have invested about $22.2 
billion and realized savings of about $37.7 billion for total net 
savings of about $15.5 billion (about $17 billion when inflated) over 
the implementation period from fiscal year 1990 to fiscal year 2001. 
Total annual savings after fiscal year 2002 are projected to be about 
$6 billion. For fiscal year 2003, the BRAC request was $545.1 million--
for environmental restoration and caretaker costs for bases closed 
under these previous rounds. The fiscal year 2004 request is $370.4 
million, a decrease of $173.7 million. This funding decrease indicates 
that bases continue to be cleaned efficiently to environmental 
standards, thereby speeding the transfer of property to redevelopment 
authorities.
    The fiscal year 2004 budget assumes that the additional round of 
base closures and realignment in 2005 will occur, as authorized in the 
fiscal year 2002 National Defense Authorization Act. The Department 
hopes that the round will achieve at least a 20-25 percent reduction in 
military infrastructure and savings of approximately $6.5 billion per 
year. Funds to begin implementation of the 2005 BRAC recommendations 
are currently programmed for fiscal year 2006.

                    NATO SECURITY INVESTMENT PROGRAM

    The NATO Security Investment Program (NSIP) request totals $169.3 
million in fiscal year 2004. This is the U.S. share (approximately 24.7 
percent) of the acquisition of NATO common use systems and equipment; 
construction, upgrade, and restoration of operational facilities; and 
other related programs and projects required in support of agreed NATO 
strategic concepts and military strategy. Anticipated recoupments from 
previously financed U.S. projects and available prior year funds of 
$14.4 million results in a total fiscal year 2004 program of $183.7 
million. This request is the minimum essential U.S. contribution for 
NATO's efforts. It will support both our strategic security and our 
economic interest in the European Theater.

                             FAMILY HOUSING

    Budget authority for fiscal year 2004 Family Housing totals $4.0 
billion--down from $4.2 billion requested in fiscal year 2003. This 
decrease is partly a result of our shrinking inventory of government-
owned housing due to privatization. This budget will enable us to 
construct, improve, privatize, operate, maintain, and lease family 
housing units. It will enable the Department to continue its aggressive 
effort begun last year to eliminate inadequate housing. The government-
owned units average about 35 years in age. These DOD-owned and leased 
units house approximately one-third of our military families.
    Our proposed increases in the Basic Allowance for Housing (BAH) 
will result in improved quality of housing for our personnel. Through 
BAH increases, the fiscal year 2004 budget will reduce out-of-pocket 
costs for personnel living off-base from 7.5 percent now to 3.5 percent 
in fiscal year 2004, and funding will phase out these costs completely 
by 2005. Prior to fiscal year 2001, service members had to absorb 18.8 
percent of these housing costs.
    Family Housing Construction.--The major emphasis of the Family 
Housing Construction Program is to replace units that are uneconomical 
to repair or renovate and to upgrade the remaining units. We are 
requesting $1.2 billion in fiscal year 2004 to build, replace, improve, 
or privatize 19,950 family housing units. This fiscal year 2004 request 
is $85.7 million lower than the amount enacted for fiscal year 2003, 
due to the President's initiative to privatize housing for our troops 
and families.
    Family Housing Operations.--The Department's fiscal year 2004 
family housing operation and maintenance request totals $2.3 billion, 
and the leasing request amounts to $526 million. Our family housing 
operations budget will ensure that houses in our inventory are in 
adequate condition for occupancy by our military families. The family 
housing portion of the operation and maintenance account funds a range 
of services and expenses necessary to support the DoD-owned and leased 
housing units. For example, the operation account funds items such as 
housing administration and management, basic support services, referral 
services, furnishings, and utilities, while the maintenance account 
funds routine maintenance and major repairs. The family housing leasing 
account provides housing at both domestic and foreign locations when 
the local economy cannot provide adequate support and when additional 
assets are needed to satisfy a housing shortfall.
    Family Housing Privatization.--The fiscal year 1996 National 
Defense Authorization Act provided innovative authorities that enable 
the Department to partner with the private sector to revitalize our 
housing inventory. These tools--loan and rental guarantees, direct 
loans and investments, differential lease payments, and the conveyance 
or leasing of land and facilities--have enabled the Department to tap 
private sector expertise and capital to provide quality housing more 
quickly than would be possible through traditional construction 
methods. Using the funds Congress appropriated directly into the Family 
Housing Improvement Fund (FHIF) or funds for construction projects that 
were later transferred into the FHIF, the Department is continuing its 
vigorous privatization program, as detailed earlier in this statement.

                               CONCLUSION

    In closing, I thank you for this opportunity to describe Department 
of Defense plans to sustain and revitalize its facilities. The 
President's fiscal year 2004 budget will enhance the quality of life of 
our service members and their families, strongly support current 
requirements and missions, and enable the needed long-term streamlining 
and recapitalization of DOD facilities. I urge your approval of our 
request. Our department and I are ready to provide whatever details you 
may need to make these important decisions. Thank you.

    Senator Hutchison. I am very pleased to hear you say that, 
Dr. Zakheim, because I think we need to have a more current 
assessment, and if then following a strategic plan you would be 
coming for reprogramming, I would certainly be pleased that you 
are more current for sure, so we will explore that a little 
more.
    Mr. DuBois.

                     STATEMENT OF RAYMOND F. DUBOIS

    Mr. DuBois. Thank you, Madam Chairman, Senator Feinstein, 
Senator Stevens, Senator Johnson--Madam Chairman, Senator 
Feinstein, Senator Johnson.
    I am honored to be here today again with my good friend Dov 
Zakheim to support him. He is the numbers guy. I will try to 
answer the programmatic and policy questions as best I can, and 
I will generously turn for the numbers questions to Dr. 
Zakheim.
    But the opportunity to discuss the President's 2004 budget 
in the military construction arena is extremely important to 
the two of us, as well as it is to Secretary Rumsfeld. Some of 
you have heard his testimony here on the Hill in the prior 
weeks, and he has addressed the issue of transforming our force 
structure; he has addressed the issue of transforming the way 
we do business to meet the new security challenges in the 21st 
Century.
    He also has made it clear that in order to achieve the 
transformation of both force structure and business operations 
in the Pentagon and the Department of Defense, we also have to 
pay attention to transforming our infrastructure.
    Now, similarly to the Department writ large, transforming 
the infrastructure is not an easy task. It is a very large 
portfolio, 620,000 facilities valued at over $600 billion, 
46,000 square miles of real estate, in excess of the size of 
the State of Pennsylvania, I might add. We have managed in that 
enormous real estate, over--we do manage over 300 threatened 
and endangered species, many, many important cultural 
resources, including 68 registered national historic landmarks 
and over 14,000 properties currently listed on, or eligible 
for, the National Register of Historic Places.
    Now, since Secretary Rumsfeld returned to the Pentagon 
after 25 years, he and I and others have adopted a different 
view of how we manage our portfolio, our installation and 
environment portfolio. It is, after all, more than just 
military construction, albeit--I know we are testifying in 
front of the Military Construction Subcommittee. I think it is 
important to understand the context within which we operate and 
how we try to manage this portfolio.
    Besides, of course, family housing, you have utilities and 
energy management, you have safety and occupational health 
funding, you have environmental funding, both cleanup and 
conservation and research and development. We have 
contributions from other appropriations accounts, such as the 
military personnel account, host nation support, 
nonappropriated funds, working capital fund, the operation and 
maintenance accounts and, as I mentioned, the R&D accounts.
    All of these budget requests are in support of the total 
portfolio, which is in excess of $20 billion, and if one were 
to add the base operations accounts, you are closer to $40 
billion. In short, as I suggested, one should not judge quality 
of life investments that the President is asking for solely on 
the basis of military construction requests.
    Now, the President and Secretary Rumsfeld at the outset of 
this Administration identified quite publicly military housing 
as a top priority. Sustaining that quality of life element is 
crucial, as we have found out, as has been proven time and time 
again, to recruitment and retention and the readiness of our 
military and, to that end, we are committed to providing 
quality housing. But quality housing, again, is not just 
military construction, albeit it is very important to sustain 
that particular appropriation, but one must always include how 
we are appropriating to increase our basic allowance for 
housing and also, again a MILCON-related issue, as Dr. Zakheim 
referred, how we are supporting the leverage factor in housing 
privatization.
    Now, just as a quick aside, the BAH, or basic allowance for 
housing, is an important fiscal year 2004 budget request 
because it continues to lower out of pocket expenses, out of 
pocket housing costs for members living off base from 7.5 
percent in 2003 to 3.5 percent in 2004, and by 2005, the 
typical member living in the private sector will have zero out 
of pocket housing expenses.
    Now, we believe our housing privatization efforts have 
gained traction. The calculus here, if you will, is the curve, 
the level of the curve is increasing. This is very important. 
As Dr. Zakheim implied, with the privatization awards through 
fiscal 2003 and by the end of fiscal 2004, the cumulative total 
within the Department will be in excess of 100,000 units 
privatized.
    Now, as I indicated, military construction is a critical 
tool to resolving our large inadequate housing problem, and in 
this budget we are requesting $4 billion in new budget 
authority for family housing construction and O&M. This funding 
will enable us to continue O&M and modernizing our family 
housing, helping us to meet the goal which the Secretary and 
the President moved up 3 years to 2007.
    But family housing is only one aspect of our housing 
requirement. Bachelor housing, or unaccompanied housing, also 
deserves our attention. In the 2004 budget, we have included a 
request to fund, fund to build or renovate over 12,000 what we 
call bed spaces, self-explanatory. The Services are making 
significant progress toward meeting, or have already met that 
other nasty issue pertaining to old housing in the bachelor 
environment, that was gang latrines.
    The Services in addition are currently preparing barracks 
master plans similar to the family housing master plan which 
the Congress required for managing their inventory, and I 
encourage you to ask the succeeding panel, the three Assistant 
Service Secretaries, for their views in this regard. We 
strongly, at the OSD level, the Defense Department level, 
support barracks privatization, and we are encouraging the 
Services to consider privatization as an alternative to improve 
unaccompanied housing.
    The sustainment and recapitalization accounts are also 
crucial. We have focused on improving the work environment 
through the proper sustainment of our facilities and 
recapitalizing them. We have seen through the installations 
readiness report, similar to unit readiness reports, that the 
quality of the infrastructure directly affects those units' 
readiness.
    Full or near full sustainment, as Dr. Zakheim indicated, 
improves performance and reduces life cycle cost. We must 
maximize the return on capital investments, new construction, 
and therefore repairing and replacing facilities once they have 
deteriorated becomes for us, and for you in the Congress, a 
much more expensive proposition.
    Sustainment alone, however, is not enough. Even well 
sustained facilities eventually wear out or become obsolete, 
and yes, Madam Chairman, we have a number of facilities in that 
condition, so in addition to sustainment we must restore and 
modernize. Some of this recapitalization is critical and cannot 
wait. Our request for $3.4 billion for restoration and 
modernization maintains our commitment to improving the work 
environment while weighing the requirements against other 
departmental priorities.
    In closing, I think it is important that we recognize that 
the defense facilities strategic plan and our installation 
management approach we believe provides a framework that 
enables us to focus on our overreaching goal, which is taking 
care of our folks, taking care of our facilities, and enhancing 
our business processes. Members of this subcommittee, under the 
chairmanship of both Senator Feinstein and now Senator 
Hutchison again, have been absolutely instrumental in 
refocusing attention on appropriate funding for recapitalizing 
our infrastructure and sustaining our quality of life 
improvements.

                           PREPARED STATEMENT

    Secretary Rumsfeld and Secretary Zakheim and I appreciate, 
sincerely appreciate the strong support from this Military 
Construction Subcommittee, and we look forward to working with 
you as we transform that infrastructure.
    Thank you, Madam Chairman.
    [The statement follows:]

                Prepared Statement of Raymond F. DuBois

    Mr. Chairman and distinguished members of this Subcommittee, I 
appreciate the opportunity to discuss the President's Budget request 
for fiscal year 2004 and the plan of the Department of Defense for 
improving its facilities. The Department is transforming its force 
structure to meet new security challenges and transforming the way it 
does 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.
    To prevail in the Global War on Terrorism and to prepare for future 
threats to American security, the Secretary of Defense has argued 
forcefully that we must transform the military. Our military 
capabilities must become more lethal, agile, and prepared for surprise. 
This transformation was under way before the attacks on September 11th. 
But, let us be clear, transformation is about more than new weapon 
systems, doctrinal innovation, and the employment of technology; it 
also is about changing our approach to the fundamental business 
practices and infrastructure of the Department of Defense.
    The Department currently manages more than 620,000 facilities, 
valued at around $600 billion, and over 46,000 square miles of real 
estate. Within that portfolio of real estate and facilities, we manage 
threatened and endangered species, diverse geological features, and 
important historical resources, including 68 registered National 
Historic Landmarks and over 14,000 properties currently listed on, or 
eligible for, the National Register of Historic Places.
    The Defense Facilities Strategic Plan is our roadmap for managing 
this portfolio and outlines our long-term plan--healthy, productive 
installations and facilities that are available when and where needed 
with capabilities to support current and future military requirements. 
In recent years, we have developed models to more accurately determine 
our requirements and a sound management plan for getting our facilities 
back on track.
    Today, I will address our accomplishments and future plans for 
restoring readiness to our facilities by taking care of our people, 
taking care of what we own, improving our business practices, and 
transforming our bases and infrastructure.

                          THE ROAD TO RECOVERY

    Military installations and facilities are an integral component of 
readiness. Installations are the ``platforms'' from which our forces 
successfully deploy to execute their diverse missions. Over many years, 
these ``platforms'' have deteriorated. For instance, each year the 
Major Commands of the Military Services rate the readiness of their 
facilities by category. In the 2001 Installations' Readiness Report 
(IRR), the Component Commanders--the force providers--collectively 
rated 68 percent of facilities categories C-3 (have serious 
deficiencies) or C-4 (do not support mission requirements), a slight 
improvement from the 69 percent rate in 2000. The 2002 IRR is roughly 
the same as 2001. Investments made since fiscal year 2002 will take 
several years before the affects are apparent. We are in the process of 
reversing the decay, but much remains to be done. From fiscal years 
2002 to 2004, we will have put over $28 billion in the sustainment and 
revitalization of our facilities, and we are beginning to see the 
results.
    The installations management approach of the Department led us to a 
different way to view our installations and environmental portfolio. 
This portfolio is more than simply military construction and family 
housing. It also includes environmental funding and other contributions 
from appropriations such as military personnel, host nation support, 
non-appropriated funds and working capital funds, in addition to 
operations and maintenance (O&M). This funding sustains our facilities 
through day-to-day maintenance and contributes to our restoration and 
modernization program. The fiscal year 2004 budget request includes 
over $19 billion in fiscal year 2004 to support our entire portfolio.
    The Facilities Sustainment program funds the normal and scheduled 
maintenance and repairs for the inventory, using operations and 
maintenance funds primarily, supplemented by other sources. Sustainment 
preserves the inventory and allows it to reach its expected service 
life. For the O&M-funded sustainment requirement, we are sustaining our 
facilities at 94 percent of commercial benchmarks, slightly over the 93 
percent requested last year. We plan to achieve full sustainment not 
later than fiscal year 2008.
    Our Facilities Restoration and Modernization program repairs or 
replaces damaged or obsolete facilities and implements new or higher 
standards where necessary. The Restoration and Modernization program 
applies both military construction and operations and maintenance 
appropriations to recapitalize our facilities and housing.
    Our fiscal year 2004 funding request allows us to achieve a 
recapitalization rate of 148 years for the Military Departments, down 
from 149 years in fiscal year 2003, meaning the Department renovates or 
replaces its facilities an average of every 148 years. We now include 
the Defense Logistics Agency, DOD Education Activity and Tricare 
Medical Activity in the calculations, resulting in a corporate rate of 
136 years for fiscal year 2004. Our goal remains a 67-year 
recapitalization rate, consistent with commercial practices, and our 
current program would achieve that level in fiscal year 2008.
    In the near term, obsolete facilities pose risks to mission 
effectiveness, safety, quality of life, productivity of the workforce, 
and cost efficiencies, but these risks are mitigated to some degree by 
eliminating facilities through Base Realignment and Closure (BRAC), 
facilities demolition programs, and an aggressive acceleration of 
recapitalization rates in the future years defense program.
    Facilities revitalization will take time. However, the indicators 
are trending in the right direction, showing that we are indeed making 
progress. With continuing attention to our Defense Facilities Strategic 
Plan and current planning guidance, we can achieve our goal.

     COMPARISON OF MILITARY CONSTRUCTION AND FAMILY HOUSING REQUESTS
      [President's budget in millions of dollars--budget authority]
------------------------------------------------------------------------
                                                   Fiscal year
                                       ---------------------------------
                                         2003 request     2004 request
------------------------------------------------------------------------
Military Construction.................          $4,054          $4,480
NATO Security Investment Program......             168             169
Base Realignment and Closure..........             545             370
Family Housing Construction/                     1,341           1,237
 Improvements.........................
Family Housing Operations &                      2,877           2,780
 Maintenance..........................
Homeowners Assistance.................               0               0
Family Housing Improvement Fund.......               2               0.3
                                       ---------------------------------
      Total...........................           8,987           9,036
------------------------------------------------------------------------

                       TAKING CARE OF OUR PEOPLE

    Our priority is to support the warfighter, ensure superior living 
and working conditions and enhance the safety of the force and quality 
of the environment. At the outset of this Administration, the President 
and Secretary Rumsfeld identified military housing as a top priority 
for the Department. Sustaining the quality of life of our people is 
crucial to recruiting, retention and readiness. To that end, the 
Department is committed to providing quality housing using the 
established three prong approach--increased basic allowance for housing 
(BAH), increased housing privatization, and sustained military 
construction for housing.
    In January 2001, the Department had about 180,000 inadequate family 
housing units. Today, through housing privatization and our military 
construction program, we have reduced that number to roughly 163,000. 
This number will continue to come down as we pursue the Secretary's 
goal of eliminating inadequate housing by 2007.
    We remain committed to reducing--and then eliminating--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 2004 budget request 
includes necessary funding to continue lowering out-of-pocket housing 
costs for members living off-base from 7.5 percent in 2003 to 3.5 
percent in 2004. By 2005, the typical member living in the private 
sector 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. Our housing privatization program is crucial to 
providing a decent quality of life for our service members.
    We believe our housing privatization efforts have gained 
``traction'' and are achieving success. As of February 2003, we have 
awarded 17 projects, which include 26,100 military family housing 
units. We also have two awards in the final stages--Marine Corps Air 
Station Beaufort/Marine Corps Recruitment Deport Parris Island, South 
Carolina; and Kirtland AFB, New Mexico--which we expect to award next 
month. We project more than 20 more privatization awards each in fiscal 
years 2003 and 2004--bringing our cumulative total to about 102,000 
units privatized.
    Projects at five installations have their renovations and 
construction completed: Naval Air Station Corpus Christi/Naval Air 
Station Kingsville, Texas, Naval Station Everett Phases I and II, 
Robins Air Force Base, Georgia, Lackland Air Force Base, Texas, and 
Dyess Air Force Base, Texas. During fiscal year 2004, we expect several 
other bases to have their renovations and construction completed or 
close to completion, including those at Fort Carson, Colorado and Naval 
Complex New Orleans, Louisiana.
    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 17 projects 
awarded thus far reflect an average leverage ratio of over 10 to 1. 
Tapping this demonstrated leveraging potential through housing 
privatization has permitted the Department, in partnership with the 
private sector, to provide housing for about $264 million of military 
construction funding that would otherwise have required over $2.7 
billion for those 17 projects if the traditional military construction 
approach was utilized.
    More important than the raw numbers is the reaction of uniformed 
personnel and their families to the housing developed under the 
initiative. It is overwhelmingly positive based on the high quality 
product produced by the projects.
    Military construction is another tool for resolving inadequate 
military housing. In fiscal year 2004, we are requesting $4.0 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--3 years earlier than 
previously planned.
    We also are improving housing for our unaccompanied service members 
through increases in bachelor housing funding. The Department's fiscal 
year 2004 budget request includes funding that would build or renovate 
over 12,000 bed spaces. The Services are making significant progress 
toward meeting, or have already met, the Department's previous goal for 
eliminating gang latrine conditions for permanent party unaccompanied 
members. Additionally, the Services are currently preparing Barracks 
Master Plans, similar to the Family Housing Master Plan, for managing 
their inventory and outlining their plans for eliminating inadequate 
permanent party barracks by 2007.
    As we gain momentum in privatizing family housing, we also are 
exploring and encouraging the possibility of privatizing barracks that 
support our unaccompanied service members. The Department strongly 
supports barracks privatization and has attempted to overcome barriers 
that impede our ability to execute a program.
    The Secretary of the Navy was authorized by the National Defense 
Authorization Act for fiscal year 2003 to execute a pilot program for 
barracks privatization that includes authority for the payment of 
partial basic allowance for housing. The Navy considers barracks 
privatization a key part of their ``Homeport Ashore Initiative''. We 
have discussed with the Navy some of their plans in this area, and we 
expect to review a pilot proposal later this year.
    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. Currently, 
two-thirds of military families reside in private sector housing, and 
that number will increase as we privatize the existing inventory of 
housing units owned by the Military Departments. 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, recently 
approved by the Deputy Secretary, 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 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.

                       TAKING CARE OF WHAT WE OWN

Sustaining, Restoring and Modernizing Facilities
    The Department's program for modernizing military housing is well 
underway. We are also focused upon improving the work environment 
through proper facilities sustainment and recapitalization. As we have 
seen through the Installations' Readiness Report, the quality of our 
infrastructure directly affects readiness. Our first priority is to 
fully sustain our facilities, and we have made significant progress in 
this area. Full sustainment improves performance and reduces life cycle 
costs, maximizing the return on our capital investments. Repairing and 
replacing facilities once they have deteriorated is more expensive. Our 
recent investments in sustainment and recapitalization, along with 
continued investment over time, will restore readiness, stabilize and 
reduce the average age of our physical plant, reduce operating costs 
and maximize our return on investment.
    Despite the challenges, we have preserved funding for facilities 
sustainment and restoration and modernization. The Department is 
requesting $6.4 billion in fiscal year 2004 for sustainment. The budget 
funds sustainment at 94 percent of standard benchmarks. That is not an 
average of the Military Departments--it is the floor we established for 
all the Military Departments, an improvement over last year, and we 
have a plan to achieve full sustainment by 2008.
    But sustainment alone is not enough. Even well-sustained facilities 
eventually wear out or become obsolete, and we have a lot of facilities 
in that condition now. So, in addition to sustainment, we must also 
restore and modernize facilities. Some of this recapitalization is 
critical and cannot wait. Our fiscal year 2004 funding request of $3.4 
billion for restoration and modernization maintains our commitment to 
improving the work environment while weighing the requirements against 
other Departmental priorities.
    We measure the rate of restoring and modernizing against an average 
expected service life of our inventories, which we calculate at 67 
years. The fiscal year 2004 Military Department recapitalization rate 
is about 148 years, compared with 149 years for fiscal year 2003. With 
the Defense Agencies included, our corporate rate for fiscal year 2004 
is down to 136 years, an improvement over last year's request. Our 
program funds the 67-year rate in fiscal year 2008, and between now and 
then we plan to follow a smooth glide path to that level. This past 
year, we thoroughly reviewed and standardized our Facilities 
Recapitalization Metric, so we can track and report on our progress 
toward the goal with confidence.

Improved Facilities Footprint Management
    We continue to explore methods for reducing our footprint and 
better utilizing existing facilities. Demolition is a valuable tool for 
eliminating excess and obsolete facilities. From fiscal years 1998 
through 2002, the Services demolished and disposed of over 75 million 
square feet of unnecessary, deteriorated facilities, resulting in 
significant cost avoidance in sustainment and restoration and 
modernization expenses to the Department. We expect to exceed our goal 
of demolishing 80.1 million square feet by the end of 2003, and we are 
requesting about $80 million in fiscal year 2004 to carry on this 
successful program.
    While we use demolition for excess facilities, the enhanced-use 
leasing program enables us to make better use of underutilized 
facilities. As we transform the way we do business, the Department 
remains committed to promoting enhanced-use leasing where viable. This 
type of lease activity allows us to transform underutilized buildings 
and facilities, with private sector participation, into productive 
facilities. Examples of these opportunities include, but are not 
limited to, the creation of new or joint-use opportunities for office 
space, warehouses, hotels/temporary quarters, vehicle test tracks, wind 
tunnels, energy generation plants, recreational playgrounds, and sports 
venues. Additional benefits can accrue by accepting base operating 
support or demolition services as in-kind consideration; thereby, 
reducing the appropriations needed to fund those activities. Finally, 
enhanced-use leasing provides opportunities to make better use of 
historic facilities and improve their preservation as both cash and in-
kind consideration may be used for those purposes. The Army is a leader 
in this regard, with pilot projects being discussed at Fort Sam Houston 
and Walter Reed Army Medical Center.

Improving Energy Management
    As we sustain, restore and modernize facilities, part of our focus 
is to reduce our energy consumption and associated costs. To accomplish 
this, the Department is developing a comprehensive energy strategy that 
will continue to optimize utility management by conserving energy and 
water usage, improve energy flexibility by increasing renewable energy 
usage and taking advantage of restructured energy commodity markets as 
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 will save the Department funds that can be better invested in 
readiness, facilities sustainment, and quality of life.
    Our efforts to conserve energy are paying off. In fiscal year 2002, 
military installations reduced consumption by 3.1 percent, resulting in 
a 6 percent decrease in the cost of energy commodities from the 
previous year. With a 25.5 percent reduction in fiscal year 2002 from a 
1985 baseline, the Department is on track to achieve the 2010 energy 
reduction goal for buildings of 35 percent per square foot.
    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 2004 budget contains $69.5 million for the 
Energy Conservation Investment Program (ECIP) to implement energy 
saving measures at our facilities. This is a 39 percent increase from 
fiscal year 2003 budget request of $50 million.
    The Department will also continue to pursue renewable energy 
technologies such as fuel cells, geothermal, wind, solar, and purchase 
electricity from these environmentally-friendly renewable sources when 
it is life-cycle cost-effective. In fiscal year 2002, military 
installations used 4.5 trillion British Thermal Units of renewable 
energy, doubling the amount from the previous year. The pursuit of 
renewable energy technologies is critical to the Department's and 
Nation's efforts in achieving energy flexibility.
    A key part of our energy program is our utilities management 
efforts, focused on modernizing systems through utilities 
privatization. By incorporating lessons learned and industry feedback, 
the Department has strengthened efforts to take advantage of private 
sector innovations, efficiencies and financing. We have over 2,600 
systems with a plant replacement value of approximately $50 billion. 
Thirty-eight (38) systems have been privatized using the utilities 
privatization authority in current law. Another 337 systems were 
privatized using other authorities, and privatization solicitations are 
ongoing for over 850 utility systems.
    The Services plan to request privatization proposals for the 
remaining 450 systems over the next 2 years. We are on track to 
complete privatization decisions on all the available water, sewage, 
electric and gas utility systems by September 2005. Congressional 
support for this effort in fiscal year 2004 is essential to maintain 
the procurement momentum and industry interest, as well as maximize the 
benefits of modernizing the Department's utility infrastructure.

Improving Environmental Management
    The Department continues to be leaders in environmental management. 
We are proud of our environmental program at our military installations 
throughout the world, and we are committed to pursuing a comprehensive 
environmental program.

                ENVIRONMENTAL PROGRAM--SUMMARY OF REQUEST
      [President's budget in millions of dollars--budget authority]
------------------------------------------------------------------------
                                                    Fiscal year
                                         -------------------------------
                                           2003 request    2004 request
------------------------------------------------------------------------
Cleanup.................................          $1,278          $1,273
BRAC Environmental \1\..................             519             412
Compliance..............................           1,701           1,603
Pollution Prevention....................             247             173
Conservation............................             152             153
Technology..............................             205             191
                                         -------------------------------
      Total.............................           4,102           3,805
------------------------------------------------------------------------
\1\ Funding levels reflect total requirement (TOA).

    In fiscal year 2004, we are requesting $3.8 billion for 
environmental programs. This includes $1.3 billion for cleanup, $0.4 
billion for BRAC environmental, $1.6 billion for compliance; about $0.2 
billion for pollution prevention, and about $0.2 billion for 
conservation.
    By the end of fiscal year 2002, we reduced new environmental 
violations by 77 percent from the 1992 baseline. The Department 
continues to reduce the percent of enforcement actions received per 
inspection, with roughly one enforcement action per 12.5 inspections, 
down from one for every three inspections in 1994. We have also 
improved our treatment of wastewater and the provision of drinking 
water for those systems we control.
    We reduced the amount of hazardous waste we generate by over 64 
percent since 1992, and we are avoiding disposal costs by diverting 
non-hazardous solid waste from landfills by recycling and other 
approved methods. These pollution prevention techniques continue to 
save the Department needed funds as well as reduce pollution. As an 
example, the Department saved about $95 million in disposal costs in 
2001. We have increased the number of alternative fueled vehicles that 
we use in order to reduce the demand for petroleum, and we continue to 
reduce the number and amount of toxic chemicals we release through our 
industrial processes and training operations.
    The Department's commitment to its restoration program remains 
strong as we reduce risk and restore property for 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 face. Conducting environmental 
restoration activities at each site of the installations 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.
    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 BRAC 
installations, final remedy for 90 percent of the sites was in place by 
the end of fiscal year 2001, and we anticipate completion by the end of 
fiscal year 2005.
    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 as best as we 
can for combat. UXO on ranges is a result of our military preparedness 
training activities. However, we are actively seeking 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.
    For the areas other than operational ranges which have a UXO 
challenge--our Formerly Used Defense Sites, BRAC installations, and 
closed ranges on active installations--we are currently developing the 
reports requested by Congress in the National Defense Authorization Act 
for fiscal year 2002. We will have an inventory of our munitions 
response sites, cost estimates, a comprehensive plan, and will define 
the current technology baseline with a roadmap for future action.
    In addition, we are developing new technologies and procedures 
through the Environmental Security Technology Certification Program and 
the Strategic Environmental Research and Development Program. These, 
along with the Army and Navy's Environmental Quality Technology 
Program, have enabled us to make tremendous strides for realizing our 
goals of reducing cost, completing projects sooner and sustaining the 
safety of our communities.
    As you may know, the Defense Science Board (DSB) assessed the UXO 
issue in 1998. Last year, the Under Secretary of Defense for 
Acquisition, Technology and Logistics commissioned a new DSB Task Force 
to look at this entire issue. Their report is due for completion this 
summer, and we look forward to acting on their recommendations.
    Beyond the dollars, we have implemented a new environmental 
management systems (EMS) policy as a part of the Administration's 
emphasis that enables us to train and operate more effectively and 
efficiently, while reducing our impact on the environment. Through this 
``systematic approach,'' we can continually improve both our mission 
performance and our environmental management. We are implementing this 
across all military missions, activities and functions to modernize the 
way we manage the environment entrusted us by the American people, and 
we are on-track to achieve the EMS goal established in Executive Order 
13148. We hope to reach the level where our mission activities are so 
well managed from an environmental perspective that our environmental 
impacts would be virtually eliminated and remove our liabilities from 
long-term compliance bills. EMS is the systematic approach to achieve 
this goal and resolve the perceived conflict between mission and 
environmental stewardship.
    We also look to our stakeholders and government agencies to help us 
better identify our environmental management issues. On February 5th, 
we hosted a defense environmental forum at the National Defense 
University. At the meeting, recognized leaders from Federal, tribal, 
state and local governments, the private sector, academia, the 
scientific and research community, and other non-governmental 
organizations exchanged insights on pressing environmental issues 
facing the Department. Our objective was to identify and diagnose the 
major issues associated with the twin imperatives of military readiness 
and environmental protection. This new initiative will improve our 
communication with stakeholders and enable us to more effectively 
manage our mission and environmental challenges.
    Another significant environmental accomplishment is in the area of 
natural resources. The Department has been managing natural resources 
for a long time--we currently manage more than 25 million acres. In 
October of 2002, we issued a new policy for ``Integrated Natural 
Resource Management Plans'', or ``INRMPS'', used by the Department to 
protect natural resources on our installations. Previous guidance 
emphasized early coordination with all stakeholders, the U.S. Fish and 
Wildlife Service and appropriate state agencies to ensure that we meet 
the conservation requirements of the Sikes Act and focus on the 
preservation and maintenance of healthy and fully functional 
ecosystems. The new guidance emphasizes coordination requirements, 
reporting requirements, implementation requirements, and other 
miscellaneous requirements. The miscellaneous requirements highlight 
the need to ensure that we manage our assets in accordance with the 
INRMPs to ensure that there is no net loss in the capability of 
military installation lands to support the military mission of the 
installation, in this case test and training opportunities, as well as 
preserving the natural resources entrusted to us.
    We have completed integrated natural resource management plans at 
the vast majority of bases. We also are pursuing the completion of 
integrated cultural resource management plans at our installations to 
ensure that we identify and preserve historical treasures. This will 
allow us to test and train to maintain a ready military force without 
fear of endangering our heritage. We acknowledge there are still some 
very complex and difficult challenges, but we are making progress.

                  PRESERVING RANGES AND TRAINING AREAS

    The Department takes seriously the fact that an important part of 
our national defense mission is to defend and preserve the natural 
environment entrusted to us. Our personnel take understandable pride in 
their environmental record--a record with documented examples of 
impressive management of critical habitats and endangered species. 
However, the impacts on readiness must be considered when applying 
environmental regulations to military-unique training and testing 
activities. The ever-growing problem of ``encroachment'' on our 
military training ranges is an issue for us here at home, as well at 
our overseas training locations.
    We are addressing the effects that encroachment pose to our ability 
to ``train as we fight.'' This effort, known as the Readiness and Range 
Preservation Initiative, is the Department's broad-based effort to find 
solutions to a variety of pressures on our test and training lands.
    This past year, Congress enacted two legislative provisions that 
allow us to cooperate more effectively with local and state 
governments, as well as private entities, to plan for smart growth 
surrounding our training ranges. These provisions allow us to work 
toward preserving habitat for imperiled species and to limit 
development to land uses that are compatible with our training and 
testing activities. Congress also provided the Department a temporary 
exemption from the Migratory Bird Treaty Act for the incidental taking 
of migratory birds during military readiness activities. These were 
three of the eight provisions the Department sought approval on as part 
of our Readiness and Range Preservation Initiative in the National 
Defense Authorization Act for fiscal year 2003.
    Today, we are developing a long-term process to address 
encroachment by creating a multi-year, comprehensive program to sustain 
training and testing. This program will pursue not only legislative 
clarification but also regulatory and administrative changes, internal 
policy and procedure adjustments, and an active stakeholder engagement 
strategy.
    The Administration will seek legislative clarification where laws 
are being applied beyond their original legislative intent. We believe 
that modest legislative reforms are needed to ensure the preparedness 
of this Nation's Armed Forces, and we will continue to work with 
Congress to seek enactment of legislation to address these concerns.
    We are in the process of evaluating all of the circumstances that 
create problems for our test and training ranges. Some of these may be 
solved with administrative or regulatory changes. We are working with 
the Military Services, other Federal agencies, tribes, states and local 
communities to find ways to better balance military, community and 
environmental needs.
    The Department also is developing a suite of internal policy and 
procedure adjustments, the capstone of which is a new Department of 
Defense Directive recently signed by the Deputy Secretary to ensure 
long-range, sustainable approaches to range management. In addition, we 
intend to strengthen and empower management structures to deal with 
range issues. We also have taken a pro-active role to protect bases 
from urbanization effects by working with local planning and zoning 
organizations and other stakeholders.
    The actions taken by Congress last year will greatly assist in this 
process by allowing us to work toward preserving habitat for imperiled 
species and to limit development to land uses that are compatible with 
our training and testing activities. The Services will identify 
opportunities to utilize these new authorities. We plan to convene a 
workshop early this year with key land conservation organizations and 
representatives from state and local communities to develop an 
implementing Memorandum of Understanding and sample cooperative 
agreements that can be utilized under the new authorities.
    The Department also is planning to address the long-term 
sustainment process by reaching out to and involving other 
stakeholders. We need to improve the understanding of readiness needs 
among affected groups such as state and local governments, and non-
governmental organizations. We must establish dialogue and form 
partnerships with these groups to reach our common goals by focusing on 
areas of common interest. This will enable us to take a proactive 
stance against encroachment and protect our bases into the future.

                      IMPROVING BUSINESS PRACTICES

Adopting a Common Approach to Managing Real Property
    We are undertaking an aggressive initiative to make management of 
our real property more efficient and effective. This project is called 
the Real Property Enterprise Solution (RPES), and is part of the larger 
Financial Management Modernization Program.
    Our vision is to improve the accuracy, reliability, timeliness, and 
usefulness of real property information necessary by all levels of 
decision-making to support the Department's overall mission, resources, 
accounting, accountability and reporting requirements. We will 
accomplish our vision through development and implementation of a 
standard, Defense-wide real property enterprise architecture resulting 
in: standard business practices and processes, standard categorization, 
definitions and terminology and a standard system (or systems).
    We are teaming with the Office of the Under Secretary of Defense 
(Comptroller) to develop and update our plans. We are 80 percent 
finished with our enterprise architecture for real property. An 
enterprise architecture catalogs the current real property activities 
and leads to identification of the optimal business processes and 
technical standards, with a transition plan showing how to get from the 
current to the optimal state, recognizing any business constraints. By 
the end of this calendar year, we plan to complete the market research 
and solution assessment and expect field a pilot system or systems in 
calendar year 2005 for a significant portion of the real property 
business area.
    As part of the reform of the Department's business practices, we 
developed the Facilities Sustainment Model (FSM) and the Facilities 
Recapitalization Metric (FRM). The Facilities Sustainment Model and the 
Facilities Recapitalization Metric, based on standard commercial 
processes, improve the way we inventory and account for facilities and 
more clearly defines our facilities sustainment and recapitalization 
requirements. The Services have used FSM to define their sustainment 
requirements since fiscal year 2003, and the Defense Agencies were 
included for fiscal year 2004.
    This past summer we thoroughly reviewed and standardized the FRM, 
so we can track and report on our progress toward our recapitalization 
goals with confidence. The revised metric is now used throughout the 
Department to calibrate the rate at which we restore and modernize 
facilities and to ensure that all elements of the Department are moving 
forward toward our corporate goals. With these two new tools, we have 
finally established a common requirements generation process and a 
sound method for forecasting funding requirements.
    In developing these models, we also changed the program element 
(PE) structure for fiscal year 2002 budget execution, doing away with 
the real property maintenance PEs, and creating sustainment and 
restoration/modernization (recapitalization) PEs. These newly defined 
program elements align our financial management and accounting cost 
elements with this new, transformed management structure and permit 
tying dollars and budgets to performance.

Reducing Cycle Time
    An imperative within the acquisition community is to reduce cycle 
time while also reducing total ownership costs. In the Installations 
and Environment community, we viewed this as a challenge to improve 
business processes, enabling resources--both money and people--to be 
better used elsewhere.
    We established an integrated product team (IPT), with the Services 
and Defense Agencies, to identify alternatives to reduce cycle time for 
military construction. Facility construction typically takes about 5 to 
8 years from requirements determination to beneficial occupancy. We 
researched and adapted private sector practices, where possible, but in 
some cases we may need legislative change. We will urge your 
consideration of such proposals should they be necessary.

Focusing on Core Competencies
    As we consider approaches to better utilize our personnel, 
competitive sourcing provides a methodology for focusing on our core 
capabilities. The Department will obtain needed products or services 
from the private sector where it makes sense. We support the 
Competitive Sourcing Initiative in the President's Management Agenda. 
To meet the target initiated by the Office of Management and Budget, 
the Department has initiated six pioneer projects as alternatives to A-
76. The Army's ``Third Wave'' is an example of our new aggressive 
approach to identify the best way to do business. We will also announce 
an additional 10,000 traditional A-76 initiatives this fiscal year. The 
Services will submit their plans to meet the President's management 
initiative objectives through the use of A-76 and alternatives in their 
fiscal year 2005 Program Objectives Memoranda submissions.
    Consistent with our approach of focusing on our core competencies, 
the Department believes our security guard functions could be better 
accomplished by contractors, freeing our military and civilians to 
focus on other tasks that will enable us to fight and win wars. We 
remain supportive of repealing the restriction in 10 U.S.C. 2465 that 
prohibits the Department from contracting for security guards. The 
current provision inhibits the Department's ability to quickly increase 
or decrease the number of security guards, as threat conditions 
warrant. This provision would provide increased flexibility as the 
Department continues to enhance anti-terrorism/force protection 
measures.

                 TRANSFORMING BASES AND INFRASTRUCTURE

    One of the most effective tools we have to transform the military 
is through the BRAC process. From 1988 through 1995, approximately 387 
closure or realignment actions were approved, and the Department has 
completed each action within its respective statutory deadline. We have 
rationalized much of our infrastructure through the previous BRACs--but 
much more needs to be done. We believe the Department has anywhere from 
20 to 25 percent excess capacity in its facilities. By removing that 
excess capacity we hope to save several billion dollars annually. For 
instance, prior BRAC actions have resulted in net savings to the 
Department--to the taxpayer--of approximately $17 billion, with annual 
recurring savings of approximately $6 billion.
    Continuing to operate and maintain facilities we no longer need 
diverts scarce resources that could be better applied to higher 
priority programs--like improving readiness, modernization and quality 
of life for our Service members. We must utilize every efficiency in 
the application of available resources to ensure we maintain just what 
we need to accomplish our missions. In the wake of the attacks of 
September 11, 2001, the imperative to convert excess base capacity into 
warfighting ability is enhanced, not diminished.
    However, achieving savings is not the only reason to realign and 
close bases. The more important reason is to enable us to attain the 
right mix of bases and forces within our warfighting strategy as we 
transform the Department to meet the security challenges of the 21st 
century. Transformation requires rationalizing our base structure to 
better match the force structure for the new ways of doing business.
    Congress authorized a Base Realignment and Closure in 2005 to 
accomplish this ``base transformation''. BRAC 2005 should be the means 
by which we reconfigure our current infrastructure into one in which 
operational capacity maximizes both warfighting capability and 
efficiency. Through BRAC, we will eliminate excess capacity that drains 
our scarce resources from defense capability.
    The process will not be simply a process to reduce capacity in a 
status-quo configuration, but rather, as the foundation to 
transformation, it will allow us the opportunity to examine a wide 
range of options for stationing and supporting forces and functions to 
make transformation what it truly should be--a ``re-tooling'' of the 
base structure to advance our combat effectiveness and make efficient 
use of our resources. A primary objective of BRAC 2005 process is to 
examine and implement opportunities for greater joint activity.
    Our installations transformation is not limited to the United 
States. We also are assessing our facilities overseas to determine the 
proper size and mix. Since 1990, the Department of Defense has returned 
or reduced operations at about 1,000 overseas sites, resulting in a 60 
percent reduction in our overseas infrastructure and a 66 percent 
reduction in Europe, in particular, and we continue to review overseas 
basing requirements of the Combatant Commanders and examine 
opportunities for joint use of facilities and land by the Services, 
consolidation of infrastructure, and enhanced training.

                               CONCLUSION

    Our facilities continue to recover, and we are seeing the results 
of investments made over the last several years. The Defense Facilities 
Strategic Plan and our installations management approach has provided a 
framework that enables us to focus on our overarching goals: taking 
care of our people, taking care of our facilities and enhancing our 
business processes. We have made significant progress toward providing 
quality housing for our service members, and we are now focused on 
improving the work environment.
    BRAC 2005 is our most important initiative to help us accomplish 
this. By consolidating, realigning and reducing unneeded 
infrastructure, the Department can focus investments on maintaining and 
recapitalizing what we actually require, resulting in ready facilities 
for the warfighters while more prudently using the taxpayer's money.
    As we prepare to rationalize our base structure, we also are 
addressing encroachment issues that impact our ability to effectively 
utilize our test and training ranges. The Readiness and Range 
Preservation Initiative is identifying solutions to these challenges. 
We have developed a plan of action and are proceeding with 
implementation. A key element of the plan is our proposed legislation 
that combines military readiness with environmental stewardship.
    Our Real Property Enterprise System (RPES) efforts will result in 
much improved and standardized business practices while enhancing our 
financial stewardship. Market research and solution assessment should 
be complete by the end of this fiscal year with pilot fielding of a new 
system(s) or modification to existing systems to follow.
    In closing, Mr. Chairman, I sincerely thank you for this 
opportunity to outline our successes in military facilities and review 
our plans for the future. We appreciate your strong support of our 
military construction program, and I look forward to working with you 
as we transform our infrastructure.

    Senator Hutchison. Thank you. As noted before, our domestic 
MILCON budget is decreasing, our overseas MILCON is increasing, 
and I would particularly note that much has changed since the 
previous long range planning for our overseas basing, and in 
particular I would say the timing of the large increase in this 
budget for overseas construction in Germany and Korea is 
questionable, based on the changes just in the last 6 months in 
our strategic needs.
    In this budget you are asking for $288 million for Germany 
alone, out of a total of $532 million for Europe, and for Korea 
$173 million at the same time we are certainly in a questioning 
mode on the number of troops we would have in Korea for the 
long term, and with General Jones, the Supreme Commander of 
NATO, actually having a proposal in public that we would be 
lessening the number of troops that we would have in Germany in 
favor of some more eastern countries. So my question is, why do 
you have all of this for Germany, Europe, Korea, when we do not 
have a clear understanding of a master plan?
    Dr. Zakheim. Let me start, and then Ray can add to that.
    In the first place, we have got a situation where we are 
really--we are already modernizing in Germany and Korea. There 
are sufficient bases in Germany. There is a plan that is a 
legacy of the previous commander in Korea. We also have a 
further complication, and here this is something I personally 
was involved in. I led the negotiation with the Koreans to get 
them to contribute 50 percent of, in effect, host nation costs. 
We got a 35 percent increase in that negotiation, and it was 
very tough, I can tell you.
    So what we have, therefore, is a situation where we have 
not yet heard the details of what General Jones has outlined 
the framework of, and I think what he has done is reflect the 
Secretary's views, and the views that many of the senior 
leadership in the Department have that the changing strategic 
environment clearly calls for a changed infrastructure 
footprint in Europe. But until such time as we have got the 
plan, as we have evaluated, as we have discussed it with you, 
we do not have it yet, and we are moving ahead with 
modernization.
    Now, we have done one thing. We have put a freeze on 2003 
construction projects in Europe, other than Ramstein, because I 
think there is a consensus, and I think General Jones may have 
actually said this in one of the articles that he was quoted 
in, that Ramstein was central no matter how you sliced this 
one, given what we do there and its strategic location and so 
on. But beyond that, we have actually currently put a freeze 
until we hear back from both General Jones and General LaPorte 
and Admiral Fargo, the Pacific Commander, as to where they are 
headed. So we have, in fact, anticipated your concern. You are 
looking at 2004. We have already put freeze on for 2003.
    Senator Hutchison. That just begs the question, how would 
you feel about a freeze in 2004 so you know the long range 
commitments would be in place before we would start spending 
hundreds of millions of dollars?
    Dr. Zakheim. I would hope we would have some answers to you 
from the combatant commanders before you actually put the 
freeze on. I mean, picture it this way. Suppose you put a 
freeze on in 2004 and it turns out there are some things that 
General Jones, even in this review, General Jones, General 
LaPorte feel they do need, then we find ourselves sort of 
twisted in a new kind of knot.
    Senator Hutchison. So what is the timetable, then?
    Dr. Zakheim. Well, we have asked them in effect to come 
back to us in, I guess it was a total of 90 days, and we put 
this request out to them about one-half a month ago, so we are 
about 2\1/2\ months away, and I think Ray DuBois and I are 
committed, I know we are committed to discussing this with you 
once we have heard from them and reviewed it with the 
Secretary.
    We know that you have an appropriations timetable, and you 
have to meet your timetable. We are going to do everything we 
can to ensure that there is consistency between what you are 
trying to do and what we are trying to do, because I do not 
think there is much disagreement here.
    Senator Hutchison. Well, I have to say I am pleased that 
there seems to be a bit of a turn toward looking at what we are 
doing overseas, and also relating it to what we are going to 
need in America in 2005 so you do not close a base you are 
going to need to bring troops from overseas back home to; so it 
seems we are on a course, but I do think the timing is going to 
be important, because I do not want to mark up a bill that is 
obsolete the day we mark it up.
    Dr. Zakheim. Well, we certainly understand that, but I 
think in fairness I have to point out that I started discussing 
the need for a relook at our European facilities with then 
Secretary-designate Rumsfeld. On September 11, 2001 Ray DuBois 
and I were in Germany, having been sent there by Secretary 
Rumsfeld to examine this issue. As you can imagine, things 
changed when we were forced to come home, and a lot has gone on 
since then. But the Secretary has for quite some time prior to 
September 11 felt that there was something that needed to be 
done about our overseas footprint, and so we are acting on it. 
As I said, we will do everything we can not to leave you out on 
some limb marking something up and then discovering that it is 
OBE. I do not think that is fair to you and, frankly, it is not 
fair to us, either.
    Senator Hutchison. I think that is right. Let me add, I 
have visited bases overseas just as you have, and I hear 
constantly about the limiting effects of not being able to have 
sufficient flying space to stay in training, not having an 
artillery range to stay in training, and so I hope that is a 
consideration when you are doing the big picture, that if you 
are going to have training constraints in some of these 
countries, that would be a factor in your decision, not the 
only factor, but a factor, so that if you are going to have to 
bring people home to train--Vieques would be another example 
where we build up a base, we have an agreement with the host 
country, and then all of a sudden that blows up and we are 
going to have to find another place to train our people coming 
in sea landings.
    So I hope that is part of the discussion in the Department 
of Defense as you are going to make these recommendations both 
for BRAC in America and BRAC overseas.
    Dr. Zakheim. It is certainly a factor. I would like to ask 
Ray DuBois to add to that, although I think I have to point out 
that the host nation for Vieques is us.
    Senator Hutchison. Well, it is but it is not.
    Dr. Zakheim. Of course. Of course.
    Senator Hutchison. I mean, it is not us who is protesting.
    Dr. Zakheim. It was complex. Anyway, Ray, would you like 
to----
    Mr. DuBois. Madam Chairman, notwithstanding my remark about 
being reticent to discuss numbers, I think it is important to 
recognize relative numbers insofar as our MILCON request in 
2004 shows an increase for the U.S. MILCON and a decrease, year 
over year request, for overseas. So in a sense we are making 
certain adjustments, but I also think we have to look at the 
legacy of underfunding for our overseas facilities that we 
inherited, quite frankly, when we came on board in January of 
2001.
    The other issue that I think it is important to recognize, 
with respect in particular to your suggestion of a moratorium 
on overseas construction, and that is, the Secretary of 
Defense, as Dr. Zakheim has indicated, has asked the combatant 
commanders for their views to reprioritize and recommend where 
reprioritizations make most sense, because the 2003 
construction projects currently in the pipeline were in point 
of fact planned for 2, 2\1/2\ years ago, and may not reflect 
the realities and the requirements of today.
    In addition, we would think that if reprioritization is a 
good thing to do, based on the combatant commanders' 
recommendations, the service Secretary and Service Chiefs' 
concurrences, that reprogramming those dollars into other areas 
is very important. That would be applicable not only to 2003, 
but 2004, and therefore by placing a moratorium on 2004, you 
would prevent an appropriate reprogramming, with Congress' 
approval, to those, today's immediate requirements, vice those 
requirements that may have looked very attractive in the 
planning stages 2\1/2\ years ago.
    Senator Hutchison. Well, let me just say that certainly we 
want to work in the best possible way for our congressional 
responsibility and oversight, but we need a lot more of a 
strategic plan before we pass a 2004 budget than just to pass 
something in a big vacuum and then come in with a huge 
reprogramming request. I just do not think that is the proper 
way to go.
    And secondly I would just say, and then I am going to 
stop--I do have some more questions, but I want to give my 
colleagues a chance, but I do want to say I do not think just 
depending on the CINCs' combatant commander views is the job of 
the Department of Defense, because a CINC may be looking at 
their sphere, but they may not be looking at the big picture 
for the strategy of where our troops are going to be needed for 
the future. So I do hope that there is an overview that will be 
put forward that does not just say the commander in Korea 
believes that you need this in Korea, without thinking about 
what is needed in the Middle East, or in Turkey, or in Italy, 
or Spain, or wherever. I just hope that just talking to the 
commanders----
    Mr. DuBois. Madam Chairman, if we were to look at an area 
of operational responsibility by a combatant commander in 
isolation, that would be a mistake. The Secretary has discussed 
at some length with the combatant commanders and the Joint 
Chiefs of Staff as recently as 2\1/2\ weeks ago here in 
Washington at the Combatant Commanders Conference the 
importance of an integrated global presence and basing 
strategy, and there was considerable discussion around that, 
but there was not any disagreement that, in point of fact, 
needed to happen.
    Dr. Zakheim. Let me add to that. Let me add to that, Madam 
Chairman. First of all, as somebody who has known Jim Jones for 
about 28 years, I can tell you he is about the least narrowly 
focused person I have ever met, but his command, as you know, 
now extends into Central Asia, and it extends into Africa, and 
so this is a man whose command is global, and what we are 
talking about, of course----
    Senator Hutchison. And NATO is a little different, too.
    Dr. Zakheim. But again, he is the European Commander, and 
for instance, Israel and Lebanon are part of his command, and 
Turkey, of course, is part of his command within NATO, and so 
his concern is as someone who has to focus, as he is as we 
speak, on a massive crisis in his southeast sector. He is fully 
aware of the implications of the new States that have come out 
from under the Soviet shadow and so on, and their potential, 
and as a Marine, quite frankly, he is also aware of the 
importance of littoral capabilities.
    As to General LaPorte, I do not know him as well, but this 
man is a really creative fellow, and he has brought a very 
different look to what is needed in Korea. In addition, he is 
working with Admiral Fargo, again someone I have known for a 
couple of decades, and Admiral Fargo's scope basically touches 
up against Admiral Jones'.
    I mean, literally, when Admiral Fargo is responsible for 
India and Admiral Jones is--and Zari, and then--well, I guess 
they do not touch exactly, but Central Asia and India, they 
come pretty close, and China, actually--no, so they do. So you 
have got two combatant commanders with huge areas of 
responsibility. You therefore can understand the exact kind of 
concern you have got, and a very creative combatant commander 
in Korea.
    Now, add that to what Ray just told you, that the Secretary 
has made it very, very clear that we have to have the exact 
kind of strategic perspective you are talking about, and I 
think you can be very, very confident in their recommendations.
    Senator Hutchison. Thank you. Senator Feinstein.
    Senator Feinstein. Thank you, Madam Chairman.
    I want to follow up along the lines--let me begin with my 
bottom line. I think it really is necessary that we sit down 
and have some kind of strategic conversations on where this is 
all going, and over what period of time, and how much the cost 
is estimated to be, and I will tell you why.
    Before last year's hearing General Meigs came in and talked 
to me about Efficient Basing South, so I went to Vicenza, and 
went to Camp Ederle, and went with him and saw his plans for 
Efficient Basing South.
    Now, this year we have gotten another plan, efficient 
basing in another direction. We put $34.8 million into 
Efficient Basing South last year. You might make a note, 
because I am going to go on for a bit. I want to know 
essentially whether this Efficient Basing South plan is going 
to be continued to be carried out.
    Secondly, I guess if they are going to leave Germany we do 
not have to worry about whether we build a new commander's 
house or remodel the old house, so we might save some money 
there. We should know about that.
    The second thing is, in December, Senator Hutchison has had 
some interest, and I have had a longstanding interest in the 
Korean situation, so I was fortunate enough to spend the day 
with General LaPorte. I saw Yongsan. I saw his desire to move 
out of Yongsan. Yongsan is a strategic piece of property in the 
heart of Seoul. It was also Japanese headquarters, which makes 
it a piece of land with some distinct sensitivity to South 
Koreans, and, was there in early December, just before the 
election, and there was a great deal of anti-American sentiment 
about our military there.
    And we put substantial moneys into the budget to do some 
renewal, and I saw some of the privately contracted housing and 
the facilities that we helped fund, which was wonderful to see, 
something really coming out of what we do here.
    Now, Secretary Rumsfeld has recently expressed support for 
reducing the United States footprint in Korea, and specifically 
mentioned moving U.S. forces away from the Seoul area and the 
DMZ. Now, the total MilCon request this year for Korea, as I 
understand it, is $173 million, of which $45 million is for 
family housing at Osan.
    Now, this is $63 million less than last year's level, but 
again, Korea's outyears construction needs approach $1 billion, 
so I think that this subcommittee really needs to know what the 
long term thinking is so that we can feel that this is not 
going to change with every change of command, that there is 
going to be something that everybody has bought into and is 
going to continue to fund in the years to come.
    I must tell you, I feel very uncertain about this, 
particularly from the Efficient Basing South, and you know, 
going to Northern Italy, and meeting the people, and seeing 
what they want to do, and buying into it, so the first part of 
my question, is Efficient Basing South going to go ahead?
    Dr. Zakheim. Well, again, we have been discussing Germany 
and Efficient Basing South is far more consistent with what I 
think is the overall direction of where we are likely to head. 
I have not heard, and either Ray can kick me, alongside me, or 
my staff can kick me from behind, I have not heard anyone 
questioning what we are trying to do in Italy. In fact, it is 
highly consistent.
    Senator Feinstein. No, do not mistake, I did not say 
anybody was questioning it. I am a supporter of it. Nobody is 
questioning it. I worry that it will change next year.
    Dr. Zakheim. I have no indication of that. Look, I cannot 
speak for what General Jones is going to do. I cannot prejudge 
it, but on its face it seems to me, and I think this is why it 
was undertaken in the first place, was because it was 
consistent with this redirection and relook at where we are 
likely to be.
    Senator Feinstein. But bottom line, we do not know whether 
Efficient Basing South is going to continue.
    Dr. Zakheim. Bottom line, right now, it is continuing, and 
we cannot prejudge what General Jones is going to do, but let 
me say, I would be highly surprised if he were to question that 
particular program.
    Senator Feinstein. He is coming in, so I will have a chance 
to ask him that. I will, and perhaps we can all share.
    Dr. Zakheim. I have no indications that that is the 
direction he is going, to somehow chop and change on that one.
    Now, on Korea, you make two points that I otherwise would 
have made. One is, General LaPorte is concerned about Yongsan. 
I was there a few months before you were, and I had the same 
reaction you did, which, one reaction that I always have when I 
am there is, we are stuck in the middle of Seoul. The other 
reaction, which was a good one, was, at least we are taking 
care of the folks who are living there.
    Now, as long as there are folks living there, we have got 
to do something for them, and whatever the plan General LaPorte 
comes up with, I would be very surprised if we just uprooted 
ourselves and left immediately.
    Senator Feinstein. My understanding is that what there 
would be is a land trade.
    Dr. Zakheim. That is correct.
    Senator Feinstein. And I guess what I am asking is, could 
you give us the status of that land trade?
    Dr. Zakheim. Well, I will get you some more for the record. 
Again, General LaPorte is coming back to us, as General Jones 
is, within the next couple of months, and so we will probably 
have a much firmer answer by then, but I can get you something 
before then.
    [The information follows:]

    The Republic of Korea (ROK) desires the return of lands in Seoul 
and in 1990 signed an Agreement-In-Principle and Memorandum of 
Understanding for relocation of U.S. forces from Seoul including the 
majority of Yongsan Main and South Posts. ROK agreed to grant U.S. 
Forces, Korea (USFK) new land in the Osan-Pyongtaek area and completely 
fund the move. On June 12, 1993, ROK informed USFK that ROK had decided 
to cancel the plan to purchase real estate near Osan Air Base due to 
strong local opposition thus halting the relocation efforts. ROK is now 
showing renewed interest in the relocation.
    The relocation of U.S. forces from Seoul is currently on hold due 
to ROK opposition of the details of the relocation plan, and there is 
no anticipated Yongsan land trade in the near future, although long-
term planning for the relocation continues. USFK conducted a Yongsan 
relocation requirements survey in summer of 2002. An initial master 
plan to relocate the U.S. forces from Yongsan is under development and 
will be completed by May 2003.

    Senator Feinstein. If we are going to leave the base there 
is no sense in putting a lot into it.
    Mr. DuBois. Senator Feinstein, just to look at Korea first, 
and then I will go back to Italy, the fact that the symbolism, 
as you have pointed out, of Yongsan headquarters far exceeds 
its square footage, its footprint, if you will, has not escaped 
the Secretary of Defense in this context, and as you have 
correctly referred, he has made comments about that. The speed 
with which one could reconfigure our presence--presence equals 
end strength as well as positioning--in South Korea is not 
something you do in a year.
    The Secretary did send to Korea recently Deputy Assistant 
Secretary of Defense Richard Lawless to talk to General 
LaPorte--and I encourage you to talk to General LaPorte when he 
is here next week. He is going to see me on Monday--in this 
regard. I am interested in what he has learned, because the 
long term thinking is exactly what the Secretary of Defense has 
insisted that LaPorte and Fargo put on the table, not just 2003 
and 2004, but 10 years plus out.
    As far as Efficient Basing South is concerned, and what we 
are really talking about here, of course, is Vicenza and 
Aviano, and also Naples and the naval stations that we have 
now, and this is important to note, because it was significant 
military construction that went into Sigonella, significant 
military construction appropriated by this subcommittee that 
went into the building of that new housing area for the Navy 
near Naples, and I encourage you to visit it. If you have not, 
it is fantastic.
    In fact, when I visited, the wonderful comment made to me 
was, the assignments folks in the Pentagon who always used to 
be prevailed upon, do not assign me to Naples, now the 
assignments people want to go to Naples. This is a positive 
thing, and yes, it does reflect where I think the Secretary is 
going in the longer term.
    Now, should we or should we not repair a four star general 
officer's house in Stuttgart? I will defer that for the moment.
    Dr. Zakheim. I did not even address it.
    Senator Feinstein. We will defer it, then.
    You know, I think what the General in charge at Vicenza has 
done, and I really want to say this to you, is really quite 
remarkable. He said when 9/11 happened the carabinieri just 
automatically came and surrounded the base to offer protection, 
and this General had established such good contacts, and this 
base is right in the town, such good connections with the 
leadership, with the community, that there was just solid 
support for the base, and that really made me feel good, and 
obviously very concerned about the men and women serving at 
that base and their opportunities, and it was really a very 
heartwarming thing to see.
    Now, it was also clear to me that General LaPorte--I mean, 
I think he is a 10. He is a great human being, and I suspect a 
very good tactical commander. At the same time, the problems 
there are really problems that take some serious, I think, long 
term thinking. And because we are putting so much money into 
Korea, particularly in the outyears, I think that both of us 
really need to know what that long term thinking is and how 
what we do can best serve it, because I think everybody wants 
the same thing, to do the land trade, to get out of Central 
Seoul, to have less of a footprint, but still be available for 
any protection that might be necessary, and I would suspect 
that that might be agreeable on everybody's part.
    But how we do this I think is going to be very difficult, 
because the costs are going to be quite substantial, and so I 
am eager, and I saw Osan, and I saw some of the housing that we 
had done, the new housing and the recreational center, and I 
was really very proud.
    Mr. DuBois. Senator, I think it may be less difficult than 
we think, and I am speaking for myself now, but as Deputy Under 
Secretary for Installations and Environment, having been to 
Korea a number of times since I became Deputy Under Secretary, 
the tough negotiations that Dov Zakheim entered into and was 
successful in accomplishing with the South Korean Government 
for host nation support must be part of our calculus here, 
because we do not want to damage that relationship, especially 
in terms of their commitment to co-invest with us on behalf of 
our military forces. We want to make sure, however, as you 
pointed out, that it is done in the right place.
    Dr. Zakheim. That is exactly right. We have to be sure that 
the agreement we got--let us be honest here, the Japanese pay a 
substantial portion of host nation support. The Europeans do 
not. The Koreans were closer to the bottom of the table. We 
have moved them up to 50 percent. We do not want to lose that, 
and so that is another factor in this, and Leon LaPorte is a 
really bright guy; he's----
    Senator Hutchison. Are you talking about Korea moving up to 
50, or are you talking about Europe moving up to 50?
    Dr. Zakheim. Well, let me tell you, if I had my druthers 
Europe is going to move up to 50. It is going to be harder to 
do. Meanwhile, I have got Korea.
    Senator Feinstein. You are at 35 now, right?
    Dr. Zakheim. Not even that high. I think if you look 
closely at the European numbers, it is less than that, and that 
is a major concern. We have got to wait for the time when we 
renegotiate. How do you renegotiate until you know what your 
plan is? I mean, what is the point, for example, to go back to 
the Germans, who do not kick in anything like the Koreans do, 
and say, well, let us renegotiate, when we do not even know 
what it is going to be like in Germany.
    So we have got to be careful. We have got different 
external factors here, in addition to just the actual 
facilities.
    Senator Feinstein. I was just going to make one last point 
so I could turn it back to the chairman. Environmental 
remediation, and maybe I have a bias, because we have 30 closed 
bases, and maybe I have a bias because McClellan Air Force Base 
had a nuclear reactor on it and we have to clean it up, and I 
was really struck by the hit that environmental remediation 
took.
    At the same time, I do want to say to you that I understand 
considerable progress is being made at Bayview-Hunters Point, 
and I want to thank you for that. I think I reported at last 
year's hearing that they had a fire that burned underground for 
2 weeks before anybody knew it was burning underground, and I 
am very pleased that the Navy has done what they said they were 
going to do, and I gather things are on schedule and on target 
there. However, I have just a list from the Air Force of what 
they could use to clean up just Kelly and McClellan, and one 
other base, and it is $64 million additional dollars this year.
    The military has an obligation to remove the contamination 
from these bases.
    Dr. Zakheim. Well, let me first say that I remember your 
concern last year and I am glad that we took care of that one 
facility. That is important. Now I do want to turn it over to 
probably the guy who knows more about this than anybody else in 
the Department, Ray DuBois.
    Mr. DuBois. The environmental remediation of BRAC'd 
property from the four prior BRAC's has been and continues to 
be a challenge, but it is a challenge in several ways, Senator. 
Number 1, we still have significant BRAC'd properties yet to be 
disposed of, and those BRAC'd properties are not disposed of in 
no small measure because of competing local environmental 
interests and competing local economic interests. One side may 
want to use the property for one use, the other faction may 
want to use it for another use.
    One of the reasons that we have been unable, and have not 
asked for in many cases money for X or Y, has been--and granted 
this does not apply necessarily to McClellan and Kelly, but 
even if we had the money we could not execute it because the 
locals have not decided what the land use will be. It is just 
an aspect of it.
    We have spent, since the first BRAC in 1988 and the BRACs 
in 1991, 1993, and 1995, up to about 40 percent of all BRAC 
environmental remediation, and this is not surprising, given 
the number of bases which were impacted in the State of 
California, in the State of California. It is not as if the 
State of California has been pro rata less than other places.
    Now, we also have, I think, an issue, and you will have to 
address this specifically to the three Service Secretaries who 
will follow us, and I thank you for raising and noticing what 
the Navy has done not just in terms of disposing of property in 
California also, but also in terms of meeting their 
environmental obligations, but all three Military Departments 
recognize their environmental obligations.
    You may, either in this forum or another forum, ask the 
question, then why would we necessarily ask for less in terms 
of BRAC environmental remediation funding this year than last? 
Two factors apply. One factor is, we have less environmental 
remediation to do, because we have been able to--not in terms 
of cost to complete, but in terms of what we have accomplished 
just in the past 2 fiscal years.
    I think the other issue is, and again I encourage you to 
ask Secretary Johnson, as he is a witness today. He is also 
Acting Secretary of the Navy, so he has got a few jobs, but as 
Assistant Secretary of the Navy for Installations and 
Environment, he has been a tremendous asset to the total DOD 
disposal philosophy, because he has worked hard with local 
communities to actually auction off properties that heretofore 
have been held from disposal.
    As you may know, under the law, those dollars go into the 
so-called BRAC account, and they can only be used for 
environmental remediation, so in the case of the Navy, they 
have asked for less dollars this year than last, but they now, 
if they get the receipts that are under contract, they will 
have a considerable amount of money in that BRAC account to 
spend, and those dollars do not need to be reappropriated.
    It is an interesting kind of inside the beltway, if you 
will----
    Senator Feinstein. We will check those accounts.
    Mr. DuBois. Yes, ma'am.
    Senator Feinstein. Thank you.
    Thank you, Madam Chairman.
    Senator Hutchison. Thank you. I just have a few more 
questions. I wanted to finish on the--I had a few questions on 
the host nation support issue. I am under the impression that 
Europe pays less than 10 percent.
    Dr. Zakheim. No. The numbers are closer to the mid 20s to 
low 30s. I do not know where you get that number from.
    Senator Hutchison. I am not talking NATO. We have 25 
percent in NATO, but in Europe itself, I am told under 10 
percent. Host nation.
    [The information follows:]

    The Land Partnership Program (LPP) was signed in March 2002 and 
ratified by the Korean government in November 2002. It is now being 
executed though no land has been exchanged. However, host nation funded 
projects have been started at enduring locations associated with LPP. 
The location of U.S. Forces Korea installations in the LPP are 
currently under review based on the requirement by the Secretary of 
Defense that geographic combatant commanders prepare an integrated 
presence and basing strategy by July 1, 2003. The LPP has a provision 
to modify the installations specified if needed. THE PACOM Commander 
must also evaluate the fiscal year 2003 and 2004 Military Construction 
programs for Korea and provide the Secretary of Defense with his 
requirement by April 19, 2003.

    Dr. Zakheim. Host nations? That does not ring a bell. I 
have seen one or two countries, but actually not in Europe, 
that for a variety of reasons give, I think one gives 8 percent 
or something. That is a Middle Eastern country, and there are 
all kinds of reasons for that.
    [The information follows:]

           The Percentage Europe Pays in Host Nation Support

    For the purposes of this response, ``host nation support'' is 
defined as bilateral cost sharing contributions, in which the cost 
sharing is ``between the United States and an ally or partner nation 
that either hosts U.S. troops and/or prepositioned equipment, or plans 
to do so in a time of crisis''. According to the June 2002 ``Report on 
Allied Contributions to the Common Defense''--A Report to the United 
States Congress by the Secretary of Defense, research revealed that our 
European allies--on average--contributed over 23 percent of the costs 
associated with the stationing of U.S. forces during the year 2000 
(most recent collection of data).
    The following European countries were considered in the collection 
of bilateral cost sharing contributors (listed in order from greatest 
U.S. cost offset percentage to least): Norway (67 percent), Luxembourg 
(51 percent), Spain (50 percent), Italy (37 percent), Belgium (35 
percent), Greece (29 percent), Germany (21 percent), United Kingdom (17 
percent), Hungary (10 percent), and Turkey (3 percent). In monetary 
terms, Germany was the largest contributor ($1,211 million) and Italy 
ranked as the second largest contributor ($364 million).

    Dr. Zakheim. I would love to see those numbers, and we will 
get you an answer for the record, because my recollection 
country by country is, that it is somewhere between 25 and 35 
for each of those.
    [The information follows:]

    The information provided below represents bilateral cost sharing 
between the United States and our European allies that host U.S. troops 
and/or prepositioned equipment.
    The Department of Defense distinguishes between two different types 
of cost sharing: the direct payment of certain U.S. stationing costs by 
the host nation (i.e., on-budget host nation country expenditures), and 
indirect cost deferrals or waivers of taxes, fees, rents, and other 
charges (i.e., off-budget, forgone revenues).
    The most recent year for which data are available is 2001, which is 
also what will be reported in the 2003 Report to Congress on Allied 
Contributions to the Common Defense.

                                           [U.S. dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                                       A/(A(+B)
                                                                              B U.S.     A+B Total    Percentage
                                       Direct      Indirect     A Total     stationing   stationing      cost
                                                                              costs        costs       sharing
----------------------------------------------------------------------------------------------------------------
Denmark...........................         $0.0         $0.1         $0.1        $66.2        $66.3          0.1
Germany...........................          8.2        853.4        861.7      3,197.2      4,058.9         21.2
Greece............................          0.5         17.3         17.7         24.4         42.2         42.1
Italy.............................          2.9        356.4        359.3        554.1        913.4         39.3
Luxembourg........................          1.1         18.7         19.8          6.0         25.8         76.8
Norway............................         10.3          0.0         10.3          0.6         10.9         94.5
Portugal..........................          1.7          2.4          4.1         72.1         76.2          5.4
Spain.............................          0.0        119.6        119.6         99.0        218.6         54.7
Turkey............................          0.0         13.6         13.6        112.1        125.7         10.8
United Kingdom....................         20.1        113.8        133.9        733.1        867.0         15.4
                                   -----------------------------------------------------------------------------
      Total.......................         44.8      1,495.2      1,540.0      4,864.9      6,405.0        24.0
----------------------------------------------------------------------------------------------------------------
Note: Belgium has not been included as complete and accurate stationing cost information is not currently
  available. Hungary is also not included; however, it does provide support to U.S. troops temporarily stationed
  there for operations in the Balkans.


    Senator Hutchison. But you do intend to renegotiate once we 
determine what our long term strategy is?
    Dr. Zakheim. As each agreement comes up for review, 
absolutely.
    Senator Hutchison. Are they going to come up for review 
this year?
    Dr. Zakheim. I do not know if the German one comes up this 
year, but obviously once there is a decision to make any 
changes at all, then all of these issues have to be addressed, 
and this would be an opportunity for us to revisit with the 
Germans exactly who is paying for what.
    Senator Hutchison. Well, I think you and I are on the same 
wavelength here, but certainly if we are going to--I am still 
looking at the right way to approach a new strategy coming 
forward in the very near future, and I certainly think that 
would be the opportunity to see how committed a country is to 
our being there for their economy and their protection.
    Dr. Zakheim. Let me be very clear, Madam Chairman, without 
Congress's help on Korea, and Congress articulated--there was I 
believe a Sense of the Congress Resolution about how much they 
thought Korea should be paying, without that kind of pressure, 
it would have been much harder for us to get what we got, and I 
encourage you to continue to push this line. It is very 
important to us, too.
    Senator Hutchison. Thank you. We will.
    A couple of other things. It is my understanding from your 
testimony that you will come back to us for anything you think 
you are not going to need for the 2003 appropriations for 
reprogramming requests.
    Dr. Zakheim. Yes.
    Senator Hutchison. That is important, of course, to our 
committee, that we stay in the loop when we are talking about 
this.
    Dr. Zakheim. Absolutely.
    Senator Hutchison. And I applaud your looking at 2003, as 
well as our working together on 2004.
    The programming this year was less for the Guard and 
Reserve components than the amount that we enacted last year. 
My question is, with our dependence on Guard and Reserves, why 
is that the case?
    Dr. Zakheim. I am probably going to give you the same 
answer that I gave you last year when you asked a similar 
question. That is, we have to look at all our priorities, and 
we have to come up with some kind of balance. So the metric we 
have used is, ``are the moneys that we are spending on Guard 
and Reserve facilities roughly--is it roughly the same 
percentage of the overall account.'' We have been at about the 
same percentage for the last 6 years.
    Senator Hutchison. Do you feel that we are basically fully 
utilizing the facilities and upgrading them as needed for our 
bigger dependence on them?
    Dr. Zakheim. There is no doubt that we could do better. 
There is no doubt that we could do better, and there is also no 
doubt that the Reserves and the Guard are making a phenomenal 
contribution.
    You have traveled overseas. Particularly, go to the Middle 
East, and my goodness--I have friends that are out there, and I 
have got one friend around the corner from me with three 
children who just spent the year serving, and then a second 
year, so we all know how difficult it is for Guard and Reserve. 
But again, it is always a balance, and we try to come up with 
the best possible number under the circumstances and, as I say, 
we use that metric of a percentage rate.
    Ray, would you like to add to that?
    Mr. DuBois. Well, just to embellish, if I might, briefly, 
fiscal year 2003 requests--requests--$297.3 million. Fiscal 
year 2004 requests $369 million, and that is a significant jump 
in the requests, not in terms of what was enacted.
    The issue, though that I think that is important is the 
percentage issue. In terms of total milcon vice Guard and 
Reserve, we went from 3 percent total MILCON to 4 percent. Now, 
mathematically that is a 33 percent increase, quote-quote.
    Senator Hutchison. Yes. MILCON is coming down----
    Mr. DuBois. But I know what you are going to say, and I can 
understand why you are going to say it.
    Senator Hutchison. Well, just--point made. Watch out for 
the Guard and Reserves and make sure that what we are asking 
them to do is commensurate with what we are doing in the 
budget.
    A last question. This is a fine point, but the funding to 
construct the chem demil facilities has always been in the past 
in the military construction portion of the budget. However, 
this year you are asking that this go in the defense budget, 
and I would like to ask why.
    Dr. Zakheim. The reason is straightforward. The law, which 
came with the Homeland Security Act, instructed us, and I in 
fact--I can even give you the section, chapter and verse. 
Section 1511(d) of the Homeland Security Act says, upon the 
transfer of an agency to the Department of Homeland Security, 
the personnel, assets and obligations held by or available in 
connection with the agency shall be transferred to the 
Secretary for appropriate allocation.
    What basically we were told, we were told first of all to 
transfer money out, and second of all we were also told that we 
were supposed to certify that the--and the Congress told us 
this, that we were supposed to certify that the money for chem 
demil would be put in an OSD-wide account, and what we have got 
is the Army as executive agent, and it is being called chemical 
demilitarization, comma, Army, as a separate account.
    And I think I was reading off of the wrong sheet of music 
on the homeland security. I see a lot of people looking 
puzzled, but the $119 million was, we were told by the Congress 
to do that as well.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Hutchison. You were told by Congress to do that?
    Dr. Zakheim. Yes. I believe so.
    Senator Hutchison. Well, we will check into that, because 
it is our position that that should continue to be in military 
construction for the continuity of oversight.
    Dr. Zakheim. That was the fiscal year 2003 authorization 
Act.
    Senator Hutchison. Okay. We will look at that again.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]

               Questions Submitted to Hon. Dov S. Zakheim

          Questions Submitted by Senator Kay Bailey Hutchison

                      FAMILY HOUSING PRIVATIZATION

    Question. I applaud your efforts with regards to family housing 
privatization. I noticed in your statement that the privatization 
leverage--that is the ratio of what we put into the deal versus what we 
get out--is 10 to 1. How did you calculate that ratio?
    Answer. The leverage is determined by dividing traditional 
construction cost by the scored cost of the privatization project. For 
example, if we were to build houses using the traditional method, it 
would cost us say $200 million. However, by privatizing those houses, 
it would cost us only $20 million. Therefore, we would get a 10 to 1 
leverage.
    Question. How many units do you plan to privatize in fiscal year 
2003 and 2004?
    Answer. We plan to privatize approximately 30,000 units in fiscal 
year 2003 and 36,000 units in fiscal year 2004. However, the Services 
are much more aggressive/optimistic in their projections. Their 
estimates show privatizing over 38,000 units in fiscal year 2003, 
compared to our more conservative estimate of 30,000. In fiscal year 
2004, our estimates are similar, about 36,000 units.

                       ADEQUACY OF BUDGET REQUEST

    Question. Two years ago you both testified that after many years of 
neglect, the department intended to start investing in infrastructure. 
Your proposed budget barely funds new mission initiatives, let alone 
replacing aging facilities. What is the DOD position on revitalizing 
facilities?
    Answer. We have three investment priorities. Our first priority is 
to sustain our existing facilities, our second priority is to 
recapitalize (both restore and modernize) our existing facilities and 
the third priority is to acquire new footprint and dispose of old 
facilities as appropriate. The fiscal year 2004 budget funds facilities 
sustainment at 94 percent of our requirement. The fiscal year 2004 
recapitalization rate was held at about the same rate as fiscal year 
2003, but is on track to meet our 67 year recapitalization goal by 
fiscal year 2008.
    Question. Why is the 2004 military construction request lower than 
the amount enacted for military construction last year?
    Answer. The fiscal year 2004 President's Budget request for 
military construction is slightly higher than the 2003 enacted amount 
when the Defense Emergency Response Fund projects and congressional 
adds are excluded.
    The 2004 request funds our highest priorities for improving quality 
of life and resolving critical readiness shortfalls. For quality of 
life, the military construction request sustains funding for family and 
bachelor housing and increases the number of housing units privatized. 
We also preserved funding for recapitalization. We increased funding 
for facilities sustainment, raising the corporate sustainment rate from 
93 to 94 percent, which will help to preserve our facilities and reduce 
the need for future, more costly revitalizations.
    Question. What is the backlog of department of defense projects for 
military construction?
    Answer. The Department of Defense does not maintain a list of 
backlog projects.
    Question. With the proposed funding in the 2004 budget for MILCON, 
how does that impact the department's overall recapitalization rate? 
How does that compare to the last 2 years?
    Answer. The fiscal year 2004 recapitalization rate is 148 years for 
the four Services and 136 years for the combination of the four 
Services and three of the Defense Agencies. This is about the same as 
the fiscal year 2003 recapitalization rate and higher than the fiscal 
year 2002 recapitalization rate. Prior to fiscal year 2002, the 
Department's requests to Congress kept the recap rates hovering around 
200 years. The Department is currently on track to meet our 67 year 
recapitalization goal by fiscal year 2008.
    Question. What is the department's strategy to reach the 
secretary's proposed recapitalization rate of 67 years? When will that 
happen?
    Answer. In the near term, it is our strategy to fund only the most 
critical restoration and modernization projects. The Department will 
achieve its goal of a 67 year recapitalization rate by fiscal year 
2008; however, through the disposition of facilities in the BRAC 2005 
process, we may achieve the 67 year target sooner.
    Question. Why have you programmed less for the Guard and Reserve 
components than the amount that was enacted last year?
    Answer. The most urgent MILCON requirements of the Department are 
included in the President's Budget without prejudice to Active nor 
Guard components. The Guard and Reserve compete equally with the Active 
Components according to their Facilities Investment Plans and overall 
Service priorities. While the MilCon amount in the President's budget 
this year is less than was enacted in fiscal year 2003, including 
congressionally added projects, the Department increased MILCON funding 
for the Army National Guard by 65.7 percent over the fiscal year 2003 
President's Budget, and it increased the Air National Guard funding by 
13.0 percent.
                                 ______
                                 

               Questions Submitted by Senator Ted Stevens

                                  BRAC

    Question. I understand the department is already getting organized 
to begin the BRAC process for the 2005 round. What have you done to 
date and how are you approaching this differently than past rounds of 
BRAC?
    Answer. Reducing the Department's excess capacity in a single 2005 
round will require extraordinary effort, given that the goal is true 
infrastructure rationalization rather than the simple reduction of 
excess in a status quo configuration typical of prior BRAC efforts. The 
Secretary signed out a BRAC ``kickoff'' memorandum in November 2002 
that provides the analytical construct for conducting the 2005 BRAC 
analyses. In this memorandum the Secretary established two senior 
groups to oversee and operate the BRAC 2005 process. The Infrastructure 
Executive Committee (IEC) chaired by the Deputy Secretary of Defense 
and composed of the Secretaries of the Military Departments and their 
Chiefs of Services, the Chairman of the Joints Chiefs of Staff and the 
Under Secretary of Defense (Acquisition, Technology and Logistics) is 
the policy making and oversight body for the entire BRAC 2005 process. 
The subordinate Infrastructure Steering Group (ISG), chaired by the 
USD(AT&L) and composed of the Vice Chairman of the Joint Chiefs of 
Staff, the Military Department Assistant Secretaries for installations 
and environment, the Service Vice Chiefs, and the Deputy Under 
Secretary of Defense (Installations & Environment), will oversee joint 
cross-service analyses of common business oriented functions and ensure 
the integration of that process with the Military Department and 
Defense Agency specific analyses of all other functions. The Secretary 
went on to indicate that a primary objective of BRAC 2005 is to examine 
and implement opportunities for greater joint activity. Accordingly, he 
divided the BRAC 2005 analysis into two categories of functions. Joint 
cross-service teams will analyze the common business-oriented support 
functions and report their results through the ISG to the IEC. The 
Military Departments will analyze all service unique functions and 
report their results directly to the IEC. The Military Departments are 
responsible for ensuring that their recommendations are fully 
consistent with the joint cross-service teams' recommendations.
    The BRAC process outlined in the Defense Base Closure and 
Realignment Act of 1990, Public Law 101-510, as amended, that governed 
the three previous BRAC rounds also governs the 2005 round, although 
Congress did amend that statute when it comes to the 2005 round.
    The first such amendment concerns the role of military value in the 
selection process. In previous rounds, as DOD policy, the military 
value criteria took priority over the other criteria. However, in BRAC 
2005, there is now a statutory requirement that military value be the 
primary consideration, reflecting the special emphasis military value 
should have during all analyses. Additionally, the authorizing 
legislation provides some other special considerations that the 
Department must address when developing its selection criteria.
    Congress also amended the BRAC statute to require the Secretary to 
provide Congress with a separate report prior to the Secretary's 
recommendations on closures and realignments. In this report, which is 
due to Congress along with the budget documents for fiscal year 2005 
(about February 2004), the Secretary must include, among other things, 
the 20 year force structure plan of probable threats, a comprehensive 
inventory of installations, a discussion of excess capacity categories, 
and a certification by the Secretary that a BRAC round in 2005 is 
necessary.
    In addition to statutory changes, there are BRAC process changes 
which the Secretary directed in his kickoff memorandum. As discussed 
above, rather than considering all functions on a service-centric 
basis, the Secretary directed that all common business oriented support 
functions will be analyzed by Joint Cross-Service Groups, under the 
supervision of the ISG. The ISG will recommend to the IEC the specific 
functions to receive joint analysis and the metrics for that analysis 
for the Secretary's approval. Outputs from the Joint Cross Service 
Groups, after being endorsed by the management oversight groups, will 
be considered as recommendations for review and approval by the 
Secretary. During previous BRAC rounds, Joint Cross-Service Groups 
developed ``alternatives'' for consideration by the Services.
    Question. What lesson will you learn in the next round?
    Answer. After the Department submitted its closure and realignment 
recommendations to the BRAC Commission in 1995, the General Accounting 
Office (GAO) provided a thorough review of the Department's BRAC 1995 
process. In its report, the GAO acknowledged that ``DOD's 1995 BRAC 
process was generally sound and well documented and should result in 
substantial savings.'' However, there were areas that GAO found could 
be improved upon. For instance, while the GAO found that ``OSD 
attempted to play a stronger role in BRAC 1995,'' there was ``limited 
success in Cross-Servicing.'' We agree with the GAOs assessment with 
respect to the cross-service group outcomes. The Secretary's November 
15, 2002, ``kick-off'' memorandum to the Department strengthened the 
Joint Cross-Service Groups by empowering them to develop 
recommendations for the Secretary. In BRAC 1995, these groups were only 
empowered to develop ``alternatives'' for consideration by the 
Services.
    Question. What do you estimate the cost will be to conduct BRAC 
beginning in 2006 through 2008?
    Answer. In the April 1998 ``Report of the Department of Defense on 
Base Realignment and Closure,'' the Department estimated that it has 
about 23 percent excess base capacity. That report also noted that its 
analysis was not appropriate for selecting individual bases for 
realignment or closure, and to do so, the Department would need to use 
the detailed base-by-base analyses of a BRAC process.
    The Department assumes that the historical costs and savings from 
BRAC rounds 1993 and 1995 would serve as a good baseline upon which to 
plan for BRAC 2005 costs and savings. These rounds collectively reduced 
the base infrastructure by approximately 12 percent. If BRAC 2005 is to 
approach a notional 20 percent reduction in base infrastructure, then 
the associated costs and savings over its 6 year implementation period 
can be inflated and interpolated from the BRAC 1993/1995 baseline. 
Based on this analysis, we believe that between fiscal year 2006 and 
fiscal year 2008, a reasonable estimate for implementing a BRAC round 
that eliminates approximately 20 percent excess capacity is about $19 
billion. These costs are offset by estimated savings of almost $9 
billion. Our estimates have also projected that this investment in 
reshaping our infrastructure should result in approximately $8 billion 
in annual recurring savings after 2011.

                         OVERALL MILCON BUDGET

    Question. Why does the amount allocated for overseas MILCON 
projects continue to grow every year, while the amount proposed for 
domestic bases decrease?
    Answer. We are not putting inordinate emphasis on overseas areas. 
However, the Services have been making some large investments in 
certain areas over the last several years. For instance the Navy is 
recapitalizing facilities at Naval Air Station Sigonella, Italy. The 
Navy is also building up the Navy Central Command in Bahrain, which is 
the command center for all Naval operations in the CENTCOM AOR and 
several joint force units. The Army is investing in the Efficient 
Basing East initiative, which will consolidate troops in Grafenwoehr, 
Germany. The Army is also improving family housing and barracks in 
Korea. Further, a large part of our overseas costs are must-pay family 
housing operation and maintenance bills.
    Question. What is the status of your review to look at the overseas 
bases?
    Answer. The Department is working on a global study to see if the 
Department can close/realign bases overseas. The Department has to 
provide the study to the Secretary by mid-June.
    Question. When will that information be provided to the congress?
    Answer. We will submit the study to the Secretary by mid-June. If 
he approves the study, and if he releases it, we will provide it to the 
Congress shortly thereafter.
    Question. Will it potentially change the budget request for Germany 
and Korea? What about the projects that were appropriated in 2003?
    Answer. If the Department moves projects in Germany and Korea, we 
will probably do a Budget Amendment prior to markup. For fiscal year 
2003, we will either use section 2803 of 10 U.S.C. if the projects are 
below the $30 million threshold. If they are above the $30 million 
threshold, we will request rescission of the projects in question and 
will request that the Congress reappropriate them at a different 
location.
                                 ______
                                 

            Questions Submitted by Senator Dianne Feinstein

                                 EUROPE

    Question. Given the freeze on military construction in Europe--how 
will this hold effect the Efficient-Basing South Initiative?
    Answer. It really depends on the outcome of the study but I believe 
the Efficient Basing South will not be affected.
    Question. Would your office provide the Committee with the level of 
host nation funding provided for construction projects, by country, 
over the last several years? And, could you give examples of where we 
are, and are not, getting a fair shake?
    Answer. We renegotiated the Special Measures Agreement with the 
Republic of Korea (ROK). As a result, ROK-funded construction for 
United States forces in Korea increased by over 35 percent. The 
Government of Japan provides us with about $680 million per year in 
construction under the Japanese Facility Improvement Program (JFIP).
  --The Korean Host Nation Funded Construction program is comprised of 
        2 parts:
  --The ROK Funded Construction program (ROKFC) supports quality-of-
            life and other non-readiness type construction
  --The Combined Defense Improvement Program (CDIP) constructs combat 
            readiness facilities.
  --The programs are funded on a calendar year (CY) basis as follows:

                                             [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                           Calender Year
                                                 ---------------------------------------------------------------
                                                       2001            2002            2003            2004
----------------------------------------------------------------------------------------------------------------
ROKFC...........................................            95.0           138.4           156.1           170.0
CDIP............................................            47.0            54.2            59.8            66.6
                                                 ---------------------------------------------------------------
      TOTAL.....................................           142.0           192.6           215.9           236.6
----------------------------------------------------------------------------------------------------------------

  --The Japanese Facility Improvement Program is funded at 80 billion 
        yen per year (approximately $680 million at the current 
        exchange rate of 117 yen/dollar) and constructs both readiness 
        and non-readiness facilities.
  --We also have the Land Partnership Program with the Koreans where we 
        return land and facilities at one location and they provide us 
        land where we are consolidating and provide us increased use of 
        ROK training ranges.
  --We also have a host nation support agreements with various NATO 
        countries where we turn back facilities and get either a 
        monetary return or payment in kind (PIK). For instance, we 
        received $181.6 Million in cash and $852.8 Million in PIK from 
        the Federal Republic of Germany (FRG).
  --Lastly, we have an agreement with NATO where we contribute 
        approximately 24 percent of war time facilities being 
        constructed. While this seems to be a large percentage, the 
        other countries contribute a larger portion of their GNP than 
        we do.

                                  BRAC

    Question. The fiscal year 2004 budget request for BRAC 
environmental cleanup represents a 34 percent reduction from fiscal 
year 2003. The Navy BRAC account took a 62 percent hit, and the Army 
BRAC account took a 57 percent hit. Yet the outstanding bill for 
environmental cleanup at closed or realigned bases exceeds $3.5 
billion.
    In your prepared testimony, you cite efficiencies in base clean up 
and speedier transfers of property as the reasons for the decrease in 
the BRAC budget request. But cutting the budget is not helping to 
reduce the $3.5 billion dollar backlog, and we will be able to complete 
the program if the Defense Department keeps squeezing the BRAC cleanup 
budget. What are your projections for the out years--are you planning 
increases or further decreases in the BRAC environmental remediation 
budget?
    Answer. The fiscal year 2004 budget request for the total fiscal 
year 2004 BRAC program (including environmental and caretaker costs) 
represents a 34 percent reduction from fiscal year 2003. When 
considering BRAC environmental costs only, the planned value of the 
fiscal year 2004 program ($412.0 million) represents a 24 percent 
reduction from fiscal year 2003 ($540.2 million). A significant portion 
of the difference is attributed to revenues anticipated from land sales 
of base closure properties, thus reducing the fiscal year 2004 budget 
request.
    The President's Budget includes $275.7 million to address the 
Department's known BRAC environmental requirements in fiscal year 2005. 
This level could increase as we approach the budget year and 
requirements are better defined. A substantial level of total BRAC 
environmental requirements will remain beyond the current FYDP due to 
the fact that many of the BRAC sites are still in the study phase and 
that a greater range of contaminants may be considered in the cleanup 
process leading to transfer of properties to communities. The 
Department recognizes the inherent advantages of transferring 
properties as soon as possible and fully funds cleanup of all 
properties with identified schedules for transfer.

                                 KOREA

    Question. I traveled to Korea this past December and had some good 
discussions with General LaPorte. I was impressed with the Land 
Partnership Plan, although I recognize that it is a very ambitious 
initiative that requires a great deal of support and cooperation from 
the South Korean government.
    What is the status of the Yongsan land swap?
    Answer. The Land Partnership Program (LPP) was signed in March 2002 
and ratified by the Korean government in November 2002. It is now being 
executed though no land has been exchanged. However, host nation funded 
projects have been started at locations associated with LPP. The 
location of U.S. Forces Korea installations in the LPP are currently 
under review based on the requirement by the Secretary of Defense that 
geographic combatant commanders prepare an integrated presence and 
basing strategy by July 1, 2003. The LPP has a provision to modify the 
installations specified if needed. THE PACOM Commander must also 
evaluate the fiscal year 2003 and 2004 Military Construction programs 
for Korea and provide the Secretary of Defense with his assessment.
                                 ______
                                 

               Questions Submitted by Senator Tim Johnson

                                 EUROPE

    Question. All the best weapons in the world will be rendered 
useless if our military personnel and their families are not afforded a 
good quality of life. When asked, our military personnel consistently 
say that family housing is one of the most important quality of life 
issues that they face. I understand that the Department of Defense is 
in the middle of a multi-year effort to replace 163,00 inadequate 
family housing units. If this is a top priority, why does the 
President's budget include a $200 million cut for family housing? Could 
the services use additional funds to speed-up the timeline for 
replacing inadequate housing units?
    Answer. The Department did not cut the budget for family housing. 
The family housing request decreased by $200 million because a large 
portion of family housing is being privatized. Since family housing is 
privatized, it is private housing owned by the developer and as such, 
Congress does not appropriate money into the family housing accounts. 
Instead, the Department requests, and the Congress appropriates, funds 
into the military personnel accounts.
    The Services are privatizing units as fast as they can. In answer 
to your question, I do not think the Services can use any additional 
funds to privatize units since they are on a timeline to eliminate 
inadequate housing by fiscal year 2007
    Question. The National Guard and Reserve are being asked to play an 
increasingly important role in our national security. In South Dakota, 
21 percent of our National Guard and Reserve units have been called to 
active duty in support of the war on terrorism. As we rely on these 
units more, I believe we need to provide a corresponding investment in 
their facilities and infrastructure. With this in mind, I was surprised 
that the President's budget did not include any funds for the South 
Dakota Army or Air National Guard. Why did the President's budget 
include a cut in military construction funding for the Army and Air 
National Guard? Would increased military construction funding for the 
Army and Air National Guard improve their readiness and ability to 
contribute to the war on terrorism?
    Answer. There are four Guard projects in the fiscal year 2004-
fiscal year 2009 Future Years Defense Program (FYDP) for South Dakota; 
although, the fiscal year 2004 President's Budget does not include any 
MilCon projects for the South Dakota Guard and Reserve. More than $36 
million was appropriated for South Dakota Guard and Reserve MilCon 
between fiscal year 2001 and fiscal year 2003. The most urgent MilCon 
requirements of the Department are included in the President's Budget, 
and the Guard and Reserve compete equally with the Active Components. 
While the MilCon amount in the President's budget this year is less 
than was enacted in fiscal year 2003, including congressionally added 
projects, the Department increased MilCon funding for the Army National 
Guard by 65.7 percent over the fiscal year 2003 President's Budget, and 
it increased the Air National Guard funding by 13.0 percent.
    Question. Recent reports in the media indicate the Department of 
Defense has begun to look at downsizing the U.S. military presence in 
Germany, including U.S. bases. There have also been reports that 
Secretary Rumsfeld has ordered all construction projects to be re-
examined in order to avoid making upgrades at facilities that may be 
closed. Has the Department of Defense done any analysis on the cost of 
closing U.S. bases in Germany? Has the Department of Defense done any 
analysis on the cost of moving these bases to Central or Eastern 
Europe?
    Answer. Yes. As I mentioned previously, the Department is 
conducting a study that will be completed by mid-June on moving bases 
out of Germany.
                                 ______
                                 

             Questions Submitted to Raymond F. DuBois, Jr.

          Questions Submitted by Senator Kay Bailey Hutchison

                      FAMILY HOUSING PRIVATIZATION

    Question. I applaud your efforts with regards to family housing 
privatization. I noticed in your statement that the privatization 
leverage--that is the ratio of what we put into the deal versus what we 
get out--is 10 to 1. How did you calculate that ratio?
    Answer. Our policy requires that privatization yield at least three 
times the amount of housing that would be provided using traditional 
military construction. The projects awarded thus far leverage upfront 
appropriations by a ratio of 10:1. This ratio is derived by dividing 
the estimated cumulative cost of an identical MILCON projects ($2.9 
billion) by the actual cost in appropriated dollars of the awarded 
privatization projects ($290 million). This financial calculation 
reflects the program's short-term effectiveness in fixing our 
inadequate housing. We also calculate and compare the long-term (50-
year) costs of MILCON and privatization, taking into account the 
members' housing allowances. The long-term economic analysis indicates 
that privatization is 5-10 percent less expensive than MILCON.
    Question. How many units do you plan to privatize in fiscal year 
2003 and 2004?
    Answer. Our current projections are that the Services will 
privatize over 38,000 family housing units during fiscal year 2003 and 
over 36,000 family housing units during fiscal year 2004. As of March 
2003, we have awarded 18 projects with 27,884 family housing units 
privatized. We plan to privatize about 102,000 family housing units by 
the end of fiscal year 2004. This large increase is primarily due to 
the Services gaining traction in their housing privatization efforts, 
and the Army's whole base projects planned for award in fiscal year 
2003 and fiscal year 2004.

                     ADEQUACY OF THE BUDGET REQUEST

    Question. Two years ago you both testified that after many years of 
neglect, the Department intended to start investigating the 
infrastructure. Your proposed budget barely funds new mission 
initiatives, let alone replacing aging facilities. What is the DOD 
position on revitalizing facilities?
    Answer. We have three investment priorities. Our first priority is 
to sustain our existing facilities, our second priority is to 
recapitalize (both restore and modernize) our existing facilities and 
the third priority is to acquire new footprint and dispose of old 
facilities as appropriate. The fiscal year 2004 budget funds facilities 
sustainment at 94 percent of our requirement. The fiscal year 2004 
recapitalization rate was held at about the same rate as fiscal year 
2003, but is on track to meet our 67-year recapitalization goal by 
fiscal year 2008.
    Question. Why is the 2004 military construction request lower than 
the amount enacted for military construction last year?
    Answer. The fiscal year 2004 President's Budget request for 
military construction is slightly higher than the 2003 enacted amount 
when the Defense Emergency Response Fund projects and congressional 
adds are excluded.
    The 2004 request funds our highest priorities for improving quality 
of life and resolving critical readiness shortfalls. For quality of 
life, the military construction request sustains funding for family and 
bachelor housing and increases the number of housing units privatized. 
We also preserved funding for recapitalization. We increased funding 
for facilities sustainment, raising the corporate sustainment rate from 
93 to 94 percent, which will help to preserve our facilities and reduce 
the need for future, more costly revitalizations.
    Question. What is the backlog of Department of Defense projects for 
military construction?
    Answer. The Department of Defense does not maintain a list of 
backlog projects.
    Question. With the proposed funding in the 2004 budget for MILCON, 
how does that impact the Department's overall recapitalization rate? 
How does that compare to the last 2 years?
    Answer. The fiscal year 2004 recapitalization rate is 148 years for 
the four Services and 136 years for the combination of the four 
Services and three of the Defense Agencies. This is about the same as 
the fiscal year 2003 recapitalization rate and higher than the fiscal 
year 2002 recapitalization rate. Prior to fiscal year 2002, the 
Department's requests to Congress kept the recap rates hovering around 
200 years. The Department is currently on track to meet our 67-year 
recapitalization goal by fiscal year 2008.
    Question. What is the Department's strategy to reach the 
Secretary's proposed recapitalization rate of 67 years? When will that 
happen?
    Answer. In the near term, it is our strategy to fund only the most 
critical restoration and modernization projects. The Department will 
achieve its goal of a 67-year recapitalization rate by fiscal year 
2008.
    Question. Why have you programmed less for the Guard and Reserve 
components than the amount that was enacted last year?
    Answer. The most urgent MilCon requirements of the Department are 
included in the President's Budget with prejudice to Active or Reserve 
components. The Guard and Reserve compete equally with the Active 
Components according to their Facilities Investment Plans and overall 
Service priorities. While the MilCon amount in the President's budget 
this year is less than was enacted in fiscal year 2003, including 
congressionally added projects, the Department increased MilCon funding 
for the Army National Guard by 65.7 percent over the fiscal year 2003 
President's Budget, and it increased the Air National Guard funding by 
13.0 percent.
                                 ______
                                 

               Questions Submitted by Senator Ted Stevens

                  BASE REALIGNMENT AND CLOSURE (BRAC)

    Question. I understand the Department is already getting organized 
to begin the BRAC process for the 2005 round. What have you done to 
date and how are you approaching this differently than the past rounds 
of BRAC?
    Answer. Reducing the Department's excess capacity in a single 2005 
round will require extraordinary effort, given that the goal is true 
infrastructure rationalization rather than the simple reduction of 
excess in a status quo configuration typical of prior BRAC efforts. The 
Secretary signed out a BRAC ``kickoff'' memorandum in November 2002 
that provides the analytical construct for conducting the 2005 BRAC 
analyses. In this memorandum the Secretary established two senior 
groups to oversee and operate the BRAC 2005 process. The Infrastructure 
Executive Committee (IEC) chaired by the Deputy Secretary of Defense 
and composed of the Secretaries of the Military Departments and their 
Chiefs of Services, the Chairman of the Joints Chiefs of Staff and the 
Under Secretary of Defense (Acquisition, Technology and Logistics) is 
the policy making and oversight body for the entire BRAC 2005 process. 
The subordinate Infrastructure Steering Group (ISG), chaired by the 
USD(AT&L) and composed of the Vice Chairman of the Joint Chiefs of 
Staff, the Military Department Assistant Secretaries for installations 
and environment, the Service Vice Chiefs, and the Deputy Under 
Secretary of Defense (Installations & Environment), will oversee joint 
cross-service analyses of common business oriented functions and ensure 
the integration of that process with the Military Department and 
Defense Agency specific analyses of all other functions. The Secretary 
went on to indicate that a primary objective of BRAC 2005 is to examine 
and implement opportunities for greater joint activity. Accordingly, he 
divided the BRAC 2005 analysis into two categories of functions. Joint 
cross-service teams will analyze the common business-oriented support 
functions and report their results through the ISG to the IEC. The 
Military Departments will analyze all service unique functions and 
report their results directly to the IEC. The Military Departments are 
responsible for ensuring that their recommendations are fully 
consistent with the joint cross-service teams' recommendations.
    The BRAC process outlined in the Defense Base Closure and 
Realignment Act of 1990, Public Law 101-510, as amended, that governed 
the three previous BRAC rounds also governs the 2005 round, although 
Congress did amend that statute when it comes to the 2005 round.
    The first such amendment concerns the role of military value in the 
selection process. In previous rounds, as DOD policy, the military 
value criteria took priority over the other criteria. However, in BRAC 
2005, there is now a statutory requirement that military value be the 
primary consideration, reflecting the special emphasis military value 
should have during all analyses. Additionally, the authorizing 
legislation provides some other special considerations that the 
Department must address when developing its selection criteria.
    Congress also amended the BRAC statute to require the Secretary to 
provide Congress with a separate report prior to the Secretary's 
recommendations on closures and realignments. In this report, which is 
due to Congress along with the budget documents for fiscal year 2005 
(about February 2004), the Secretary must include, among other things, 
the 20 year force structure plan of probable threats, a comprehensive 
inventory of installations, a discussion of excess capacity categories, 
and a certification by the Secretary that a BRAC round in 2005 is 
necessary.
    In addition to statutory changes, there are BRAC process changes 
which the Secretary directed in his kickoff memorandum. As discussed 
above, rather than considering all functions on a service-centric 
basis, the Secretary directed that all common business oriented support 
functions will be analyzed by Joint Cross-Service Groups, under the 
supervision of the ISG. The ISG will recommend to the IEC the specific 
functions to receive joint analysis and the metrics for that analysis 
for the Secretary's approval. Outputs from the Joint Cross Service 
Groups, after being endorsed by the management oversight groups, will 
be considered as recommendations for review and approval by the 
Secretary. During previous BRAC rounds, Joint Cross-Service Groups 
developed ``alternatives'' for consideration by the Services.
    Question. What lessons learned will you apply in the next round?
    Answer. After the Department submitted its closure and realignment 
recommendations to the BRAC Commission in 1995, the General Accounting 
Office (GAO) provided a thorough review of the Department's BRAC 95 
process. In its report, the GAO acknowledged that ``DOD's 1995 BRAC 
process was generally sound and well documented and should result in 
substantial savings.'' However, there were areas that GAO found could 
be improved upon. For instance, while the GAO found that ``OSD 
attempted to play a stronger role in BRAC 1995,'' there was ``limited 
success in Cross-Servicing.'' We agree with the GAO's assessment with 
respect to the cross-service group outcomes. The Secretary's November 
15, 2002, ``kick-off'' memorandum to the Department strengthened the 
Joint Cross-Service Groups by empowering them to develop 
recommendations for the Secretary. In BRAC 1995, these groups were only 
empowered to develop ``alternatives'' for consideration by the 
Services.
    Question. What do you estimate the cost to be to conduct BRAC 
beginning in 2006 through 2008?
    Answer. In the April 1998 ``Report of the Department of Defense on 
Base Realignment and Closure,'' the Department estimated that it has 
about 23 percent excess base capacity. That report also noted that its 
analysis was not appropriate for selecting individual bases for 
realignment or closure, and to do so, the Department would need to use 
the detailed base-by-base analyses of a BRAC process.
    The Department assumes that the historical costs and savings from 
BRAC rounds 1993 and 1995 would serve as a good baseline upon which to 
plan for BRAC 2005 costs and savings. These rounds collectively reduced 
the base infrastructure by approximately 12 percent. If BRAC 2005 is to 
approach a notional 20 percent reduction in base infrastructure, then 
the associated costs and savings over its 6 year implementation period 
can be inflated and interpolated from the BRAC 1993/1995 baseline. 
Based on this analysis, we believe that between fiscal year 2006 and 
fiscal year 2008, a reasonable estimate for implementing a BRAC round 
that eliminates approximately 20 percent excess capacity is about $19 
billion. These costs are offset by estimated savings of almost $9 
billion. Our estimates have also projected that this investment in 
reshaping our infrastructure should result in approximately $8 billion 
in annual recurring savings after 2011.

                         OVERALL MILCON REQUEST

    Question. Why does the amount allocated for overseas MILCON 
projects continue to grow every year, while the amount proposed for 
domestic bases decreases?
    Answer. Approximately 25 percent of our forces are stationed 
overseas. The fiscal year 2004 MilCon bill requests $754 million for 
overseas areas and $3.6 billion for U.S./territories, reflecting a 17 
percent foreign and 83 percent U.S./territories split. This is actually 
a reduction in overseas investment from fiscal year 2003, when our 
request reflected a 21 percent foreign and 79 percent U.S./territories 
split.

                  BASE REALIGNMENT AND CLOSURE (BRAC)

    Question. What is the status of your review to look at overseas 
bases?
    Answer. The Secretary asked the Chairman of the Joint Chiefs of 
Staff to direct geographic combatant commanders to develop overseas 
basing master plans in Aug 2001. The Deputy Secretary notified Congress 
in April 2002 that additional time was needed to review/consolidate the 
Joint Staff's input with other ongoing overseas studies. He indicated 
that a response would result in early 2003. Currently, the Under 
Secretary of Defense for Policy and the Joint Staff are studying 
various aspects of overseas presence. Once these studies are complete, 
it will provide the foundation upon which we can then determine what 
infrastructure is needed (and where) to support these forces.
    Note: In his March 20, 2003, memorandum, ``Integrated global 
Presence and Basing Strategy,'' the Secretary provided additional 
direction on overseas programs. He directed the geographic Combatant 
Commanders to provide, within 30 days, their priorities regarding the 
fiscal year 2003 and fiscal year 2004 military construction programs. 
The Secretary also directed the Under Secretary of Defense for Policy 
and the Chairman, Joint Chiefs of Staff, to develop a comprehensive and 
integrated presence and basing strategy that looks out 10 years.
    Question. When will that information be provided to Congress?
    Answer. I will be working with the Under Secretary of Defense for 
Policy and Joint Staff to compile and assess these various overseas 
studies, including the overseas basing study. A comprehensive review of 
all efforts is anticipated to be completed by the end of the summer 
with a report to Congress in the fall. The Department will keep you 
informed of unforeseen obstacles that would delay this effort.
    Question. Will it potentially change the budget request for Germany 
and Korea? What abut the projects that were appropriated in 2003?
    Answer. The Department has not made any decisions regarding closing 
or relocating bases in Germany or Korea. We are still awaiting the 
results of several studies that will help us determine what forces are 
needed overseas and what infrastructure is required to support these 
forces. The Secretary asked the Combatant Commanders to evaluate 
projects that are in the fiscal year 2003 and fiscal year 2004 budget 
requests and get back to us as to which projects they need and do not 
need. For the projects that are determined unnecessary at this time, 
the funds will either be reprogrammed using the emergency authority, or 
will seek an adjustment to the authorization and appropriation bill.
                                 ______
                                 

            Questions Submitted by Senator Dianne Feinstein

                                 EUROPE

    Question. Given the freeze on military construction in Europe--how 
will this hold affect the Efficient-Basing South Initiative?
    Answer. I cannot prejudge General Jones's review. However, 
Efficient Basing South, which adds a second airborne battalion to the 
173rd Airborne Brigade in Vicenza, Italy, will provide U.S. European 
Command with enhanced forced entry capabilities and increased 
flexibility. These capabilities are not inconsistent with the precepts 
underpinning this overseas base structure review.
    The final company of the battalion, C Company, was activated on 16 
March 2003, 6 months ahead of the original timeline. In support of this 
initiative, Congress approved fiscal year 2003 military construction 
funding of $31 million for a barracks complex and $3.7 million for a 
Child Development Center.
    Question. Would your office provide the Committee with the level of 
host nation funding provided for construction projects, by country, 
over the last several years? And, could you give examples of where we 
are, and are not, getting a fair shake?
    Answer. Host nation funding is accomplished through the NATO 
Security Investment Program as well as payment-in-kind construction 
provided as compensation for U.S.-funded improvements at facilities 
being returned to the host nation.
    The NATO Security Investment Program has funded about $1.7 billion 
in projects since 1989 for runway improvements, utilities, missile 
maintenance, hanger doors, piers, ammunition facilities, roads and 
pavements, and support to the Balkans. About $532 million is being 
provided for projects currently in progress:

                         [In millions of dollars]
------------------------------------------------------------------------

------------------------------------------------------------------------
Aviano Beddown..........................................             166
Ramstein Upgrades.......................................             150
Mildenhall Upgrades.....................................              49
Spangdahlem Upgrades....................................              16
Fairford Upgrades.......................................              99
Lakenheath Upgrades.....................................              46
Patriot Site Upgrades...................................               6
------------------------------------------------------------------------

    Host nation funding is also provided through payment-in-kind 
construction, given in lieu of cash payments for U.S. capital 
investments at facilities being returned to host nations. To date, the 
United States has received payment-in-kind worth $36 million from the 
United Kingdom, $240,000 from Iceland, and about $316 million from 
Germany, which is expected to provide another $34 million in the 
future. In addition, in exchange for returning Rhein-Main Air Base to 
Germany, the German Government provided $425 million worth of 
construction projects to replicate and enhance Air Force mission 
capabilities at Ramstein and Spangdahlem Air Bases.
    We are generally satisfied with our progress in obtaining payment-
in-kind commitments from our NATO allies.
                                 ______
                                 

               Questions Submitted by Senator Tim Johnson

                                HOUSING

    Question. All the best weapons in the world will be rendered 
useless if our military personnel and their families are not afforded a 
good quality of life. When asked, our military personnel consistently 
say that family housing is one of the most important quality of life 
issues that they face. I understand that the Department of Defense is 
in the middle of a multi-year effort to replace the 163,000 inadequate 
family housing units. If this is a top priority, why does the 
President's budget include a $200 million cut for family housing? Could 
the services use additional funds to speed-up the timeline for 
replacing inadequate housing units?
    Answer. The Department remains committed to improving the living 
conditions of our military personnel and their families. As we continue 
to increase housing privatization, coupled with the increased Basic 
Allowance for Housing (BAH), the Department's requirement for on-base 
housing decreases. This, in turn, reduces the need for direct 
investment to maintain inadequate housing. Both initiatives enhance the 
Department's efforts to eliminate inadequate housing by 2007 and 
provide military families the opportunities to secure suitable and 
affordable housing in the community.

                     ADEQUACY OF THE BUDGET REQUEST

    Question. The National Guard and Reserve are being asked to play an 
increasingly important role in our national security. In South Dakota, 
21 percent of our National Guard and Reserve units have been called to 
active duty in support of the war on terrorism. As we rely on these 
units more, I believe we need to provide a corresponding investment in 
their facilities and infrastructure. With this in mind, I was surprised 
that the President's budget did not include any funds for the South 
Dakota Army or Air National Guard. Why did the President's budget 
include a cut in military construction funding for the Army and Air 
National Guard? Would increased military construction funding for the 
Army and Air National Guard improve their readiness and ability to 
contribute to the war on terrorism?
    Answer. MilCon requirements of the Department included in the 
President's Budget reflect important priorities in infrastructure 
improvements to meet current mission. The Guard and Reserve compete 
equally with the Active Components in this regard. While military 
construction funding in the President's Budget this year is less than 
was enacted by Congress for fiscal year 2003, the Department increased 
MilCon funding for the Army National Guard by 65.7 percent over the 
fiscal year 2003 President's Budget, and increased the Air National 
Guard funding by 13.0 percent.

                                 EUROPE

    Question. Recent reports in the media indicate the Department of 
Defense has begun to look at downsizing the U.S. military presence in 
Germany, including U.S. bases. There have also been reports that 
Secretary Rumsfeld has ordered all construction projects to be re-
examined in order to avoid making upgrades at facilities that may be 
closed. Has the Department of Defense done any analysis on the cost of 
closing U.S. bases in Germany? Has the Department of Defense done any 
analysis on the cost of moving these bases to Central or Eastern 
Europe?
    Answer. In August 2001, the Secretary of Defense directed all 
combatant commanders to review overseas basing requirements and examine 
opportunities for joint use of facilities and land by the Services, 
consolidation of infrastructure, and enhanced training. While that 
particular task is completed, the Department is continuing to examine 
our overseas basing and presence within the context of a global 
strategy. Specifically, combatant commanders have been asked to provide 
priorities regarding their fiscal year 2003 and fiscal year 2004 
military construction programs by April 20. To complement that effort, 
the Department is developing a comprehensive and integrated presence 
and basing strategy looking out 10 years. We anticipate that effort to 
be completed by July 1, 2003.
    While no decisions have been made on our future base structure in 
Germany, the Department is in the process of analyzing all aspects of 
potential basing changes. These would include the cost of any base 
closures as well as the cost of moving bases to other forward 
locations.
                         Department of the Navy

STATEMENT OF HON. H.T. JOHNSON, ASSISTANT SECRETARY OF 
            THE NAVY, INSTALLATIONS AND ENVIRONMENT 
            (ALSO ACTING SECRETARY OF THE NAVY)
    Senator Hutchison. Thank you very much, and we would just 
call the next panel to come forward, please. Dr. Mario Fiori, 
Assistant Secretary of the Army for Installations and 
Environment: Mr. H.T. Johnson, Acting Secretary of the Navy and 
Assistant Secretary for Installations and Environment, and Mr. 
Nelson Gibbs, Assistant Secretary of the Air Force for 
Installations, Environment, and Logistics, and I am going to 
take a 2-minute break and be right back.
    Senator Feinstein. Senator Hutchison asked if we could keep 
going, so Mr. Johnson, since you were so nice with Bayview-
Hunters Point, I will call on you first to make any remarks you 
may care to make to the subcommittee.
    Mr. Johnson. Thank you very much, and you are very 
gracious. We have a long ways to go on Hunters Point, but we 
are as committed as you are.
    I am H.T. Johnson. As you mentioned, I am appearing this 
afternoon as Assistant Secretary for Installations and 
Environment. We have some comments, if you will put those in 
the record.
    All of our services are faced with difficult financial 
decisions and a difficult environment with terrorism. We need 
very badly to keep up our readiness of our facilities and our 
ships, the acquisition accounts and everything, and we are 
trying our best to find the right balance.
    This afternoon, as we talk, you will see that some areas in 
the MILCON and the other activities are lower than we would 
like, but we are trying to find the correct balance. Housing is 
still a very high priority for us. Bachelors in the Navy and 
Marine Corps have a higher need than the family housing. We 
have been very successful with family housing, and we would 
like to take that success over to the bachelor housing.
    We have committed $269 million to bachelor quarters. We 
have been trying for the last couple of years to bring our 
sailors who are on board ships ashore when they are in their 
home port. To do that, we are building bachelor quarters at San 
Diego and also at Norfolk. We will build these at the agreed-to 
standards, one plus one, but initially we will have two sailors 
in each room. It is certainly better accommodations than they 
would have on board the ships.
    The family housing is on track. We are doing very, very 
well in family housing. The Navy has doubled its privatization 
effort, and the Marine Corps will approach 95 percent of the 
housing being public-private venture type operations.
    The basic allowance for housing increase has made it easier 
for military families to find housing in the local economy. We 
have also found in some of our early surveys that there is less 
demand for on-base housing. We are very pleased to have 
announced just last week a new PPV at Beaufort and Parris 
Island for 1,700 units. This is a very large one, second only 
to San Diego, where we had a much larger one. We now have 8,300 
homes in the public-private venture, and we plan over 17,000 at 
10 Navy and Marine Corps bases.
    We have urged the Members to focus on the goal of 
eliminating inadequate housing, and not necessarily on the 
money. I have a handout, if you would pass it to the Senators, 
that shows--it is this one. When you look at our family 
housing, you need to look at the top line. You will notice a 
difference between the dark blue and the lighter blue. The 
lighter blue is the public-private venture.
    As we go to the right, you will see that, as I mentioned 
earlier, the Marine Corps will be 95 percent public-private, so 
once we go into the public-private, we will not require 
additional military construction. That becomes a self-
fulfilling entitlement. At various times during the agreed-to 
period we will refurbish the housing, we will rebuild it at 
certain times, but all that comes from the housing allowances. 
In other words, that goes in to pay for that, so as you look 
towards the off-side there, our military construction for 
family housing will go down almost to nothing. If we were to 
privatize all of it, it would go to zero.
    In our milcon we have $1.2 billion, and we have an 
unusually large amount on bachelor housing. I talked about 
counterterrorism. We also plan to buy Blount Island down in 
Jacksonville. This has long been the home port for our Marine 
Corps prepositioning ships. We have looked at the explosive arc 
and find that we need to buy that as well as get agreements 
from the other tenants in that area.
    We are also supporting new weapons systems, the F/A-18 E&F 
outlying field, the JSF joint strike fighter test facility, and 
the test facilities for the next generation fighters. We have 
worked hard to maintain a high level of funding for our 
sustainment. Sustainment, of course, is the first line of 
taking care of our new facilities and our old.
    We have not been as successful in funding the proper levels 
for restoration and modernization. The goal is to do 67 years. 
In the Marine Corps we have decreased this year from 156 to 88. 
The Navy has actually gone up a little bit from 116 to 140 
years in the budget year. By the end of the FYDP we do get down 
to the 67. This is an area where we would like to do very much 
more, but we will manage the risk there in taking care of the 
quality of life facilities for our sailors and marines.
    We appreciate the specific interest of you and Mrs. 
Feinstein also on prior BRAC cleanups. As Ray DuBois mentioned, 
we are working very, very hard to clean up the bases and also 
to get them off of our rolls. We have had difficulty in doing 
the cleanup and passing them back to the communities. As Mr. 
DuBois mentioned, we in the Navy have been very successful in 
selling property, and those funds go into the BRAC cleanup and 
will help us accelerate. That is a very good news story for us, 
but also for the communities in which we are selling the 
property.
    The Navy is consolidating shore infrastructure management 
leadership, if you will, under one level, one leader. This will 
eliminate successive levels, where these funds often are used 
for other things. The whole purpose was to ensure that funds 
that you provide for us for facilities are in fact used for 
that purpose.
    I would also like to talk just briefly about environmental 
programs. I recognize that is not necessarily the focus of this 
hearing, but it is very much a part of all that we do. We are 
making a good effort on our environmental activities. Last 
year, the Congress gave us a Migratory Bird Treaty Act change. 
We are working with the Department of Interior to implement 
that act as you gave it to us.
    We are also this year going to come back with activities 
that we came with last year. One is the Endangered Species Act, 
using the INRMP's, integrated natural resources management 
plan, as opposed to having individual endangered specie 
considerations.
    Another area that is very important to our services is the 
Marine Mammal Protection Act, and we have gained agreement with 
Department of Commerce to come forward on the proper 
definitions, and we will bring that to you a little bit later.

                           PREPARED STATEMENT

    We always look for the proper balance, not only between 
environmental stewardship but also what is best to serve our 
sailors, soldiers, airmen, marines, and Coast Guardsmen. We are 
as dedicated to that as you are, and we thank you for your 
strong support of all of these men and women who serve our 
Nation.
    [The statement follows:]

                   Prepared Statement of H.T. Johnson

    Madam Chairman and members of the Committee, I am H.T. Johnson. 
While I have recently been designated as the Acting Secretary of the 
Navy, I am also the Assistant Secretary of the Navy (Installations and 
Environment), and it is in this latter capacity that I appear before 
you today to provide an overview of the Department of the Navy's shore 
infrastructure programs and environmental efforts.

Fiscal Year 2004 Budget Overview
    Before his recent departure to the Department of Homeland Security, 
Secretary of the Navy Gordon England articulated several overarching 
Department of Navy goals for the fiscal year 2004 budget:
  --Successfully prosecuting the global war on terrorism while 
        sustaining our current readiness;
  --Recapitalizing and transforming our Navy and Marine Corps to meet 
        the challenges of the future;
  --Fully networking our forces at sea and ashore to operate seamlessly 
        in a joint environment;
  --Continuing to invest in our Sailors and Marines; and
  --Sustaining the quality of our operational training.
    I believe the fiscal year 2004 Department of Navy's budget request 
meets all of these goals and represents a successful balance between 
funds needed to operate, recapitalize and transform our fleet assets 
with funds needed to do the same for our shore installations. Allow me 
to provide you with an overview of our budget, with further details to 
follow later in this statement.

Fiscal Year 2004 Budget Overview
    Our fiscal year 2004 Military Construction, Family Housing, and 
Sustainment, Restoration and Modernization (SRM) request of $4.2 
billion is $764 million below the fiscal year 2003 enacted amount, but 
generally on par with our fiscal year 2003 budget request. Looking at 
the individual components, the fiscal year 2004 Military Construction, 
(MCON) Navy (active + reserve) request is a very robust $1.16 billion, 
similar to the fiscal year 2003 request. I note that the fiscal year 
2003 enacted amount includes $236M in one-time combating terrorism 
projects that were part of the fiscal year 2003 Supplemental request. 
These projects met the criteria for military construction and were 
included in the fiscal year 2003 MCON appropriation.
    We have reduced our fiscal year 2004 Family Housing, Navy request 
by 17 percent compared to the fiscal year 2003 enacted amount or 16 
percent compared to our fiscal year 2003 request. However, expanded use 
of our housing privatization authorities, and increases to the Basic 
Allowance for Housing (BAH), which makes housing in the community more 
affordable, allow us to still meet the Department of Defense goal of 
eliminating inadequate homes by fiscal year 2007. Sustainment, 
Restoration and Modernization (SRM) funding \1\ is down 15 percent 
compared to the enacted level, a reflection of overall affordability 
within the Secretary's priorities. Compared to our fiscal year 2003 
request, the fiscal year 2004 request represents a 1.5 percent 
reduction.
---------------------------------------------------------------------------
    \1\ Refers only to the Operations and Maintenance portion of SRM.
---------------------------------------------------------------------------
    Our fiscal year 2004 request for environmental programs totals $1.0 
billion, a reduction of about $200 million from the fiscal year 2003 
enacted level and a 12 percent reduction from our fiscal year 2003 
request. Much of the reduction is due to the completion of cleanup on 
the island of Kaho'olawe, a former Naval bombing range in Hawaii. Title 
X required the Navy to conduct a 10-year cleanup, which will end on 11 
November 2003. We are working to transition full control of the island 
to the State of Hawaii.
    The decline in Technology investments is due to the completion of 
environmental research to retrofit non-ozone depleting equipment. This 
equipment is now being installed on ships. Our must-fund environmental 
cleanup requirements for bases closed under the Bases Realignment and 
Closure rounds in 1988, 1991, 1993, 1995, which I will refer to as 
Prior BRAC \2\, are less in fiscal year 2004 than in fiscal year 2003, 
while cleanup at active bases is unchanged from fiscal year 2003.
---------------------------------------------------------------------------
    \2\ Prior BRAC amounts shown in the graphic are only for 
environmental cost, and exclude $12 million in fiscal year 2003 and $11 
million in fiscal year 2004 for caretaker costs. These caretaker costs 
are a portion of the Prior BRAC budget request. The fiscal year 2004 
budget request includes $68 million in expected land sale revenue to be 
applied to cleanup Prior-BRAC locations.
---------------------------------------------------------------------------
    Environmental Quality (EQ) includes funds for compliance with 
existing environmental standards, pollution prevention, and 
conservation of natural and historic resources on Navy and Marine Corps 
Bases. Approximately half of these funds are for routine functions such 
as personnel salaries, environmental permits and fees, environmental 
sampling and laboratory analyses, and hazardous waste disposal costs, 
while the rest are for one-time projects. The decline in environmental 
quality funds is due to the completion of one-time pollution prevention 
projects and a reduction in equipment purchases.

                                HOUSING

    We have made a special effort in this budget to maintain progress 
on improving the quality of housing for our Sailors and Marines.
Family Housing
    Our family housing strategy consists of a prioritized triad:
    Reliance on the Private Sector.--In accordance with longstanding 
Department of Defense and DoN policy, we rely first on the local 
community to provide housing for our Sailors, Marines, and their 
families. Approximately three out of four Navy and Marine Corps 
families receive a Basic Allowance for Housing (BAH) and own or rent 
homes in the community. Our bases have housing referral offices to help 
newly arriving families find suitable homes in the community.
    Public/Private Ventures (PPVs).--With the strong support from this 
Committee and others, we have successfully used statutory PPV 
authorities enacted in 1996 to partner with the private sector and meet 
our housing needs, in part, through the use of private sector capital. 
These authorities, which I like to think of in terms of public/private 
partnerships, allow us to leverage our own resources and provide better 
housing faster to our families.
    Military Construction.--Military construction will continue to be 
used where PPV authorities don't apply (such as overseas), or where a 
business case analysis shows that a PPV project is not financially 
sound.
    The Department remains on track to eliminate the inadequate family 
housing units we own by fiscal year 2007, in large measure because we 
have increased our emphasis on privatization. We will be able to 
eliminate almost two-thirds of our inadequate inventory through the use 
of public/private ventures. As of 1 February, we have awarded eight 
projects totaling almost 6,600 units. During fiscal years 2003 and 
2004, we plan to award projects totaling over 17,000 homes at ten Navy 
and Marine Corps locations. This will allow us to improve our housing 
stock and provide more homes to Sailors, Marines and their families 
much faster than if we relied solely on traditional military 
construction.
    Another important factor is the continuing initiative to improve 
the basic allowance for housing (BAH). With higher BAH, our members are 
finding suitable, affordable housing in the private sector. This, in 
turn, reduces the need for military housing, thus allowing us to divest 
ourselves of excess, inadequate units in our inventory.

Bachelor Housing
    Our budget request of $269 million for Bachelor Quarters 
construction projects continues the emphasis on improving living 
conditions for our unaccompanied Sailors and Marines. There are three 
challenges:
    Provide Homes Ashore for our Shipboard Sailors.--There are 
approximately 18,100 Sailors worldwide who are required to live aboard 
ship even while in homeport. This requirement is less than reported 
last year because of a recent change to Navy policy allowing 
unaccompanied E4s to live off base. This new policy is tied to the 
fiscal year 2001 National Defense Authorization Act that authorized the 
payment of BAH to E4s without dependents who are assigned to sea duty. 
The Navy continues to project that it will be able to achieve its 
``homeport ashore'' initiative by fiscal year 2008 by housing two 
members per room. Our fiscal year 2004 budget includes two ``homeport 
ashore'' projects. One represents the second increment of a Norfolk, VA 
project that will provide a total of 500 spaces. The second project 
would construct 500 spaces for shipboard Sailors at San Diego, CA.
    Ensure our Barracks Meet Today's Standards for Privacy.--We are 
continuing our efforts to construct new and modernize existing barracks 
to provide increased privacy to our single Sailors and Marines. The 
Navy applies the ``1+1'' standard for permanent party barracks. Under 
this standard, each single junior Sailor has his or her own sleeping 
area and shares a bathroom and common area with another member. To 
promote unit cohesion and team building, the Marine Corps was granted a 
waiver to adopt a ``2+0'' configuration where two junior Marines share 
a room with a bath. The Navy will achieve these barracks construction 
standards by fiscal year 2013; the Marine Corps by fiscal year 2012.
    Eliminate gang heads.--The Navy and Marine Corps remain on track to 
eliminate inadequate barracks with gang heads \3\ for permanent party 
personnel. The Navy will achieve this goal by fiscal year 2007; the 
Marines by fiscal year 2005.
---------------------------------------------------------------------------
    \3\ Gang heads remain acceptable for recruits and trainees.
---------------------------------------------------------------------------
    We appreciate the support from the Congress in our efforts to 
extend the principles of privatization to our critical bachelor housing 
needs. We envision that privatization will prove to be as successful in 
accelerating improvements in living conditions for our single Sailors 
and Marines as it has been for family housing. We are developing pilot 
unaccompanied housing privatization projects for Hampton Roads, Camp 
Pendleton, and San Diego. We hope to be able to brief you on our 
concepts for these projects before the end of this fiscal year.

Military Construction Projects
    In addition to the $269 million in Bachelor Housing projects, our 
fiscal year 2004 military construction program includes $361 million in 
Operational and Training facilities such as waterfront and airfield 
projects, and $44 million in compliance projects. There is $32 million 
for counter-terrorism (CT) projects; additional CT costs are included 
as a portion of the total project where appropriate.
    This budget includes $473 million in ``new footprint'' projects, 
representing an unusually large 41 percent of the military construction 
program. While many barracks and CT projects are new-footprint, there 
are several other important projects that will support the 
transformation to new weapon systems of the future.
  --$116 million to complete the purchase of the Blount Island facility 
        and safety buffer in Jacksonville, Florida. Blount Island is 
        the maintenance site for the Marine Corps' Maritime Pre-
        positioning Force. The purchase of this site, along with a 
        surrounding safety buffer, will ensure the long-term viability 
        of this strategic national asset.
  --$28 million to support the first phase of an outlying field for 
        East-Coast basing of the F/A-18 E/F Super Hornets. Selection of 
        a specific basing of this aircraft is pending completion of an 
        Environmental Impact Statement (EIS). The EIS is scheduled for 
        completion this summer.
  --$24 million to construct a Joint Strike Fighter test facility.
  --$21 million to construct a facility to develop the next generation 
        shipboard aircraft launching system to be used on the new 
        aircraft carrier CVN21.

Facilities Sustainment, Restoration and Modernization (SRM)
    The Department of Defense uses models to calculate life cycle 
facility maintenance and repair costs. These models use industry wide 
standard costs for various types of buildings. Sustainment funds in the 
Operations and Maintenance accounts maintain shore facilities and 
infrastructure in good working order and preclude its premature 
degradation. Both the Navy and Marine Corps increased sustainment 
funding in fiscal year 2004, with the Navy improving to 93 percent of 
the full sustainment requirement, and the Marine Corps staying at or 
very near the Department of Defense goal of full sustainment.
    Restoration and Modernization provides for the major 
recapitalization of our facilities using Military Construction and 
Operations and Maintenance funds. While both the Navy and Marine Corps 
achieve the Department of Defense goal of a 67 year recapitalization 
rate by fiscal year 2008, one year later than expressed last year, the 
fiscal year 2004 recap rate increases to 140 years for Navy while 
improving to 88 years for the Marine Corps. The Navy will manage the 
near term investment in facilities recapitalization to limit 
degradation of operational and quality of life facilities.
    While additional funds would certainly improve the situation, it is 
unrealistic to believe that we will simply ``buy'' our way to attain 
these facility goals. We must seek and implement greater efficiency in 
our infrastructure

                      INFRASTRUCTURE EFFICIENCIES

Prior BRAC
    The BRAC rounds of 1988, 1991, 1993 and 1995 have been a major tool 
in reducing our domestic base structure and generating savings. The 
Department closed and must dispose a total of ninety (90) bases, and 
has achieved a steady state savings of $2.7 billion per year. All that 
remains is to complete the environmental cleanup, with an estimated 
cost of $785 million, and property disposal.
    We have completed disposal of sixty-four bases to date; eight more 
bases are planned in fiscal year 2003, five in fiscal year 2004. 
Legislation was enacted last year that will allow the Navy to transfer 
nearly all of the former Naval Air Station Adak, Alaska to the 
Department of Interior, who will in turn exchange this property for 
other wildlife refuge property owned by The Aleut Corporation. The 
United States will then retain title to wildlife refuge property 
previously designated for transfer to the Aleuts under the Alaska 
Native Claims Settlement Act. We are working the final details for the 
transfer and hope to complete the property exchange later this year. 
That transfer, along with the planned disposals this fiscal year, 
should leave us with less than 12,000 acres still to dispose.
    I am proud of the hard work and innovation that the Navy and Marine 
Corps team have displayed in working with environmental regulators to 
expedite property cleanup and support local redevelopment efforts to 
speed reuse. Congress provided the necessary legislative authority to 
allow the Navy to pursue early transfer opportunities. With the 
concurrence of environmental regulators and the State Governor, we 
transfer the deed to the property while environmental cleanup 
continues, or pass mutually agreed cleanup funds to the developer who 
becomes responsible for doing the cleanup. We have used this authority 
many times, including the transfer of 1,300 acres at Mare Island Naval 
Shipyard last year.
    The spirit of innovation continues. Taking a cue from the popular 
commercial uses of the Internet, we worked closely with General 
Services Administration (GSA) to use its web site to auction two 
hundred thirty-five (235) acres of highly desirable property at the 
former Marine Corps Air Station Tustin in California. We have deposited 
$51 million from this sale, with settlement for the balance this 
spring. Existing statutes require that all BRAC leasing and land sale 
revenue be deposited into the Prior BRAC account to meet caretaker and 
environmental cleanup needs. We will increasingly rely on BRAC land 
sale revenue to accelerate the remaining BRAC cleanup efforts. I am 
very pleased with using the GSA web site to auction real estate. It can 
attract a very wide audience of potential bidders, ensure that the 
government receives the maximum value for the property, and can help 
the community quickly resolve reuse needs. We will pursue more BRAC 
property sales using the GSA web site.

BRAC 2005
    The fiscal year 2002 National Defense Authorization Act amended the 
1990 Defense Base Closure and Realignment Act to authorize another 
round of BRAC in 2005. We will apply the BRAC process to examine and 
implement opportunities for greater joint use of facilities, thus 
eliminating excess physical capacity, and to integrate DoN 
infrastructure with defense strategy. Continuing to operate and 
maintain facilities we simply no longer need is unfair to the taxpayer 
and diverts resources that would be better applied to recapitalize the 
operating forces (ships, aircraft and equipment) for the future.
    The BRAC statute sets out a very fair process.
  --All bases are treated equally;
  --All recommendations based on 20 year force structure plan, 
        infrastructure inventory and published selection criteria;
  --Statutory selection criteria include:
    --Preserve training areas for maneuver by ground, naval, or air 
            forces;
    --Preserve military installations in the United States as staging 
            areas for the use of the Armed Forces in homeland defense 
            missions;
    --Preserve military installations throughout a diversity of climate 
            and terrain in the United States for training purposes;
    --Consider the impact on joint war fighting, training, readiness, 
            contingency, mobilization, and future total force 
            requirements at both existing and potential receiving 
            locations to support operations and training.
  --All data certified as accurate and complete and provided to the 
        Commission and Congress.
    We are working closely with the Office of the Secretary of Defense 
and the other Military Departments to develop opportunities for joint 
basing that would further eliminate excess infrastructure among the 
Services.

Commander, Navy Installation Command
    The Navy will consolidate the management of its shore establishment 
on 1 October 2003 from eight installation claimants across sixteen (16) 
regional commanders to a single Navy Installation Command. This 
consolidation will achieve economies of scale, increase efficiency, and 
reduce headquarters staffs while also standardizing policies, 
procedures, and service levels across all Navy installations, much as 
the Marine Corps now enjoys. We estimate that the benefits of this 
streamlining will save the Navy $1.6 billion over the FYDP.
    There is still much work to be done to implement this change. The 
Navy must still define the personnel impacts, finalize the reporting 
relationships, and identify the appropriate funding transfers. I 
believe this effort will result in a more focused, leaner organization 
that will improve services to the Fleet.

Utility Privatization
    We are proceeding with plans to privatize utility systems (water, 
wastewater, gas, electric) where it is economically feasible and does 
not pose a security threat. Utility privatization is an integral part 
of our efforts to improve our utility infrastructure. The Secretary of 
Defense issued new utility privatization guidance last fall that 
requires the Services to complete a source selection decision on each 
system by September 2005. We are on track to do so for the 662 Navy and 
Marine Corps systems under consideration for privatization.

Strategic Sourcing
    Strategic sourcing uses commercial business practices such as 
process re-engineering, divestiture of non-core functions, elimination 
of obsolete services, and public/private competitions under Office of 
Management and Budget A-76 guidelines to improve efficiency. We expect 
to achieve $1.6 billion in annual steady State savings in fiscal year 
2005 from strategic sourcing initiatives.
    Our fiscal year 2004 budget includes A-76 competitions for 2,000 
positions. OMB has been trying to bring about much needed process 
changes for conducting these competitions. We will incorporate these 
process changes, as well as some of our own initiatives, to speed the 
process while still ensuring a fair playing field between in-house and 
private sector interests. We are also supporting the Secretary of 
Defense's Business Investment Council efforts to identify non-core 
functions for divestiture. The Navy has identified the manufacturing of 
eyewear for military personnel as a pioneer project for divestiture.

Naval Safety Program
    Although safety is foremost a personnel program to avoid accidental 
human injury or death, the private sector has also recognized safety 
programs for their contribution to the bottom line in avoiding damage 
to expensive equipment or facilities, inadvertent loss of highly 
skilled personnel, and long-term injury compensation costs. We have 
established a senior executive in my office, the first in Department of 
Defense, to help foster a new Naval safety vision for the future. A 
Safety Task Force has been meeting to consider the relationships 
between safety staffs and funding mechanisms. We have engaged Navy and 
Marine Corps installation commanders to recognize and work to reduce 
the incidence of civilian man-hours lost due to injury even as we 
participate in a Department of Defense-sponsored Employee Work Safety 
Demonstration project at four bases. We plan to provide basic 
Operational Risk Management training to all new Sailors and Marines, 
with more advanced training to senior personnel.
    We are also pursuing safety improvements for the more visible 
aviation mishaps, for which past experience shows that 85 percent are 
in part attributable to human errors. We plan to try a new technique 
that would store critical flight performance data and allow the pilot 
to later replay a realistic animation of the flight.

                         ENVIRONMENTAL PROGRAMS

Encroachment
    The military readiness of our forces is the highest priority of the 
Department of the Navy. Unfortunately, sustaining military readiness is 
becoming increasingly difficult because over time a host of factors, 
including urban sprawl, increasing regulation, litigation, and our own 
accommodations, although reasonable when viewed in isolation, have 
cumulatively diminished the Department of the Navy's ability to train 
and test systems effectively. Military bases and ranges represent some 
of the few remaining undeveloped large tracts, and are being looked at 
more and more by Federal and State regulators as a solution for 
difficult and costly conservation efforts. For example, initial 
proposals for critical habitat designations would have included about 
56 percent of Marine Corps Base, Camp Pendleton, California. The Marine 
Corps and the U.S. Fish and Wildlife Service worked together in an 
effort to devise an approach that would satisfy the needs of both 
agencies. As a result of these efforts, the Secretary of the Interior 
determined that the speculative benefits of critical habitat 
designation were outweighed by military training needs at Camp 
Pendleton. This determination led to the designation of only 5 percent 
of Camp Pendleton's lands as critical habitat. However, a lawsuit 
challenging the U.S. Fish and Wildlife Service final rule quickly 
followed. As a result, U.S. Fish and Wildlife Service withdrew the 
designation. A new critical habitat designation is still pending.
    We--the Congress, Federal and State regulators, and the military 
services--must identify a reasonable balance between the competing 
national priorities of military readiness and environmental 
stewardship. The Department of the Navy, in conjunction with the 
Department of Defense, has begun working with some regulatory agencies 
to identify changes in regulations and agency policies that can help 
restore the appropriate balance. However, many environmental laws do 
not always lend themselves to such changes because when enacted, no one 
considered their applicability to the military readiness activities of 
today.
    The need for legislative change was demonstrated again recently 
when the use of a new defensive sensor known as SURTASS LFA, which was 
developed to deal with the threat of quiet diesel submarines now being 
deployed by potential adversaries, was recently restricted by a court 
order. The Navy had undertaken an unprecedented research program to 
ensure that marine mammals would not be injured, and worked closely 
with the National Marine Fisheries Service to develop mitigation 
measures so that marine mammals would not be injured. The Navy 
concluded that based on tests and analysis conducted by an independent 
panel of scientists, which was subjected to peer review and approved 
through a public rule making process by the National Marine Fisheries 
Service--the Federal regulatory agency tasked with protection and 
preservation of marine mammals, the system would have little impact 
upon marine mammals. Yet a Federal judge determined that the Marine 
Mammal Protection Act (MMPA) would not allow the Navy to deploy the 
defensive sensor in question in the manner the Navy had determined was 
needed. In the court's view, there were serious issues raised with 
regard to whether National Marine Fisheries Service had used a proper 
mechanism to identify the ``specified geographic region'' required 
under the MMPA to issue a ``small take'' authorization for the Navy's 
deployment of the sensors. The court ordered the Navy to confer with 
plaintiffs over possible restrictions on deployment of SURTASS LFA 
until the final hearing on the merits of the case currently scheduled 
for June 2003. Following these discussions, the court issued a 
preliminary injunction restricting the Navy's use to an area in the 
western Pacific between Japan and Guam.
    The military services have been criticized by some for seeking 
legislative relief without first using national defense exemptions or 
Presidential waivers built into environmental laws. Although many of 
the laws contain some provision for the President to waive compliance 
with a specific requirement, these waivers are of limited scope and 
duration. Some laws have no provision for an exemption or require an 
adverse decision by a court before the exemption can be pursued. For 
example, the MMPA contains no waiver provision, even for actions that 
are absolutely necessary for national defense. Many environmental laws, 
when enacted, did not consider their impact on military readiness 
activities. The exemptions or waivers that do exist were not intended 
to serve as routine management tools; they were designed to provide 
short term fixes for unanticipated or emergency situations.
    Last year, the Department of Defense recommended legislative 
changes to address specific areas of environmental laws that had the 
greatest adverse impact on sustaining military readiness. Congress 
provided some relief in one critical area--the applicability of the 
Migratory Bird Treaty Act (MBTA) to military readiness activities. We 
are working with the Department of Interior to craft a mutually 
acceptable proposed rule consistent with report language accompanying 
the fiscal year 2003 National Defense Authorization Act authorizing 
take of migratory birds for military readiness activities, and a 
Memorandum of Understanding to promote migratory bird conservation, as 
required by executive Order 13186, for non-readiness related military 
actions.
    The other five involved proposed changes to the MMPA, Endangered 
Species Act (ESA), Clean Air Act (CAA), Comprehensive Environmental 
Response, Compensation, and Liability Act (CERCLA), and the Resource 
Conservation and Recovery (RCRA) Act were not made. The Department of 
the Navy is particularly concerned with MMPA and ESA, and the need 
remains for a legislative solution. For example, the Department of Navy 
uses special management plans called Integrated Natural Resource 
Management Plans (INRMPs), pursuant to the Sikes Act, to protect 
habitat on military installations. A Federal district court in Arizona, 
however, recently decided the substitution of special management plans 
for critical habitat designation is impermissible under the ESA. In 
this case, which involved forest management plans, the court determined 
that the special management considerations could not substitute for the 
designation of critical habitat. The Department of Navy is concerned 
this reasoning could be relied upon by other Federal courts when 
reviewing INRMPs. The U.S. Fish and Wildlife Service is using other 
administrative options in an attempt to exclude installations with 
approved INRMPs from critical habitat designations, but more certainty 
would be provided by legislative actions.
    In addition to the decision concerning restricting deployment of 
the SURTASS LFA system I mentioned earlier, two other recent decisions 
by different Federal district courts stopped scientific research after 
the court determined that the National Marine Fisheries Service had 
improperly authorized harassment of marine mammals during research by 
the National Science Foundation off the coast of Mexico and a Navy 
funded project to study the effects of underwater sound on Grey Whales 
off the coast of California.
    We recognize the importance of resource preservation. We are not 
looking for wholesale suspension of environmental laws as they apply to 
military readiness. We are not attempting to avoid the issues that 
American industries and businesses face regarding environmental 
compliance. We are not abandoning the outstanding stewardship over the 
lands entrusted to us or shrinking from environmental protection 
requirements. We are merely trying to restore balance where 
environmental requirements adversely affect uniquely military 
activities--activities that are necessary to prepare Sailors and 
Marines to engage in combat and win.

Shipboard Environmental
    The U.S. Navy is a recognized world leader in environmental 
stewardship at sea. In recent years the Navy has completed installation 
of pulpers, shredders and plastic waste processors on its surface 
ships. This ensures no plastic discharge to the world's oceans and 
provides environmentally benign disposal of other solid wastes, such as 
food, paper, cardboard, metal and glass. The Navy expects to have its 
submarine fleet fully outfitted with solid waste equipment by the end 
of 2005, well in advance of the 31 December 2008 Act to Prevent 
Pollution from Ships deadline. Next year, the Navy will begin to 
upgrade the solid waste equipment in the surface fleet. These upgrades 
will mean shipboard personnel will expend less time, energy and 
resources in processing solid waste.
    The Navy continues to convert shipboard air-conditioning and 
refrigeration plants to ones that use non-ozone depleting, 
environmentally friendly refrigerants. As of today, over 75 percent of 
the fleet is CFC-free. Additionally, the Navy continues to upgrade the 
fleet's ability to safely and effectively handle hazardous materials by 
installing pollution prevention equipment on all our surface ships. We 
continue to work with the Environmental Protection Agency to set 
Uniform National Discharge Standards for all Armed Forces vessels, and 
in developing best management practices for preparing vessels for use 
as artificial reefs. These programs, along with others in the shipboard 
environmental program, reap enormous environmental and public relations 
benefits while maintaining the primary goal of allowing our ships to 
operate anywhere in the world in a manner that complies with or exceeds 
domestic and international environmental laws and agreements.

Cleanup Program at Active Bases
    For the second year in a row, the number of cleanups completed at 
active bases exceeded the planning target. While we still have work to 
do, almost seventy (70) percent of all sites now have remedies in place 
or responses complete. At the end of fiscal year 2002, 2,225 of the 
3,668 sites at active installations have responses complete. We plan to 
continue this pace. By the end of fiscal year 2004 we plan to have 
about 2,500 sites completed at active bases.

Vieques Cleanup
    On January 10, 2003, the Secretary of the Navy signed the letter of 
certification to Congress confirming that the U.S. Navy and Marine 
Corps will cease military training on the Vieques Inner Range by May 1, 
2003. The Department of the Navy has identified training alternatives 
that will collectively provide equivalent or superior training to the 
options provided on the island of Vieques. The law requires the Navy to 
transfer Vieques to the Department of Interior. We have been working 
with Interior and the Environmental Protection Agency to do so.
    We plan to conduct munitions clearance and any necessary cleanup in 
accordance with applicable laws. The clearance and cleanup will be done 
in a manner that is consistent with land use designated in the 
governing statute and where appropriate, minimizes disturbance of the 
natural environment. The designated land uses, once transferred to the 
Department of Interior, are wilderness area for the live impact area 
and a wildlife refuge for the remaining portions. We will be 
considering the need for land use controls to ensure long-term 
protectiveness as part of the remedial actions, including consideration 
of future land use plans. We have identified $2 million in fiscal year 
2004 funds from our Munitions Response Program line within the 
Environmental Restoration, Navy (ER, N) appropriation to begin 
munitions clearance efforts.

Environmental Range Management
    The Navy and Marine Corps have initiated efforts to better 
understand and manage the environmental concerns on its ranges. The 
Navy has $15.8 million in fiscal year 2004 to begin this effort at the 
Southern California, Fallon, Key West, and Gulf of Mexico range 
complexes. This environmental program addresses three major areas:
  --Conduct living marine resource assessments, including ocean surveys 
        of marine mammal population densities;
  --Assess groundwater, surface water, soils conditions, natural 
        resources and the environmental compliance status for each of 
        the complex's land-based ranges and associated airspace;
  --Integrate this information into complex-wide environmental planning 
        in accordance with the National Environmental Policy Act, which 
        will in turn drive Navy range complex management plans.

                         LEGISLATIVE PROPOSALS

    I would like to call your attention to several legislative 
proposals of particular importance to the Department of Navy.

Readiness & Range Preservation Initiative
    This legislative proposal is a top Department of Defense priority. 
It would provide legislative relief for military readiness activities 
under various environmental statutes. Of particular interest to the 
Department of the Navy are:
  --Modifications to MMPA that would clarify the MMPA's definition of 
        ``harassment'' as a biologically significant response, and 
        resolve other procedural issues related to the MMPA.
  --Modify the ESA to allow use of Integrated Natural Resources 
        Management Plans now required under the Sikes Act to provide 
        the special management considerations in lieu of the need to 
        designate critical habitat on military lands.

Property Conveyance for Housing
    We propose to extend to barracks existing authority that allows the 
transfer of land at locations closed under prior year BRAC actions for 
family housing. The Administration's request also includes a similar 
proposal that would allow the Services to transfer land at locations 
not related to BRAC for either housing, land suitable for siting 
housing, cash, or some combination of these. These proposals would 
provide additional tools that we could use to obtain housing for our 
Sailors and Marines and their families faster.

MILCON Streamlining
    We propose several initiatives to streamline the administrative 
aspects of the military construction process. It typically takes 5 to 8 
years from inception to completion for a military construction project. 
That's too long. Our proposal would increase the minor construction 
threshold to permit faster execution of smaller projects, and allow the 
use of the planning and design sub account to initiate early project 
design on design build projects. Such projects now include most of the 
design funds as part of the project cost, and thus must await line item 
authorization and appropriation of the project by the Congress to begin 
design work in earnest.

                               CONCLUSION

    In conclusion, I would ask the members of this committee to not 
judge the merits of the Department of the Navy's installations and 
environmental program solely through a single lens comparison of this 
year's budget request vs. last year's enacted level. We continue 
progress on most fronts, and the decline in funding is generally due to 
reduced requirements or less costly alternatives.
    We remain steadfast in resolving inadequate housing concerns. 
Consistent with Department of Defense and our own priorities, we will 
eliminate inadequate family housing by fiscal year 2007 through 
increased reliance on our privatization efforts and the help of BAH 
increases that it more likely for our members to find good, affordable 
housing in the community. We have maintained momentum to fix housing 
for our single Sailors and Marines, particularly with respect to 
getting our shipboard sailors a place ashore they can call home when 
their ship is in homeport. We hope to extend the benefits of family 
housing privatization to barracks with three pilot projects that are 
being developed. The very robust $1.2 billion military construction 
request will revitalize existing facilities while acquiring those to 
support future weapon systems and readiness needs. We will apply the 
proceeds from selling Prior BRAC property to accelerate cleanup of 
remaining BRAC property. Facilities sustainment, restoration and 
modernization trends are positive, with the exception of the Navy 
recapitalization rate; regrettably, affordability required that we 
defer near term progress in using Operations and Maintenance, Navy 
funds to revitalize facilities.
    We have fully funded all environmental commitments. The decline in 
environmental funds is tied to finishing the cleanup on Kaho'olawe, and 
the completion of several research and development projects and 
pollution prevention initiatives. Encroachment remains the primary 
environmental issue we must deal with. We will work with the Department 
of Interior to craft mutually acceptable solutions under MBTS. However, 
other environmental statutes, with ESA and MMPA of particular interest 
to the Department of Navy, remain to be resolved. We need to craft an 
appropriate balance between environmental stewardship and military 
readiness.
    That concludes my statement. I appreciate the support of each 
member of this committee, and will try to respond to any comments or 
concerns you may have.

                         Department of the Army

STATEMENT OF HON. MARIO P. FIORI, ASSISTANT SECRETARY 
            OF THE ARMY, INSTALLATIONS AND ENVIRONMENT
    Senator Hutchison. Thank you, Mr. Secretary.
    Mr. Fiori.
    Mr. Fiori. Madam Chairman, I am pleased to appear before 
you to review our fiscal year 2004 military construction 
program. We have provided a detailed written statement for the 
record. I would just like to briefly comment on the highlights 
of our program.
    The Army's overall budget request for fiscal year 2004 
supports the Army Vision, Transformation, Readiness, and 
People. It implements the strategic guidance to transform to a 
full spectrum force, while ensuring war-fighting readiness. It 
reflects a balanced base program that will allow the Army to 
remain trained and ready throughout fiscal 2004 while ensuring 
we fulfill our critical role in the global war on terrorism.
    Our military construction budget request is $3.2 billion, 
and will fund our highest priority facilities and family 
housing requirements. When we developed this year's budget, 
difficult decisions were made to optimize our resources in 
response to the global situation. The Army budget provides the 
best balance among all of our programs, including military 
construction.
    Transformation is one facet of the Army Vision. The Army is 
fundamentally changing the way we fight and creating a force 
more responsive to the strategic requirements of the Nation. 
Our fiscal year 2004 budget includes facilities to support both 
the Active and Reserve components in this transition.
    First, I would like to briefly tell you how we are 
transforming installation management. Recognizing the 
requirement to enhance support to the commanders and buttress 
Army transformation, the Secretary of the Army directed the 
reorganization of the Army's installation management structure. 
On October 1, 2002, the Army placed the management of Army 
installations under the Installation Management Agency. It is a 
new field operating agency reporting to the Assistant Chief of 
Staff for Installation Management, who in turn reports to me 
and to the Chief of Staff of the Army. A top down, regional 
alignment creates a corporate structure with the sole focus on 
efficient and effective management of all our installations. It 
frees up our mission commanders to concentrate on 
transformation and readiness. They will still have an influence 
on important installation decisions, but not the day-to-day 
headaches.
    Second, in support of Army transformation, our budget 
contains $329 million for 17 projects at four Active 
installations and an additional $85 million for 31 Army 
National Guard projects.
    Facilities requested cover the spectrum needed for 
effective operations and training, including ammunition supply 
point upgrades, mobilization facilities, training land 
acquisition, maintenance facilities, ranges, information system 
facilities, barracks, and family housing. The Army National 
Guard Army Division Redesign Study facilities include readiness 
centers, maintenance shops, and training fire stations.
    A second facet of the Army's Vision is Readiness. Army 
installations are our Nation's power projection platforms, and 
they provide critical support for the Army and joint 
operations. We have requested funding for key projects that 
specifically focus on readiness. These include live fire 
ranges, maintenance, test, deployment facilities, Army National 
Guard Readiness, and Army Reserve Centers. These critically 
needed projects constitute about $266 million of our budget.
    The third facet of the Army Vision is People. The Army 
continues its major campaign to modernize barracks to provide 
enlisted permanent party soldiers with quality living 
environments. The new complexes provide increased personal 
privacy and larger rooms with new furnishings. With the 
approval of our budget, 79 percent of our barracks requirements 
for permanent party soldiers will be funded. Additionally, we 
are including physical fitness centers and dining facilities to 
support soldier fitness and well being.
    According to our surveys, adequate and affordable housing 
continues to be the major concern to soldiers and their 
families. We have waiting lists at all our major posts. With 
approval of the fiscal year 2004 budget, out of pocket expenses 
for soldiers living off post will be reduced to 3\1/2\ percent, 
as was previously mentioned by Messrs. Zakheim and DuBois. And 
by 2005, average out of pocket expenses should be reduced to 
zero.
    This year's budget expands family housing privatization and 
increases improvements to existing housing to support our goal 
to provide adequate housing to all military families by 2007. 
Our privatization effort has been particularly successful. The 
current program of 28 projects will transition to privatized 
operations by the end of fiscal year 2006. These projects 
include almost 72,000 homes, more than 80 percent of our 
inventory in the United States. We have already transitioned 
four installations to developers.
    At Fort Carson, for example, 1,823 existing homes were 
privatized in November 1999, and our partner developer will 
construct 840 more. So far, we have 618 homes, new homes, and 
943 have been renovated. Families have moved into those homes, 
and the process has been very positive to date.

                           PREPARED STATEMENT

    In closing, Madam Chairman, I sincerely thank you for the 
opportunity to outline our program. As I have visited Army 
installations, I have witnessed the progress that has already 
been made, and I attribute much of this success directly to the 
longstanding support of this Committee and your staff. We look 
forward to working with you as we transform our Army 
installations.
    Thank you, ma'am.
    [The statement follows:]

                  Prepared Statement of Mario P. Fiori

    Madam Chairman and members of the subcommittee, it is a pleasure to 
appear before you to discuss the Active Army and Reserve Components' 
military construction budget request for fiscal year 2004. This request 
includes initiatives of considerable importance to The Army, as well as 
this Committee, and we appreciate the opportunity to report on them to 
you.
    Our budget provides resources in our construction and family 
housing programs essential to support The Army's role in our National 
Military Strategy and our role in the Global War on Terrorism. The 
budget supports The Army's Vision and our Transformation strategy.
    The program presented herein requests fiscal year 2004 
appropriations and authorization of appropriations of $1,536,010,000 
for Military Construction, Army (MCA); $1,399,917,000 for Army Family 
Housing (AFH); $168,298,000 for Military Construction, Army National 
Guard (MCNG); and $68,478,000 for Military Construction, Army Reserve 
(MCAR).
    The Army has begun one of the most profound periods of 
transformation in its 227-year history. In 1999, we published The Army 
Vision--People, Readiness, and Transformation--that defined how we meet 
the Nation's military requirements today and into the future. After 3 
years, we are on the road to implement the self-transformation that 
will allow us to continue to dominate conventional battlefields, but 
also provide the ability to deter and defeat adversaries who rely on 
surprise, deception and asymmetric warfare to achieve their objectives.
    The attacks against our Nation and the ongoing Global War on 
Terrorism validated The Army's Vision and our Transformation. To meet 
the challenges of Army Transformation and to carry out today's missions 
at home and abroad, The Army must sustain a force of high quality, 
well-trained people; acquire and maintain the right mix of weapons and 
equipment; and maintain effective infrastructure and power projection 
platforms to generate the capabilities necessary to meet our missions. 
Taking care of soldiers and families is a readiness issue and will 
ensure that a trained and qualified soldier and civilian force will be 
in place to support the Objective Force and the transformed Army.
    Installations are a key component in all three tenets of The Army 
Vision. They are the operational and service support centers where our 
soldiers and civilians work, live, and train; and from which we deploy, 
launch, and accomplish our missions. Our worldwide installations 
structure is inextricably linked to the Transformation of The Army and 
the successful fielding of the Objective Force.
    Army installations, both Active and Reserve Component, must fully 
support our war fighting needs, while at the same time provide soldiers 
and their families with a quality of life that equals that of their 
peers in civilian communities. The Army Vision begins and ends talking 
about the well-being of people. Our installations are the hometowns to 
many of our people. To improve our installations, we realized we had to 
transform installation management to improve the way we operate and 
manage this important resource.
    In support of the Transformation of Army installations, on October 
1, 2002, The Army activated the Installation Management Agency (IMA). 
This activation symbolized a radical transformation in how The Army 
manages installations. Through the IMA, The Army has created a 
corporate structure for managing its installations. By shifting that 
responsibility from the 14 formerly land-holding major commands, the 
IMA seeks to enhance effectiveness in installation management, achieve 
regional efficiencies, eliminate the migration of installation support 
dollars, and provide consistent and equitable services and support.
    Major Commanders can now focus solely on their primary missions. 
Though the major commands no longer have a primary responsibility for 
installation management, the support they receive from installations is 
a paramount mission of the IMA. The IMA exists to support and enable 
mission commanders. The senior mission commander on each installation 
is part of the rating chain for the garrison commander of that 
installation. The most senior commanders of the major commands, as well 
as the Director of the Army National Guard and the Chief of the Army 
Reserve, also sit on an Installation Management Board of Directors, 
providing oversight and guidance to the operations of the IMA.
    The Army's transformation of installation management represents a 
significant paradigm shift in the way The Army manages installations. 
It represents a new commitment to installation management as a key 
component of Army Transformation. Mission readiness no longer competes 
with installation management tasks; and the soldier's well-being and 
quality of life on the installations does not compete with the mission. 
It will allow us to provide for our soldiers and their families and to 
permit us to implement our facilities strategy.

                          FACILITIES STRATEGY

    The Army's Facilities Strategy (AFS) is the centerpiece of our 
efforts to fix the current state of Army facilities over 20 years. It 
addresses our long-term need to sustain and modernize Army-funded 
facilities in both Active and Reserve Components by framing our 
requirements for sustainment, restoration and modernization (SRM) using 
operations and maintenance (O&M) and military construction (MILCON) 
funding. The AFS addresses sustainment, recapitalization, quality, and 
quantity improvements so that The Army will have adequate facilities to 
support Transformation and our 21st Century missions.
    The first objective of the strategy requires us to halt further 
deterioration of our facilities. Our sustainment funding, which comes 
from the Operation and Maintenance (O&M) SRM accounts, has improved. 
Our budget request funds 93 percent of our requirements in fiscal year 
2004. This level of funding may be sufficient to slow further 
deterioration of Army facilities. We use the Installation Status Report 
(ISR) to rate the condition of our facilities. A C-1 quality rating 
indicates facilities support mission accomplishment; a C-2 quality 
rating indicates facilities support the majority of assigned missions; 
a C-3 quality rating indicates facilities impair mission performance; 
and a C-4 rating indicates facilities that significantly impair mission 
performance. Currently, The Army's overall quality rating is C-3 
(impairs mission performance). We must have sufficient O&M SRM 
resources to sustain our facilities and prevent facilities from 
deteriorating further, or we put our MILCON investments at risk.
    The second objective of our strategy addresses improving 
recapitalization of our facilities to a 67-year cycle. This will ensure 
we have adequate facilities to keep pace with future force structure 
changes and weapons modernization programs. The focus is on The Army's 
most obsolete infrastructure, such as vehicle maintenance facilities, 
Army National Guard Readiness Centers, and Army Reserve Centers. 
Unfortunately, our budget resources limit our recapitalization rate to 
144 years for fiscal year 2004.
    The third objective is to raise The Army facilities from the 
current C-3 quality rating (impairs mission performance) to an overall 
C-2 quality rating (supports majority of assigned missions) by the end 
of 2010. This will be accomplished by bringing a focused set of 
facilities to C-1 (supports mission performance) during that timeframe. 
Since we cannot afford a quick fix to buy down the SRM backlog, we will 
centrally manage resources towards focused investments. This capital 
investment requirement will primarily require MILCON funding, 
supplemented by O&M SRM project funding.
    The fourth objective is to reduce facility shortfalls where they 
exist over the entire 20-year strategy. These shortfalls are a result 
of facilities modernization not keeping pace with our weapons 
modernization and supporting force structure. Ranges and training 
facilities are an example.
    Modest MILCON investment will be made in fiscal year 2004 for these 
objectives. These four objectives will enable us to improve the health 
of Army real property and the ability to successfully support our 
worldwide missions and our soldiers. This year, our highest priority 
went to sustainment to achieve a 93 percent funding level.
    In addition to implementing our facilities strategy, we continue 
our policy of eliminating excess facilities throughout the entire Army 
to allow us to use our limited resources where they have the most 
impact. During fiscal years 1988-2003, our footprint reduction program, 
along with the base realignment and closure process (including overseas 
reductions), resulted in the disposal of over 400 million square feet 
worldwide from our fiscal year 1990 peak of 1,157,700,000 square feet. 
In fiscal year 2004, we plan to reduce an additional 2.7 million square 
feet. We continue our policy of demolishing at least one square foot 
for every square foot constructed.

                   MILITARY CONSTRUCTION, ARMY (MCA)

    This year's MCA program focuses on The Army's Vision and four major 
categories of projects: people, readiness, transformation, and other 
worldwide support. I will explain each category in turn.

                                 PEOPLE

    Fifty percent of our MCA budget is dedicated to providing for the 
well-being of our soldiers, their families, and civilians. We are 
requesting 23 barracks (plus an additional one for transformation), a 
dining facility and 2 physical fitness centers. These projects will 
improve not only the well-being of our soldiers and families, but also 
the readiness of The Army. We are requesting $776.2 million for these 
projects.
    Whole Barracks Renewal Program.--The Army continues its major 
campaign to modernize barracks to provide enlisted permanent party 
soldiers with quality living environments. The new complexes provide 
increased personal privacy, larger rooms, closets, new furnishings, 
adequate parking, and landscaping. In addition, administrative offices 
are separated from the barracks. With the approval of our budget, 
$737.9 million, as requested, 79 percent of our barracks requirement 
(including the transformation barracks), will be funded at the new 
standard for our permanent party soldiers. Between fiscal years 2005 
and 2009, we plan to invest an additional $3.5 billion in MCA and host 
nation funds. While we are making considerable progress at 
installations in the United States, we will request increased funding 
for Germany and Korea in future budgets to compensate for the fact that 
these areas have been historically funded at lower levels than 
installations in the United States. A large portion of the remaining 
modernization effort--37 percent--is in overseas areas.
    In fiscal year 2004, we are planning 23 barracks projects as part 
of our barracks modernization program, including 7 projects in Europe 
(one of which supports our Efficient Basing East initiative) and 3 
projects in Korea. This will provide new or improved housing for at 
least 5,500 soldiers. The installations with the largest investment are 
Fort Bragg, North Carolina, with $102 million (3 projects), and 
Schofield Barracks, Hawaii, with $98 million (2 projects). At these 
installations, large soldier populations and inadequate barracks 
require sustained high investment to provide quality housing. Barracks 
projects are also requested for Fort Hood, Texas; Fort Riley, Kansas; 
Fort Campbell, Kentucky; Fort Lewis, Washington; Fort Richardson, 
Alaska; Fort Drum, New York; and Fort Stewart, Georgia. A barracks 
project supporting Transformation is also requested at Fort Wainwright, 
Alaska. Although we are requesting authorization for all phases of a 
multi-phase barracks complex at Fort Drum and Fort Bragg, we are only 
requesting the appropriation needed for the fiscal year 2004 phase. Our 
plan is to award each complex, subject to subsequent appropriations, as 
a single contract to gain cost efficiencies, expedite construction, and 
provide uniformity in building systems.
    Community Facilities.--Our budget request includes a dining 
facility at Fort Meade, Maryland, for $9.6 million. Also included are 
two physical fitness centers at Hohenfels, Germany ($13.2 million) and 
Fort Stewart, Georgia ($15.5 million) to improve soldier fitness and 
community wellness. The physical fitness center at Fort Stewart has 
been selected as a pilot project for the demonstration program for the 
reduction of long-term facility maintenance costs. We believe this 
demonstration program will decrease our maintenance expenses and 
increase the quality of our facilities. This project is one of three 
included in fiscal year 2004. An Army Reserve and a National Guard 
demonstration project are also included in the budget.

                               READINESS

    In fiscal year 2004, there are 11 projects, $153 million, to ensure 
The Army is deployable, trained, and ready to respond to meet its 
national security mission. The projects provide enhanced training and 
readiness via live fire ranges and simulators, maintenance and test 
facilities, and a deployment facility.
    To improve soldier training, we are requesting $45.8 million to 
construct five training and readiness projects. Our request includes 
Modified Record Fire Ranges at Schweinfurt, Germany; Fort Knox, 
Kentucky; and Fort Sill, Oklahoma; an instrumented Multipurpose 
Training Range Complex at Fort Benning, Georgia; and a live fire urban 
operations Shoot House at Fort Lewis, Washington. All five ranges will 
provide our soldiers with realistic, state-of-the-art live fire 
training.
    A project to construct troop support facilities, including a 
physical fitness center and dining facility, and to renovate a 
headquarters facility and a postal facility at a cost of $46 million 
will support the Efficient Basing, East, initiative at Grafenwoehr, 
Germany.
    We are requesting three maintenance facilities for $41 million to 
support Army missions.
    Our request also includes $5.5 million for a Vibration Dynamic Test 
facility at Redstone Arsenal, Alabama. This facility will enable The 
Army to test small rocket systems and components for reliability to 
ensure that equipment can withstand the rigors of military operations.
    To support deployment of an airborne battalion ready task force, 
our request includes $15.5 million for a Joint Deployment Facility in 
Aviano, Italy. This facility will be constructed on an Air Force Base 
and will provide support for deployments of the 173rd Airborne Brigade 
stationed in Vicenza, Italy. In addition, the facility will support 
other United States and NATO forces deploying through Aviano Air Base.

                             TRANSFORMATION

    Our budget contains $285.3 million for 16 projects at 4 
installations that will support the deployment, training, unit 
operations, and equipment maintenance for Army Transformation. The 
projects include one barracks, one multi-purpose training range 
complex, one live fire urban operations Shoot House, upgrades to an 
existing Military Operations in Urban Terrain (MOUT) facility, two 
Mission Support Training Facilities (and the acquisition of additional 
lands in Hawaii to ensure our forces are properly trained), two Alert 
Holding Areas, expansion of a Deployment Staging Facility, an upgrade 
to an existing Ammunition Supply Point, a Pallet Processing Facility, 
an Information Systems Facility, Arms Storage, and an Aircraft 
Maintenance Hangar. The proposed projects in Hawaii will support the 
legacy force requirements that are currently not being met and future 
combat systems.
    Following the Persian Gulf War, Congress charged the Department of 
Defense to determine strategic mobility requirements to support the 
revised national strategy of greater reliance on CONUS-based 
contingency forces and power projection capabilities. The Army 
established the Army Strategic Mobility Program (ASMP) in fiscal year 
1994 that centered on the capability to deploy a five division 
contingency force with its associated support structure anywhere in the 
world within 75 days. We will successfully complete funding the program 
in fiscal year 2003. Over the 10-year period we funded approximately 
$800 million in projects to support our strategic mobility.
    The Army has reviewed the lessons learned from the successful ASMP 
and has analyzed current and future strategic environment; multiple, 
astute, and dynamic adversaries; and identified the need to deploy a 
brigade combat team anywhere in the world in 96 hours after liftoff, a 
division on the ground in 120 hours, and five divisions in theater in 
30 days. To meet these goals, The Army has developed The Army Power 
Projection Program (AP3) beginning in fiscal year 2004. Five of the 
Transformation projects listed above support our new deployment 
requirements for a transformed Army and initiate the start of the AP3 
program.

                    OTHER WORLDWIDE SUPPORT PROGRAMS

    The fiscal year 2004 MCA budget includes $100.7 million for 
planning and design (P&D). The fiscal year 2004 P&D request is a 
function of the construction programs for two fiscal years: 2005 and 
2006. The requested amount will be used to complete design of fiscal 
year 2005 projects and initiate design of fiscal year 2006 projects. 
Without this level of funding, our ability to design future year 
projects will be impaired and this will ultimately impact delivery of 
critically needed facilities to our soldiers.
    Host Nation Support (HNS) P&D: The Army, as Executive Agent, 
provides HNS P&D for oversight of host nation funded design and 
construction projects. The U.S. Army Corps of Engineers oversees design 
and construction to ensure facilities meet The Army's requirements and 
standards. Lack of oversight may result in an increase in design errors 
and construction deficiencies that might require United States dollars 
to rectify. Maintaining the funding level for this mission results in a 
payback where $1 of United States funding gains $44 worth of host 
nation construction. The fiscal year 2004 budget request for $22 
million will provide oversight for over $950 million of construction in 
Japan, Korea, and Europe.
    The fiscal year 2004 budget also contains $20 million for 
unspecified minor construction. This funding level will allow us to 
address unforeseen, critical needs that cannot wait for the normal 
programming cycle.

                          ARMY FAMILY HOUSING

    According to the Military Family Housing Standards Study done in 
April 2001, adequate and affordable housing continues to be a major 
concern to soldiers and their families. We have waiting lists at all of 
our major posts. Out-of-pocket expenses for soldiers living off post, 
though less than in prior years due to increases in Basic Allowance for 
Housing, will be reduced to 3.5 percent of the total cost of their 
housing with the approval of the Army fiscal year 2004 budget. By 
fiscal year 2005, we will meet our OSD goal to reduce our out-of-pocket 
expenses to zero. Maintaining and sustaining safe, attractive, and 
convenient housing for our soldiers and families is one of our 
continuing challenges. This year's budget expands privatization and 
increases improvements to existing housing. It supports the Secretary 
of Defense's goal to provide adequate housing to all military families 
by 2007.
    Our fiscal year 2004 request for Army Family Housing is 
$1,399,917,000. Table 1 summarizes each of the categories of the Army 
Family Housing program.

             TABLE 1.--ARMY FAMILY HOUSING--FISCAL YEAR 2004
------------------------------------------------------------------------
                 Facility Category                   Dollars    Percent
------------------------------------------------------------------------
New Construction..................................   $126,600          9
Post Acquisition Construction.....................    197,803         14
Planning and Design...............................     32,488          2
Operations........................................    179,031         13
Utilities.........................................    167,332         12
Maintenance.......................................    432,605         31
Leasing...........................................    234,471         17
Privatization.....................................     29,587          2
                                                   ---------------------
      Total.......................................  1,399,917        100
------------------------------------------------------------------------

                      FAMILY HOUSING PRIVATIZATION

    The Army continues to implement the Residential Communities 
Initiative (RCI) to create modern residential communities in the United 
States, using the military housing privatization authorities granted by 
the Congress. We are leveraging appropriated funds and government 
assets by entering into long-term partnerships with private sector real 
estate development and management firms to obtain financing and 
management expertise to construct, repair, maintain, and operate family 
housing communities.
    The current program of 28 projects will transition to privatized 
operations by the end of fiscal year 2006. These projects include over 
71,000 homes, more than 80 percent of our family housing inventory in 
the United States. We already have transitioned 4 installations to 
privatized operations: Forts Carson, Hood, Lewis and Meade. These 
projects include over 15,700 housing units. Families have moved into 
new and renovated housing at those locations and our experience to date 
has been very positive.
    We have selected development partners and are currently negotiating 
Community Development and Management Plans (50-year construction, 
operations, and financing plan) at 8 additional locations with over 
23,000 units. Five of these projects (Fort Bragg, Fort Campbell, 
Presidio of Monterey, Fort Irwin/Moffett Army Airfield/Camp Parks, and 
Fort Hamilton) will transition to privatized operations in fiscal year 
2003 and the remaining three (Fort Belvoir, Forts Eustis/Story/Monroe 
and Fort Stewart) will transition in fiscal year 2004. In addition to 
these projects, four other projects are in various stages of the 
procurement process (Walter Reed Army Medical Center, Fort Shafter/
Schofield Barracks, Fort Polk and Fort Detrick). Twelve more projects 
are scheduled for the future (Fort Leonard Wood, Fort Sam Houston, Fort 
Bliss, Fort Drum, Fort Benning, Fort Rucker, Fort Gordon, Fort Knox, 
Fort Leonard Wood, Picatinny Arsenal, Carlisle Barracks, and Redstone 
Arsenal).
    Our development partners expertise, experience, and resources are 
resulting in significant improvements in our family housing 
communities. The fiscal year 2004 budget request is necessary to 
support continued implementation of this quality of life program.

                      FAMILY HOUSING CONSTRUCTION

    The total fiscal year 2004 request for construction is $356.9 
million. It continues the Whole Neighborhood Revitalization initiative 
approved by Congress in fiscal year 1992, and supported consistently 
since that time, and our Residential Communities Initiative program. 
These projects are based on life-cycle economic analyses and support 
the Department of Defense's goal funding the elimination of inadequate 
housing by 2007.
    New Construction.--The fiscal year 2004 new construction program 
provides Whole Neighborhood Revitalization projects at 4 locations, 496 
units for $126.6 million. Replacement construction provides adequate 
facilities, built to local standards, where there is a continuing 
requirement for the housing and it is not economical to renovate the 
current housing. New (deficit elimination) construction provides 
additional housing to meet requirements. All of these projects are 
supported by housing surveys, which show that adequate and affordable 
units are not available in the local community.
    Construction Improvements.--The Construction Improvements Program 
is an integral part of our housing revitalization program. In fiscal 
year 2004, we are requesting $197.8 million for improvements to 6,883 
existing units at 6 locations in the United States and 5 locations in 
Europe. Included within the scope of these projects are efforts to 
improve supporting infrastructure and energy conservation.

               FAMILY HOUSING OPERATIONS AND MAINTENANCE

    The operations, utilities, maintenance, and leasing programs 
comprise the majority of the fiscal year 2004 request. The requested 
amount of $1.043 billion for fiscal year 2004 is approximately 74 
percent of the total family housing budget. This budget provides for 
annual operations, municipal-type services, furnishings, maintenance 
and repair, utilities, leased family housing, demolition of surplus/
uneconomical housing and funds supporting management of the Military 
Housing Privatization Initiative.

                         FAMILY HOUSING LEASING

    The leasing program provides another way of adequately housing our 
military families. We are requesting $234.5 million in fiscal year 2004 
to fund over 14,300 housing units including existing Section 2835 
(formerly known as 801 leases) project requirements, temporary domestic 
leases in the United States, and approximately 7,800 units overseas.

           MILITARY CONSTRUCTION, ARMY NATIONAL GUARD (MCNG)

    Focused on The Army's Vision, the Army National Guard's military 
construction program for fiscal year 2004 is giving special attention 
to People, Readiness and Transformation. The fiscal year 2004 Army 
National Guard program supports these elements.

                             TRANSFORMATION

    This year we have concentrated on Army Division Redesign Study 
(ADRS) projects. ADRS addresses a long-standing Army problem of lack of 
Combat Support and Combat Service Support Force. The Army National 
Guard, in support of the National Military Strategy and wartime 
requirement shortfalls, is reorganizing selected units toward this end, 
i.e., Chemical, Medical, and Military Police units.
    We are requesting $84.9 million for 31 ADRS projects. These funds 
will support the construction of Readiness Centers, Organizational 
Maintenance Shops, Training Fire Stations, an Armed Forces Reserve 
Center, and a Working Animal Building.
    The ADRS transformation, which began in fiscal year 2001, is 
scheduled to be completed by fiscal year 2009.
    Readiness Centers/Armed Forces Reserve Center.--To accommodate the 
force structure change, the Army National Guard will make additions or 
alterations to 14 readiness centers in Alabama, Indiana, Kansas, 
Kentucky, Nebraska, New Mexico, New York and North Dakota. Six new 
Readiness Centers are planned for California, Kentucky, Michigan, 
Missouri, Nebraska and North Carolina.
    We will also construct an Armed Forces Reserve Center in Mobile, 
Alabama. This facility will house all elements of a Support Group, 
Chemical Company, Medical Battalion, and Special Forces Detachment, as 
well as the Marine Reserves Reconnaissance Company, Intelligence 
Company, and the Marine Corps Inspector and Instructor staff.
    Training Fire Stations.--Six training fire stations are scheduled 
for Alabama, Connecticut, Kentucky, North Carolina (2), and Nebraska. 
These training fire stations will provide the necessary administrative, 
training, maintenance and storage areas required for the units to 
achieve proficiency in their required training tasks.
    Organizational Maintenance Shops.--The Army National Guard has 
three Organizational Maintenance Shops requested in fiscal year 2004. 
These facilities require additional space and upgrades to support the 
ADRS initiative. They are located in Montana (two) and New York.
    Working Animal Building.--As a result of ADRS, there will be two 
Military Police Working Dog Teams assigned to the Connecticut Army 
Nation Guard. These facilities will provide for all phases of dog 
training for patrol and protection.

                                MISSION

    In fiscal year 2004, the Army National Guard has requested $55.3 
million for the revitalization of four mission projects. They include a 
Readiness Center, a Consolidated Maintenance Facility (Phase I), an 
Army Aviation Support Facility and a Military Education Facility (Phase 
III)
    Readiness.--A new Readiness Center at Lenoir, North Carolina, will 
replace the current 48-year old facility that was built in a flood 
plain. The State will provide 41 acres of State land to relocate the 
new Readiness Center. This project has been selected as the Army 
National Guard fiscal year 2004 candidate for the demonstration program 
for the reduction of long-term facility maintenance cost.
    Maintenance.--The Consolidated Maintenance Facility at Pineville, 
Louisiana, will consist of a Combined Support Maintenance Facility, a 
Maneuver and Training Equipment Site, and two Organizational 
Maintenance Shops. These facilities will provide direct support, 
general support, and limited depot maintenance for all vehicles and 
equipment in Louisiana and full-time organizational maintenance support 
to selected units. This facility will permit Army National Guard 
personnel to work in a safe and efficient environment.
    An Army Aviation Support Facility in South Burlington, Vermont, 
will replace the current facility that was built in 1954. The new 
facility will provide the additional 80,650 square feet required to 
support three aviation units with 18 aircraft.
    Training.--The Military Education Facility (Phase III) at Camp 
Shelby, Mississippi, is the last and final phase of this Regional 
School Project. This Regional Training Center, a Category A Training 
Site, supports units from Mississippi, Alabama, Arkansas, Kentucky, 
Louisiana, Oklahoma, Tennessee, and Texas. The school conducts 
leadership training, maintenance training, and armor crewman training.

                     WORLDWIDE UNSPECIFIED FUNDING

    The Army National Guard's fiscal year 2004 budget request contains 
$26.6 million for planning and design of future projects and $1.5 
million in unspecified minor construction to address unplanned health 
or safety issues that may arise during fiscal year 2004.

               MILITARY CONSTRUCTION, ARMY RESERVE (MCAR)

    This year's MCAR program focuses on the Army Reserve's highest 
priority--Readiness. Army Reserve Centers are the key component to the 
readiness of units and provide support to soldiers and their families. 
In fiscal year 2004, the Army Reserve has requested $57.9 million to 
construct three Army Reserve Centers and a Maintenance and Storage 
facility.

                           MISSION FACILITIES

    Army Reserve Centers.--Three Army Reserve Centers will be built in 
Fort Meade, Maryland; Cleveland, Ohio; and Nashville, Tennessee. The 
Fort Meade Army Reserve Center will replace 50 World War II wood 
buildings, which will be returned to the installation for demolition. 
This project has been selected as the Army Reserve fiscal year 2004 
candidate for the demonstration program for the reduction of long-term 
facility maintenance cost. The Cleveland Army Reserve Center will 
replace two 1950s era facilities and three leased facilities. The 
Nashville Army Reserve Center will replace a high-cost leased facility.
    Maintenance.--An Organizational Maintenance Shop/Direct Support 
Maintenance Shop and Storage facility will be built on Fort Gillem, 
Georgia.

           PLANNING AND DESIGN/UNSPECIFIED MINOR CONSTRUCTION

    The fiscal year 2004 MCAR budget includes $7.712 million for 
planning and design (P&D), which provides essential planning and design 
capability in order to properly execute the MCAR program. The fiscal 
year 2004 budget also contains $2.886 million for unspecified minor 
construction to satisfy critical and emergent mission requirements.

            SUSTAINMENT, RESTORATION AND MODERNIZATION (SRM)

     In addition to MCA and AFH, the third area in the facilities arena 
is the O&M portion of the Sustainment, Restoration and Modernization 
(SRM) program. Sustainment is the primary account in installation base 
support funding responsible to maintain the infrastructure to achieve a 
successful readiness posture for The Army's fighting force. 
Installation facilities are the power projection platforms of America's 
Army and must be properly maintained to be ready to support current 
Army missions and any future deployments.
    O&M SRM consists of two major functional areas: (1) facilities 
sustainment of real property and (2) restoration and modernization. 
Facilities sustainment provides resources for maintenance costs and 
contracts necessary to keep an inventory of facilities in good working 
order. It also includes major repairs or replacement of facility 
components, usually accomplished by contract, that are expected to 
occur periodically throughout the life cycle of facilities. Restoration 
includes repair and restoration of facilities damaged by inadequate 
sustainment, excessive age, natural disaster, fire, accident or other 
causes. Modernization includes alteration or modernization of 
facilities solely to implement new or higher standards, including 
regulatory changes, to accommodate new functions, or to replace 
building components that typically last more than 50 years, such as 
foundations and structural members. The Active Army's OMA Sustainment 
funding request in fiscal year 2004 is $1.8 billion. The Army National 
Guard is requesting $380 million and the Army Reserve is requesting 
$182 million.
    In fiscal year 2004, The Army's top O&M priority in SRM is to fully 
sustain its facilities. This prevents further deterioration of the 
facilities we own and allows the facilities to support The Army's 
mission. The basic maintenance and repair of all Army facilities is 
funded at 93 percent of the OMA requirement. At the current funding 
levels, facilities will be properly maintained and deterioration will 
be minimal. Restoration and modernization initiatives supplement MILCON 
funding and meet recapitalization requirements. The Army has used the 
O&M R&M for barracks, strategic mobility, and other needs. The Army's 
demolition program will eliminate unneeded facilities. In fiscal year 
2004, we plan to eliminate approximately 2.7 million square feet of 
facilities worldwide.
    The Army's privatization or outsourcing of utilities is the first 
part of our Long Range Utilities Strategy within the SRM program to 
provide reliable and efficient utility services at our installations. 
All Army-owned electrical, natural gas, water, and waste water systems 
are being evaluated to determine the feasibility of privatization. When 
privatization appears economical, we use competitive contracting 
procedures as much as possible. The Army is on track and continues to 
seek ways to privatize as many systems as possible by September 30, 
2003. OMA restoration and modernization resources will be programmed 
for systems we are not able to privatize so that all systems are 
brought to a C2 (quality) status by 2010. To date, 18 percent (64 of 
351 systems) of all CONUS systems and 23 percent (250 of 1,068) of 
systems worldwide have been privatized. During fiscal year 2003, the 
negotiation and evaluation process for an additional 103 CONUS systems 
will be completed. Recent successes include privatization of the 
natural gas system at Fort Campbell, Presidio of Monterey and Fort 
Benning; electrical systems at Fort AP Hill, Picatinny Arsenal, 
Presidio of Monterey, Red River Army Depot, and Fort Bliss; and water 
and waste water systems at Red River Army Depot and Presidio of 
Monterey.

                  BASE REALIGNMENT AND CLOSURE (BRAC)

    Our facilities strategy strives to meet the needs of today's 
soldiers while also focusing on the changes required to support The 
Army of the 21st Century. For BRAC in fiscal year 2004, we are 
requesting $67 million. This budget represents the Army's requirement 
to continue unexploded ordnance (UXO) removal, environmental 
restoration, and property management of those facilities not yet 
disposed from the first four rounds of BRAC. In fiscal year 2001, The 
Army began saving $924 million annually upon completion of the first 
four rounds of BRAC. Although these savings are substantial, we need to 
achieve even more, and bring our infrastructure assets in line with 
projected needs. The Army supports the need to close and realign 
additional facilities and we appreciate the Congress' authority to have 
an additional round in fiscal year 2005.
    The Army is now in the second year of exclusively caretaking and 
completing the remaining environmental restoration activities at BRAC 
installations. We request $67,067,000 in fiscal year 2004 to continue 
this important work. These funds allow us to properly caretake these 
properties and to continue environmental and ordnance removal efforts 
that will facilitate economic revitalization and will render these 
properties safe. This budget includes the resources required to support 
projected reuse in the near term and to continue with current projects 
to protect human health and the environment. The Army implemented 
innovative approaches to environmental restoration at BRAC sites in 
fiscal year 2002, which supported the early transfer of several 
properties. The Army will continue to support early property transfers 
in fiscal year 2003 and beyond.
    Although the extensive overseas closures do not receive the same 
level of public attention as those in the United States, they represent 
the fundamental shift from a forward-deployed force to one relying upon 
overseas presence and power projection. Without the need for a 
Commission, we are continuing to reduce the number of installations 
overseas. The total number of Army overseas sites announced for closure 
or partial closure since January 1990 is 685. Additional announcements 
and efficient basing initiatives will occur until the base structure 
matches the force identified to meet U.S. commitments.
    The significant challenges posed by the removal of unexploded 
ordnance, the remediation of groundwater, and the interface of a 
variety of regulatory authorities continue to hinder the disposal of 
property. A number of innovative approaches for environmental 
restoration were recently developed in an effort by The Army to 
expedite the transfer of property, while ensuring the protection of 
human health and the environment. Two innovative mechanisms are being 
utilized to complete environmental restoration efforts: Guaranteed/
Fixed Price Remediation (G/FPR) Contracts and Environmental Services 
Cooperative Agreements (ESCA). A G/FPR Contract obligates BRAC funds 
necessary for regulatory closure of specified restoration activities. 
The Army retains responsibility for completion of the environmental 
restoration, overseeing the contractor and ensuring that regulatory 
closure of the property is obtained. An ESCA is a different mechanism, 
authorized under the environmental restoration program that obligates 
Army BRAC funds and apportions some amount of liability to a 
governmental entity representing the reuse interests of the particular 
BRAC installation, in exchange for specific environmental restoration 
services outlined in the ESCA.
    The Army used a G/FPR to accelerate regulatory closure from 2003 to 
2002 at Fort Pickett, Virginia, at a cost that will not escalate over 
the course of the work. We estimate that this $2.9 million contract 
saved us $0.8 million based on our initial estimates. An ESCA allows 
The Army to transfer property and associated cleanup responsibilities 
to a local reuse authority or developer. This allows the developer to 
integrate cleanup with their redevelopment plans. An ESCA completed in 
2001 was used in conjunction with early transfer authority at Military 
Ocean Terminal, Bayonne, New Jersey, saving The Army an estimated $5 
million. An ESCA will facilitate the early transfer in fiscal year 2003 
of property at Oakland Army Base, California. The benefits of the G/FPR 
and ESCA initiatives are that they limit Army environmental remediation 
cost growth liability and facilitate property disposal.
    We remain committed to promoting economic redevelopment at our BRAC 
installations. We are supporting early reuse of properties through 
economic development conveyances, as well as the early transfer of 
properties along with cooperative agreements to accelerate the 
completion of remaining environmental remediation. The Army is also 
making use of leasing options approved by Congress and awarding 
guaranteed fixed price remediation contracts to complete environmental 
cleanup and make properties available earlier. Real property assets are 
being conveyed to local communities, permitting them to quickly enter 
into business arrangements with the private sector. Local communities, 
with The Army's support and encouragement, are working to develop 
business opportunities that result in jobs and tax revenues. The 
successful conversion of former Army installations to productive use in 
the private sector benefits The Army and ultimately the local 
community.

                                SUMMARY

    Madam Chairman, our fiscal year 2004 budget is a balanced program 
that permits us to execute our essential construction programs; 
provides for the military construction required to improve our 
readiness posture; provides for family housing leasing, operations and 
maintenance of the non-privatized inventory; and initiates 
privatization at four additional installations. This request is part of 
the total Army budget request that is strategically balanced to support 
the current war effort, the readiness of the force and the well-being 
of our personnel.
    Over the past few years with your support, we have successfully 
improved our infrastructure posture and postured ourselves for further 
improvements as The Army moves to the Objective force and The Army of 
the future. We implemented a revolutionary management system with the 
establishment of the Installation Management Agency. We have reduced 
our infrastructure by a third. In addition, we have initiated efforts 
to privatize family housing and utilities systems where it makes 
economic sense and supports our military mission. We have the resources 
to improve the living conditions of 106,000 single soldiers and will be 
79 percent complete with approval of this budget. We have expedited the 
process to turn over closed facilities and save the taxpayers money.
    Our long-term strategy can only be accomplished through sustained, 
balanced funding, divestiture of excess capacity, and improvements in 
management and technology. With your support, we will continue to 
streamline, consolidate, and establish community partnerships that 
generate effective relationships and resources for infrastructure 
improvement, continuance of services, and improved quality of life for 
soldiers, their families, and the local communities of which we are a 
part.
    The fiscal year 2004 request for the Active Army is for 
appropriations and authorization of appropriations of $2,935,927,000 
for Military Construction, Army, and Army Family Housing.
    The request for appropriations and authorization of appropriations 
is $168,298,000 for Military Construction, Army National Guard, and 
$68,478,000 for the Military Construction, Army Reserve.
    Madam Chairman, this concludes my statement. Thank you.

                      Department of the Air Force

STATEMENT OF HON. NELSON GIBBS, ASSISTANT SECRETARY OF 
            THE AIR FORCE, INSTALLATIONS, ENVIRONMENT 
            AND LOGISTICS
    Senator Hutchison. Thank you, Mr. Secretary.
    Secretary Gibbs.
    Mr. Gibbs. Madam Chairman, thank you very much. I 
appreciate the opportunity to appear before you today to 
discuss the Department of the Air Force fiscal year 2004 budget 
request for military construction, military family housing, and 
dormitories. I have submitted a statement for the record, and I 
would like to summarize it now.
    The Air Force total military construction and military 
family housing programs play a vital role supporting Air Force 
operational needs, workplace productivity, and the quality of 
life. This committee's support for those programs has remained 
steadfast over the years. The Secretary of Defense has made a 
commitment to transform the Department of Defense--this 
includes installations and facilities--into those that are 
required for our 21st Century military. Given the ever-present 
competing priorities, the Air Force has developed an executable 
and fiscally responsible plan for getting its facilities on a 
path to recovery.
    The Air Force top priority within this year's President's 
budget are to sustain the facilities that already exist, 
enhance the quality of life by improving housing for both 
single and married members, complying with existing 
environmental statutes and supporting new missions and weapons 
systems.

                AIR FORCE FACILITIES AND INFRASTRUCTURE

    For fiscal year 2004, the Air Force is requesting over $4.4 
billion to invest in Air Force facilities and infrastructure, 
an increase of approximately $200 million over its request for 
fiscal year 2003. This includes nearly $2 billion for 
sustainment, restoration, and modernization to maintain our 
existing infrastructure and facilities, up slightly from our 
fiscal year 2003 request.
    This budget request also reflects the Air Force's 
continuing commitment to taking care of its people and their 
families. Their welfare is a critical factor to overall Air 
Force combat readiness, and the family housing program, 
dormitory program, and other quality of life initiatives 
reflect a commitment by the Air Force to provide its people 
with the facilities that they deserve. The Air Force is 
requesting $1.5 billion for military family housing, 
approximately the same as it requested last year.

                            QUALITY OF LIFE

    To improve the quality of life for the Air Force unmarried 
junior enlisted members, the Air Force is requesting $200 
million for its fiscal year 2004 dormitory program, which 
consists of 10 enlisted dormitories in stateside bases and two 
at overseas bases.
    Our fiscal year 2004 request also includes over $750 
million for active force military construction, $60 million to 
the Air National Guard, and $40 million for the Air Force 
Reserves, all a slight increase over the request for 2003.

                        MILITARY FAMILY HOUSING

    In conclusion, I want to thank the committee for its 
continuing strong support of Air Force military construction, 
military family housing, and dormitory programs. With the 
committee's assistance and support, the Air Force will meet the 
most urgent need of commanders in the field, while providing 
quality facilities for the men and women who serve in and are 
the backbone of the most respected Air and Space Force in the 
world.
    Thank you very much, Madam Chairman.
    [The statement follows:]

                 Prepared Statement of Nelson F. Gibbs

                              INTRODUCTION

    Madam Chairman and members of the committee, good afternoon. I 
appreciate the opportunity to appear before you and present the 
Department of the Air Force fiscal year 2004 military construction 
program. Today, I will present to the committee the Air Force 
investment strategies for facilities, housing, and environmental 
programs.

                                OVERVIEW

    Our Total Force military construction and military family housing 
programs (MFH) play vital roles supporting Air Force operational needs, 
work place productivity, and quality of life. Today, when our Nation 
needs its Air Force more than ever before, our installations are the 
platforms from which we project the global air and space power so 
important to combat operations overseas. During Operation ENDURING 
FREEDOM, we flew the longest bomber combat mission in history . . . 44 
hours traveling more than 16,000 miles . . . from Whiteman Air Force 
Base, Missouri, against targets in Afghanistan. Our military 
construction program is a direct enabler of this kind of dominant 
combat capability. In that same vein, as we send tens of thousands of 
airmen overseas to prepare for possible conflict with Iraq, the peace-
of-mind they enjoy, knowing their families are safe and secure, living 
in adequate housing with state-of-the-art quality of life facilities, 
has direct impact on their ability to focus on the task at hand.
    While the Air Force has always acknowledged the importance of 
robust funding for facility sustainment and recapitalization, in the 
past we have found that higher competing priorities have not permitted 
us to address all the problems we face with our aging infrastructure. 
We turned a corner with our fiscal year 2002 and 2003 military 
construction and family housing budget requests, both well in excess of 
$2 billion. You supported those requests and increased them to nearly 
$3 billion, making the last 2 years' infrastructure investment programs 
the two largest in more than a decade. We sincerely appreciate your 
support.
    We're continuing this positive trend in fiscal year 2004 . . . we 
are requesting more than $2.4 billion for Total Force military 
construction and Military Family Housing, a $160 million increase over 
last year's request. The request includes more than $770 million for 
Active military construction, $60 million for Air National Guard 
military construction, more than $40 million for Air Force Reserve 
military construction, and more than $1.5 billion for Military Family 
Housing. In addition, we have maintained our focus on Operations and 
Maintenance (O&M) sustainment, restoration, and modernization (SRM) 
funding. Last year's O&M SRM request was nearly $400 million more than 
in fiscal year 2002. This year, we protected and actually increased 
that program growth. With the fiscal year 2004 budget request, we will 
invest more than $2 billion in critical infrastructure maintenance and 
repair through our O&M program.
    When one considers our level of effort across the entire 
infrastructure spectrum (military construction, MFH, and O&M SRM), we 
plan to invest more than $4.4 billion in fiscal year 2004.
    These Air Force programs were developed using a facility investment 
strategy with the following objectives:
  --Accommodate new missions
  --Invest in quality of life improvements
  --Continue environmental leadership
  --Sustain, restore, and modernize our infrastructure
  --Optimize use of public and private resources
  --Continue demolition of excess, uneconomical-to-maintain facilities, 
        and
  --Base realignment and closure
    Madam Chairman, Air Force missions and people around the world 
clearly depend upon this committee's understanding of and support for 
our infrastructure programs. That support has never wavered, and for 
that we are most grateful.
    With this background, I will discuss in more detail our military 
construction budget request for fiscal year 2004.

                        ACCOMMODATE NEW MISSIONS

    New weapon systems will provide the rapid, precise, global 
capability that enables our combat commanders to respond quickly to 
conflicts in support of national security objectives. Our fiscal year 
2004 Total Force new mission military construction program consists of 
43 projects, totaling more than $273 million. These projects support a 
number of weapons system beddowns; 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 fighter. Tyndall Air Force Base, Florida, will house the F/
A-22 flying training program. Nellis Air Force Base, Nevada, will be 
the location for F/A-22 Follow-on Operational Test and Evaluation. 
Langley Air Force Base, Virginia, will be home for the first 
operational squadrons. The fiscal year 2004 military construction 
request includes one F/A-22 project at Tyndall for $6 million, and 
three F/A-22 projects at Langley totaling $25 million.
    The C-17 Globemaster III aircraft is replacing our fleet of C-141 
Starlifters. The C-17 provides rapid global mobility by combining the 
C-141 speed and long-range transport capabilities; the C-5 capability 
to carry outsized cargo; and the C-130 capability to land on short, 
forward-located airstrips. We are planning to bed down C-17s at 
Elmendorf Air Force Base, Alaska; Travis Air Force Base and March Air 
Reserve Base in California; Dover Air Force Base, Delaware; Hickam Air 
Force Base, Hawaii; Jackson Air National Guard Base, Mississippi; 
McGuire Air Force Base, New Jersey; Altus Air Force Base, Oklahoma; 
Charleston Air Force Base, South Carolina; and McChord Air Force Base, 
Washington. Thanks to your support, construction requirements for 
Charleston and McChord were all funded in prior-year military 
construction programs. Our request for fiscal year 2004 includes a $1 
million facility project at Altus, an $8 million assault runway at Camp 
Shelby (near Jackson, Mississippi), two facility projects for $12 
million at McGuire, and six facility projects for $63 million at 
Hickam. Other new mission requirements in fiscal year 2004 include the 
Global Hawk beddown at Beale Air Force Base, California; Combat Search 
and Rescue aircraft beddown at Davis-Monthan Air Force Base, Arizona; 
C-130J beddown at Pope Air Force Base, North Carolina, and Little Rock 
Air Force Base, Arkansas; and Joint Strike Fighter facilities at 
Edwards Air Force Base, California.

                 INVEST IN QUALITY OF LIFE IMPROVEMENTS

    The Air Force is committed to taking care of our people and their 
families. Quality of life initiatives acknowledge the increasing 
sacrifices our airmen make in support of the Nation and are pivotal to 
recruiting and retaining our best. When our members deploy, they want 
to know that their families are stable, safe, and secure. Their welfare 
is a critical factor to our overall combat readiness. Our family 
housing and dormitory programs, and other quality of life initiatives 
reflect our commitment to provide facilities they deserve.

Family Housing
    Our Air Force Family Housing Master Plan provides the road map for 
our Housing military construction, O&M, and privatization efforts, to 
meet the goal of providing safe, affordable, and adequate housing for 
our members. Our fiscal year 2003 budget request reflected an increase 
of more than $140 million over the prior year--we have built on that 
increase with our fiscal year 2004 request and in the programmed 
budgets for the next 3 years. With the exception of four northern-tier 
locations, we will eliminate our inadequate housing units in the United 
States by 2007. The inadequate units at those four northern-tier 
locations will be eliminated by 2008, and the inadequate units at our 
overseas installations will be eliminated by 2009.
    For fiscal year 2004, the $700 million we have requested for 
housing investment constructs nearly 2,100 units at 18 bases, improves 
more than 1,500 units at eight bases, and supports privatization of 
nearly 7,000 units at seven bases. I'll discuss our housing 
privatization program in more detail later. Our fiscal year 2004 
housing operations and maintenance program totals nearly $835 million.

Dormitories
    Just as we are committed to provide adequate housing for families, 
we have an ambitious program to house our unaccompanied junior enlisted 
personnel. The Air Force Dormitory Master Plan is a comprehensive, 
requirements-based plan, which identifies and prioritizes our dormitory 
military construction requirements. The plan includes a three-phased 
dormitory investment strategy. The three phases are: (1) fund the 
replacement or conversion of all permanent party central latrine 
dormitories; (2) construct new facilities to eliminate the deficit of 
dormitory rooms; and (3) convert or replace existing dormitories at the 
end of their useful life using a new, Air Force-designed private room 
standard to improve airman quality of life. Phase 1 is complete, and we 
are now concentrating on the final two phases of the investment 
strategy.
    Our total requirement is 79,400 Air Force dormitory rooms. We 
currently have a deficit of 11,400 rooms, and the existing inventory 
includes 3,700 inadequate rooms. It will cost approximately $1 billion 
to execute the Air Force Dormitory Master Plan and achieve Office of 
the Secretary of Defense's (OSD) fiscal year 2007 goal to replace all 
of our inadequate dormitory rooms. This fiscal year 2004 budget request 
moves us closer to that goal.
    The fiscal year 2004 dormitory program consists of 12 dormitory 
projects at nine U.S. bases and two overseas bases, for a total of $203 
million. On behalf of all the airmen affected by this important quality 
of life initiative, I want to thank the committee. We could never have 
made it this far without your tremendous support.

Fitness Centers
    Other traditional quality of life investments include community 
facilities, such as fitness centers, vital in our efforts to attract 
and retain high-quality people and their families. A strong sense of 
community is an important element of the Air Force way of life, and 
these facilities are important to that sense of community as well as to 
the physical and psychological well being of our airmen. The fiscal 
year 2004 military construction program includes fitness centers at 
Lajes Air Base, Azores; Mountain Home Air Force Base, Idaho; 
Spangdahlem and Ramstein Air Bases, Germany; and Royal Air Force Bases 
Lakenheath and Mildendall in the United Kingdom.

                   CONTINUE ENVIRONMENTAL LEADERSHIP

    The Air Force continues to ensure operational readiness and sustain 
the public trust through prudent environmental stewardship. We are 
meeting our environmental cleanup commitments and Department of Defense 
goals through effective outreach and partnering with Federal and State 
regulators and team building with stakeholders and communities. Meeting 
our legal obligations remains a primary objective of the Air Force 
environmental quality program. Our record of environmental stewardship 
illustrates our environmental ethic, both here in the United States and 
overseas.
    In addition to ensuring our operations comply with all 
environmental regulations and laws, we are dedicated to enhancing our 
already open 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. We have reduced our open 
enforcement actions from 263 in 1992 to just 22 at the end of 2002.
    We have one project ($7 million) in our fiscal year 2004 
environmental compliance military construction program. With it, we 
will install arsenic treatment systems on water wells at Kirtland Air 
Force Base, New Mexico, to ensure the base is in full compliance with 
the U.S. Environmental Protection Agency's (EPA) new standard for 
maximum arsenic levels allowed in drinking water. Failure to install 
these treatment systems could result in fines from the EPA, shutdown of 
water wells at Kirtland, and the increased cost of purchasing and 
distributing potable water on the base.

           SUSTAIN, RESTORE, AND MODERNIZE OUR INFRASTRUCTURE

Overseas Military Construction
    The quality of our installations overseas continues to be a 
priority to us. Even though the majority of our Air Force personnel are 
assigned in the United States, 16 percent of our forces are permanently 
assigned overseas, including 29,000 Air Force families. The Air Force 
overseas base structure has stabilized after years of closures and 
force structure realignments. At this level, our overseas 
infrastructure still represents 11 percent of our Air Force physical 
plant. Now, old and progressively deteriorating infrastructure at these 
bases requires increased investment. Our fiscal year 2004 military 
construction request for European and Pacific installations is $171 
million totaling 22 projects. The program consists of infrastructure 
and quality of life projects in the United Kingdom, Germany, the 
Azores, Italy, Turkey, and Korea, as well as critical facilities on 
Wake Island. We ask for your support of these operational and quality 
of life projects.

Planning and Design/Unspecified Minor Construction
    We are also requesting planning and design and unspecified minor 
construction funding. Our request for fiscal year 2004 planning and 
design is $102 million. These funds are required to complete design of 
the fiscal year 2005 construction program, and to start design of our 
fiscal year 2006 projects. We have requested $23 million in fiscal year 
2004 for our total force unspecified minor construction program, which 
is our primary means of funding small, unforeseen projects that cannot 
wait for the normal military construction process.

Operations and Maintenance Investment
    To sustain, restore, and modernize what we own, we must achieve a 
balance between our military construction and O&M programs. Military 
construction allows us to restore and recapitalize our facilities. O&M 
funding allows us to perform facility sustainment activities necessary 
to prevent facilities from failing prematurely. Without proper 
sustainment, facilities and infrastructure wear out sooner. We also 
rely on O&M funding to directly address many of our 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.
    Since the early nineties, constrained defense budgets resulted in 
reduced military construction funding. For a few years, adequate O&M 
funding partially offset this military construction decline. However, 
between fiscal year 1997 and fiscal year 2001, competing priorities 
forced the Air Force to cut sharply into both military construction and 
O&M funding. Our effort to sustain and operate what we own was strained 
by minimally funded O&M, which forced us to defer much-needed 
sustainment and restoration requirements. Thankfully, along with the 
robust military construction programs provided in the last two years, 
we have been able to restore our O&M balance for the second year in a 
row. In fiscal year 2004, our sustainment, restoration, and 
modernization share of the Air Force O&M funding is more than $2 
billion--allowing us to properly invest in facility sustainment (to 
keep our good facilities good) and invest some O&M funding in 
restoration and modernization work compared to fiscal year 2003. Our 
known restoration and modernization O&M backlog has grown to nearly $8 
billion, so it will be important for us to continue this precedent of 
higher O&M facility investment in the future.

              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 
our follow-on initiatives. We awarded our first housing privatization 
project at Lackland Air Force Base, Texas, in August of 1998, and all 
420 of those housing units were constructed and are occupied by 
military families. Since then, we have completed two more projects (at 
Robins Air Force Base, Georgia, and Dyess Air Force Base, Texas) and 
have two more under construction (at Elmendorf Air Force Base, Alaska, 
and Wright-Patterson Air Force Base, Ohio). Once these two projects are 
complete, our privatized unit total will exceed 3,800. We are on-track 
to award another eight projects in the next 12 months. Looking at 2005 
and beyond, we are targeting an end-state of privatizing 60 percent of 
the U.S.-based housing inventory. Our fiscal year 2004 budget request 
includes $44 million to support the privatization of nearly 7,000 units 
at seven bases: Luke Air Force Base, Arizona; Altus and Tinker Air 
Force Bases in Oklahoma; Shaw Air Force Base, South Carolina; Sheppard 
Air Force Base, Texas; McChord Air Force Base, Washington; and F.E. 
Warren Air Force Base, Wyoming.
    We continue to pursue privatization of utility systems at Air Force 
installations. Our goal is to privatize utility systems where it makes 
economic sense and does not negatively impact national security. The 
Air Force has identified 420 of our 650 systems as potential 
privatization candidates. We expect to release approximately 190 
requests for proposal over the next 24 months.

   CONTINUE DEMOLITION OF EXCESS, UNECONOMICAL-TO-MAINTAIN FACILITIES

    For the past 7 years, we have pursued an aggressive effort to 
demolish or dispose of facilities that are not economical to sustain or 
restore. From fiscal year 1998 through fiscal year 2002, we demolished 
more than 12 million square feet of non-housing building space. We 
expect to demolish an additional 2 million square feet in fiscal year 
2003, for a total reduction of 14 million square feet. This is 
equivalent to demolishing six Air Force bases equal to the combined 
square footage of Whiteman, Goodfellow, Moody, Brooks, Vance, and Pope 
Air Force Bases. Looking at fiscal year 2004 and beyond, we will 
continue to identify opportunities for Air Force demolition through 
facility consolidation. In general, we consider our facility demolition 
program a success story enabling us to reduce the strain on our 
infrastructure funding by getting rid of facilities we don't need and 
can't afford to maintain.

                      BASE REALIGNMENT AND CLOSURE

    The Air Force views the fiscal year 2005 Base Realignment and 
Closure (BRAC) process as a unique opportunity to reshape our 
infrastructure to optimize military readiness and to ensure we are most 
efficiently postured to meet new security challenges. In January of 
this year, we created a Basing and Infrastructure Analysis group within 
Headquarters Air Force. This office will serve as the Air Force focal 
point for the fiscal year 2005 BRAC process. Our major commands are 
following suit with creating their own analysis structures to support 
the BRAC process. As in previous rounds of base closures, we are 
establishing a Base Closure Executive Group (BCEG) composed of general 
officers and senior civilians representing a variety of functional 
areas, including those with range and airspace operational expertise. 
We continue to participate in joint BRAC forums with our sister 
services and the Office of the Secretary of Defense to meet the 
Secretary of Defense guidance and develop the required processes and 
procedures.
    The Air Force leadership is committed to meeting the BRAC fiscal 
year 2005 statutory deadlines and ensuring our analytical processes are 
unbiased and defensible.
    The Air Force continues to work with the local reuse authority at 
each base closed under previous rounds of BRAC to minimize the impact 
on the local community from the closure. This effort has led to the 
creation of over 48,000 jobs with 86 percent of the property 
transitioned for reuse.
    While these facilities are being returned to their respective 
communities, the Air Force has a continuing responsibility for 
environmental cleanup from past industrial activities. The Air Force 
approaches this responsibility at our BRAC bases with the same prudent 
environmental stewardship as at our active bases. We have spent $2.2 
billion since fiscal year 1991 in environmental cleanup at closing 
bases, and for fiscal year 2004, the Air Force is requesting $176 
million to continue the cleanup.

                               CONCLUSION

    In conclusion, Madam Chairman, I thank the committee for its strong 
support of Air Force military construction and family housing. With 
your help, we will ensure we meet the most urgent needs of commanders 
in the field while providing quality facilities for the men and women 
who serve in and are the backbone of the most respected aerospace force 
in the world. I will be happy to address any questions.

    Senator Hutchison. I want to thank all three of you, and 
say I appreciate all that you are doing, and I want to ask a 
couple of general questions. The issue of environmental cleanup 
has come up in our committee since I have been on it, and I 
would ask two questions of each of you.

                         ENVIRONMENTAL CLEANUP

    Number 1, the numbers are staggering in these environmental 
cleanups. Has anyone actually assessed these costs to know that 
they are absolutely efficient and necessary? Are we doing this 
in the best possible way to get the result that we want, or are 
we just throwing these huge numbers out there and accepting it 
at face value?
    Then secondly, I would like to just go ahead and have the 
second question for each of you as well, and that is, when you 
are looking at the bases that you are going to put on the BRAC 
list for 2005, are you going to put environmental cleanup on 
the list of factors, which does not seem to have been done in 
the past, although obviously, Mr. Johnson, you are the expert 
here, and maybe you did consider these things. But it 
certainly--let me say that the costs that we are now dealing 
with were not the costs that were brought up when these bases 
were closed, so with that, let me start with you.
    Mr. Johnson. Yes, ma'am. Two questions. Obviously, we look 
and try to find the most efficient way to clean up bases. There 
are many factors that affect it. Number 1 is the intended use, 
and the receiving agency often will use an intended use for 
cleanup purposes that requires more than if you used a 
different use, so some of it is driven by the receiving agency, 
normally the community.
    And the techniques are evolving. We look very carefully to 
use the most efficient ones, but quite frankly, environmental 
cleanup techniques each year get a little better, or a little 
different. We have our challenges with the local regulatory 
organizations, as well as the national EPA, but our services 
have worked very closely with them and have a good 
relationship.
    The second question came up when in another life I was on a 
BRAC, and I understand what you are saying, that we should 
consider the environmental cleanup. The thought in those days 
and my continuing thoughts are that the property should be 
cleaned whether it is kept in the active inventory or 
transferred, so environmental aspects should not be a decision 
in any BRAC decisions. That is my personal view.
    We have not considered any bases for BRAC, and we intend 
to, in our service anyway, not to select any bases until we 
look at all of the functions across the bases and then, if you 
have too many functions, a base will be selected, but we will 
start from what we need as opposed to looking at individual 
bases.
    Senator Hutchison. I hear what you are saying. It is just, 
I think, a difference when you are closing a base than when the 
base is ongoing in its usage. I am not sure you could clean up 
a base that was ongoing in certain respects.
    Mr. Johnson. We can certainly do a better job of estimating 
what the costs are to clean bases, but we really do not know 
until you go through the process, and also go through the 
intended use.
    Senator Hutchison. It just seems to me that it should be a 
factor to be considered when that comes up in 2005.
    Mr. Gibbs.
    Mr. Gibbs. I would agree with my colleague, generally just 
a couple of points to add to his. The first question, are we 
doing it in the most effective manner, we believe we are as we 
go along, and I will split it into two pieces, those that are 
closed bases, and those that are continuing ones.
    We do have significant activities and costs for cleanup on 
our existing bases, and we pursue those in a manner that is a 
little more straightforward and a little easier to do because 
we know the intended use when we start out, and we can be more 
consistent over time.
    For the bases that have been closed, in some cases it takes 
quite a while to find out exactly how the community wants to 
use the land that they are going to get back, so we are a 
little hesitant in proceeding on the cleanup activities. In 
other cases, it changes over time, so we may have to change 
from one level of cleanup to another.
    As I said, I agree with Secretary Johnson, the costs should 
be the same whether we are going to stay or whether we are 
going to leave. It is just the time period over which the costs 
are going to be incurred. At the final date, whenever that is, 
all of the facilities, continually owned or returned to the 
local communities, will be put back in the state that they were 
when the Air Force received them, so it is a method of timing.

                      BASE REALIGNMENT AND CLOSURE

    In terms of the determination for consideration for BRAC, I 
basically believe the only determination there would be on the 
speed with which it is going to be done, and if an economic 
analysis is placed on that, the net present value of the cost 
should be the same whether we do it sooner or later, so it 
really should not, in my view, make a substantive difference in 
terms of the utilization of the facilities.
    Senator Hutchison. Dr. Fiori.
    Mr. Fiori. I certainly agree with you, Madam Chairman, that 
the costs are staggering when we look at all of our 
environmental mortgage. That goes just beyond the BRAC 
mortgage. We have our UXO, unexploded ordnance throughout the 
country, and that is not funded very high, so we are estimating 
100 years to clean it up. So to solve that problem and to get 
the speed, to bring it in a little closer than 100 years from 
now, we have to look at various technologies that are 
transportable that we could bring to the scene to explode this 
ordnance, we have to find the ordnance, so there is a good 
technology program available to try to speed up the UXO issues 
that are both on BRAC and off BRAC, so that is one way.
    We are also looking at more innovative business ways of the 
BRAC properties, in transferring them and sharing the 
responsibility, or again the end use is key to the whole thing. 
If I have to make it pristine clean, it is going to cost us a 
fortune. If we are going to use it forever as a habitat, I may 
not have to do much of anything to it. It just depends.
    As my counterparts have said, a lot has to do with the 
local regulatory issues, and some could be extreme. In one case 
I note that I am going to take 14 years at least to clean up 
7,000 acres. It almost by definition is going to take that 
long, and that is a regulatory local issue that you have to 
resolve.
    These issues are different throughout the country, but by 
business and by technology we can assist this. It is still 
going to be very expensive.
    Our bases to BRAC, of course, we have not put any bases 
online. Our process is to examine all our bases, and that is 
what we are going to do, and I cannot really add much to what 
my counterparts have said, because we work very closely 
together on the BRAC issues.
    We need and we will have some new tools to get rid of the 
property faster. I still have 140,000 acres I am getting from 
the first four BRAC's that I am trying to eliminate, and it is 
a slow process. Even when the recipient is anxious and you are 
anxious to give and he is to take, and we agree on the price 
and everything else, the regulatory issues can really bog you 
down.
    Senator Hutchison. I agree with you. I do think there is a 
difference, by the way, on environmental cleanup for an ongoing 
use versus turning it over for a different use. I think you 
have to make those assessments, and it should be a factor in a 
BRAC, in my opinion.
    But secondly, all of the savings that BRACs are supposed to 
bring would, I think, be curtailed by the fact that so many of 
these bases are not yet completely turned back, and I just hope 
these factors are considered in the next BRAC. I mean, 
certainly we should have learned from these past BRACs what the 
problems are, and I would hope it would be factored in what the 
environmental cleanup costs would be, and what the problems in 
turning it back would be, as well as all the other factors that 
would be relevant. And so I am hoping that we are going to 
learn from past mistakes and past problems that have arisen 
that were not expected.

                     OVERSEAS MILITARY CONSTRUCTION

    Along that line, I assume that you heard what we were 
talking about in the previous panel. Are you dealing with the 
new strategies, are you keeping in mind that things are 
changing in Europe and perhaps in other places, and are you 
taking that into consideration as you begin to spend the 2003 
dollars, and also as you are coming to us with your 2004 
requests?
    Once again I say, we have got $288 million now being 
requested for MILCON in Germany at a time when our own 
commander in Europe is saying that there will be a significant 
drawdown from Germany, and then $173 million or so in South 
Korea. Are you taking these things, all of these issues into 
consideration before you even spend the dollars that have been 
allocated in the 2003 cycle, and is it going to be a part of 
what we are going to be looking at in 2004?
    Mr. Fiori. Perhaps I should answer, since most of it is 
mine.
    Senator Hutchison. A lot of it is yours, right. There is 
some Air Force, of course.
    Mr. Fiori. The Secretary of Defense has asked our major 
commanders to review everything in 2003 and to see if there is 
any flexibility to either not build or do it somewhere else, or 
do it smarter, whichever, so we have halted all the 
construction, and it must be reviewed by either General LaPorte 
or General Jones prior to our starting construction in the 2003 
time frame.
    For the 2004 budgets, we are supporting the Army program 
pretty much as it is, and I really cannot add much to what Mr. 
DuBois and Dr. Zakheim said. We have put the program together 
clearly looking at the facilities that we will probably need in 
most cases, and we will obviously do a review as soon as these 
policy decisions are made.
    We had to submit a budget to you, and I did hear the 
comment made that it would be nice to get it done before the 
budgeting process, but the way the timing is of these things, 
sometimes a reprogramming might be the only alternative we have 
to make sense of this, and all these things, we do not do them 
overnight. I think that was the point made, and I would 
certainly agree to it.
    A lot of these facilities we will be using for 2, 3 years, 
particularly in the housing area, which I am concerned with 
overseas quite a bit. We will still have our soldiers there for 
quite a while, so it is going to have to be a balance, ma'am.
    Senator Hutchison. Mr. Gibbs.

                                GERMANY

    Mr. Gibbs. Being second in line for the amount, as you 
heard Dr. Zakheim say, the hold that is occurring in Germany 
has excluded Ramstein, the major Air Force facility in Germany, 
actually one of only two that we are going to end up with. The 
reason for that is, we have an agreement with the German 
Government to vacate the Rhein-Main facility, which has been 
heretofore the major transshipment point from the United States 
through Europe and into points east from there.
    Various levels of the German Government, from the Federal 
Government and on down through the local governments, have 
committed in excess of $400 million to facilitate that move 
that is going on out there. They are paying the bulk of the 
cost. However, there are some aspects of it that we are 
responsible for, and we are continuing with that program, so it 
should remain intact both in 2003 and in the request for 2004.
    There has been, I believe, a determination that we will 
need a major transshipment hub through Europe, and that is the 
only place that it basically can be, so Ramstein is pretty much 
different than the other ones.

                                 KOREA

    In the case of Korea, we are in need, dire need of some of 
the housing facilities, and we have a request in to General 
LaPorte to review those specifically, because if we lose the 
window on a dormitory for the people then we lose it for a 
year, so he has I believe agreed to take a look at those and 
see whether they should go on an individual basis or not.

                             PRIVATIZATION

    Senator Hutchison. My last question is--in fact, we have 
several questions that we may submit to you in writing that are 
on the details. But one is the issue of privatizing military 
barracks and dorms. We have all seen the privatized housing for 
married families, but the issue of privatizing barracks and 
dorms, to what extent do you think this could work, and do you 
think you can save money doing it, and do you think you can 
protect the troops with that type of privatization?
    Mr. Johnson. I think we have the most in the Department of 
the Navy. We plan and have submitted three pilots. One is at 
San Diego, one at Norfolk, and one at Camp Pendleton. When we 
do that, we have to look at things a little bit differently if 
we are going to privatize a dormitory, and when you privatize 
things you have to have alternative uses. In other words, if 
the military moved out, it has to be in a location that other 
people can use, so we will be building those more on the edge 
of bases rather than in the middle.
    We believe we worked out all of the concerns. We believe 
that we can get three times the number of sailors and marines 
housed for the same amount of money, and overall it is much 
cheaper, but it is something that we are working with your 
staff very carefully to make sure we do it just right, and we 
do the pilots.
    Fortunately, San Diego and Norfolk work very, very well. 
Pendleton will work well, but it is not quite as severable. In 
other words, you cannot build it quite on the edge of the base, 
but we are confident we can, number 1, assure our private 
partners that it will be filled, and number 2, that it will 
really serve our Nation much better, and number 3, and perhaps 
it should be number 1, is that we provide much better quarters 
for our bachelors, and it becomes a self-sustaining 
entitlement.
    In other words, the private partnership will continue to 
upgrade the dormitories and rebuild them at certain cycles so 
we think that we can take the same lessons we have learned from 
the family housing and transform it into barracks, but there 
are new issues which we are working very carefully with your 
staff.
    Senator Hutchison. Okay, thank you very much. We may have a 
few more submissions. I am sorry, were you going to comment on 
this? Do you have this in the works as well?

                        ELMENDORF AIR FORCE BASE

    Mr. Gibbs. Yes, we do. The Air Force fortunately has been 
working on its dormitory program for a number of years, and it 
is in relatively good shape. All of the gang type latrines were 
eliminated about 2 years ago, but we still have requirements, 
and we are always looking for ways to make the most effective 
use of the resources we have. So we have a pilot program that 
we are trying to work through up at Elmendorf to do the 
privatization of one of the dormitories there. We think that we 
may be successful there, and to the extent that we learn from 
that, then we may be able to move it on out to other locations.
    Mr. Fiori. I would like to comment, ma'am.
    As I pointed out, we have about 79 percent of our permanent 
party barracks that we have rehabilitated in one way or another 
to meet the standards of today, but we are still looking at, 
and we have two for permanent party barracks in the Presidio 
and Fort Lewis, but I have a massive amount of training 
barracks that are really in less than good shape--that would be 
a charitable statement to make--so we are looking at ways to 
consider privatizing them because they serve much more like a 
hotel, with transients coming and going on a constant basis.
    So we are looking at several places, but there are some 
serious issues, not the least of which is scoring, funding. If 
I am going to get scored the same amount as military 
construction I might as well build it, because we have done 
such a detailed job. And execution with deployments is an issue 
that we have not yet totally resolved.
    So we are looking at it, but we are not charging off 
massively to do it. I have a request to do defense logistics--
excuse me, the language school in California, in Monterey, and 
that might be--you know, it is one of these hotels you have to 
stay for 4 or 5 months type thing, and we are looking at seeing 
how we could transfer that into private industry.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Hutchison. All right. Unless there is anything 
else--yes, Mr. Johnson.
    Mr. Johnson. Ma'am, I would like to take the opportunity to 
tell you and your committee what great staff you have. It is a 
great pleasure to work with Sid Ashworth and Alycia Farrell, 
Christina Evans, I think, just left, and also B.G. Wright. You 
and we are well served by this strong team of professionals.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]

                  Questions Submitted to H.T. Johnson

          Questions Submitted by Senator Kay Bailey Hutchison

                          BARRACKS/DORMITORIES

    Question. I understand that all three services are working toward 
the elimination of inadequate permanent party barracks by 2007. The 
success of that program will be largely dependent on significant 
funding increases that the Army, Navy and Air Force have programmed for 
military construction beginning in 2005 and into the future. Past 
experience has shown that those increases in the out years seem to 
disappear, as it gets closer to the submission of the budget.
    Is the DOD goal of 2007 realistic and achievable?
    Answer. Yes. In developing the fiscal year 2004 program to meet the 
DOD goal, the Department of the Navy defined inadequate permanent party 
barracks as those barracks containing gang heads. Using O&M and MILCON-
funded projects, the Navy will eliminate their inadequate barracks by 
fiscal year 2007; the Marine Corps will eliminate their inadequate 
barracks by fiscal year 2005.
    Question. Would you also comment on the likelihood of realizing 
future funding increases for MILCON?
    Answer. The Department of the Navy is pursuing the use of 
privatization authorities to house our bachelors. This will determine 
the amount of traditional military construction necessary to achieve 
our goals.
    Question. Several of you are assessing the issue of privatizing 
military barracks and dormitories.
    Have you worked out the financial issues associated with this 
proposal and how would the Office of Management and Budget (OMB) score 
these proposals?
    Answer. We are currently developing concepts for pilot projects at 
Hampton Roads, Camp Pendleton (Del Mar), and San Diego. Financial 
issues, including OMB scoring, will be resolved as these concepts are 
finalized.
    Question. Has the OSD provided the services guidance on 
privatization?
    Answer. OSD has provided general guidance to the Services on family 
housing privatization. Some of the guidance is likely to be applicable 
to bachelor housing as well. OSD has not provided specific guidance to 
the Services on bachelor housing privatization. The Department of the 
Navy will work with OSD during the development of the bachelor housing 
privatization pilot projects to document proposed guidance for future 
projects.
    Question. What are the major cost concerns that will potentially 
impact this initiative?
    Answer. Major factors that will impact the costs of barracks 
privatization include: (1) the private sector's assessment of financial 
risk (i.e. no assignment of sailors, impact of deployment, secondary 
market, etc.); (2) the project concept (i.e. number and type of units); 
(3) income stream (i.e. intended demographics, rent set at full vs. 
partial BAH); (4) available assets (Government investment, inclusion of 
existing units and land availability); and, (5) construction 
requirement (supporting facilities requirement, applicability of 
Antiterrorism/Force Protection modifications, site costs and/or land 
cost, etc.). These issues are being addressed as the bachelor housing 
privatization pilot project concepts are being developed.

                         RECAPITALIZATION RATE

    Question. With the funding proposed in the 2004 budget for MILCON, 
how does that impact your recapitalization rate?
    Answer. Based upon the funding budgeted in fiscal year 2004 for 
those appropriations used for restoration and modernization projects, 
the facility recapitalization rate in fiscal year 2004 is 140 years for 
the Navy and 88 years for the Marine Corps.
    Question. How does that compare to last year's rate?
    Answer. The recapitalization rate for the President's fiscal year 
2003 budget submission was 116 years for the Navy and 156 years for the 
Marine Corps.
    Question. Gentlemen, there have been a lot of promises made over 
the past 2 years regarding revitalizing our defense facilities. Are we 
back to business as usual neglecting our facilities?
    Answer. The Department of Defense has established two specific 
installation infrastructure performance goals and associated metrics to 
improve readiness over the long term: (1) fully sustain facilities; and 
(2) recapitalize the existing infrastructure at a 67 year rate by 
fiscal year 2008. These metrics provide important credibility and 
visibility to facility funding levels that did not exist in the past.
    Question. What are your long-term plans to reach the Department's 
proposed recapitalization rate of 67 years?
    Answer. The Navy and Marine Corps plan to reach the 67 year 
recapitalization rate through a combination of (1) restoration and 
modernization funding, (2) reduction in excess infrastructure, and (3) 
efficiencies in managing and maintaining our infrastructure.
    Question. When will that happen?
    Answer. The fiscal year 2004 President's FYDP indicates that both 
the Navy and the Marine Corps will achieve the 67-year rate 
recapitalization goal in fiscal year 2008.
    Question. I worry about the message we send our young soldiers, 
airmen, and sailors as well as their families, about the condition of 
the facilities in which they live, work and train, especially as we try 
to retain them. How does the condition of your infrastructure relate to 
the services' goal of recruitment and retention?
    Answer. The Navy and Marine Corps are meeting its recruitment goals 
and currently finds no correlation between recruitment and facilities 
condition. However, facilities condition is very important to 
retention. It is critical that we provide adequate, comfortable housing 
for our families and bachelors as well as safe, modern working 
facilities for our highly trained military and civilian workforce.

                         INSTALLATION READINESS

    Question. I understand that all three services rate the readiness 
of their infrastructure on a scale of C-1 to C-4. It appears that C-1 
indicates only minor deficiencies with negligible impact on capability 
to support missions. I was disturbed to find out that such a large 
percentage of your overall facilities are rated C-3 or worse.
    How does that impact mission readiness?
    Answer. The readiness ratings of our installations are based on 
condition assessments of the individual facilities at the base. These 
ratings are then aggregated into eight major facility types for our 
four major commands. The inspection-based ratings are verified and 
adjusted by our force commanders to ensure they match the readiness 
condition. The way facility conditions affect readiness is both direct 
and indirect. The direct affect, for example, might be where we have to 
close a runway because of pavement issues. These problems are rare and 
are quickly corrected. The most common readiness issue is indirect, 
caused by years of underfunding, that impact on the quality of life of 
installation tenants, or causes temporary interruptions of daily 
operations.
    Question. What would be the bill to bring all of your C-3 and C-4 
facilities to at least C-2?
    Answer. The total unfunded bill to bring all current facilities in 
fiscal year 2004 to at least C-2 is $17.7B for the Navy and $4.1B for 
the Marine Corps. This amount includes those funds to satisfy both 
quality and quantity deficiencies.
    Question. What is the associated timeline?
    Answer. The Department of Defense goal is to improve our existing 
facilities to C-2 by fiscal year 2010. Current funding levels indicate 
that the Navy will not attain that goal until fiscal year 2021 and the 
Marine Corps by fiscal year 2013.
    Question. I note that the services have goals to improve your 
facilities to C-1 by the end of the decade. Is that realistic based on 
current funding projections?
    Answer. Simply adding more money cannot realistically solve this 
problem. We need to resolve C-3/C-4 deficiencies through a combination 
of (1) funding, (2) reduction in excess infrastructure, and (3) 
efficiencies in managing and maintaining our infrastructure.

                      FAMILY HOUSING PRIVATIZATION

    Question. I want to compliment the military departments for 
improving military family housing for our service members. Through 
buying down the military member's out-of-pocket expenses for housing 
costs as well as eliminating inadequate housing units through military 
construction and privatization-you are making great progress. I am 
particularly proud of the fact that our state is leading the way with 
more housing privatization projects awarded at Texas military 
installations than any other state with six private-public partnerships 
(NAS Corpus Christi, Lackland Air Force Base, Dyess Air Force Base, NAS 
Kingsville, Fort Hood and NC South Texas) or 33 percent of the total 
projects awarded within the Department of Defense.
    While housing revitalization is a good news story for our military 
families, I am concerned with the message being sent to our service 
members with the budget proposal to cut impact aid funding for the 
education of soldier's, sailors', airmen and marines' children, and 
I've spoken to the administration about my concerns. A total of 1,300 
school districts across the nation receive impact aid funding to pay 
the salaries of teachers, purchase textbooks and computers and pay for 
advanced placement classes among other things. Cutting this funding 
sends a negative message at a time when we are promoting quality 
education for all children and sending their mothers and fathers into 
harm's way in the Persian Gulf region and around the world.
    With regards to privatization, I understand that some of these 
contracts are for 50 years and beyond. What happens when one of our 
family housing contractors goes out-of-business or does not fulfill its 
commitments?
    Answer. The business agreements the Department of the Navy enters 
into for housing privatization are crafted to preserve the financial 
viability of the company and protect the interests of the government. 
In the event of a default by our managing partner the Department of the 
Navy may remove the partner and designate a new partner to manage the 
company or cause the sale of the managing partner's interest in the 
company and admit the transferee to the company as the new managing 
partner.
    Question. There seems to be a growing emphasis on privatizing more 
housing in a shorter period of time. Are there concerns that moving too 
quickly on such major procurement contracts could lead to future 
problems?
    Answer. No. The Department of the Navy carefully considered the 
variables and possible uncertainties, over the long term, in crafting 
its approach to housing privatization. The Department has structured 
its business agreements to include provisions that protect the 
Government's interests while providing flexibility to adapt to future 
changes. Lessons learned on the first nine privatization efforts, and 
the use of document templates allow the Department to pursue family 
housing privatization efficiently without compromising the integrity of 
the process.
                                 ______
                                 

            Questions Submitted by Senator Dianne Feinstein

                                  NAVY

    Question. The fiscal year 2004 Navy request for BRAC cleanup is 
$101.9 million, a 62 percent decrease from the fiscal year 2003 enacted 
level. How much money above the budget request could the Navy execute 
in fiscal year 2004 to expedite its BRAC cleanup programs?
    Answer. The Navy's fiscal year 2004 budget consists of an 
appropriation request for $101.9 million plus a conservative estimate 
of $68 million from land sales and a $10.7 million adjustment from the 
DOD Comptroller providing a total of $180.6 million in spending 
authority. The Navy has substantial contract execution capacity in 
place and could readily obligate as much as about $500 million in 
fiscal year 2004 for BRAC cleanup under normal BRAC outlay rates. Other 
factors that impact expediting BRAC cleanup programs include regulator 
support for additional workload, timing when funds become available, 
and making sure that we get real cleanup and property disposal progress 
for the investment.
    Question. Did you request a higher level of funding from the 
Defense Department?
    Answer. No. The fiscal year 2004 BRAC budget request fully funds 
all legally enforceable agreements with environmental regulators and 
other must-fund agreements with communities. The Navy believes that the 
budget request and land sales receipts will be sufficient to meet BRAC 
cleanup requirements in fiscal year 2004.
    Question. Also, please provide a list of those BRAC properties that 
were sold publicly and give an analysis of where those dollars were 
directed within the BRAC accounts.
    Answer. Below is the list of Navy BRAC property that has been sold 
by public sale, negotiated sale, or where reimbursement was received 
under a public benefit conveyance through 13 March 2003. Total sales 
are $257.6 million, of which $208.5 million is from the recent sale of 
three parcels totaling 235 acres at the former Marine Corps Air Station 
Tustin, CA. The other $49.1M, which spans nearly 13 years since 
implementation of BRAC 1988, were previously spent on BRAC 
environmental and caretaker needs. The Department of the Navy has 
complied with the law, which requires that all land sale revenue from 
BRAC actions be used for environmental cleanup and caretaker costs at 
BRAC locations. An analysis of where those dollars were directed within 
the BRAC accounts is not available, as all BRAC land sale revenue is 
commingled with appropriated funds, recovery of prior year unobligated 
or unexpended funds, and additional BRAC funding allocations 
occasionally provided by the DOD comptroller. With the normal execution 
vagaries of some cleanup projects cost more, some cost less, some must 
be delayed due to regulator or other concerns, while others must be 
advanced for similar reasons, it is impracticable and would serve 
little purpose to maintain an audit trail of where any particular 
dollar is applied.

                           [In dollar amount]
------------------------------------------------------------------------
             Property                    Cost           Type of sale
------------------------------------------------------------------------
NAS Chase Field, TX...............        $168,000  Economic Development
                                                     Conveyance
NTC Orlando, FL...................       1,850,000  Economic Development
                                                     Conveyance
NAS Chase Field, TX...............         623,000  Negotiated Sale
                                                     (GSA)
NTC Orlando, FL...................         235,000  Negotiated Sale
                                                     (GSA)
NTC Orlando, FL...................          10,300  Negotiated Sale
                                                     (GSA)
NTC Orlando, FL...................         158,000  Negotiated Sale
                                                     (GSA)
NTC Orlando, FL...................           9,300  Negotiated Sale
                                                     (GSA)
NTC San Diego, CA.................          80,000  Negotiated Sale
                                                     (GSA)
NAS Moffett Field, CA.............       6,250,000  Negotiated Sale
                                                     (GSA)
NCBC Davisville, RI...............          62,500  Negotiated Sale
                                                     (GSA)
NTB Salton Sea, CA................          13,617  Negotiated Sale
                                                     (GSA)
NAWC Trenton, NJ..................         651,622  Public Sale (GSA)
DOD Fam Hsg Niagara, NY...........       1,125,000  Public Sale (GSA)
NAWC Warminster, PA...............          62,500  50 percent PBC
NTC Orlando, FL...................       3,849,000  Economic Development
                                                     Conveyance
NS Philadelphia, PA...............       2,000,000  Economic Development
                                                     Conveyance
NAS Cecil Field, FL...............          48,000  Negotiated Sale
                                                     (GSA)
NAS Dallas, TX....................           1,500  Negotiated Sale
                                                     (GSA)
NRL Orlando, FL...................           2,500  Negotiated Sale
                                                     (GSA)
NH Philadelphia, PA...............              25  Negotiated Sale
                                                     (GSA)
NRL Orlando, FL...................          79,000  Public Sale (GSA)
NRC Coconut Grove, FL.............       7,134,173  Public Sale (GSA)
NRC Pittsfield, MA................          52,000  Public Sale (GSA)
NS Staten Island, NY..............         601,842  Public Sale (GSA)
NRC Jamestown, NY.................          53,280  Public Sale (GSA)
NH Long Beach, CA.................      10,968,409  Economic Development
                                                     Conveyance
PWC SanFranBay (Novato), CA.......       8,130,000  Negotiated Sale
                                                     (GSA)
NRC Perth Amboy, NJ...............       1,000,000  Negotiated Sale
                                                     (GSA)
PWC SanFranBay (Novato), CA.......       1,300,000  Public Sale (GSA)
NTC Orlando, FL...................         415,000  Public Sale (GSA)
NAS Key West, FL..................         600,000  Fed-to-Fed (DOI)
NH Oakland, CA....................         453,500  Negotiated Sale
                                                     (GSA)
NAWC Trenton, NJ..................       1,160,000  Public Sale (GSA)
MCAS Tustin, CA...................     157,500,000  Public Sale (GSA)
MCAS Tustin, CA...................      51,000,000  Public Sale (GSA)
------------------------------------------------------------------------

    Question. Does the 2004 request include anticipated revenue from 
sales? If so, how much, and from where?
    Answer. The fiscal year 2004 budget request includes anticipated 
revenue in the amount of $68 million from property sales at 4 locations 
Naval Hospital Long Beach, CA; Naval Hospital Oakland, CA; Marine Corps 
Air Station Tustin, CA; Marine Corps Air Station El Toro, CA. This 
differs from the $208 million received from the recent sale of Tustin 
because the Department of the Navy used very conservative estimates, 
including the expectation that in some cases, the actual receipt of 
funds would be spread across several fiscal years. While Tustin sold 
for far more than expected, the sale of Naval Hospital Oakland was 
terminated after the winner bidder defaulted and litigation ensued, and 
the sale of El Toro is still in the formative stage. We did not want to 
unduly raise community expectations for environmental cleanup if the 
revenue proved to be less than expected, or that funds arrived later 
than initially expected. The law requires that all BRAC land sale 
revenue be deposited into the BRAC account and be used only for 
environmental cleanup and caretaker costs at BRAC locations. To the 
extent that actual revenue exceeds budgeted estimates, the Department 
of the Navy will use the additional land sale revenue to further 
accelerated cleanup and property disposals at BRAC locations.

                ALAMEDA POINT NAVAL AIR STATION FUNDING

    Question. I am aware that the former Alameda Point Naval Air 
Station is currently being considered as a candidate for early transfer 
based on the recent agreement between the Navy and the community of 
Alameda for reuse, development, and preservation of the property. Early 
transfer of this land and associated facilities would serve as a model 
for all the military services of base conversion in an urban 
environment.
    It is critical for the community that this early transfer be 
completed by October 2004 for cleanup and redevelopment to occur in 
line with community plans. As I understand it, the Navy is full 
supportive of that goal and intends to meet the October 2004 deadline. 
Is that correct?
    Answer. Yes. The Navy is in full support of the requested Early 
Transfer at the Former NAS Alameda and has been working closely with 
the Local Redevelopment Agency to expedite the proposed Early Transfer 
of approximately 1,000 acres. Our most notable challenge will be 
obtaining regulator concurrence from both the Environmental Protection 
Agency (EPA) and California's Department of Toxic Substances Control 
(DTSC). Both agencies have presented requirements that pose a challenge 
to the 2004 anticipated conveyance.

                      HUNTERS POINT NAVAL SHIPYARD

    Question. What is the Navy's estimated cost to complete the cleanup 
of Hunters Point Shipyard? What is the budget for the current fiscal 
year and each of the next 2 fiscal years?
    Answer. Cost to complete for fiscal year 2004 and out is $103.9 
million. Budgets for current and next 2 fiscal years are $40.2 million 
in fiscal year 2003, $21.6 million in fiscal year 2004, and $1.9 
million in fiscal year 2005. Budget estimates for fiscal year 2004 and 
fiscal year 2005 assume the receipt of land sale revenue to finance 
cleanup costs.
    Question. Given the Navy's recent discovery of more than 100 boxes 
of previously unknown Shipyard radiological documents, will the new 
radiological review and survey work come at the expense of other 
important, and budgeted, cleanup activities or will the Navy find other 
funds to pay for it?
    Answer. Funding to pay for the expanded Historical Radiological 
Assessment (HRA) will not be taken from funds budgeted for cleanup at 
Hunters Point.
    Question. Does the Navy see any remaining hurdles to moving forward 
with the Conveyance Agreement in the next 1-2 months?
    Answer. The Navy is working diligently with the City of San 
Francisco to reach agreement on the Hunters Point Conveyance Agreement. 
The Navy's goal is to achieve a mutually agreeable solution to the 
remaining two significant issues (utilities transition plan and 
finalization of the deeds) within the next 1 or 2 months.

                                  NATO

    Question. Last year, at the request of the Navy, the Committee 
approved a $6.6 million barracks quarter's complex in Larissa, Greece, 
to support a NATO headquarters. With the proposed headquarters 
structure changes in NATO Allied Command Operation, Larissa is on a 
list to be dropped as a headquarters site. With this change, is the 
barracks complex still needed for U.S. troops?
     Answer. If NATO determines that Larissa will no longer be required 
as a headquarters site as a result of their ongoing military structure 
review, scheduled to be completed during the summer of 2003, and that 
U.S. troops will not be needed at Larissa, it is a reasonable 
assumption that the barracks complex for U.S. troops would no longer be 
required.
    Question. Would each of you provide the committee with a copy of 
your service's current FYDP and unfunded priorities by March 31?
    Answer. Attached are (1) MCON FYDP, (2) MCNR FYDP, and (3) CNO & 
CMC unfunded priorities.

                  MCON POM04 FYDP CONGRESSIONAL SUBMIT
                              [In dollars]
------------------------------------------------------------------------
 ST         ACTIVITY           PNO             TITLE           PRG COST
------------------------------------------------------------------------
           PY 2004
 AZ YUMA AZ MCAS                442  A/C MAINTENANCE           $14,250
                                      HANGAR.
 AZ YUMA AZ MCAS                484  STATION ORDNANCE            7,980
                                      AREA.
 CA CAMP PENDLETON CA            02  TERTIARY SWG TRTMNT        24,960
     MCB                              (INCI).
 CA CAMP PENDLETON CA           98B  BACHELOR ENLISTED          22,930
     MCB                              QUARTERS.
 CA CHINA LAKE CA               521  AIRFIELD PAVEMENT          12,890
     NAWCWPNSDIV                      UPGRADE.
 CA LEMOORE CA NAS              217  MAINT HANGAR--O/H          24,610
                                      SPACE.
 CA LEMOORE CA NAS              271  OPERATIONAL TRAINER.        9,900
 CA MIRAMAR CA MCAS              95  A/C FIRE/RESCUE             4,740
                                      STATION.
 CA MONTEREY CA NPGS            198  BACHELOR OFFICER           35,550
                                      QTRS REPL.
 CA SAN CLEMENTE IL CA          493  OPERATIONAL ACCESS--       18,940
     NAF                              SHOBA.
 CA SAN DIEGO CA NAS            748  TAXIWAY/TOWER.......       13,650
     NORTH IS
 CA SAN DIEGO CA NAS            751  SQUADRON OPERATIONS        35,590
     NORTH IS                         FAC.
 CA SAN DIEGO CA NAVSTA         501  BEQ HOMEPORT ASHORE.       42,710
 CA SAN NICOLAS ISLAND          268  BACH ENL QTRS--TRANS        6,150
     CA                               E1/E4.
 CA TWENTYNINE PALMS CA         426  EXPLOSIVE ORDNANCE          2,290
     MAGCC                            OPS.
 CA TWENTYNINE PALMS CA         605  BACHELOR ENLISTED          26,100
     MAGCC                            QUARTERS.
 DC WASH DC MCBKS               901  MOTOR TRANSPORT FAC         1,550
                                      ADDN.
 FL JACKSONVILLE FL NAS         268  AIRFLD PERIM SECURTY        3,190
                                      ENHAN.
 FL JAX FL BLOUNT ISLAND         01  LAND ACQUISITION....      115,711
 FL PANAMA CITY FL              376  LITTORAL WARFARE            9,550
     NSWCCSTSYS                       RESRH CPL.
 FL WHITING FLD FL NAS          243  CLEAR ZONE ACQ (OLF         4,830
                                      BARIN).
 GA KINGS BAY GA SWFLANT        588  RIFLE RANGE.........        8,170
 GA KINGS BAY GA SWFLANT        589  SFF ADDN & HMMWV            3,340
                                      GARAGE.
 HI LUALUALEI HI NM             172  ORDNANCE HOLDING            6,320
                                      AREAS.
 HI PEARL HARBOR HI FISC        193  WATERFRONT                 32,180
                                      IMPROVEMENTS.
 HI PEARL HARBOR HI NSY         905  PERIMETER/SECURITY          7,010
                                      LIGHTNG.
 IL GREAT LAKES IL NTC          736  RECRUIT BARRACKS....       31,600
 IL GREAT LAKES IL NTC          737  RECRUIT BARRACKS....       34,130
 IL GREAT LAKES IL NTC          745  BATTLE STA TRNG FAC        13,200
                                      INC I.
 MD INDIAN HEAD MD              160  WATER SYSTEM               14,850
     NSWCTRDIV                        IMPROVEMENTS.
 MD PATUXENT RIVER MD           129  JSF TEST FACILITY...       24,370
     AWCACDV
 MS MERIDIAN MS NAS             295  FIRE & RESCUE               4,570
                                      STATION.
 NJ EARLE NJ NWS                 32  GENL PURP/BERTHING         26,740
                                      PIER.
 NJ LAKEHURST NJ NAWC           252  EMALS FACILITY......       20,681
     ACFTDIV
 NC CAMP LEJEUNE NC MCB        1093  US JOINT MARITIME           6,300
                                      INST FAC.
 NC CAMP LEJEUNE NC MCB        1094  JOINT MARITIME OPS &       12,880
                                      TRNG.
 NC CAMP LEJEUNE NC MCB         227  CONSOLIDATED ARMORY.       10,270
 NC NEW RIVER NC MCAS           647  WATER TREATMENT             6,240
                                      FACILITY.
 RI NEWPORT RI NS               454  BEQ REPLACMENT             16,140
                                      (NAPS).
 RI NEWPORT RI NUSWCTR           11  UNDERWATER WEAPON          10,890
     DIV                              SYS LAB.
 VA ARLINGTON VA HQMC           01A  PHYSICAL FITNESS            1,970
                                      CENTER.
 VA DAHLGREN VA                 292  NAVAL NETWORKS OPS         20,520
     NAVSPACECOM                      CTR ADN.
 VA LITTLE CREEK VA             535  GATE 1 IMPROVEMENTS.        3,810
     NAVPHIBSE
 VA NORFOLK VA NS                94  PIER 11 REPLACEMENT        27,610
                                      INC I.
 VA NORFOLK VA NS              293A  BEQ HOMEPORT ASHORE        46,730
                                      INCII.
 VA NORFOLK VA NS               526  A/C MAINTENANCE            36,460
                                      HANGARS.
 VA PORTSMOUTH VA               514  CRANE/WGHT HNDLG EQP       17,770
     NORFOLK NSY                      SHOP.
 VA QUANTICO VA                 549  WTBN LOAD & TEST            3,700
     MCCOMBDEV CMD                    FACILITY.
 WA BANGOR WA NAVSUBASE         395  SVC PIER UPGD/MOD          33,820
                                      BLD 7111.
 WA BANGOR WA NAVSUBASE         971  WTRFRNT SECURITY            6,530
                                      FORCE FAC.
 WA INDIAN ISLAND WA            334  ORDNANCE TRANSFER           2,240
     NAVMAG                           FAC.
 BA NAVSUPPACT BAHRAIN          927  OPS CONTROL CENTER..       18,030
 IT LAMADDALENA IT NSO          995  CONSOL SANTO STEFANO       39,020
                                      FACS.
 IT SIGONELLA ITALY NAS         635  BASE OPS SUPPORT I..       34,070
 UK ST MAWGAN                   115  BACHELOR ENLISTED           7,070
                                      QUARTERS.
VAR X/MCON DESIGN FUNDS         204  MCON DESIGN FUNDS          55,558
                                      (N4).
VAR X/MCON DESIGN FUNDS         504  MCON DSGN FNDS--           10,054
                                      MARCORPS.
VAR X/UNSPECIFIED MINOR         204  UNSPECIFIED MINOR          12,334
     CONST                            CONSTR.
VAR Z/VARLOCS MILCON            689  OLF FACS (INC I)....       27,610
                                                          --------------
          FISCAL 2004     .........  ....................    1,132,858
           TOTAL
                                                          ==============
           PY 2005
 AZ YUMA AZ MCAS                440  BACHELOR ENLISTED          25,636
                                      QUARTERS.
 AZ YUMA AZ MCAS                485  STATION ORDNANCE            6,518
                                      AREA.
 CA CAMP PENDLETON CA            32  CONSOL OPERATIONS           5,454
     MCAS                             CENTER.
 CA CAMP PENDLETON CA            38  WEIGHT HANDLING SHOP        7,177
     MCAS
 CA CAMP PENDLETON CA           02A  TERTIARY SWG TRTMNT        24,843
     MCB                              (INCII).
 CA CAMP PENDLETON CA            13  ASSAULT BREACHER VEH        4,256
     MCB                              FAC.
 CA CAMP PENDLETON CA            14  BACHELOR ENLISTED          19,293
     MCB                              QUARTERS.
 CA CAMP PENDLETON CA           608  PHYSICAL FITNESS            7,070
     MCB                              CENTER.
 CA CAMP PENDLETON CA           613  CLOSE COMBAT PISTOL         1,951
     MCB                              COURSE.
 CA CHINA LAKE CA              453D  PROPELLANT/EXP LAB         13,609
     NAWCWPNSDIV                      (03 ADD).
 CA EL CENTRO CA NAF            201  BEQ TRANSIENT.......       25,085
 CA EL CENTRO CA NAF            207  APRON & HANGAR RECAP       45,249
 CA SAN DIEGO CA NAVSTA         404  BEQ--SHIPBOARD             52,840
                                      ASHORE.
 CA SEAL BEACH CA               222  LAND PURCHASE.......          754
     NAVWPNSTA
 CT NEW LONDON CT NSB           463  RBUILD PIER 6.......       27,464
 DC WASHINGTON DC NRL            10  ADVANCED COMPUTING         12,862
                                      FAC.
 FL MAYPORT FL NS               185  EXPAND FLIGHT               1,393
                                      TRAINER.
 GA KINGS BAY GA SWFLANT        586  LA UTILITIES & SITE         1,896
                                      IMPVS.
 GA KINGS BAY GA SWFLANT        590  MISSILE MAGAZINE....       90,021
 HI KANEOHE BAY HI MCB          801  RUNWAY PERIMETER            2,060
                                      ROAD.
 HI LUALUALEI HI NM             177  PASS OFC & SECURITY         3,877
                                      UPGRD.
 HI PEARL HARBOR HI NS          616  PERIMETER/SECURITY          1,508
                                      LIGHTNG.
 HI PEARL HARBOR HI NS          624  SECURTY/PERIMTR             8,330
                                      FENCE/WALL.
 IL GREAT LAKES IL NTC          738  RTC BARRACKS........       35,859
 IL GREAT LAKES IL NTC         745A  BATTLE STATIONS TRNG       45,548
                                      FAC.
 IL GREAT LAKES IL NTC          748  RTC INFRASTRUCTURE          6,614
                                      UPGRADE.
 ME BRUNSWICK ME NAS            191  RELOCATE BASE               7,301
                                      ENTRANCE.
 ME KITTERY ME                  280  GATE 2 IMPROVEMENTS.        2,275
     PORTSMOUTH NSY
 MS GULFPORT MS                 800  PASS RD AT/FP               2,325
     NAVCONSTRACEN                    SECURITY IMP.
 NJ EARLE NJ NWS                32A  UPGRADE PIER CMPLX         47,579
                                      (INC II).
 NJ EARLE NJ NWS                 34  SECURTY/PERIMTR             4,465
                                      FENCE/WALL.
 NC CAMP LEJEUNE NC MCB        1025  ASSUALT BREACHER VEH        3,665
                                      FAC.
 NC CAMP LEJEUNE NC MCB        1041  ARMORY CAMP GEIGER..        3,375
 NC CHERRY POINT NC MCAS        122  UAV OPERATIONS/             9,752
                                      MAINTENANCE.
 NC CHERRY POINT NC MCAS        124  AICUZ LAND                  2,931
                                      ACQUISITION.
 NC NEW RIVER NC MCAS           617  ADD TO SIMULATOR            2,804
                                      BUILDING.
 NC NEW RIVER NC MCAS           630  BACHELOR ENLISTED          18,253
                                      QUARTERS.
 NC NEW RIVER NC MCAS           648  CONSTRUCT FREST             7,281
                                      FACILITY.
 PA MECHANICSBURG               573  OXFORD GATE SECRTY          3,926
     NAVSUPPACT                       IMPROVS.
 PA MECHANICSBURG               575  SECURTY/PERIMTR             2,669
     NAVSUPPACT                       FENCE/WALL.
 RI NEWPORT RI NAVSTA           457  SECURTY/PERIMTR             2,364
                                      FENCE/WALL.
 SC BEAUFORT SC MCAS            428  EXPLOSIVE ORDNANCE          1,238
                                      FAC.
 SC CHASN NAVAL WPN              76  SOUTH ANNEX GATE 4..        2,275
     STATION
 VA CAMP ELMORE VA MCCD         820  COMMAND OPERATIONS         10,464
                                      FAC.
 VA DAHLGREN VA NSWCTR          287  MISSILE SUPPORT FAC        14,870
     DIV                              REPL.
 VA LITTLE CREEK VA             376  PERIMETER SECURITY          2,611
     NAVPHIBSE                        FENCE.
 VA NORFOLK VA                  830  CLF/TYCOM HDQTRS FAC       59,051
     LANTFLTHQSPACT                   INC I.
 VA NORFOLK VA NS               94A  PIER 11 REPLACEMENT        45,065
                                      INC II.
 VA NORFOLK VA NS               295  BEQ--SHIPBOARD             28,363
                                      ASHORE INC I.
 VA NORFOLK VA NS               463  SUSPECT CARGO               1,422
                                      HANDLING FAC.
 VA NORFOLK VA NS               994  TRUCK INSPECTION FAC        3,781
 VA OCEANA VA NAS               467  SUSPECT CARGO HOLDNG        1,422
                                      FAC.
 VA QUANTICO VA MCAF            449  GREEN SIDE HANGAR          11,779
                                      COMPLEX.
 VA QUANTICO VA MCAF            495  AIRCRAFT PARKING            9,981
                                      APRON.
 VA QUANTICO VA                 152  H&S BN HEADQUARTERS,        3,791
     MCCOMBDEV CMD                    TBS.
 VA QUANTICO VA                 531  BACHELOR ENLISTED          11,789
     MCCOMBDEV CMD                    QUARTERS.
 VA QUANTICO VA                 539  TBS ARMORY..........        4,217
     MCCOMBDEV CMD
 VA QUANTICO VA                 667  HERITAGE CENTER ROAD          947
     MCCOMBDEV CMD                    IMPVS.
 VA YORKTOWN VA                 617  MAIN GATE SECURITY          2,529
                                      IMPROVS.
 VA YORKTOWN VA NWS             518  ORD HNDLNG VEH MAINT        7,002
                                      SHOP.
 VA YORKTOWN VA NWS             534  EXPLOSIVES TRUCK            1,769
                                      HOLDG YD.
 WA BANGOR WA SWF PAC           968  LA U&SI EMERG               1,896
                                      GENERATOR.
 WA PUGET SOUND WA              346  CVN MAINTENANCE            17,590
     NAVSHIPYD                        COMPLEX.
 CU GUANTANAMO BAY CUBA         502  BASEWIDE WSTWTR             6,179
     NS                               TRTNT FAC.
 GU GUAM MI                     451  KILO WHARF                 11,906
     COMNAVMARIANAS                   IMPROVEMENTS.
 IC KEFLAVIK ICELAND NAS        832  SEWER CONNECTION            3,782
                                      CHARGE.
 IT NAPLES ITALY NSA            211  BEQ HOMEPORT ASHORE.       27,320
VAR X/MCON DESIGN FUNDS         205  MCON DESIGN FUNDS          96,876
                                      (N4).
VAR X/MCON DESIGN FUNDS         505  MCON DSGN FNDS--           11,913
                                      MARCORPS.
VAR X/UNSPECIFIED MINOR         205  UNSPECIFIED MINOR          12,842
     CONST                            CONSTR.
VAR Z/VARLOCS MILCON           689A  OLF FACS (INC II)...       27,803
                                                          --------------
          FISCAL YEAR     .........  ....................    1,040,605
           2005 TOTAL
                                                          ==============
           PY 2006
 AZ YUMA AZ MCAS                364  PHYSICAL FITNESS CTR        3,706
                                      ADD.
 CA CAMP PENDLETON CA            15  BACHELOR ENLISTED          22,003
     MCB                              QUARTERS.
 CA CAMP PENDLETON CA            73  BACHELOR ENLISTED          21,110
     MCB                              QUARTERS.
 CA CAMP PENDLETON CA           330  PHYSICAL FITNESS CTR        9,681
     MCB                              HORNO.
 CA CAMP PENDLETON CA           725  REG MAINT SUPPORT           9,789
     MCB                              COMPLEX.
 CA CHINA LAKE CA               513  ELECTRONIC WAR TRNG        17,405
     NAWCWPNSDIV                      RANGE.
 CA CHINA LAKE CA               515  COMBINED BOS               17,220
     NAWCWPNSDIV                      FACILITY.
 CA CHINA LAKE CA               529  BACHELOR QUARTERS...       14,455
     NAWCWPNSDIV
 CA LEMOORE CA NAS               59  CORROSION CNTL             13,125
                                      HANGAR.
 CA LEMOORE CA NAS              216  EXPAND AIR TRAFFIC          2,473
                                      CTL TWR.
 CA LEMOORE CA NAS              242  GALLEY REPLACEMENT..        1,572
 CA PORT HUENEME CA CBC         491  OPER VEH MAINT FAC..       15,978
 CA PORT HUENEME CA              13  COMBAT SYS/BATTLEGRP       15,250
     NSWCDIV                          INTGR.
 CA SAN DIEGO CA                740  BACHELOR ENLISTED          15,978
     AUXLNDFLD                        QUARTERS.
 CA SAN DIEGO CA NAS            731  BEQ--SHIPBOARD             38,146
     NORTH IS                         ASHORE.
 CA SAN DIEGO CA                 07  BACHELOR ENLISTED          25,399
     NAVMEDCEN                        QUARTERS.
 CA SAN DIEGO CA NAVSTA         406  BEQ--SHIPBOARD             43,473
                                      ASHORE.
 CA SAN DIEGO CA NSB            118  PIER 5002 SUB FNDR          7,916
                                      INSTALL.
 CA SAN DIEGO CA NSB            119  TACTICAL TRNG FAC          14,601
                                      ADDN.
 CA SEAL BEACH CA               221  REPLACE FIRE STATION        1,892
     NAVWPNSTA
 CA SEAL BEACH CA               223  VLS MISSILE MAGAZINE        8,160
     NAVWPNSTA
 CA TWENTYNINE PALMS CA         556  ENLISTED DINING FAC.       10,934
     MAGCC
 CA TWENTYNINE PALMS CA         617  WASTE HNDLNG &              5,132
     MAGCC                            RECOVRY FAC.
 DC WASHINGTON DC                50  ATOMIC CLOCK VAULT..        3,425
     NAVOBSY
 FL CAPE CANAVERAL FL           988  ENGINEERING SERVICES       23,526
     NOTU                             BLDG.
 FL JACKSONVILLE FL             246  AIRCRAFT PARTS STGNG        1,330
     NADEP                            FAC.
 FL JACKSONVILLE FL NAS         204  CONSOLIDATED OPER          11,574
                                      SUPT FAC.
 FL JACKSONVILLE FL NAS         265  AIRCRAFT PARKING           11,535
                                      APRON.
 FL KEY WEST FL NAF             678  STRUCT ACFT FIRE &          6,830
                                      RESCUE.
 FL MAYPORT FL NS               189  AIRFIELD CONTROL            4,822
                                      TOWER.
 FL MAYPORT FL NS               253  SHIP MAINTENANCE            4,531
                                      CONSOL.
 FL MAYPORT FL NS               774  SECURITY BLDG.......        1,717
 FL ORLANDO FL NAWCTSD           03  FORCE PROTECTION            2,280
                                      IMPVS.
 FL PANAMA CITY FL              315  JNT AQUATIC CMBT DVR        6,743
     DIVSALTRAC                       TRNG.
 FL PENSACOLA FL NAS            711  BEQ A SCHOOL (NATTC)       17,511
 FL WHITING FLD FL NAS          245  INSTL/RELOCATE PERIM        2,949
                                      FENCE.
 HI CAMP HM SMITH HI            113  PACIFIC WARFIGHTING        27,872
     CINCPAC                          CENTER.
 HI LUALUALEI HI NM             166  SECURITY LIGHTING...        5,095
 HI PEARL HARBOR HI FISC        194  SECURITY FENCING....        1,901
 HI PEARL HARBOR HI NB           02  SEC UPGRADES ADMIN/        11,317
                                      OPS FAC.
 HI PEARL HARBOR HI NS          132  RECONSTRUCT WHARF          29,202
                                      S20.
 HI PEARL HARBOR HI NS          137  WHARF RECONSTRUCTION       27,775
 HI PEARL HARBOR HI NS         400A  OILY WASTE COLL            11,894
                                      TRTMT FAC.
 HI PEARL HARBOR HI NS          619  SEC UPGRADES ADMIN/        34,436
                                      OPS FAC.
 HI PEARL HARBOR HI NS          634  GENL PURP/BERTHING         24,728
                                      WHARF.
 HI PEARL HARBOR HI NSY         266  SHORE POWER IMPVS           3,803
                                      DD4.
 IL GREAT LAKES IL NTC          667  RTC DRILL HALL RPL..       12,913
 IL GREAT LAKES IL NTC          739  RTC BARRACKS........       36,827
 IL GREAT LAKES IL NTC          740  RTC BARRACKS........       36,827
 IL GREAT LAKES IL NTC          741  RTC BARRACKS........       39,038
 IL GREAT LAKES IL NTC          771  REPLACE PERIMETER           3,521
                                      FENCE.
 MD BETHESDA MD                 188  ENGR MNGMT &               12,370
     NSWCCARDEROCK                    LOGISTICS FAC.
 MD INDIAN HEAD MD              161  AGILE CHEMICAL             11,894
     NSWCTRDIV                        FACILITY.
 MD PATUXENT RIVER MD           558  AIRCRAFT PROTOTYPE         34,556
     AWCACDV                          FAC.
 MD PATUXENT RIVER MD           560  MARITIME T&E SUPPORT       11,166
     AWCACDV                          LAB.
 MD PATUXENT RIVER MD           977  LANDING SYS TEST FAC        5,152
     AWCACDV                          ADDN.
 MS GULFPORT MS                 781  STLWRKRS APPLIED            8,683
     NAVCONSTRACEN                    INST FAC.
 NV FALLON NV NAS               342  WEAPONS MAGAZINE....        3,813
 NV FALLON NV NAS               361  RANGE IMPROVEMENTS          8,168
                                      TGTB-20.
 NJ EARLE NJ NWS                32B  UPGRADE PIER               32,704
                                      CMPLX(IN III).
 NC CAMP LEJEUNE NC MCB        1011  BACHELOR ENLISTED          20,471
                                      QUARTERS.
 NC CAMP LEJEUNE NC MCB        1092  US JOINT MARITIME          16,608
                                      BEQ.
 NC CHERRY POINT NC MCAS        720  ORDNANCE MAGAZINES..        4,221
 NC CHERRY POINT NC             973  HAZ WASTE STOR/XFER         5,491
     NADEP                            FAC.
 NC CHERRY POINT NC             974  ENGNR PROD SUP FAC..        8,207
     NADEP
 PA MECHANICSBURG                10  NAVSUPSYSCOM HQ FACS       32,383
     NAVSUPPACT                       INC I.
 SC BEAUFORT SC MCAS            420  PHYSICAL FITNESS            9,789
                                      CENTER.
 SC PARRIS ISLAND SC            350  INDOOR PISTOL RANGE.        1,165
     MCRD
 TX CORPUS CHRISTI TX           356  RUNWAY EXTENSION....        4,657
     NAS
 TX INGLESIDE TX NS              73  MINE WARFARE COMMAND        5,666
                                      HQTRS.
 TX KINGSVILLE TX NAS           271  AIRFIELD LIGHTING           5,035
                                      (NALFOG).
 VA DAHLGREN VA NSWCTR          281  WEAPONS DYNAMICS            3,231
     DIV                              RDT&E CTR.
 VA LITTLE CREEK VA             283  REPLACE PIERS &            44,119
     NAVPHIBSE                        QUAYWALL.
 VA LITTLE CREEK VA             406  POLICE & SEC OPRS           4,754
     NAVPHIBSE                        FAC.
 VA NORFOLK VA                 830A  CLF/TYCOM HDQTRS FAC       47,565
     LANTFLTHQSPACT                   (INII).
 VA NORFOLK VA NS               94B  PIER 11 REPLACEMENT        40,116
                                      INC III.
 VA NORFOLK VA NS              295A  BEQ SHIPBOARD ASHORE       31,510
                                      INCII.
 VA NORFOLK VA NS               395  OPERATIONAL STORAGE        13,320
                                      (MISC).
 VA OCEANA VA NAS               714  BEQ.................       22,168
 VA PORTSMOUTH VA               239  BEQ TRANSIENT INC I.       28,541
     NORFOLK NSY
 VA PORTSMOUTH VA               515  SHIP SVCS SHOP             16,764
     NORFOLK NSY                      CONSOLID.
 VA QUANTICO VA                 519  SNCO ACADEMIC               8,265
     MCCOMBDEV CMD                    FACILITY.
 VA QUANTICO VA                 552  NETWORK OPERATIONS         13,677
     MCCOMBDEV CMD                    CENTER.
 VA YORKTOWN VA NWS             211  RECAP IGLOO                 7,711
                                      MAGAZINES.
 VA YORKTOWN VA NWS             387  NORTH TRESTLE&PIER         38,048
                                      REPL I.
 WA BANGOR WA NAVSUBASE        124A  SMALL ARMS TRN CTR         14,184
                                      (O3 ADD).
 WA BANGOR WA SWF PAC           964  EXPLOSIVES SHIP/TRAN        2,823
                                      DEP.
 WA BANGOR WA SWF PAC           969  MSL TRANSPORTER             5,664
                                      SAFEHAVENS.
 WA INDIAN ISLAND WA            333  MISSILE MAGAZINES...       11,516
     NAVMAG
 WA KEYPORT WA NUWC DIV        381B  USW SYSTEMS CTR (03         2,685
                                      ADD).
 WA KEYPORT WA NUWC DIV         386  U/S VEH MAINT & ENGR       12,370
                                      CTR.
 WA PUGET SOUND WA              359  SHIP REPAIR PIER 3         10,468
     NAVSHIPYD                        IMPVS.
 WA PUGET SOUND WA              372  DRYDOCK #4 CAISSON         11,321
     NAVSHIPYD                        REPLACE.
 WA PUGET SOUND WA              373  DRYDOCK #5 CAISSON          9,129
     NAVSHIPYD                        REPLACE.
 WA WHIDBEY IS WA NAS            41  STRUC ACFT/FIRE STA         3,328
                                      ADDN.
 WA WHIDBEY IS WA NAS           164  ADMINISTRATIVE             16,687
                                      OFFICE.
 BA NAVSUPPACT BAHRAIN          908  OPERATIONS & SUPPORT       25,953
                                      FACS.
 BF ANDROS IS BF NUWC           200  BACHELOR ENLISTED          19,278
     DET                              QUARTERS.
 CU GUANTANAMO BAY CUBA         343  FIRE STATIONS.......        5,084
     NS
 CU GUANTANAMO BAY CUBA         503  PERIMETER ROAD              1,427
     NS                               LIGHTING.
 DG DIEGO GARCIA                146  SANITARY/CUT FIL            6,956
     NAVSUPPFAC                       DISP AREA.
 GU GUAM MI                     431  GENL PURP/BERTHING          5,045
     COMNAVMARIANAS                   PIER.
 GU GUAM MI                     432  DELTA/ECHO WHARVES          4,754
     COMNAVMARIANAS                   IMPVS.
 GU GUAM MI                     433  ROMEO/SIERRA WHARVES        5,423
     COMNAVMARIANAS                   IMPVS.
 GU GUAM MI                     439  VICTOR WHARF                9,129
     COMNAVMARIANAS                   IMPROVEMENT.
 GU GUAM MI                     440  VICTOR WHARF FENDER         3,997
     COMNAVMARIANAS                   SYSTEM.
 GU GUAM MI                     457  SINGLE SAILOR SUPT/         7,334
     COMNAVMARIANAS                   GALLEY.
 GU GUAM PWC                    256  WATER TREATMENT PLT        12,010
                                      UPG.
 IT LAMADDALENA IT NSO          991  BEQ HOMEPORT ASHORE.       21,822
 IT LAMADDALENA IT NSO          999  ADMINISTRATIVE             52,721
                                      OFFICE.
 IT NAPLES ITALY NSA            213  BEQ/NEX LAGO PATRIA.       13,243
 IT NAPLES ITALY NSA            921  AFSOUTH NATIONAL            7,730
                                      ELEM FAC.
 IT SIGONELLA ITALY NAS         640  BASE OPERATIONS            38,505
                                      SUPPORT II.
VAR X/MCON DESIGN FUNDS         206  MCON DESIGN FUNDS         118,176
                                      (N4).
VAR X/MCON DESIGN FUNDS         506  MCON DSGN FNDS--           12,915
                                      MARCORPS.
VAR X/UNSPECIFIED MINOR         206  UNSPECIFIED MINOR          13,771
     CONST                            CONSTR.
VAR Z/VARLOCS MILCON            998  WHARF UPGRADE.......       38,048
                                                          --------------
          FISCAL YEAR     .........  ....................    1,487,981
           2006 TOTAL
                                                          ==============
           PY 2007
 CA CAMP PENDLETON CA            41  AVTB/DEL MAR BOAT           3,177
     MCB                              BASN FAC.
 CA CAMP PENDLETON CA            42  AAAV MAINTENANCE           10,647
     MCB                              FACILITY.
 CA CAMP PENDLETON CA            51  BACHELOR ENLISTED          19,071
     MCB                              QUARTERS.
 CA CAMP PENDLETON CA            52  BACHELOR ENLISTED          19,466
     MCB                              QUARTERS.
 CA CAMP PENDLETON CA            97  BACHELOR ENLISTED          18,967
     MCB                              QUARTERS.
 CA CAMP PENDLETON CA           112  WASTEWATER                 20,547
     MCB                              CONVEYANCE (PH3).
 CA CAMP PENDLETON CA           563  FIRE STATION DEL MAR        2,227
     MCB
 CA CAMP PENDLETON CA           780  FSSG HQ CHAPPO......       13,684
     MCB
 CA CAMP PENDLETON CA           991  BACHELOR ENLISTED          13,684
     MCB                              QUARTERS.
 CA CHINA LAKE CA               527  MISSILE MAGAZINES...        3,032
     NAWCWPNSDIV
 CA CHINA LAKE CA               528  RANGE RESIDUE               2,685
     NAWCWPNSDIV                      FACILITY.
 CA CORONADO CA                 739  WATERFRONT CMD/CTL         14,064
     NAVPHIBASE                       FAC.
 CA CORONADO CA                 742  BEQ--SHIPBOARD             16,345
     NAVPHIBASE                       ASHORE.
 CA EL CENTRO CA NAF             04  COMBINED FIRE/RESCUE        4,669
                                      STA.
 CA EL CENTRO CA NAF            206  ORDNANCE LOAD PADS..        9,741
 CA EL CENTRO CA NAF            244  APRON & HANGAR RECAP       12,645
 CA LEMOORE CA NAS              215  AVIATION WAREHOUSE..        1,024
 CA LEMOORE CA NAS              233  COLLEGE CAMPUS......        3,789
 CA LEMOORE CA NAS              234  BEQ TRANSIENT.......        5,345
 CA MONTEREY CA NPGS            188  EDUCATIONAL FAC REPL        8,894
                                      I.
 CA NAS PT MUGU CA              276  TACTICAL SUPPORT            6,443
     NAVAIRWARC                       CENTER.
 CA POINT MUGU CA               773  READY MISSILE               3,041
     NAVBASE                          MAGAZINE.
 CA PORT HUENEME CA CBC         537  APPLIED INSTRUCTION         3,789
                                      BLDG.
 CA PORT HUENEME CA CBC         543  OPER BATTALION              5,289
                                      FACILITY.
 CA PORT HUENEME CA              14  CMBT SYS/BATTLEGRP         10,990
     NSWCDIV                          INT FAC.
 CA SAN DIEGO CA MCRD           293  RECRUIT SUPPORT            14,271
                                      BARRACKS.
 CA SAN DIEGO CA NAS            503  CHILD DEVELOP CTR           9,023
     NORTH IS                         CONSOL.
 CA SAN DIEGO CA NAS            835  ORDNANCE HANDLING           2,388
     NORTH IS                         PAD.
 CA SAN DIEGO CA NAS            840  BEQ--SHIPBOARD             31,296
     NORTH IS                         ASHORE.
 CA SAN DIEGO CA NAVSTA         327  REPLACE BERTHING           66,331
                                      PIER.
 CA SAN DIEGO CA                 96  C4I SYSTEM                 10,507
     SPAWARSYSCEN                     INTEGRATION.
 CA SEAL BEACH CA               224  AMMO WHARF & TURNING       54,528
     NAVWPNSTA                        BASIN.
 CA TWENTYNINE PALMS CA         604  STUDENT INDEPENDENT         2,331
     MAGCC                            STUDY.
 CA TWENTYNINE PALMS CA         614  OPERATIONAL TRAINING       11,729
     MAGCC                            CTR.
 CT NEW LONDON CT               462  MK-10 SUB ESCAPE           13,386
     NAVSUBSCH                        TRNG FAC.
 CT NEW LONDON CT NSB           465  PIER 2 REPLACEMENT..       18,176
 CT NEW LONDON CT               430  TOMAHAWK MISSILE            2,331
     SUBSUPPFAC                       MAGAZINE.
 FL JACKSONVILLE FL             244  PRODUCT SUPPORT BLDG        3,677
     NADEP
 FL JACKSONVILLE FL             245  WAREHOUSE                   3,362
     NADEP                            REPLACEMENT.
 FL JACKSONVILLE FL             250  ORDNANCE OPERATIONS         2,846
     NADEP                            FAC.
 FL MAYPORT FL NS               773  BEQ--SHIPBOARD             27,659
                                      ASHORE INC I.
 FL PANAMA CITY FL              380  BACHELOR QTRS               6,419
     NSWCCSTSYS                       TRANSIENT.
 FL PENSACOLA FL NAS            721  PIER 302                    8,137
                                      RECAPITALIZATION.
 HI KANEOHE BAY HI MCB           06  PHYSICAL FITNESS            8,725
                                      CENTER.
 HI KANEOHE BAY HI MCB          604  HANGAR 102 FIRE             3,709
                                      PROTECTION.
 HI KANEOHE BAY HI MCB          751  BACHELOR ENLISTED          17,987
                                      QUARTERS.
 HI KANEOHE BAY HI MCB          809  PARKING STRUCTURE...       11,770
 HI PEARL HARBOR HI NS          582  ADMINISTRATIVE              6,008
                                      OFFICE.
 HI PEARL HARBOR HI NS          587  DEPERMING PIER SEE         24,498
                                      159-30.
 HI PEARL HARBOR HI NS          621  BRAVO DOCK                  7,902
                                      IMPROVEMENTS.
 HI PEARL HARBOR HI NS          625  BQ/CMD BLDGS               13,829
                                      SECURITY SYS.
 HI PEARL HARBOR HI NS          629  RECONSTRUCT WHARF          31,610
                                      (FI).
 HI PEARL HARBOR HI PWC         704  RELIEF SEWER LINE           4,113
                                      SO. AVE.
 ID BAYVIEW ID                  207  PIER & BOATHOUSES...        3,515
     NSURFWARCENDET
 IL GREAT LAKES IL NTC          664  EXTEND RECRUIT              2,854
                                      SUPPORT CTR.
 IL GREAT LAKES IL NTC          742  RTC BARRACKS........       32,433
 IL GREAT LAKES IL NTC          743  RTC BARRACKS........       34,166
 IL GREAT LAKES IL NTC          744  RTC BARRACKS........       33,441
 IN CRANE IN                    310  PROD ASSURANCE MGMT         9,798
     NAVSURFWARCENDIV                 FAC.
 IN CRANE IN                    318  ORDNANCE T&E COMPLEX        9,136
     NAVSURFWARCENDIV
 IN CRANE IN                    321  WATER DIST SYS REPL.        5,927
     NAVSURFWARCENDIV
 IN CRANE IN                    322  SEWER SYSTEM                1,072
     NAVSURFWARCENDIV                 REPLACEMENT.
 IN CRANE IN                    327  JOINT ORD ENG&LOG           9,838
     NAVSURFWARCENDIV                 MGMT FAC.
 ME KITTERY ME                  264  ENGINEERING MGMT            1,064
     PORTSMOUTH NSY                   BLDG IMPV.
 ME KITTERY ME                  266  STRUCTURAL SHOP            14,224
     PORTSMOUTH NSY                   CONSOL.
 ME KITTERY ME                  267  TRANSDUCER TEST &           7,507
     PORTSMOUTH NSY                   CALB FAC.
 ME KITTERY ME                  269  EMERGENCY RESPONSE          4,580
     PORTSMOUTH NSY                   FAC.
 MD BETHESDA MD                 102  SHIP PROTECT                8,693
     NSWCCARDEROCK                    DYNAMICS LAB.
 MD INDIAN HEAD MD              120  JOINT CAD/PAD TEST         14,305
     NSWCTRDIV                        FAC.
 MD INDIAN HEAD MD              144  CONFINED BURN              16,200
     NSWCTRDIV                        FACILITY.
 MD PATUXENT RIVER MD           536  AIRCRAFT SYS LAB            3,362
     AWCACDV                          ADDN.
 MD PATUXENT RIVER MD           729  ATC & LS INTEGRATION        5,846
     AWCACDV                          LAB.
 MD PATUXENT RIVER MD           966  AIR OPS CONTROL             5,855
     AWCACDV                          TOWER.
 MD PATUXENT RIVER MD           978  ID SYSTEM                  16,483
     AWCACDV                          ENGINEERING LAB.
 MS MERIDIAN MS NAS             293  STUDENT UN/SNGL             3,435
                                      SAILOR FAC.
 MS PASCAGOULA MS NS           120A  BEQ--SHIPBD ASHR (03        9,117
                                      ADD).
 MS PASCAGOULA MS NS            122  WEAPONS WHARF.......       10,273
 NV FALLON NV NAS               362  RANGE IMPROVEMENTS          3,081
                                      TGTB-20.
 NC CAMP LEJEUNE NC MCB        1030  ENLISTED DINING             9,410
                                      FACILITY.
 NC CAMP LEJEUNE NC MCB        1047  BACHELOR ENLISTED          14,781
                                      QUARTERS.
 NC CAMP LEJEUNE NC MCB        1086  4TH MEB COMMAND             7,345
                                      CENTER.
 NC CAMP LEJEUNE NC MCB        1089  4TH MEB OPERATIONS         13,039
                                      COMPLEX.
 NC CAMP LEJEUNE NC MCB         882  ENLISTED DINING             9,483
                                      FACILITY.
 NC CAMP LEJEUNE NC MCB         945  EOD OPERATIONAL             4,060
                                      FACILITY.
 NC CHERRY POINT NC             985  V22 GEAR BX REP &           9,064
     NADEP                            TEST FAC.
 NC CHERRY POINT NC             986  V22 ROTOR BLADE REPL        3,895
     NADEP                            FAC.
 PA MECHANICSBURG               10A  NAVSUPSYSCOMHQ FACS        16,886
     NAVSUPPACT                       INC II.
 PA NSY NORFOLK DET             610  INSIDE MACHINE SHOP        13,668
     PHILA PA                         IMPVS.
 PA PHILADELPHIA PA             205  FS ELECTRIC DRIVE           9,879
     NSWCSSES                         TEST FAC.
 RI NEWPORT RI NAVSTA           452  CBQ.................       31,756
 RI NEWPORT RI NAVWARCOL         10  NATIONAL SECURITY          35,142
                                      RES CTR.
 RI NEWPORT RI NS               451  BEQ REPLACMENT             22,659
                                      (BOOST).
 RI NEWPORT RI NS              454A  BEQ REPLACMENT              4,435
                                      (NAPS).
 SC BEAUFORT SC MCAS            414  F/A-18 SUPPORT FAC          6,604
                                      (PH II).
 SC BEAUFORT SC MCAS            425  CONSOLIDATED COMM           6,322
                                      FACILITY.
 SC BEAUFORT SC MCAS            427  GROUND SUPPORT EQUIP        3,378
                                      SHOP.
 SP ROTA SP NCB CB              690  BACHELOR ENLISTED          15,202
     CPMITCHELL                       QUARTERS.
 TN MILLINGTON TN               357  BLDG 750 ALT/EMPRIS/        4,266
     SUPPACT                          DPRIS.
 VA DAHLGREN VA NSWCTR          274  FITNESS CENTER              3,766
     DIV                              ADDITION.
 VA LITTLE CREEK VA             203  PIER 18 & 19               21,498
     NAVPHIBSE                        REPLACEMENT.
 VA LITTLE CREEK VA             223  REPLACE PIERS 58 &         19,756
     NAVPHIBSE                        59.
 VA LITTLE CREEK VA             386  MOB DIVING SALVGE           4,781
     NAVPHIBSE                        UNT OPS.
 VA NORFOLK VA                 830B  CLF/TYCOM HQ FACS          35,562
     LANTFLTHQSPACT                   INC III.
 VA NORFOLK VA NS               154  STRENGTHEN ACFT             3,952
                                      PARKG APRN.
 VA NORFOLK VA NS               155  RECONSTRUCT TAXIWAY         4,741
                                      D.
 VA NORFOLK VA NS               297  BEQ--SHIPBOARD             28,449
                                      ASHORE INC I.
 VA NORFOLK VA NS               303  BEQ--SHIPBOARD             28,449
                                      ASHORE INC I.
 VA NORFOLK VA NS               399  CARGO TERMINAL FAC         33,191
                                      INC I.
 VA NORFOLK VA NS               495  CHAMBERS FIELD              4,234
                                      MAGAZINE.
 VA NORFOLK VA NS               527  BEQ HOMEPORT ASHORE        31,627
                                      INC I.
 VA NORFOLK VA NS               701  FIRE STATION........        3,491
 VA PORTSMOUTH VA              239A  BEQ TRANSIENT INC II       24,530
     NORFOLK NSY
 VA PORTSMOUTH VA               382  DRYDOCK #8 EXTENSION       21,982
     NORFOLK NSY
 VA PORTSMOUTH VA               391  SHIP REPAIR PIER           13,668
     NORFOLK NSY                      REPL.
 VA YORKTOWN VA                  34  CONSOL CARGO                3,871
                                      HANDLING AREA.
 VA YORKTOWN VA NWS             215  RECAP IGLOO                 6,008
                                      MAGAZINES.
 VA YORKTOWN VA NWS            387A  NORTH TRES&PIER REPL       14,443
                                      (II).
 VA YORKTOWN VA NWS             397  FAMILY SERVICES             1,580
                                      CENTER.
 WA BANGOR WA NAVSUBASE         379  ELEC DIST UPGRADES..        2,532
 WA BANGOR WA NAVSUBASE         380  STEAM DIST                  4,959
                                      MODERNIZATION.
 WA BANGOR WA SWF PAC           813  SPECIAL WEAPONS             2,451
                                      MAGAZINES.
 WA BREMERTON WA NS             305  BEQ HOMPORT ASHORE         19,595
                                      PH I.
 WA BREMERTON WA NS             307  BEQ--SHIPBOARD             20,224
                                      ASHORE.
 WA BREMERTON WA NS             311  CONSOLIDATE FUEL            4,266
                                      FACILITY.
 WA EVERETT WA NAVSTA           155  BEQ HOMEPORT ASHORE        28,224
                                      (PH I).
 WA KEYPORT WA NUWC DIV         382  UNDERSEA VEH SHIP/          5,451
                                      RCV FAC.
 WA PUGET SOUND WA              347  PRODUCTION SHOP            22,127
     NAVSHIPYD                        CNSLDTN.
 WA PUGET SOUND WA              356  CVN MAINT PIER             60,799
     NAVSHIPYD                        REPLACEMENT.
 WA PUGET SOUND WA              360  ADMINISTRATIVE             10,693
     NAVSHIPYD                        OFFICE.
 WA PUGET SOUND WA              367  SEISMIC IMPROVEMENTS        7,669
     NAVSHIPYD
 WA WHIDBEY IS WA NAS           129  JP-8 TRUCK LOADING          2,307
                                      FAC.
 WA WHIDBEY IS WA NAS           155  CORROSION CONTROL          11,378
                                      HANGAR.
 WA WHIDBEY IS WA NAS           156  COMBAT A/C LOADING         16,758
                                      AREA.
 WA WHIDBEY IS WA NAS           159  ACADEMIC INSTR                669
                                      BUILDING.
 WA WHIDBEY IS WA NAS           160  WASHRACK (INDOOR)...        7,194
 BA NAVSUPPACT BAHRAIN          906  AVIATION FACILITIES.       33,254
 DG DIEGO GARCIA                113  HAZARDOUS WASTE               629
     NAVSUPPFAC                       FACILITY.
 DG DIEGO GARCIA                124  WATER SYSTEM                7,902
     NAVSUPPFAC                       IMPROVES.
 GR SOUDA BAY CRETE             744  QOL UPGRADES........       11,736
     NAVSUPACT
 GU GUAM MI                     436  DRDGING ROMEO/SIERRA/      15,572
     COMNAVMARIANAS                   BRAVO.
 IT LAMADDALENA IT NSO          992  BEQ HOMEPORT ASHORE.       18,968
 IT SIGONELLA ITALY NAS         641  ADMINISTRATIVE             20,517
                                      OFFICE.
 UK LONDON UK NAVACTS           701  HQ MODERNIZATION I..       11,935
VAR X/MCON DESIGN FUNDS         217  MCON DESIGN FUNDS         111,710
                                      (N4).
VAR X/MCON DESIGN FUNDS         507  MCON DSGN FNDS--           17,831
                                      MARCORPS.
VAR X/UNSPECIFIED MINOR         207  UNSPECIFIED MINOR          13,164
     CONST                            CONSTR.
                                                          --------------
          FISCAL YEAR     .........  ....................    1,959,375
           2007 TOTAL
                                                          ==============
           PY 2008
 AZ YUMA AZ MCAS                520  FIXED WING FUELING          4,042
                                      APRON.
 CA BARSTOW CA MCLB             608  BUILDING                   25,368
                                      MODERNIZATION.
 CA BARSTOW CA MCLB             930  FLD MAINT SHOP......        9,264
 CA CAMP PENDLETON CA            09  ISR CAMP INTEL             11,312
     MCB                              BATTALION.
 CA CAMP PENDLETON CA            43  BACHELOR ENLISTED          22,608
     MCB                              QUARTERS.
 CA CAMP PENDLETON CA            90  BACHELOR ENLISTED          11,183
     MCB                              QUARTERS.
 CA CAMP PENDLETON CA           110  RECL FOR MARG BASIN        17,115
     MCB                              (PH4).
 CA CHINA LAKE CA                61  SURFACE TARGETS DEV         4,649
     NAWCWPNDIV                       LAB.
 CA CHINA LAKE CA               102  SHIPS/MAR SYS               6,966
     NAWCWPNDIV                       INTERGR LAB.
 CA CHINA LAKE CA               126  WAREHOUSE (SNI).....        7,378
     NAWCWPNDIV
 CA CHINA LAKE CA               253  MULTI-PURPOSE REC          14,310
     NAWCWPNDIV                       CEN SNI.
 CA CHINA LAKE CA               104  CONSOLID A/F ADMIN         11,002
     NAWCWPNSDIV                      FAC.
 CA CHINA LAKE CA               105  RECONSTRUCT RUNWAY/         6,887
     NAWCWPNSDIV                      TAXIWAY.
 CA CHINA LAKE CA               359  AIR TRAFFIC CONTROL         2,273
     NAWCWPNSDIV                      TOWER.
 CA CORONA CA                    08  GUIDED MISSILE LAB..       10,623
     NAVSURFWARCENDI
 CA CORONADO CA                 142  OPERATIONS FACILITY.        4,434
     NAVPHIBASE
 CA MIRAMAR CA MCAS             110  INSTALL HVAC TO BLDG        3,289
                                      9277.
 CA MONTEREY CA NPGS           188A  EDUCATIONAL FAC REPL       33,119
                                      II.
 CA NORTH ISL CA                729  SUPPORT EQUIP MAT           2,393
     NAVAIRDEPOT                      STAGING.
 CA POINT MUGU CA                85  JET ENGINE TEST CELL        8,610
     NAVBASE
 CA PORT HUENEME CA CBC         479  FITNESS CENTER REPL.        7,722
 CA PORT HUENEME CA CBC         542  MILITRY READINESS           6,044
                                      TRNG FAC.
 CA SAN DIEGO CA NAS            180  ENVIRONMENTAL               2,583
     NORTH IS                         LABORATORY.
 CA SAN DIEGO CA NAS            657  REPLACE TAXIWAY.....        9,479
     NORTH IS
 CA SAN DIEGO CA NAS            745  APPLIED INSTRUCTION        12,062
     NORTH IS                         BLDG.
 CA SAN DIEGO CA NAS            767  REPLACE MWR COMPLEX.       12,483
     NORTH IS
 CA SAN DIEGO CA NAS            841  BEQ--SHIPBOARD             33,413
     NORTH IS                         ASHORE.
 CA SAN DIEGO CA NAS            842  BEQ--SHIPBOARD             33,413
     NORTH IS                         ASHORE.
 CA SAN DIEGO CA NAS            864  AUTO VEHICLE MAINT          8,747
     NORTH IS                         SHOP.
 CA SAN DIEGO CA NAVSTA         407  BEQ HOMEPORT ASHORE.       38,562
 CA SAN DIEGO CA NAVSTA         410  LEGAL SERVICES              7,128
                                      FACILITY.
 CA SAN DIEGO CA NSB            144  FIRE PROTECTION.....        2,066
 CA TWENTYNINE PALMS CA         175  FIRE STA/PROVOST            4,563
     MAGCC                            MARSHALL.
 CA TWENTYNINE PALMS CA         686  BACHELOR ENLISTED          21,514
     MAGCC                            QUARTERS.
 CA TWENTYNINE PALMS CA         906  BEQ & POV PARKING          25,368
     MAGCC                            STRUCT.
 CA TWENTYNINE PALMS CA         908  BACHELOR ENLISTED          17,046
     MAGCC                            QUARTERS.
 CT NEW LONDON CT NSB           404  SWIMMING POOL               6,715
                                      REPLACEMENT.
 CT NEW LONDON CT NSB           464  PIER 31 REPLACEMENT.       20,421
 DC WASHINGTON DC                22  CONVERT BUILDING W-         6,793
     COMNAVDIST                       101.
 DC WASHINGTON DC               351  REG INTRUSION DETECT        4,555
     COMNAVDIST                       SYS.
 DC WASHINGTON DC               357  PERIMETER WALL--            3,711
     COMNAVDIST                       ANACOS/BELV.
 FL JACKSONVILLE FL NAS         269  LAND PURCHASE.......        1,790
 FL KEY WEST FL NAF             579  POST OFFICE.........        3,038
 FL KEY WEST FL NAF             901  AT/FP...............        1,790
 FL KEY WEST FL NAF             903  CVQ & GALLEY AT/FP          4,279
                                      UPGRADE.
 FL MAYPORT FL NS               192  ACADEMIC INSTRUCTION        1,024
                                      BLDG.
 FL MAYPORT FL NS              773A  BEQ--SHIPBOARD             22,040
                                      ASHORE INCII.
 FL MAYPORT FL NS               888  UPGRADE WHARF B.....       21,851
 FL PENSACOLA FL NAS            720  CARRIER DREDGING....       50,821
 GA ATHENS GA NSCS              998  POUND HALL                  6,182
                                      RENOVATIONS.
 GA KINGS BAY GA SWFLANT        587  MSL TRNSPORTER              3,797
                                      SAFEHAVENS.
 HI BARKING SANDS HI            410  CONSOL RANGE CTL           13,500
     PMRF                             CENTER.
 HI BARKING SANDS HI            413  SECURTY/PERIMTR             6,749
     PMRF                             FENCE/WALL.
 HI LUALUALEI HI NM             167  SECURITY LIGHTING...        4,890
 HI PEARL HARBOR HI FISC        156  CONSOL AUTOMATED           19,491
                                      WAREHOUSE.
 HI PEARL HARBOR HI FISC        189  SHORE PWR IMPVS            20,250
                                      HOTEL/KILO.
 HI PEARL HARBOR HI FISC        195  SECURTY/PERIMTR             8,858
                                      FENCE/WALL.
 HI PEARL HARBOR HI NS          124  RECONSTRUCT WHARF S-       33,499
                                      1.
 HI PEARL HARBOR HI NS          150  BERTHING WHARF             15,694
                                      IMPROV.
 HI PEARL HARBOR HI NS          596  CONSOLIDATE TRNG           27,248
                                      CAMPUS.
 HI PEARL HARBOR HI NS          620  SECURITY UPGRADE           10,124
                                      (MAKALAPA).
 HI PEARL HARBOR HI NS          622  MIKE IMPROVEMENTS...        4,218
 HI PEARL HARBOR HI NSY          98  CONSOLIDATE CRANE           5,063
                                      DEPT.
 HI PEARL HARBOR HI NSY         315  DRYDOCK.............       10,297
 HI PEARL HARBOR HI PWC         706  UTILITIES SECURITY          3,797
                                      IMPVS.
 HI PEARL HARBOR HI PWC         709  CONSOL/SECTY IMPVS         16,874
                                      (INCR I).
 IL GREAT LAKES IL NTC          485  HVAC UPGRADE BLDG I.        7,232
 IL GREAT LAKES IL NTC          629  RTC PASS/SECURITY           1,102
                                      BUILDING.
 IL GREAT LAKES IL NTC          713  BEQ A SCHOOL               29,392
                                      REPLACEMENT.
 IL GREAT LAKES IL NTC          714  BEQ A SCHOOL               29,943
                                      REPLACEMENT.
 IL GREAT LAKES IL NTC          773  RELOCATE SECURITY           3,737
                                      FACILITY.
 IL GREAT LAKES IL PWC          533  PUBLIC WORKS SHOPS..       11,915
 IL GREAT LAKES IL PWC          753  WASTEWATER TREATMENT        5,192
                                      FAC.
 IN CRANE IN                    906  ANTITERR/FORCE PROT         9,995
     NAVSURFWARCENDIV                 IMPV.
 ME BRUNSWICK ME NAS            175  WEAPONS MAGAZINES           3,185
                                      REPL.
 ME KITTERY ME                  268  WATERFRONT SUPPORT         16,789
     PORTSMOUTH NSY                   FAC.
 MD ANNAPOLIS MD NAVACAD       165A  CENTRAL CHILLER SYS         5,183
                                      UPGRD.
 MD BETHESDA MD                 901  SECURITY FACILITY...        4,890
     NSWCCARDEROCK
 MD INDIAN HEAD MD              154  JOINT CAD/PAD               7,263
     NSWCTRDIV                        TRANSFER FAC.
 MD INDIAN HEAD MD              166  WEAPONS ENGINEERING         8,377
     NSWCTRDIV                        FAC.
 MD INDIAN HEAD MD              167  RESEARCH LAB COMPLEX       13,629
     NSWCTRDIV
 MD INDIAN HEAD MD              171  FORCE PROTECTION           11,812
     NSWCTRDIV                        IMPVS.
 MD PATUXENT RIVER MD           103  RDT&E COMMAND OPS          11,984
     AWCACDV                          CENTER.
 MD PATUXENT RIVER MD           107  ROTARY WING TEST            6,208
     AWCACDV                          SUPT FAC.
 MD PATUXENT RIVER MD           110  CONSOL A/C INTER           17,796
     AWCACDV                          MAINT FAC.
 MD PATUXENT RIVER MD           115  FINGER PIER REPL,           3,349
     AWCACDV                          KEY WEST.
 MD PATUXENT RIVER MD           123  SECURE MAIL FACILITY        1,722
     AWCACDV
 MD PATUXENT RIVER MD           128  BATTLE FORCE SUPPORT       29,401
     AWCACDV
 MD PATUXENT RIVER MD           960  ACFT APRON EXPAN &          8,815
     AWCACDV                          IMPR.
 MD PATUXENT RIVER MD           961  ROTARY WING TEST            6,346
     AWCACDV                          FACILITY.
 MD PATUXENT RIVER MD           981  HIGH EXPLOSIVE              3,591
     AWCACDV                          MAGAZINES.
 MD PATUXENT RIVER MD           986  FORCE PROT IMPV            11,303
     AWCACDV                          GUARD HSE.
 MD PATUXENT RIVER MD           987  RANGE THEODOLITE            3,340
     AWCACDV                          TRACK STN.
 MS GULFPORT MS                 782  BUILDERS APPLIED            6,500
     NAVCONSTRACEN                    INST FAC.
 MS GULFPORT MS                 784  CONSOLIDATED DRT            3,883
     NAVCONSTRACEN                    FACILITY.
 MS MERIDIAN MS NAS             296  RENOVATE BUILDING           1,636
                                      100.
 MS MERIDIAN MS NAS             299  PUBLIC SAFETY               1,541
                                      FACILITY.
 MS MERIDIAN MS NAS             310  AIRFIELD PERIMETER          4,727
                                      FENCING.
 NJ LAKEHURST NJ NAWC           999  PERIM & IS SECURITY         3,641
     ACFTDIV                          IMPVS.
 NC CAMP LEJEUNE NC MCB        1017  BACHELOR ENLISTED          15,247
                                      QUARTERS.
 NC CAMP LEJEUNE NC MCB        1033  CONSOL ACADEMIC BLDG       12,406
                                      (PH2).
 NC CAMP LEJEUNE NC MCB        1042  ARMORIES (2D MEF)...        4,063
 NC CAMP LEJEUNE NC MCB        1372  BACHELOR ENLISTED          15,247
                                      QUARTERS.
 NC CAMP LEJEUNE NC MCB        1381  BACHELOR ENLISTED          17,718
                                      QUARTERS.
 NC CAMP LEJEUNE NC MCB         920  MAINT SHOP/UTIL             3,953
                                      PLATOON.
 NC CHERRY POINT NC MCAS        130  MOTOR TRANSPORT &           7,806
                                      COM SHOP.
 NC CHERRY POINT NC             981  CENTRAL COMP AIR            6,939
     NADEP                            FACILITY.
 NC NEW RIVER NC MCAS           526  AIRCRAFT HANGAR.....       11,915
 PA MECHANICSBURG               10B  NAVSUP HQ FACS INCR        21,773
     NAVSUPPACT                       III.
 PA NSY NORFOLK DET             611  PRODUCTION SHOP             7,844
     PHILA PA                         MODERN.
 PA PHILADELPHIA PA             106  VIRT INTEG SHIP             6,122
     NSWCSSES                         TSTNGFAC.
 RI NEWPORT RI NAVSTA           370  TRAINING POOL               3,331
                                      REPLACEMENT.
 RI NEWPORT RI NAVSTA           453  REPL FUEL OIL STOR          2,859
                                      TANKS.
 RI NEWPORT RI NAVSTA           455  NAVAL JUSTICE SCHOOL        5,622
                                      ALTS.
 RI NEWPORT RI NUSWCTR           75  SUB PAYLOADS/INTEGR         8,385
     DIV                              LAB.
 RI NEWPORT RI NUSWCTR           76  U/S LAUNCHER/MISLE          8,351
     DIV                              SYS LAB.
 SC BEAUFORT SC MCAS            424  AICUZ LAND                 13,611
                                      ACQUISITION.
 SC CHASN NAVAL WPN              53  ENGINEERNG FUNCTION         4,149
     STATION                          CONSOL.
 SC PARRIS ISLAND SC            336  SUPT BN BARRACKS &          4,218
     MCRD                             OPS CTR.
 TN MILLINGTON TN               352  ACADEMIC INSTRUCTION        3,340
     SUPPACT                          BLDG.
 TN MILLINGTON TN               359  HAZARDOUS WASTE STRG          757
     SUPPACT                          FAC.
 TX CORPUS CHRISTI TX           353  AVIATION TRAINER            5,838
     NAS                              FACILITY.
 TX CORPUS CHRISTI TX           435  CONTROL TOWER.......        8,438
     NAS
 TX INGLESIDE TX NS              72  COMMUNITY SUPPORT           5,209
                                      FACILITY.
 TX KINGSVILLE TX NAS           192  CRASH STRIP RUNWAY..       16,995
 VA DAHLGREN VA                  17  PHYS SECTY ENHANCE          6,233
     NAVSPACECOM                      (CENT).
 VA DAHLGREN VA NSWCTR          295  MARITIME DIRECTED          11,812
     DIV                              ENGY CTR.
 VA DAHLGREN VA NSWCTR          300  EMERGENCY OPERATIONS        4,218
     DIV                              CTR.
 VA DAHLGREN VA NSWCTR          305  INFRAST ASSURANCE           5,399
     DIV                              FAC ADDN.
 VA LITTLE CREEK VA             205  SWDG SUPPORT                1,937
     NAVPHIBSE                        FACILITY.
 VA LITTLE CREEK VA             227  REP/UPGR PIER &            17,546
     NAVPHIBSE                        QUAYWALL.
 VA LITTLE CREEK VA             257  PIERS 14 & 15              19,741
     NAVPHIBSE                        REPLACEMENT.
 VA LITTLE CREEK VA             261  BOAT REPAIR FACILITY        3,547
     NAVPHIBSE
 VA NORFOLK VA                 830C  CLT/TYCOM HQ FAC           32,836
     LANTFLTHQSPACT                   (INCR IV).
 VA NORFOLK VA NS                49  PIER 3 REPLACEMENT..       41,996
 VA NORFOLK VA NS                51  PIER 10 REPLACEMENT.       38,725
 VA NORFOLK VA NS              297A  BEQ--SHIPBOARD             25,311
                                      ASHORE INCII.
 VA NORFOLK VA NS              303A  BEQ--SHIPBOARD             25,311
                                      ASHORE INCII.
 VA NORFOLK VA NS               311  BEQ HOMEPORT ASHORE        28,410
                                      INC I.
 VA NORFOLK VA NS               391  PIER 15 INCR I......       33,748
 VA NORFOLK VA NS              527A  BEQ--SHIPBOARD             25,311
                                      ASHORE INCII.
 VA NORFOLK VA NS               668  FLEET OPERATIONS           30,881
                                      CENTER.
 VA NORFOLK VA NS               765  POLICE STATION......        2,531
 VA NORFOLK VA NS               977  BRIG RENOVATIONS....        4,132
 VA OCEANA VA NAS               401  HANGAR 200 UPGRADE..        1,265
 VA OCEANA VA NAS               936  MAGAZINE REPLACEMENT        1,076
 VA PORTSMOUTH VA               353  FIRE DEPARTMENT             5,063
     NORFOLK NSY                      BUILDING.
 VA PORTSMOUTH VA               377  PWC SUPPORT FACILITY        3,125
     NORFOLK NSY                      ALTS.
 VA PORTSMOUTH VA               383  CONTROLLED                 32,208
     NORFOLK NSY                      INDUSTRIAL FAC.
 VA PORTSMOUTH VA               513  WTRFRNT PROD SUPPORT       18,562
     NORFOLK NSY                      FAC.
 VA QUANTICO VA                 479  INFRASTRUCTURE              8,158
     MCCOMBDEV CMD                    RUSSELL RD.
 VA YORKTOWN VA                 389  TRESTLE & PIER REPL        29,530
                                      INC I.
 VA YORKTOWN VA NWS             213  RECAP IGLOO                 6,500
                                      MAGAZINES.
 VA YORKTOWN VA NWS             381  FELGATES CREEK              1,145
                                      BRIDGE REPL.
 VA YORKTOWN VA NWS             385  CHILD DEVELOPMENT           8,438
                                      CENTER.
 WA BANGOR WA SWF PAC           311  UTIL & SITE IMPVS           2,850
                                      (PH IV).
 WA BANGOR WA SWF PAC           973  LA PROCESSING & STG        45,560
                                      CMPLX.
 WA BANGOR WA SWF PAC           974  HARDENED MISSILE           71,716
                                      MAGAZINE.
 WA EVERETT WA NAVSTA           151  AEGIS TRAINING              4,391
                                      FACILITY.
 WA EVERETT WA NAVSTA          155A  BEQ HOMEPORT ASHORE        30,132
                                      (PH II).
 WA INDIAN ISLAND WA            335  MISSILE MAGAZINES...        8,902
     NAVMAG
 WA INDIAN ISLAND WA            336  MISSILE MAGAZINES...        7,929
     NAVMAG
 WA KEYPORT WA NUWC DIV         392  EMERGENCY COMMAND           6,413
                                      CENTER.
 WA PUGET SOUND WA              366  PLANNING YARD&SHOP          8,858
     NAVSHIPYD                        STG FAC.
 WA PUGET SOUND WA              368  WELDER/SHOPFITTER          18,312
     NAVSHIPYD                        SHOP IMP.
 WA PUGET SOUND WA              374  DRYDOCK #6 CAISSON         12,002
     NAVSHIPYD                        REPLMNT.
 WA WHIDBEY IS WA NAS           119  YOUTH CENTER........        3,814
 DG DIEGO GARCIA                135  THEATER.............        7,258
     NAVSUPPFAC
 GU GUAM MI                     425  HIGH PERFORMANCE           22,532
     COMNAVMARIANAS                   MAGS.
 GU GUAM MI                     446  GYMNASIUM...........        9,109
     COMNAVMARIANAS
 GU GUAM MI                     462  BEQ RENOVATIONS.....        8,351
     COMNAVMARIANAS
 IC KEFLAVIK ICELAND NAS        565  BASE PERIMETER SECTY        2,502
                                      FENCE.
 IT NAPLES ITALY NSA            218  COMMUNITY FACILITIES       15,261
                                      GAETA.
 IT SIGONELLA ITALY NAS         650  BASE OPERATIONS            16,119
                                      SUPPORT IV.
 PR ROOSEVELT RDS PR NS         143  CESE WAREHOUSE......        4,089
 PR ROOSEVELT RDS PR NS         526  CONCRETE BARRIER/           1,265
                                      BOXER DR.
 PR ROOSEVELT RDS PR NS         620  TACTICAL SUPPORT            7,844
                                      CENTER.
 SP ROTA SPAIN NS               648  PUBLIC WORKS COMPLEX       18,497
 SP ROTA SPAIN NS               662  AIR OPERATIONS              4,625
                                      UPGRADES.
 UK LONDON UK NAVACTS           702  HQ MODERNIZATION II.        7,823
 UK LONDON UK NAVACTS           703  UXBRIDGE RELOCATION        19,942
                                      I.
 UK LONDON UK NAVACTS           704  UXBRIDGE RELOCATION        20,574
                                      II.
VAR X/MCON DESIGN FUNDS         218  MCON DESIGN.........      125,174
VAR X/MCON DESIGN FUNDS         508  MCON DSGN FNDS--           28,641
                                      MARCORPS.
VAR X/UNSPECIFIED MINOR         208  UNSPECIFIED MINOR          15,797
     CONST                            CONSTR.
VAR Z/VARLOCS MILCON            251  EARS LAND BASED SITE       10,969
                                                          --------------
        FISCAL YEAR 2008  .........  ....................    2,377,878
         TOTAL
                                                          ==============
           PY 2009
 AZ YUMA AZ MCAS                378  SECURITY OPS               10,762
                                      FACILITY.
 CA BARSTOW CA MCLB             167  BACHELOR ENLISTED          10,228
                                      QUARTERS.
 CA BARSTOW CA MCLB             203  INDOOR PHYSICAL FIT         6,496
                                      CTR.
 CA BARSTOW CA MCLB             403  CONSOLIDATED SEC FAC        1,454
 CA BARSTOW CA MCLB             935  HQ BLDG FOR FLEET           2,889
                                      SUPT CTR.
 CA BARSTOW CA MCLB             939  ENGINE DYNAMOMETER          3,761
                                      FAC.
 CA CAMP PENDLETON CA            78  TACTICAL VAN PAD            2,734
     MCAS                             EXPANSION.
 CA CAMP PENDLETON CA            06  DEMO STP SOUTH SYS          5,507
     MCB                              (PH 5).
 CA CAMP PENDLETON CA            25  BACHELOR ENLISTED          14,921
     MCB                              QUARTERS.
 CA CAMP PENDLETON CA            28  BACHELOR ENLISTED          12,449
     MCB                              QUARTERS.
 CA CAMP PENDLETON CA            32  MARDIV COMMAND              5,507
     MCB                              HEADQUARTER.
 CA CAMP PENDLETON CA            65  MESS HALL, DEL MAR..       15,135
     MCB
 CA CAMP PENDLETON CA            79  5 MILLION GALLON            7,523
     MCB                              RESERVOIR.
 CA CAMP PENDLETON CA            94  BACHELOR ENLISTED          24,229
     MCB                              QUARTERS.
 CA CAMP PENDLETON CA          101A  BACHELOR ENLISTED          16,152
     MCB                              QUARTERS.
 CA CAMP PENDLETON CA           113  WATER/WW TDS RED FAC       30,685
     MCB                              (B-PH3.
 CA CAMP PENDLETON CA          569A  FIRE STATION, PULGAS        2,561
     MCB
 CA CAMP PENDLETON CA           604  CHILD DEVELOPMENT           7,825
     MCB                              CENTER.
 CA CHINA LAKE CA               106  CONSOLIDATE AIRFIELD        7,611
     NAWCWPNDIV                       FAC.
 CA CHINA LAKE CA               111  PUBLIC WORKS               15,580
     NAWCWPNDIV                       COMPOUND.
 CA CHINA LAKE CA               356  CHILD DEVELOPMENT           4,178
     NAWCWPNDIV                       CENTER.
 CA CHINA LAKE CA               133  BACHELOR QUARTERS...       16,841
     NAWCWPNSDIV
 CA CORONADO CA                 148  MISSILE COMPT SLING         6,767
     NAVPHIBASE                       TESTER.
 CA CORONADO CA                 765  LIBRARY/COMMUNITY           5,623
     NAVPHIBASE                       BLDG.
 CA EL CENTRO CA NAF            232  AVIATION EASEMENTS..       10,180
 CA EL CENTRO CA NAF            242  SURVEILLANCE RADAR          1,182
                                      INSTALL.
 CA LEMOORE CA NAS              218  AIR COMBAT TRNG             3,781
                                      FACILITY.
 CA MIRAMAR CA MCAS              67  CONSTR RUNWAY 6L           15,580
                                      OVERRUN.
 CA MIRAMAR CA MCAS             124  GROUND COMBAT TRNG          3,335
                                      RANGE.
 CA MIRAMAR CA MCAS             126  POLICE STATION......        3,335
 CA NAS PT MUGU CA              255  LAND ACQ IN ESQD ARC        1,901
     NAVAIRWARC
 CA POINT MUGU CA               281  AIRCRAFT TEST STAND           689
     NAVBASE                          PAD.
 CA POINT MUGU CA               505  GENERAL WAREHOUSE,          9,046
     NAVBASE                          NAVY.
 CA SAN DIEGO CA FASWTC         387  GYMNASIUM...........        4,082
     PAC
 CA SAN DIEGO CA NAS            749  S-3/C-2 HANGAR......       33,750
     NORTH IS
 CA SAN DIEGO CA NAS            759  THIRD ST EXTENSION/        17,956
     NORTH IS                         GATE.
 CA SAN DIEGO CA NAS            844  HANGAR MODERNIZATION       22,522
     NORTH IS
 CA SAN DIEGO CA NAVSTA         105  BUILDING 12                20,932
                                      CONVERSION.
 CA SAN DIEGO CA NAVSTA         300  BRIDGE REPLACEMENT..        1,648
 CA SAN DIEGO CA NAVSTA         331  UPGRADE PIER 6......       22,804
 CA SAN DIEGO CA NAVSTA         415  BEQ TRANSIENT.......       43,426
 CA SAN DIEGO CA NSB            138  BEQ UPGRADE.........        4,750
 CA TWENTYNINE PALMS CA         904  BACHELOR ENLISTED          21,446
     MAGCC                            QUARTERS.
 CT NEW LONDON CT NSB            80  VEHICLE MAINTENANCE         1,901
                                      FAC.
 CT NEW LONDON CT NSB           392  SUBMARINE BERTHING          7,223
                                      IMPRVS.
 CT NEW LONDON CT NSB           466  REPLACE PIER 12.....       26,604
 CT NEW LONDON CT NSB           467  REPLACE PIER 10.....       23,753
 CT NEW LONDON CT NSB           469  REPLACE PIER 33.....       25,654
 DC WASHINGTON DC               332  ANACOSTIA SWIMMING          4,750
     COMNAVDIST                       POOL.
 FL JACKSONVILLE FL NAS         216  COMBINE NCF OPS             6,748
                                      FACILITY.
 FL JACKSONVILLE FL NAS         267  WHITEHOUSE OLF GUARD        4,750
                                      HOUSE.
 FL JACKSONVILLE FL             175  INDUSTRIAL MATRL            2,850
     SUPSHIP                          COMPLEX.
 FL KEY WEST FL NAF             677  HQS CONSOLIDATED FAC        8,930
 FL MAYPORT FL NS               999  UPGRADE WHARF E.....       10,830
 FL PENSACOLA FL NAS            727  HANGAR 1853                19,197
                                      RECAPITALZTN.
 FL PENSACOLA FL NAS            728  HANGAR 1854                22,804
                                      RECAPITALZTN.
 HI BANGOR WA SWF PAC           312  UTIL & SITE IMPVS           3,500
                                      (PH V).
 HI BARKING SANDS HI            407  CONSOL OPS ADMIN           13,496
     PMRF                             CENTER.
 HI BARKING SANDS HI            408  CONSOLIDATED SUPPLY         7,223
     PMRF                             COMPLX.
 HI KANEOHE BAY HI MCB          703  HAZ MATL/WASTE              5,419
                                      CONSOL FAC.
 HI KANEOHE BAY HI MCB          749  BACHELOR ENLISTED          24,151
                                      QUARTERS.
 HI KANEOHE BAY HI MCB          750  BACHELOR ENLISTED          22,047
                                      QUARTERS.
 HI KANEOHE BAY HI MCB          758  BACHELOR ENLISTED          21,514
                                      QUARTERS.
 HI KANEOHE BAY HI MCB          770  BACHELOR ENLISTED          22,154
                                      QUARTERS.
 HI KANEOHE BAY HI MCB          774  PTA STORAGE                 4,712
                                      FACILITIES.
 HI LUALUALEI HI NM             138  FIRE STATION........        2,375
 HI PEARL HARBOR HI FISC        185  SECONDARY SUPPLY            9,879
                                      WAREHOUSE.
 HI PEARL HARBOR HI FISC        196  RECAP HOTEL 1-4.....       28,504
 HI PEARL HARBOR HI NS          516  CONSTRUCT CVN HARBOR       35,727
                                      DEPTH.
 HI PEARL HARBOR HI NS          578  PHYS READINESS TRNG        20,903
                                      CTR.
 HI PEARL HARBOR HI NS          579  REGIONAL BEQ........       28,699
 HI PEARL HARBOR HI NS          586  BEQ MODERNIZATION...        3,994
 HI PEARL HARBOR HI NS          590  BACH ENLISTED QTRS         20,330
                                      MODERN.
 HI PEARL HARBOR HI NS          600  APPLIED INSTRUCTION        27,554
                                      BLDG.
 HI PEARL HARBOR HI NS          605  DREDGE MAIN CHANNEL        40,856
                                      (PH I).
 HI PEARL HARBOR HI NS          611  BEQ MODERNIZATION...       24,704
 HI PEARL HARBOR HI NS          612  BEQ MODERNIZATION...        3,326
 HI PEARL HARBOR HI NS          613  DREDGE NORTH CHANNEL       67,460
 HI PEARL HARBOR HI NS          633  JICPAC RELOCATION          48,457
                                      (INCR I).
 HI PEARL HARBOR HI NSB         119  PIER & WATERFRONT          38,005
                                      UTIL.
 HI PEARL HARBOR HI NSY         210  STRUCTURAL SHOP            11,402
                                      CONSOL.
 HI PEARL HARBOR HI NSY         270  DD2 AFT WATERFRONT          6,651
                                      FAC.
 HI PEARL HARBOR HI NSY         271  DD1 WATERFRONT              6,651
                                      FACILTY.
 HI PEARL HARBOR HI PAC         461  FIELD ENGINEERING          28,504
     NFEC                             OPS CTR.
 HI PEARL HARBOR HI PWC         442  ELEC DISTRIB SYSTEM        15,203
                                      IMPRS.
 HI PEARL HARBOR HI PWC         477  ELEC SYS UPGRADE....        9,724
 HI PEARL HARBOR HI PWC         488  ELEC DIST SYS IMPV         23,753
                                      (PUULUA).
 HI PEARL HARBOR HI PWC         492  HALAWA WATERLINE            2,095
                                      REPL.
 HI PEARL HARBOR HI PWC         493  WTR DISTRIB LINE           10,451
                                      (WAIAWA).
 HI PEARL HARBOR HI PWC         705  UTIL DIST SYS (FD          20,428
                                      IS) INC I.
 IL GREAT LAKES IL NTC          507  CBU TRAINING                5,323
                                      BUILDING.
 IL GREAT LAKES IL NTC          715  BEQ A SCHOOL               34,390
                                      REPLACEMENT.
 IL GREAT LAKES IL NTC          716  BEQ A SCHOOL               35,475
                                      REPLACEMENT.
 IL GREAT LAKES IL NTC          717  BEQ A SCHOOL               35,475
                                      REPLACEMENT.
 IL GREAT LAKES IL NTC          751  PHYSICAL TRAINING           5,875
                                      FACILITY.
 IL GREAT LAKES IL NTC          755  BEQ (NAVAL HOSPITAL)       12,942
 IL GREAT LAKES IL NTC          767  RECRUIT PROCESSING         11,460
                                      FAC ADD.
 IL GREAT LAKES IL NTC          768  BEQ TPU.............       23,307
 IL GREAT LAKES IL PWC          564  WATER PLANT UPGRADE.        6,651
 IL GREAT LAKES IL PWC          565  AUTO VEHICLE MAINT          7,611
                                      SHOP.
 IL GREAT LAKES IL PWC          675  MODERNIZE 2.4KV SYS.       12,207
 ME BRUNSWICK ME NAS            197  FIRE PROT SYS              10,200
                                      UPGRADES.
 ME KITTERY ME                  217  PAINT AND BLASTING         15,299
     PORTSMOUTH NSY                   SHOP.
 MD ANNAPOLIS MD NAVACAD        208  SUPPLY WAREHOUSE....        3,045
 MD ANNAPOLIS MD NAVACAD        309  BOAT SHOP RENOV B/          1,901
                                      234.
 MD ANNAPOLIS MD NAVACAD        312  MULTI-PURPOSE BLDG..        1,997
 MD ANNAPOLIS MD NAVACAD        316  PUBLIC WORKS SHOP...        1,522
 MD ANNAPOLIS MD NAVACAD        320  APPLIED INSTRUCTION        32,809
                                      BLDG.
 MD ANNAPOLIS MD NAVACAD        334  FIELD HOUSE @ TURNER       30,724
                                      FIELD.
 MD BETHESDA MD                 304  SHIP VIRTUAL               13,020
     NSWCCARDEROCK                    PROTOTPNG LAB.
 MD INDIAN HEAD MD              170  JOINT INTEROP CERT          7,194
     NSWCTRDIV                        FAC.
 MD PATUXENT RIVER MD           120  MARINE OPS FACILITY.        6,787
     AWCACDV
 MD PATUXENT RIVER MD           127  AIRCRAFT EM T&E            21,145
     AWCACDV                          CATAPULT.
 MD PATUXENT RIVER MD           130  AIRCRAFT DEVELOP           27,137
     AWCACDV                          SUPPT FAC.
 MD PATUXENT RIVER MD           976  BOQ REPLACEMENT.....       11,188
     AWCACDV
 MS GULFPORT MS NCBC            791  REGMT/GROUP HQ              2,211
                                      (MARCOR).
 MS PASCAGOULA MS NS            101  ELEC DISTRIB LINES          4,266
                                      REPL.
 MS PASCAGOULA MS NS            128  HAZ/FLAM/CHRMP                747
                                      WAREHOUSE.
 MS STENNIS SPC CTR MS           10  OCEAN SCIENCE LAB...       19,313
     NAVOCO
 NV FALLON NV NAS               289  AIR NAVIGATION              3,704
                                      BUILDING.
 NJ LAKEHURST NJ NAWC           112  ENGINEERING SUPPORT        17,432
     ACFTDIV                          FAC.
 NC CAMP LEJEUNE NC MCB        1016  BACHELOR ENLISTED          23,240
                                      QUARTERS.
 NC CAMP LEJEUNE NC MCB        1034  INTEL OPERATIONS           12,246
                                      CENTER.
 NC CAMP LEJEUNE NC MCB        1035  MATERIAL                   11,402
                                      DISTRIBUTION CTR.
 NC CAMP LEJEUNE NC MCB        1088  BACHELOR ENLISTED          33,352
                                      QUARTERS.
 NC CAMP LEJEUNE NC MCB         126  ASP UPGRADES PH II..        5,506
 NC CAMP LEJEUNE NC MCB         417  ORGANIZATIONAL EQUIP        4,159
                                      STRG.
 NC CAMP LEJEUNE NC MCB         919  MAINT SHOP/BULK FUEL        7,300
                                      CO.
 NC CAMP LEJEUNE NC MCB         963  BEQ.................       17,102
 NC CHERRY POINT NC MCAS        658  PHYSICAL FITNESS            6,834
                                      CENTER.
 NC CHERRY POINT NC             987  PROT A/C MAINT             11,092
     NADEP                            STORAGE FAC.
 NC NEW RIVER NC MCAS           632  BACHELOR ENLISTED          17,102
                                      QUARTERS.
 PA PHILADELPHIA PA             105  STEAM GENERATION           13,399
     NSWCSSES                         FACILITY.
 PA PHILADELPHIA PA             404  TANK FARM...........        7,795
     NSWCSSES
 RI NEWPORT RI NS               450  CBQ REPLACEMENT.....       20,263
 SC BEAUFORT SC MCAS            419  ENLISTED DINING            10,451
                                      FACILITY.
 SC BEAUFORT SC NH              515  BACHELOR ENLISTED           6,961
                                      QUARTERS.
 SC CHASN NAVAL WPN              24  ENGINEERING MGMNT          23,753
     STATION                          CENTER.
 SC CHASN NAVAL WPN              56  SPAWAR CONSOLIDATION       15,203
     STATION
 SC PARRIS ISLAND SC            337  BACHELOR ENLISTED          15,057
     MCRD                             QUARTERS.
 SC PARRIS ISLAND SC            338  COMM CTR ADDN.......        5,284
     MCRD
 SC PARRIS ISLAND SC            351  BACHELOR ENLISTED          16,637
     MCRD                             QUARTERS.
 TN MILLINGTON TN               281  CENTRAL WAREHOUSE...        2,230
     SUPPACT
 TN MILLINGTON TN               358  PW TRANSPORT MAINT          4,159
     SUPPACT                          FAC.
 TN MILLINGTON TN               360  IMPV GATE/PERIMTR           5,895
     SUPPACT                          SECURITY.
 TX KINGSVILLE TX NAS           193  NALFOG CRASH STRIP         10,394
                                      RUNWAY.
 VA DAHLGREN VA NSWCTR          294  COLLAB MULTIWRFRE          11,402
     DIV                              ENG CPLX.
 VA LITTLE CREEK VA             209  PIERS 12 & 13              27,554
     NAVPHIBSE                        REPLACEMENT.
 VA LITTLE CREEK VA             219  UPGRADE ELECTRICAL          7,931
     NAVPHIBSE                        DISTRIB.
 VA LITTLE CREEK VA             221  PIER 56 & 57               23,753
     NAVPHIBSE                        REPLACEMENT.
 VA LITTLE CREEK VA             354  EOD GRU2 FACILITY...        6,176
     NAVPHIBSE
 VA NORFOLK VA NS                48  PIER 1 REPLACEMENT..       35,727
 VA NORFOLK VA NS                52  PIER 9 REPLACEMENT..       36,009
 VA NORFOLK VA NS                95  PIER 4 REPLACEMENT..       51,307
 VA NORFOLK VA NS                96  PIER 5 REPLACEMENT..       53,208
 VA NORFOLK VA NS               253  RECONSTRUCT TAXIWAY.       11,402
 VA NORFOLK VA NS              311A  BEQ HOMEPORT ASHORE        29,086
                                      INC II.
 VA NORFOLK VA NS               336  INDOOR PHYSICAL FIT         9,502
                                      FAC.
 VA NORFOLK VA NS              391A  PIER 15 INCR II.....       37,434
 VA NORFOLK VA PWC               02  HEATING PLANT               5,149
                                      BUILDING.
 VA OCEANA VA NAS               263  AIR WARRIOR SQUAD          13,457
                                      SPT FAC.
 VA OCEANA VA NAS               697  ROAD IMPROVEMENTS...       11,692
 VA OCEANA VA NAS               722  CHILD DEV CENTER....        7,407
 VA OCEANA VA NAS               906  ROAD IMPROVEMENTS...        2,636
 VA PORTSMOUTH VA               333  CHILD DEVELOPMENT           6,196
     NORFOLK NSY                      CENTER.
 VA PORTSMOUTH VA               337  ADMIN SUPT FAC             19,003
     NORFOLK NSY                      RESTORATION.
 VA PORTSMOUTH VA               373  AUTO VEHICLE MAINT         34,205
     NORFOLK NSY                      NONCOMB.
 VA PORTSMOUTH VA               520  DRYDOCK #2 CAISSON          8,551
     NORFOLK NSY                      REPLACE.
 VA PORTSMOUTH VA               522  DRYDOCK #4 CAISSON         10,171
     NORFOLK NSY                      REPLACE.
 VA PORTSMOUTH VA               532  ROAD IMPROVEMENTS...        2,375
     NORFOLK NSY
 VA QUANTICO VA MCAF            448  WHITE SIDE COMPLEX..       27,777
 VA QUANTICO VA MCAF            517  CONSTRUCT TYPE II          12,091
                                      HANGAR.
 VA QUANTICO VA                 489  RELIGIOUS/FAMILY            3,316
     MCCOMBDEV CMD                    SVCS CTR.
 VA YORKTOWN VA                389A  TRESTLE & PIER REPL        24,888
                                      INC II.
 VA YORKTOWN VA NWS             235  HVAC MAKE UP AIR....        2,636
 VA YORKTOWN VA NWS             416  TOMAHAWK MAGAZINE...        3,161
 VA YORKTOWN VA NWS             436  AMRAAM MAGAZINE.....        1,231
 WA BANGOR WA SWF PAC           960  UTIL & SITE IMPVS             640
                                      (PH III).
 WA BREMERTON WA NS             304  INDUSTRIAL OPS              7,980
                                      SUPPORT FAC.
 WA BREMERTON WA NS             313  FLEET RECREATION            3,132
                                      COMPLEX.
 WA BREMERTON WA NS             315  PUBLIC WORKS                7,980
                                      FACILITY.
 WA BREMERTON WA NS             319  TRANSPORTATION              4,557
                                      FACILITY.
 WA INDIAN ISLAND WA            325  AMMUNITION WHARF           60,809
     NAVMAG                           IMPRS.
 WA KEYPORT WA NUWC DIV         390  MINE & U/S WARFARE         13,680
                                      SPT FAC.
 WA PUGET SOUND WA              355  POLLUTION PRVNT            14,727
     NAVSHIPYD                        EQUIP FAC.
 WA WHIDBEY IS WA NAS            68  DATA PROCESSING/SYS         4,072
                                      MGMT.
 WA WHIDBEY IS WA NAS           149  PERSONNEL SUPPORT           2,095
                                      FACILITY.
 WA WHIDBEY IS WA NAS           158  ACADEMIC INST BLDG..        1,047
 WA WHIDBEY IS WA NAS           169  VAQ HANGAR RECAP....       50,105
 BA NAVSUPPACT BAHRAIN          920  WARTIME PREPOS EQP         13,415
                                      STG FAC.
 GU GUAM MI                     434  SUPPLY WHARF........        3,433
     COMNAVMARIANAS
 GU GUAM MI                     445  AMPHIB LAND TIPALAO         6,457
     COMNAVMARIANAS                   BEACH.
 GU GUAM MI                     450  BEQ RENOVATIONS.....        8,745
     COMNAVMARIANAS
 GU GUAM NCTAMS WESTPAC         236  SEISMIC MODS (VAR           4,178
                                      BLDGS).
 GU GUAM PWC                    815  UNDERGRND PWR DIST            804
                                      LNS.
 DG DIEGO GARCIA                 71  PW MAINT STORAGE            5,130
     NAVSUPPFAC                       FACILITY.
 DG DIEGO GARCIA                107  VEHICLE WASH STATION          476
     NAVSUPPFAC
 DG DIEGO GARCIA                139  AMMUNITION WHARF....       58,908
     NAVSUPPFAC
 IC KEFLAVIK ICELAND NAS         08  HAZARDOUS/FLAMMABLE         4,105
                                      STRHSE.
 IT NAPLES ITALY NSA            215  ADMINISTRATIVE             18,171
                                      OFFICE.
 IT NAPLES ITALY NSA            217  CHILD DEVELOPMENT           2,461
                                      CENTER.
 PR ROOSEVELT RDS PR NS         611  CB BUILDING                 5,603
                                      HEADQUARTERS.
 PR ROOSEVELT RDS PR NS         754  BEQ REPLACEMENT.....       15,880
 SP ROTA SP NCB CB              613  UPGRADE MAINTENANCE        10,263
     CPMITCHELL                       FAC.
 SP ROTA SPAIN NS               645  COMMAND OPS                18,474
                                      CONSOLIDATION.
 UK LONDON UK NAVACTS          704A  UXBRIDGE RELOCATION         1,857
                                      II.
VAR X/MCON DESIGN FUNDS         219  MCON DESIGN FUNDS...      143,845
VAR X/MCON DESIGN FUNDS         509  MCON DSGN FNDS-            32,595
                                      MARCORPS.
VAR X/UNSPECIFIED MINOR         209  UNSPECIFIED MINOR          19,371
     CONST                            CONSTR.
VAR Z/VARLOCS MILCON            604  PUBLIC WORKS COMPLEX        2,753
                                                          --------------
          FISCAL YEAR     .........  ....................    3,118,962
           2009 TOTAL
------------------------------------------------------------------------



                                      MCNR POM04 FYDP CONGRESSIONAL SUBMIT
                                                  [In dollars]
----------------------------------------------------------------------------------------------------------------
 ST            IMC                       ACTIVITY               PNO                 TITLE               PRG COST
----------------------------------------------------------------------------------------------------------------
            PY 2004
 CA NVRESFOR                SAN DIEGO CA NAVAIRES........        737  C-40 HANGAR..................    $15,973
 VA MARCORPS                QUANTICO VA I&I STAFF........        518  RESERVE CENTER...............      9,497
VAR A&E SERV                X/MCNR DESIGN FUNDS..........        504  MCNR DESIGN FUNDS (N4).......      1,700
VAR A&E SERV                X/MCNR DESIGN FUNDS..........        224  USMC MCNR DESIGN FUNDS.......        862
                                                                                                    ------------
          FISCAL YEAR 2004  .............................  .........  .............................     28,032
           TOTAL
                                                                                                    ============
            PY 2005
 FL MARCORPS                JACKSONVILLE FL I&I STAFF....        532  RESERVE TRAINING CENTER......      8,312
 PA NVRESFOR                WILLOW GROVE PA NAS..........        237  FITNESS CENTER...............      7,141
 VA MARCORPS                NORFOLK VA NMCRC.............         41  VEHICLE MAINTENANCE FAC......      4,447
VAR A&E SERV                X/MCNR DESIGN FUNDS..........        225  USMC MCNR DESIGN FUNDS.......        820
VAR A&E SERV                X/MCNR DESIGN FUNDS..........        505  MCNR DESIGN FUNDS (N4).......      2,650
                                                                                                    ------------
          FISCAL YEAR 2005  .............................  .........  .............................     23,370
           TOTAL
                                                                                                    ============
            PY 2006
 AL MARCORPS                MOBILE AL 4TH MARINE DIV.....         32  RES TRNG CTR&VEH MAINT FAC...      7,158
 FL MARCORPS                TALLAHASSEE FL NMCRC.........         13  RESERVE TRAINING CENTER......      8,018
 LA NVRESFOR                NEW ORLEANS LA NSA...........        122  OVERHEAD U/G HI-VOLT SYS.....      9,576
 NY NVRESFOR                ALBANY NY NMCRC..............        598  RESERVE CENTER...............     10,736
 NC NVRESFOR                ASHEVILLE NC NRC.............        596  RESERVE CENTER...............      3,289
 PA NVRESFOR                LEHIGH VALLEY PA NRC.........        565  RESERVE CENTER ADDITION......      4,256
 TN NVRESFOR                NASHVILLE TN NRC.............        388  RESERVE CENTER...............      7,448
 TX NVRESFOR                FT WORTH TX NAS JRB..........        28D  AIMD PWR PLNT SHOP (03 ADD)..      8,589
VAR A&E SERV                X/MCNR DESIGN FUNDS..........        226  USMC MCNR DESIGN FUNDS.......        826
VAR A&E SERV                X/MCNR DESIGN FUNDS..........        506  MCNR DESIGN FUNDS (N4).......      2,900
                                                                                                    ------------
          FISCAL YEAR 2006  .............................  .........  .............................     62,796
           TOTAL
                                                                                                    ============
            PY 2007
 GA NVRESFOR                AUGUSTA GA NMCRC.............        382  RESERVE CENTER WITH LAND.....      6,702
 LA NVRESFOR                NEW ORLEANS LA NAS JRB.......        353  SMALL ARMS RANGE--INDOOR.....      3,001
 LA NVRESFOR                NEW ORLEANS LA NAS JRB.......        456  JOINT RESERVE HQ BLDG........      6,897
 MI MARCORPS                DETROIT MI HQ & SERV CO 1ST           44  RESERVE TRAINING CENTER......      6,799
                             BN.
 MS MARCORPS                GULFPORT MS MCRESCEN.........         18  VEHICLE MAINT FACILITY.......      2,914
 NC MARCORPS                WILMINGTON NC MCRC...........         45  RESERVE TRAINING CENTER......      7,489
 OK NVRESFOR                TULSA OK NMCRC...............         76  RESCEN ADDN..................      3,594
 PA NVRESFOR                WILLOW GROVE PA NAS..........        232  DEICING FACILITY.............      1,457
 PA NVRESFOR                AVOCA PA NRTC................        598  RESERVE CENTER...............      7,509
 SC MARCORPS                FORT JACKSON SC I&I..........         21  RESERVE VEHICLE MAINT FAC....      3,497
 TX NVRESFOR                FT WORTH TX NAS JRB..........         26  COMBINED RATCC/PASS TERM.....      2,574
 TX NVRESFOR                FT WORTH TX NAS JRB..........         27  ADMINISTRATIVE OFFICE........      9,519
 VA NVRESFOR                NORFOLK VA NAVAIRES..........        491  C-40 HANGAR MODS.............      5,828
VAR A&E SERV                X/MCNR DESIGN FUNDS..........        227  USMC MCNR DESIGN FUNDS.......      1,211
VAR A&E SERV                X/MCNR DESIGN FUNDS..........        507  MCNR DESIGN FUNDS (N4).......      3,530
                                                                                                    ------------
          FISCAL YEAR 2007  .............................  .........  .............................     72,521
           TOTAL
                                                                                                    ============
            PY 2008
 DE NVRESFOR                WILMINGTON DE NMCRC..........        602  RESERVE CENTER...............      9,758
 GA NVRESFOR                ATLANTA GA NAS...............        349  PUBLIC WORKS COMPLEX.........      4,879
 LA NVRESFOR                NEW ORLEANS LA NAS JRB.......        405  RUNWAY TAXIWAY 14/32 EXT.....      6,245
 LA NVRESFOR                NEW ORLEANS LA NAS JRB.......        408  RELIGIOUS EDUCATION BLDG.....      3,903
 LA NVRESFOR                NEW ORLEANS LA NAS JRB.......       461D  AFRC (PHASE III)(03 ADD).....      9,758
 MD MARCORPS                BALTIMORE MD MCRTC...........         40  RES TRNG CTR&VEH MAINT FAC...      9,250
 ME MARCORPS                TOPSHAM ME MCRESCEN..........         24  RESERVE TRAINING CENTER......      2,927
 NE NVRESFOR                OMAHA NE NMCRC...............         85  RELOCATE RESCEN TO OFFUTT....      1,854
 NJ NVRESFOR                KEARNY NJ NAVRESCEN..........        601  RESERVE CTR RELOC--FT DIX....      4,450
 OH MARCORPS                DAYTON OH AFRC...............         09  RES TRNG CTR&VEH MAINT FAC...      8,001
 OR NVRESFOR                EUGENE OR NMCRC..............        172  RESCEN W/LAND................      9,270
 TN MARCORPS                MEMPHIS TN MCRESCEN..........         30  RESERVE TRAINING CENTER......      6,830
 TX NVRESFOR                EL PASO TX NMCRC.............        380  RESERVE CENTER ADDITION......      3,415
VAR A&E SERV                X/MCNR DESIGN FUNDS..........        228  USMC MCNR DESIGN FUNDS.......      1,354
VAR A&E SERV                X/MCNR DESIGN FUNDS..........        508  MCNR DESIGN FUNDS (N4).......      3,980
                                                                                                    ------------
          FISCAL YEAR 2008  .............................  .........  .............................     85,874
           TOTAL
                                                                                                    ============
            PY 2009
 AR NVRESFOR                LITTLE ROCK AR NMCRC.........        362  RESCEN ADDN..................      1,696
 DC NVRESFOR                WASH DC NAF ANDREWS AFB......         43  HANGAR 13 ADDITION (C-130)...      3,041
 FL MARCORPS                TAMPA FL MCRTC...............         19  VEHICLE MAINTENANCE FAC......      7,520
 GA NVRESFOR                ATLANTA GA NAS...............        367  C-40 HANGAR ALTERATIONS......      4,845
 KY NVRESFOR                LEXINGTON KY NMCRC...........        353  RESERVE CENTER ADDITION......      4,167
 LA MARCORPS                NEW ORLEANS LA MCARTC........         20  RES TRNG CTR&VEH MAINT FAC...      7,752
 LA NVRESFOR                NEW ORLEANS LA NAS JRB.......        441  CORROSION CONTROL HANGAR.....      6,299
 LA NVRESFOR                NEW ORLEANS LA NAS JRB.......        464  AIRFRAME ASSEMBLY PLANT......      1,260
 MD MARCORPS                FORT DETRICK MD I & I STF....        547  LAV MAINTENANCE FACILITY.....      6,783
 MS NVRESFOR                PASCAGOULA MS NS.............        390  LITTORAL SURV SYS FAC........      5,136
 NM NVRESFOR                ALBUQUERQUE NM NMCRC.........        378  RESERVE CENTER ADDITION......      2,907
 PA NVRESFOR                WILLOW GROVE PA NAS..........        217  WAREHOUSE....................        581
 PA NVRESFOR                WILLOW GROVE PA NAS..........        233  PW SUPPORT EQUIP SHED........        678
 PA NVRESFOR                WILLOW GROVE PA NAS..........        246  HANGAR 80 MODS FOR C-40......      3,004
 RI NVRESFOR                NEWPORT RI NAVRESREDCOM......        600  RESERVE & REDCOM.............      4,554
 TX NVRESFOR                FT WORTH TX NAS JRB..........         19  POST OFFICE..................      1,045
 TX NVRESFOR                FT WORTH TX NAS JRB..........         25  COMBINED AIMD FAC............     24,225
 VA NVRESFOR                ROANOKE VA NMCRC.............        325  RESERVE CENTER ADDITION......      3,488
 WA NVRESFOR                WHIDBEY IS WA NAVAIRES.......        167  C-40 HANGAR MODS.............      4,845
VAR A&E SERV                X/MCNR DESIGN FUNDS..........        229  USMC MCNR DESIGN FUNDS.......      1,354
VAR A&E SERV                X/MCNR DESIGN FUNDS..........        509  MCNR DESIGN FUNDS (N4).......      3,980
                                                                                                    ------------
          FISCAL YEAR 2009  .............................  .........  .............................     99,160
           TOTAL
----------------------------------------------------------------------------------------------------------------

                                 ______
                                 

               Questions Submitted to Dr. Mario P. Fiori

          Questions Submitted by Senator Kay Bailey Hutchison

                          BARRACKS/DORMITORIES

    Question. I understand that all three services are working toward 
the elimination of inadequate permanent party barracks by 2007. The 
success of that program will be largely dependent on significant 
funding increases that the Army, Navy and Air Force have programmed for 
military construction beginning in 2005 and into the future. Past 
experience has shown that those increases in the out years seem to 
disappear as it gets closer to the submission of the budget. Is the DOD 
goal of 2007 realistic and achievable?
    Answer. Although current funding levels do not permit us to achieve 
DOD's goal of 2007, we still foresee continuing with an extremely 
robust military construction program each year until our barracks 
modernization campaign is complete. Programmed outyear levels provide 
funding for 91 percent of all barracks by fiscal year 2007 and 98 
percent by fiscal year 2008.
    Question. Would you also comment on the likelihood of realizing 
future funding increases for MILCON?
    Answer. The Army anticipates MILCON funding at the increasing 
levels shown in the Future Years Defense Program.
    Question. Several of you are assessing the issue of privatizing 
military barracks and dormitories. Have you worked out the financial 
issues associated with this proposal and how would the office of 
management and budget (OMB) score these proposals?
    Answer. The Army is currently studying the privatization of troop 
barracks at a couple of locations. DOD has not yet worked out the 
financial issues and we await a decision by OMB on whether mandatory 
assignment to barracks is a ``scorable'' event.
    Question. Has the OSD provided the services guidance on 
privatization?
    Answer. The authorities of the Military Housing Privatization 
Initiative (MHPI) permit the inclusion of unaccompanied housing in the 
Residential Communities Initiative (RCI) for The Army. As a result, we 
have asked OSD to develop a Departmental position, coordinated with 
OMB, for interpretation as to whether or not this mandatory assignment 
policy is a ``scorable'' event. We are awaiting final guidance from OSD 
on this issue.
    Question. What are the major cost concerns that will potentially 
impact this initiative?
    Answer. In view of the substantial investment the Army has made in 
modernizing barracks, the major concerns that impact this initiative 
are securing adequate funding for the Basic Allowance for Housing/Basic 
Allowance for Subsistence (BAH/BAS), potential scoring requirements, 
and continuing with RCI without diverting attention from our family 
housing effort.

                         RECAPITALIZATION RATE

    Question. With the funding proposal in the 2004 budget for MILCON 
how does that impact your recapitalization rate? How does that compare 
to last year's rate?
    Answer. The funding proposed in the 2004 budget provides a 
recapitalization rate of 144 years. Last year's rate was 123 years. Our 
fiscal year fiscal year 2004 recapitalization rate is higher than last 
year, and is the best we could do given competing requirements.
    Question. Gentlemen, there have been a lot of promises made over 
the past 2 years regarding revitalizing our defense facilities. Are we 
back to business as usual neglecting our facilities?
    Answer. No. The Army was not able to meet all its objectives for 
facilities in the fiscal year 2004 Budget. We will continue to 
emphasize sustainment funding to halt the deterioration of our 
facilities and to fund our facilities strategy in the fiscal year 2005 
Budget. Additionally, we are exploring and implementing alternatives to 
traditional funding, such as Residential Communities Initiative (RCI) 
and the Army Reserve Real Property Exchange (RPX) program.
    Question. What are your long-term plans to reach the department's 
proposed recapitalization rate of 67 years? When will that happen? I 
worry about the message we send our young soldiers, airmen, and sailors 
as well as their families, about the condition of the facilities in 
which they live, work and train--especially as we try to retain them. 
How does the condition of your infrastructure relate to the services' 
goal of recruitment and retention?
    Answer. At current funding levels, we achieve 70 years in 2008. 
Soldiers and families see the Army's commitment to barracks and family 
housing improvements. The overall condition of our facilities is a C-3 
quality rating, impairing mission performance. The potential impact of 
infrastructure condition on our soldiers and their families has been 
recognized and is included in the on-going development of the Army 
Well-being Status Report to be completed September 2004.

                         INSTALLATION READINESS

    Question. I understand that all three services rate the readiness 
of their infrastructure on a scale of C-1 to C-4. It appears that C-1 
indicates only minor deficiencies with negligible impact on capability 
to support missions. I was disturbed to find out that such a large 
percentage of your overall facilities are rated C-3 or worse. How does 
that impact on mission readiness?
    Answer. An installation and its facilities exist to support 
training, power projection, and to provide community support to 
soldiers, civilians and their families. Low quality and quantity of 
facilities adversely impact the accomplishment of these missions.
    The overall condition rating of C-3 for Army facilities worldwide 
indicates significant facility deficiencies that prevent performing 
some missions in the manner they should be executed. The Army will 
complete its missions with facility workarounds, which result in 
degraded operations and increased costs.
    For example: Our motor pools have not kept pace with our equipment. 
At many locations, maintenance on vehicles is performed outside in the 
rain, mud and cold weather. Clearly, there are days where maintenance 
cannot be performed. Overhead cranes are not available and another 
tactical vehicle is used to hoist engines out of a vehicle under 
maintenance.
    Question. What would be the bill to bring all of your C-3 and C-4 
facilities to at least C-2? What is the associated timeline?
    Answer. The cost to bring all C-3 and C-4 facilities to an overall 
C-2 condition across the Army is $10.2 billion. Realistically, it is 
achievable in 2023.
    Question. I note that the services have goals to improve your 
facilities to C-1 by the end of the decade. Is this realistic based on 
current funding projections?
    Answer. The Army, under the Focused Facility Strategy (FFS), plans 
to bring a focused group of facility types to a C-1 quality rating. By 
focusing on selected facilities, we concentrate our efforts on the 
worst facilities with the highest overall cost and impact on soldiers. 
The focused facility types are: Vehicle Maintenance Shops and 
Supporting Hardstand; Trainee Barracks and Complexes; Physical Fitness 
Facilities; General Instruction Classrooms; National Guard Readiness 
Centers; Army Reserve Centers; and Chapels. By raising these facilities 
to a C-1 rating, the overall average rating across the Army would be C-
2. Realistically, it is achievable in 2023.

                      FAMILY HOUSING PRIVATIZATION

    Question. With regards to privatization, I understand that some of 
these contracts are for 50 years and beyond. What happens when one of 
our family housing contractors goes out-of-business or does not fulfill 
its commitments?
    Answer. Either the failure to fulfill contractual commitments or 
bankruptcy by an entity that has contracted with the Army housing 
privatization partnership is an event of default under the respective 
agreements. One of the available remedies after default is the right to 
terminate the agreement. Once terminated, the partnership can freely 
contract for the services from another party. As to the developer 
partner itself, insolvency triggers an option by the Army, and other 
partners if any, to buy out the insolvent managing member's partnership 
interest. There are also provisions for the Army to remove the managing 
member for cause.
    Question. There seems to be a growing emphasis on privatizing more 
housing in a shorter period of time. Are there concerns that moving too 
quickly on such major procurement contracts could lead to future 
problems?
    Answer. The Army's housing privatization process is designed to 
partner with nationally recognized property development/management and 
financial firms with the experience and capability to build, renovate, 
maintain, and operate family housing, while minimizing the probability 
of future problems. Additionally, the business agreements negotiated 
with the private sector firms provide a framework for resolving issues 
and problems, and are structured in a manner to protect the interests 
of the government. The Army also is designing and implementing a 
portfolio and asset management process that will ensure oversight of 
the agreement to monitor operational compliance and financial health of 
the partnership.
                                 ______
                                 

               Questions Submitted by Senator Ted Stevens

                             TRANSFORMATION

    Question. I understand that The Army is moving forward with the 
fielding of the Stryker brigades. I also understand that there are 
significant MILCON requirements associated with each of the six 
brigades. Are all of those requirements funded or programmed for the 
first four brigades?
    Answer. Yes. When the fiscal year 2004 budget was developed, all 
validated critical Stryker Brigade Combat Team (SBCT) requirements were 
funded. Since that time, we have continued to refine military 
construction requirements and are presently reviewing emerging 
requirements that are in the validation process.
    Question. What about the MILCON requirements for the Hawaii and 
Pennsylvania brigades?
    Answer. The proposed projects in Hawaii and Pennsylvania are 
required to support both the legacy force requirements that are 
currently not being met and transformation.
                                 ______
                                 

            Questions Submitted by Senator Dianne Feinstein

              ANTITERRORISM/FORCE PROTECTION FUNDING PLAN

    Question. It is my understanding that funding previously approved 
by the Committee for Antiterrorism/Force Protection (ATFP) is not 
finding its way to the reserve components. Could you provide the 
Committee with your funding plan for ATFP?
    Answer. As it pertains to military construction force protection 
projects, the Army National Guard has validated requirements of $1.952 
million in fiscal year 2004 for planning and design of future year 
construction of antiterrorism/force protection related projects. In 
addition, each military construction project routinely incorporates all 
necessary antiterrorism/force protection features. These requirements 
are funded as part of the military construction project. The Army 
National Guard continues to work with the active Army to further 
validate their increased force protection requirements.
    The Army Reserve has not identified any requirement for military 
construction projects that are exclusively for antiterrorism/force 
protection. However, each military construction project incorporates 
all necessary antiterrorism/force protection features. The Army Reserve 
antiterrorism/force protection projects at existing facilities will be 
funded with Operations and Maintenance, Army Reserve appropriations.

                          BRAC CLEANUP PROGRAM

    Question. The Army's fiscal year 2004 BRAC budget request is $66.4 
million, a 56 percent reduction from fiscal year 2003. I will ask you 
the same question I have asked your colleagues. How much money above 
the budget request could the Army execute in fiscal year 2004 to 
expedite its BRAC cleanup program?
    Answer. The fiscal year 2004 budget request of $66.4 million ($57.3 
million for environmental cleanup) allows us to achieve our restoration 
and disposal goals, within Army priorities, and in support of community 
reuse of the remaining BRAC installations.
    Question. Did you request a higher level of funding from the 
Defense Department?
    Answer. No. The Department of Defense supported the Army's. request 
for BRAC funding in fiscal year 2004.
                                 ______
                                 

                  Questions Submitted to Nelson Gibbs

          Questions Submitted by Senator Kay Bailey Hutchison

                          BARRACKS/DORMITORIES

    Question. I understand that all three services are working toward 
the elimination of inadequate permanent party barracks by 2007. The 
success of that program will be largely dependent on significant 
funding increases that the Army, Navy and Air Force have programmed for 
military construction beginning in 2005 and into the future. Past 
experience has shown that those increases in the out years seem to 
disappear as it gets closer to the submission of the budget. Is the DOD 
goal of 2007 realistic and achievable? Would you also comment on the 
likelihood of realizing future funding increases for MILCON?
    Answer. With the Military Construction (MILCON) funding we have 
programmed for 2006 and 2007, our plan to eliminate inadequate 
permanent party dormitories by 2007 is a realistic and achievable goal. 
This funding is subject to change, however, depending on overall Air 
Force total obligation authority in those program years, balanced with 
other, emerging Air Force requirements. The Air Force MILCON future 
years defense plan shows funding streams currently anticipated for 
facility restoration and modernization. In each budget cycle the Air 
Force will use available MILCON dollars to fund the most urgent 
requirements.
    Of significant note, the military construction portions of the 
budgets we submitted in fiscal years 2003 and 2004 were larger than 
what we had programmed in prior-year forecasts. In the last 2 years, we 
have done a good job protecting and building upon our projected MILCON 
budgets. We are hoping to continue this trend as we build our programs 
for fiscal years 2005, 2006, and beyond.
    Question. Several of you are assessing the issue of privatizing 
military barracks and dormitories. Have you worked out the financial 
issues associated with this proposal and how would the Office of 
Management and Budget (OMB) score these proposals? Has the OSD provided 
the services guidance on privatization?
    Answer. The Air Force is still identifying and reviewing the 
different financial issues involved with privatizing military 
dormitories. We have identified key areas we feel will require an 
Office of Management and Budget (OMB) ruling, to ensure the projects 
remain feasible as privatization projects. These key areas include 
assignment of members to quarters, provision of basic allowance for 
housing directly from the Air Force to the developer on behalf of the 
member, and signing of individual leases (whether or not they are 
necessary, and how the project would score if they are not required). 
The Navy has already broached some of these questions to OSD for an OMB 
ruling. The Air Force is waiting for this information back and will 
frame new questions if required. OSD has not provided specific 
dormitory privatization guidance at this time.
    Question. What are the major cost concerns that will potentially 
impact this initiative?
    Answer. The Air Force has some cost concerns that could potentially 
impact the initiative.
    The full value of basic allowance for housing applied from all 
dormitory tenants could bring too much cash flow to the project, making 
it financially unattractive for the government. The Air Force is 
looking into ways to counter this concern, possibly through payment of 
only a partial amount of the occupants' basic allowance for housing, or 
by drawing off excess funds from the project via the ground lease.
    We are also concerned about the ability to obtain reasonable 
financing, due to the potential risk inherent in dormitory 
privatization projects. These risks include allowing access to 
installations' interiors to non-military dorm residents, a limited list 
of other eligible tenants, and a lack of strong secondary market for 
these types of units.

                         RECAPITALIZATION RATE

    Question. With the funding proposed in the 2004 budget for MILCON 
how does that impact your recapitalization rate? How does that compare 
to last year's rate?
    Answer. MILCON funding levels in the fiscal year 2004 President's 
Budget Request support a 180-year recapitalization rate. The fiscal 
year 2003 recapitalization rate was 284 years, based on the fiscal year 
2003 President's Budget Request, and 195 years based on the fiscal year 
2003 enacted budget.
    Question. Gentlemen, there have been a lot of promises made over 
the past 2 years regarding revitalizing our defense facilities. Are we 
back to business as usual neglecting our facilities?
    Answer. We are not neglecting our facilities. The portion of the 
Air Force fiscal year 2004 budget request dedicated to facility 
investment (MILCON; Operations and Maintenance (O&M) facility 
sustainment, restoration, and modernization; and military family 
housing construction, improvement, and O&M) is the largest in more than 
a decade.
    We still have much work to do. Reaching our 67-year 
recapitalization rate goal and eliminating our critical restoration and 
modernization backlog (developed over years of underfunding) will 
require us to continue and increase this level of investment in the 
future. We are doing that with the funding we have programmed in the 
future years defense plan.
    Question. What are your long-term plans to reach the department's 
proposed recapitalization rate of 67 years? When will that happen?
    Answer. The Air Force continues to program funding to meet the 
Department's 67-year recapitalization rate goal. Over the long term, 
the Air Force targets recapitalization of facilities and infrastructure 
in the Military Construction and Operations & Maintenance (Restoration 
& Modernization) programs. The Air Force fiscal year 2004-2009 future 
years defense plan puts us on a trajectory to meet the 67-year 
recapitalization rate goal by fiscal year 2008.
    Question. I worry about the message we send our young soldiers, 
airmen, and sailors as well as their families, about the condition of 
the facilities in which they live, work train--especially as we try to 
retain them. How does the condition of your infrastructure relate to 
the services' goal of recruitment and retention?
    Answer. The quality of our facilities, infrastructure, and 
communities sends a direct signal to our men and women regarding the 
value we place on their service. Quality of life initiatives 
acknowledge the increasing sacrifices our airmen make in support of the 
Nation and are pivotal to recruiting and retaining our best. When our 
members deploy, they want to know that their families are stable, safe, 
and secure. Their welfare is a critical factor to our overall combat 
readiness, and our family housing program, dormitory program, and other 
quality of life initiatives reflect our commitment to provide them the 
facilities they deserve.

                         INSTALLATION READINESS

    Question. I understand that all three services rate the readiness 
of their infrastructure on a scale of C-1 to C-4. It appears that C-1 
indicates only minor deficiencies with negligible impact on capability 
to support missions. I was disturbed to find out that such a large 
percentage of your overall facilities are rated C-3 or worse. How does 
that impact mission readiness?
    Answer. Installations' Readiness Report ratings indicate how well 
facilities are supporting the mission. C-3 and C-4 ratings can coincide 
with the preclusion or shutdown of a mission, but are more of an 
indicator of increased risk and potential for adverse mission impact.
    For example, in our Operations and Training facility class, 
degraded airfield pavements pose risk of aircraft engine and structural 
damage from loose pavement pieces, impacting everything from basic 
airfield operations to day-to-day aircraft maintenance. Inoperative 
fuel hydrant systems force us to refuel by truck, increasing the 
workload for maintenance and supply personnel. Other examples of 
deficiencies that impact mission readiness include obsolete airfield 
lighting systems, inadequate training facilities, and deteriorated/
inadequate drainage systems.
    Question. What would be the bill to bring all of your C-3 and C-4 
facilities to at least C-2? What is the associated timeline?
    Answer. The cost to bring our facility classes to a C-2 status is 
approximately $24 billion. This amount is comprised of $13 billion in 
Military Construction requirements, $5 billion in military family 
housing requirements, $3 billion in operations and maintenance 
requirements, and $3 billion in requirements funded from other sources 
(i.e., host nation funds, non-appropriated funds, Defense Logistics 
Agency funds). Based on current funding projections we would eliminate 
all C-3s and C-4s by 2014.
    Question. I note that the services have goals to improve your 
facilities to C-1 by the end of the decade. Is that realistic based on 
current funding projections?
    Answer. Our goal (based on the fiscal year 2004 Defense Planning 
Guidance) is to restore the readiness of existing facilities to at 
least C-2 status, on average, by the end of fiscal year 2010. Based on 
current funding projections, it is realistic that we will meet this 
goal.
    We are concurrently targeting our investment to eliminate all C-3 
and C-4 rated facility classes. Based on current funding projects (and 
extending them beyond fiscal year 2009 . . . our farthest-reaching 
funding projection), we expect to eliminate all C-3 and C-4 rated 
facility classes by 2014.

                      FAMILY HOUSING PRIVATIZATION

    I want to compliment the military departments for improving 
military family housing for our service members. Through buying down 
the military member's out-of-pocket expenses for housing costs as well 
as eliminating inadequate housing units through military construction 
and privatization--you are making great progress. I am particularly 
proud of the fact that our state is leading the way with more housing 
privatization projects awarded at Texas military installations than any 
other state with six private-public partnerships (Nas Corpus Christi, 
Lackland Air Force Base, Dyess Air Force Base, Nas Kingsville, Fort 
Hood and NC South Texas) or 33 percent of the total projects awarded 
within the Department of Defense.
    While housing revitalization is a good news story for our military 
families, I am concerned with the message being sent to our service 
members with the budget proposal to cut impact aid funding for the 
education of soldiers', sailors', airmen and marines' children and I've 
spoken to the administration about my concerns. A total of 1,300 school 
districts across the nation receive impact aid funding to pay the 
salaries of teachers, purchase textbooks and computers and pay for 
advanced placement classes among other things. Cutting this funding 
sends a negative message at a time when we are promoting quality 
education for all children and sending their mothers and fathers into 
harm's way in the Persian Gulf region and around the world.
    Question. With regards to privatization, I understand that some of 
these contracts are for 50 years and beyond. What happens when one of 
our family housing contractors goes out-of-business or does not fulfill 
its commitments?
    Answer. We exercise tight control over the project through 
portfolio management after award, wherein we closely monitor the 
financial health of the project throughout the 50 years. Any necessary 
adjustments to factors, such as occupancy and debt coverage ratio, can 
be made on a routine basis. In the event the developer defaults on the 
project despite these controls, the lease and lockbox account 
agreements will protect the government interest.
    None of the project income goes directly to the developer, but is 
collected in lockbox accounts controlled by a lockbox agent over whom 
the Secretary has significant control. These monies are protected and 
will be used to operate, maintain, and repair the property until 
another lessee can be brought in to manage the property or the 
government takes control over the project. The construction and 
permanent lenders also exercise a great deal of control over the 
project to ensure the success of the project and to protect their 
investment.
    I want to compliment the military departments for improving 
military family housing for our service members. Through buying down 
the military member's out-of-pocket expenses for housing costs as well 
as eliminating inadequate housing units through military construction 
and privatization--you are making great progress. I am particularly 
proud of the fact that our state is leading the way with more housing 
privatization projects awarded at Texas military installations than any 
other state with six private-public partnerships (Nas Corpus Christi, 
Lackland Air Force Base, Dyess Air Force Base, Nas Kingsville, Fort 
Hood and NC South Texas) or 33 percent of the total projects awarded 
within the Department of Defense.
    While housing revitalization is a good news story for our military 
families, I am concerned with the message being sent to our service 
members with the budget proposal to cut impact aid funding for the 
education of soldiers', sailors', airmen and marines' children and I've 
spoken to the administration about my concerns. A total of 1,300 school 
districts across the Nation receive impact aid funding to pay the 
salaries of teachers, purchase textbooks and computers and pay for 
advanced placement classes among other things. Cutting this funding 
sends a negative message at a time when we are promoting quality 
education for all children and sending their mothers and fathers into 
harm's way in the Persian Gulf region and around the world.
    Question. There seems to be a growing emphasis on privatizing more 
housing in a shorter period of time. Are there concerns that moving too 
quickly on such major procurement contracts could lead to future 
problems?
    Answer. We have developed a rigorous privatization project 
schedule. Based on the lessons learned from the five projects we have 
closed to date and the well-defined and well-refined process we have 
developed, we are confident we are not moving too quickly.
    The 27 privatization projects we have planned through fiscal year 
2004 include six that are in active solicitation. We maintain 
centralized control through our execution agent, the Air Force Center 
for Environmental Excellence, and decentralized execution of the 
projects through six major commands and their five privatization 
support contractors. Our resources include a proven generic request for 
proposals, well-defined source selection process, experienced 
privatization support contractors, and definitive known housing 
requirements, which will ensure success of our process.
                                 ______
                                 

               Questions Submitted by Senator Ted Stevens

                   C-17 AIRCRAFT IN ALASKA AND HAWAII

    Question. I understand that the Air Force is proceeding with their 
mobility force structure plan which will station C-17s in Alaska and 
Hawaii. Are all of the required military construction requirements in 
either the budget or the Air Force's future year defense plan?
    Answer. The Air Force is still reviewing and validating all future 
Military Construction requirements to beddown C-17s at Elmendorf AFB, 
Alaska, and Hickam AFB, Hawaii. Our fiscal year 2004 budget request 
includes $63 million for C-17 beddown at Hickam AFB. The future years 
defense plan includes $310 million in fiscal years 2005-2009 targeted 
for C-17 beddown at several locations, including Elmendorf AFB and 
Hickam AFB.
    We have approximately $120 million in requirements not included in 
the future years defense plan. Until our construction requirements 
review is complete and we program specific projects in the future years 
defense plan, we will not know what portion of the unfunded requirement 
is for Hickam and Elmendorf. We expect to have our review complete 
later this year.
    Question. What is the timeline to field those aircraft in Alaska 
and Hawaii?
    Answer. C-17s will arrive at Elmendorf AFB, AK, beginning in the 
3rd quarter of fiscal year 2007 and ending in the 4th quarter of fiscal 
year 2007. Aircraft will arrive at Hickam AFB, HI, beginning in the 1st 
quarter of fiscal year 2006 and ending in the 3rd quarter of fiscal 
year 2006.
                                 ______
                                 

            Questions Submitted by Senator Dianne Feinstein

                          CORPORATE ADJUSTMENT

    Question. The Air Force uses a ``Corporate Adjustment'' model for 
the allocation of the military construction funds. First, could you 
briefly explain what ``Corporate Adjustment'' is and whether, in your 
opinion, this model adequately meets the needs of the Air National 
Guard and the Air Force Reserve?
    Answer. The Air Force corporately prioritizes its Military 
Construction (MILCON) requirements. We do this by integrating the 
results of our MILCON scoring model (which includes Major Command 
priorities) with must-pay requirements (i.e., environmental compliance 
requirements and planning and design funds), projects necessary to 
beddown new weapon systems, and crosscutting corporate priorities 
(called ``Corporate Adjustments'' . . . e.g., dormitories and fitness 
centers).
    This results in a final integrated priority list (IPL) that 
balances the Air Force's overall construction needs with available 
resources to best meet overall Air Force needs (as well as the needs of 
the Major Commands, the Air National Guard, and the Air Force Reserve).
    Question. Do you believe that the fiscal year 2004 request for the 
Guard and Reserve, which represents respectively a 70 percent and a 34 
percent decline from the enacted fiscal year 2003 level, adequately 
funds the Air Force Guard and Reserve?
    Answer. We believe the fiscal year 2004 request properly balances 
construction requirements with available resources.
    When compared to the fiscal year 2003 President's Budget request, 
the Air Force Reserve fiscal year 2004 request of $44.3 million is 13 
percent greater than the fiscal year 2003 request of $39.1 million. 
Similarly, the Air National Guard fiscal year 2004 request of $60.4 
million is 11 percent greater than the fiscal year 2003 request of 
$54.2 million. Comparing the fiscal year 2004 President's Budget 
Request to the fiscal year 2003 enacted budget skews the comparison to 
something of an apples-to-oranges comparison. Congressional inserts 
make the fiscal year 2004 request less than the fiscal year 2003 
enacted amounts.

                          CORPORATE ADJUSTMENT

    Question. And for the record, could you give us a breakout, by 
number of projects and by total cost, of what each MAJOR COMMAND 
received as a ``corporate adjustment?
    Answer. The following table shows the number of ``corporate 
adjustment'' projects, and total cost, each Major Command would receive 
in fiscal year 2004.

                          [Dollars in millions]
------------------------------------------------------------------------
                                             Number of
              Major Command                  Projects      Project Cost
------------------------------------------------------------------------
11th Wing (Bolling AFB).................               1            $9.3
Air Combat Command (ACC)................               6            26.2
Air Education and Training Command                     5           104.8
 (AETC).................................
Air Force Materiel Command (AFMC).......               3            55.3
Air Force Reserve Command (AFRC)........               3            10.3
Air Force Special Operations Command                   0             0.0
 (AFSOC)................................
Air Force Space Command (AFSPC).........               1             7.0
Air Mobility Command (AMC)..............               2            10.8
Air National Guard (ANG)................               2            13.0
Pacific Air Forces (PACAF)..............               6            83.7
United States Air Forces Europe (USAFE).              16           102.2
------------------------------------------------------------------------

                      MILCON RECAPITALIZATION RATE

    Question. Based on the fiscal year 2004 budget only, and ignoring 
for now the outyear funds which may or may not be there, what is the 
MILCON recapitalization rate for the Active Duty Air Force, the Air 
National Guard and the Air Force Reserves for fiscal year 2004?
    Answer. The Air Force recapitalization rates based on the fiscal 
year 2004 budget request are:

------------------------------------------------------------------------
                                                               Years
------------------------------------------------------------------------
Active..................................................             183
Air National Guard......................................             170
Air Force Reserve.......................................             141
                                                         ---------------
      Total Force.......................................             180
------------------------------------------------------------------------

                                  BRAC

    Question. Over the past 2 years, this committee has significantly 
added to the amount requested by the services for environmental clean 
up from the previous four rounds of BRAC. Now, we are faced with 
another upcoming BRAC initiative, yet we still fail to fully address 
the previous cleanup necessary. This year the Air Force request for 
BRAC environmental remediation and caretaker costs is $198.7 million.
    Answer. The fiscal year 2004 Air Force BRAC environmental 
remediation and caretaker cost is $200.7 million; the budget authority 
request is $198.7 million and $2 million is from fiscal year 2002 
inflation savings. The Air Force appreciates the subcommittee's support 
to fund the environmental cleanup program.
    Question. Did you seek a higher level of funding for BRAC 
environmental remediation in your budget submission to the Office of 
Secretary of Defense?
    Answer. No. The Office of Secretary of Defense supported full 
funding of our fiscal year 2004 budget submission for BRAC 
environmental remediation.
    Question. Would additional funding help to expedite the Air Force 
BRAC environmental clean up program?
    Answer. While the fiscal year 2004 request reflects our 
requirements additional funding would allow us the opportunity to 
expedite cleanup requirements currently planned for future years.

                             MC CLELLAN AFB

    Question. As you are aware, the former McClellan Air Force Base in 
Sacramento, CA, continues to be a high priority environmental 
remediation activity for the Air Force. However, persistent funding 
shortfalls have dramatically impacted the Air Force's own cleanup 
schedule and scope of activities. I understand that the required 
McClellan funding for fiscal year 2004 is nearly $42.0 million and that 
the Air Force has communicated to the community a commitment of $30.0 
to $40.0 million per year to be spent on remediation at McClellan over 
the next 5 years. Is that, in fact, correct?
    Answer. The Air Force's fiscal year 2004 budget request includes 
$38.1 million for McClellan. Our current plans include approximately 
$200 million for McClellan over the next 5 years.
    Question. In addition to the larger cleanup effort, I am 
particularly concerned with the dilapidated condition of the sewer line 
at McClellan that continues to significantly impede economic 
redevelopment at the base. As you know, the Comprehensive Environmental 
Response, Compensation and Liability Act of 1980 (CERCLA) prohibits 
transfer of the sewer line and adjacent property from the Air Force to 
the McClellan site developer until the contamination is evaluated and 
remediated by the Air Force. The estimated cost of that effort is $20.0 
million over 3 years. Currently, the community and developer are 
investing $20.0 million of their own funds to install a new sewer line. 
I understand that concurrent remediation and sewer installation 
projects could reduce costs to both the Air Force and the site 
developer. I would encourage the Air Force's support for a concurrent 
effort and would request the Air Force's estimate of the funding needed 
for the project in fiscal year 2004.
    Answer. We understand the County's desire to replace the sewer 
system in order to support redevelopment. This accelerates the need for 
the Air Force to address contaminated soils that will be removed as 
part of the project. We are currently working with the County to 
establish a cooperative agreement for the Air Force cost share that 
pertains to the handling and disposing of contaminated soils. The 
County estimates the Air Force share for fiscal year 2004 is $7 
million. Funds for the Air Force's share will come from those already 
budgeted for McClellan's environmental cleanup unless additional funds 
are provided for this effort.

                    AIR FORCE BRAC ENVIRONMENTAL FYDP
------------------------------------------------------------------------
                       Fiscal year                            Dollars
------------------------------------------------------------------------
2004....................................................           175.6
2005....................................................           127.7
2006....................................................           116.4
2007....................................................           112.5
2008....................................................           119.1
2009....................................................           114.4
------------------------------------------------------------------------

    While the Air Force is fully funded in fiscal year 2004, we have 
requirements identified in fiscal year 2003 that currently would be 
addressed in fiscal year 2005/2006. The Air Force could execute an 
additional $65 million in fiscal year 2004.

                      FYDP AND UNFUNDED PRIORITIES

    Question. Would each of you provide the committee with a copy of 
your service's current FYDP and unfunded priorities by March 31?
    Answer. The Air Force's fiscal year 2004 unfunded priority list and 
fiscal year 2004 MILCON unfunded priority list were provided to the SAC 
MILCON Subcommittee staff on March 13, 2003. The Air Force's MILCON and 
MFH FYDP lists were provided to the SAC MILCON Subcommittee staffs on 
April 8, 2003.

                          SUBCOMMITTEE RECESS

    Senator Hutchison. I agree with you, and of course Senator 
Feinstein and I work so well together, and we all work with 
Senator Stevens and Senator Inouye, and we have wonderful 
staff, so I thank you for pointing that out.
    Thank you.
    [Whereupon, at 4:25 p.m., Tuesday, March 4, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]


       MILITARY CONSTRUCTION APPROPRIATIONS FOR FISCAL YEAR 2004

                              ----------                              


                        TUESDAY, MARCH 18, 2003

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:02 a.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Kay Bailey Hutchison (chairman) 
presiding.
    Present: Senators Hutchison, Stevens, Burns, and Feinstein.

                       NONDEPARTMENTAL WITNESSES

STATEMENT OF JAMES C. BRYAN, CHAIRMAN, CHARLESTON NAVAL 
            COMPLEX REDEVELOPMENT AUTHORITY

           OPENING STATEMENT OF SENATOR KAY BAILEY HUTCHISON

    Senator Hutchison. I am going to go ahead and call the 
meeting to order even though our first witness is not here. I 
want to go expeditiously forward, so what I think I will do is 
go straight to the third panel of community witnesses. Since 
only two of the three second panel members are here, I would 
like to just go ahead and ask our third panel to come forward, 
and I will make my opening statement as you are coming forward. 
That would be: Paul Roberson, who I see; James Bryan from 
Charleston, South Carolina; and Robert Leonard from Sacramento, 
California; and of course, retired Air Force Brigadier General 
Paul Roberson of San Antonio.
    Good morning. I would like to call to order this hearing of 
the Subcommittee on Military Construction Appropriations. 
Today's hearing will examine the base realignment that resulted 
in nearly 400 base closures or realignments. Congress has 
authorized another round to begin in 2005.
    BRAC has a worthy goal, to reduce the cost to the taxpayer 
of maintaining infrastructure that our military no longer 
needs. But achieving that goal is a complex and difficult 
challenge. Determining future requirements for military 
infrastructure is difficult at any time, but this is 
particularly so today. New threats to our country have emerged. 
Our military forces are undergoing an organizational and 
technological transformation. Political relationships with some 
of our traditional allies are changing while potential new 
allies are emerging.
    All of these factors have implications for the size of our 
military force and where we put it. Making sensible decisions 
about closing military facilities in the midst of this 
uncertainty will be difficult, and I am concerned about our 
ability to do it right.
    Because of training constraints and changed geographic 
priorities, it is possible that some of the forces we have 
based overseas now could move home. It does not make sense to 
close facilities in the United States if we are likely to have 
to recreate them in a few years at a great expense.
    BRAC also can be a wrenching process for local communities 
that host military installations. Base closures can have 
devastating effects on local economies. In some cases it can be 
really devastating; In other cases, communities have recovered 
well from the closures. The GAO noted in a report last year 
that as of October 2001, 130,000 jobs at major installations 
had been lost to BRAC, only 79,000 had been recreated. Whatever 
the economic effect is, the process is disruptive.
    We have three panels today to help us understand this 
issue. The panel with which we will start is made up of people 
who have had real life experience in the communities, taking a 
closed base and turning it into something productive.
    So with that, I want to ask my Ranking Member and friend 
Senator Feinstein for her remarks, and then we would like to 
hear from you.

                 STATEMENT OF SENATOR DIANNE FEINSTEIN

    Senator Feinstein. Thanks very much, Madam Chairman, and 
thank you for holding this hearing. Thank you, gentlemen, for 
being here today. I would like to put my full statement in the 
record, but I would like to make just a few comments.
    On the assumption that we are going to have another BRAC 
round in 2005, it is my hope that we, just as the chairman has 
said, can avoid some of the pitfalls we experienced in the 
past. So I hope that what this hearing accomplishes is the 
elucidation of ways that we can minimize the economic upheaval 
for local communities and maximize our efforts to expedite the 
transfer of closed installations to local communities.
    Now, the GAO calculates that the Defense Department has 
already spent over $7 billion on BRAC environmental cleanup and 
will have to spend another $3.5 billion to complete these 
cleanups. McClellan--and I want to welcome Mr. Leonard--is a 
case in point in California. Primarily because of delays due to 
environmental cleanup, the Defense Department has yet to 
transfer half of the total amount of excess base property. Half 
of the total amount of excess base property has not been 
transferred because of the need for environmental cleanup.
    So cleanup from prior base closures is a very high priority 
issue, as you know, for me, and I think it has got to become a 
priority in evaluating the costs and reuse potential of future 
closures.
    Now, Madam Chairman, one of the things that is happening--
and this is a small diversion, but I think it is appropriate--
in your State, in my State, and in 20 other States is the 
permeation of a chemical ingredient which was the primary 
ingredient in rocket propellants in munitions and explosives 
called perchlorate. Perchlorate has contaminated water supplies 
in 22 States from California and Colorado to Massachusetts and 
Maryland. It can impair thyroid function and may well affect 
the physical and mental development of children.
    The situation is particularly serious, gentlemen, in 
California. State health officials so far have detected the 
presence of perchlorate in 292 groundwater wells operated by 80 
different water agencies. The problem is most severe in 
southern California, where 267 of the contaminated wells are 
located.
    I have expressed my concerns in November of last year with 
letters to Secretary Rumsfeld and Administrator Whitman, 
Secretary Rumsfeld because the primary contractor and the 
primary user was the Defense Department and is the Defense 
Department. The Defense Department renounces any responsibility 
and I gather is going to renounce any liability, and I 
profoundly disagree.
    I would like to introduce into the record three letters 
that I have sent. Another one is on the way that Senator Reid 
of Nevada and I will send to the Secretary, outlining the 
history of the facility at Henderson, Nevada, which was 
actually begun by the Department of Defense and then contracted 
to Kerr McGee, and what that perchlorate infusion from that 
facility has done in the State of California.
    [The information follows:]
                                               U.S. Senate,
                                 Washington, DC, November 27, 2002.

Hon. Secretary of Defense,
Department of Defense, Pentagon, Washington, DC 20301.
    Dear Secretary Rumsfeld: I am writing to bring your attention to 
the growing problem of perchlorate contamination in Southern 
California's groundwater supplies and to request that the Department of 
Defense provide clean-up funding through the Formerly Used Defense 
Sites program to eligible communities as soon as possible.
    According to a recent report by the California Department of Health 
Services, perchlorate has been detected in 284 groundwater wells 
operated by 75 different water agencies throughout the State. 
Collectively these agencies serve 24.8 million people, representing 71 
percent of the State's population. The problem is most severe in 
Southern California, where 267 of the contaminated wells are located.
    The growing number of perchlorate contaminated wells is all the 
more alarming in the context of California's efforts to reduce its 
consumption of Colorado River water under the terms of the 
Quantification Settlement Agreement. While California water districts 
are working diligently to devise strategies to reduce the State's need 
for imported water, perchlorate contamination is threatening the native 
water supplies these agencies are relying upon to meet local needs. The 
Metropolitan Water District of Southern California estimates that in 
its service area alone, lost well production due to Perchlorate 
contamination could reach 57,000 acre feet annually.
    The problem is particularly acute in the Inland Empire, where a 
seven mile long plume was discovered earlier this year in an area 
formerly occupied by the Army and several defense contractors involved 
in munitions manufacturing and storage, The plume, which is moving 2 to 
3 inches per day, has contaminated 22 drinking water wells in western 
San Bernardino County, jeopardizing water supplies for approximately 
500,000 local residents and businesses. Replacement water is generally 
unavailable due to lack of infrastructure and up to eight times more 
expensive than groundwater in the limited cases where it can be 
imported. Local officials have informed my staff that the problem is so 
severe that without Federal assistance, the region faces a very real 
possibility of water rationing or of having to supply customers with 
bottled water.
    Because many of the contaminated sites in Southern California 
involve former defense facilities, the Department of Defense bears a 
special responsibility to help remedy the situation. I would appreciate 
hearing from you whether you intend to make FUDS funding available to 
assist in the clean-up of perchlorate contaminated wells in Southern 
California.
    Thank you for you very much for your immediate attention to this 
important matter.
            Sincerely,
                                          Dianne Feinstein,
                                                      U.S. Senator.
                                 ______
                                 
                                               U.S. Senate,
                                   Washington, DC, January 7, 2003.

Ms. Christine Todd Whitman,
Administrator, U.S. Environmental Protection Agency, Ariel Rios 
        Building, Washington, DC 20460.
    Dear Administrator Whitman: Thank you for your prompt response to 
my letter of November 27, asking for the assistance of the 
Environmental Protection Agency (EPA) in cleaning up perchlorate 
contamination in California's water supply. While I appreciate the 
steps that your agency has taken on this issue to date, I request that 
the EPA accelerate clean up efforts to reduce perchlorate contamination 
in local groundwater supplies and in Colorado River water.
    I want to stress the enormity of this issue and its importance to 
California. Perchlorate has already contaminated water supplies in more 
than 22 States, including California, where State health officials 
recently reported 294 groundwater wells have been impacted. 
Additionally, perchlorate has seeped into the Colorado River, which 
provides the drinking water for nearly 20 million people in Southern 
California, Nevada and Arizona.
    It is currently estimated that 450 pounds of perchlorate leech into 
the groundwater near Henderson, Nevada each day, and that water then 
enters Lake Mead and the Colorado River via the Las Vegas Wash. The 
impact of this contamination is particularly devastating to 
California's water supply.
    To address this issue, I convened a roundtable meeting on 
perchlorate contamination at the Metropolitan Water District 
headquarters on December 19, 2002. At that meeting, I was briefed on 
the scope and severity of the contamination from local, State, and 
Federal officials including Keith Takata, Superfund Division Director 
from U.S. EPA Region IX.
    In my view, further efforts are needed to clean up perchlorate 
contamination as quickly as possible to protect the 20 million water 
users in Southern California and elsewhere who depend on the Colorado 
River for their drinking water.
    To help accelerate clean up efforts, I urge the EPA to take the 
following actions:
    Set a Federal drinking water standard for perchlorate as soon as 
possible.--While I understand EPA is currently evaluating whether to 
establish a drinking water standard, existing scientific research 
already strongly suggests that perchlorate can pose serious health 
risks, especially to pregnant women and children. Federal regulation is 
clearly warranted, and promulgation of national standards should help 
accelerate clean-up efforts.
    Provide clearer guidance on goals for cleanup.--Nevada Division of 
Environmental Protection currently requires a cleanup goal of 18 ppb 
based on a memorandum from the U.S. EPA's Office of Research and 
Development (ORD) to Regional Administrators dated June 18, 1999. U.S. 
EPA's more recent risk assessment recommended a reference dose 
equivalent to a drinking water concentration of 1 part per billion 
(ppb). California's Office of Environmental Health Hazard Assessment 
revised the draft public health goal to a range of 2 to 6 ppb. Based on 
these recommendations, ORD should revise its interim guidelines and 
establish an appropriate standard goal more closely meeting the range 
adopted by California. Nevada and other States should be directed to 
immediately use the lower number adopted by California and other 
States.
    Closely oversee clean up efforts in Henderson, Nevada.--U.S. EPA 
Region IX should ensure that all practicable steps are taken by Nevada 
Division of Environmental Protection to reduce the perchlorate load in 
Colorado River water supplies by intercepting the ground water as close 
to the Las Vegas Wash as possible and intercepting perchlorate 
contamination immediately adjacent to the La Vegas Wash.
    Thank you very much for you consideration of this request. I 
appreciate your attention to this issue and hope that EPA will continue 
to work to reduce perchlorate contamination in the water supply.
            Sincerely yours,
                                          Dianne Feinstein,
                                                      U.S. Senator.

    Senator Feinstein. Now, I believe that the Defense 
Department is directly or indirectly responsible for the bulk 
of perchlorate contamination, and unless the Federal Government 
takes positive action we will be sticking many small 
communities with a huge problem they did not create. Frankly, 
this is not acceptable.
    Madam Chairman, in your State a congressionally-mandated 
study is underway to assess perchlorate contamination in the 
Boss and Leon River watersheds from the Naval Weapons 
Industrial Reserve Plant in Madrid. Nine western Texas counties 
where the Department has tested rockets have recently found 
perchlorate contamination in their groundwater. I have gotten 
nothing but the most perfunctory responses. It's just not 
acceptable.
    The Department has a responsibility and I believe you have 
a liability. So I do not intend to drop this subject. I intend 
to do everything I can in various bills to see that the Defense 
Department begins to deal with the problem that all of the 
evidence points has been created by that Department.
    So I thank you, Madam Chairman.
    Senator Hutchison. Thank you, Senator Feinstein.
    With that, let me call first on Mr. James Bryan, the 
chairman of the Charleston Naval Complex Development Authority.
    Mr. Bryan. Thank you, Madam Chairman, Senator Feinstein.
    In April 1996, the Charleston Naval Base received its 
honorable discharge.
    Senator Hutchison. Let me just ask each of you if you would 
limit your remarks to maybe 4 minutes and then just summarize 
what you have and then we would like to ask some questions.
    Mr. Bryan. Okay, I will start again. In April of 1996, our 
naval base received its honorable discharge and embarked on a 
whole new life appropriate to the 21st century. As the 
organization charged with guiding the base in its new life, we 
recognized that our first and most important task was the 
creation of jobs. Today the facilities abandoned by the 
military are being reborn as viable economic assets. New jobs 
by the thousand are replacing those lost when the base was 
closed and the property is again becoming a resource for the 
benefit and enjoyment of South Carolina citizens.
    Back in 1993 when base closure was announced, everyone was 
pronouncing doom and gloom for Charleston. Now I can say we are 
a success story because of the Government was not heavy-handed 
with its disposal procedure. We benefited from the cooperation 
of the U.S. Navy OEA and the fact that everything flowed 
through a no-cost economic development conveyance to the 
Charleston Naval Complex Redevelopment Authority.
    There was no map to point the way to success. If property 
had been disposed of through a public sale or, worse, land 
banking, I am convinced that I would not be here today speaking 
of our successes. Thanks to the cooperation and assistance from 
Federal and State officials, I can currently report that we 
host 74 commercial and 10 Federal tenants at the naval complex.
    The important thing is that they make up our naval complex 
family and contribute to the employment of 5,400 workers, a 
$265 million annual payroll. Overall they pay more than $141 
million that has been spent on renovations, infrastructure, and 
improvements, and unemployment in the immediate three-county 
area is actually lower than it was in 1993.
    What I would like to do is just hit on some things that I 
think worked for the reconversion of this type property, 
starting with the no-cost economic development conveyance. We 
are a success story because the Government was not heavy-handed 
in its disposal procedure. We benefited from the cooperation of 
the U.S. Navy OEA and the fact that everything flowed through a 
no-cost economic development conveyance.
    The no-cost economic development conveyance allowed us to 
address the deteriorated utilities and infrastructure without 
the additional burden of paying for the property that had been 
donated 100 years before. Even with agreed-upon zoning in 
place, a public sale to the highest offeror we believe is a 
recipe for disaster.
    Interim leasing: To my knowledge, we have the only shipyard 
in America that has been successfully converted from public to 
private use.
    Supplemental funding: Like many other State boards and 
agencies, our LRA was given no funding appropriation through 
the State Government. Thankfully, OEA funding was available 
initially to support the LRA office activities, and separate 
State legislation provided some additional funds through fees 
collected in the Charleston County area.
    Federal grant assistance: Charleston has been successful in 
securing approximately $38 million in grant funding from the 
U.S. Economic Development Administration.
    The lease evaluation criteria and process: As a State 
agency, Charleston Naval Complex Redevelopment Authority was 
required to establish a tenant selection and approval process. 
Rather than going with the highest amount of rent offered, this 
process allowed our LRA to consider the number, quality, and 
type of jobs created.
    Community effort: After the closure announced in 1993, 
rather than engaging in a prolonged fight against the decision, 
the citizens of Charleston took action and formed a regional 
development alliance to attract business and industry to the 
entire area.
    I think, to touch on a few things that I think does not 
work under these scenarios: fighting the closure decision. 
Don't waste time, money, manpower trying to reverse the 
decision to close the facility. Rather, spend time and efforts 
on recovery.
    I think a thing that does not work is allowing the Navy to 
retain the lease income. The newly-formed organization needs 
the moneys from the lease of these properties to operate and 
improve the infrastructure.
    Another slight hurdle was the Navy's standard lease of 5 
years does not work for someone that is willing to invest 
millions of dollars in a shipyard. So we were able to obtain 
some long-term leases along the way, 30-year leases I think, 
that helped with our success.
    The McKinney Act was a tough one to deal with. Because of 
the type property that we have, I think every nonprofit 
organization that may touch the McKinney Act in one way or 
another, we have to deal with them before you can move ahead 
with the process of development or redevelopment.

                           prepared statement

    The restoration advisory boards: We think that the LRA 
should be the one, the voice of the community. The LRA should 
be comprised of members of the community and the groups, not 
being fragmented and trying to protect turf. We feel like that 
was something that needs to be looked at in the future.
    To save time, I will be willing to answer any questions 
now.
    [The statement follows:]

                  Prepared Statement of James C. Bryan

                              INTRODUCTION

    For more than a hundred years, the North Charleston waterfront 
property known today as ``the Navy Base'' has played a defining role in 
our community. Through the 1800s it was the location of Chicora Park, 
an idyllic setting where the ladies and gentlemen of Charleston would 
arrive by trolley to picnic by the Cooper River. As the century turned, 
the property's character changed, and its importance was magnified many 
fold.
    On August 12, 1901, the land was sold to the U.S. Government for 
the construction of a Navy yard. The property soon became a strategic 
keystone, and its docks the site of many an emotional farewell as young 
sailors went to sea to protect and defend the American way of life.
    In April of 1998, the Navy Base received its honorable discharge 
and embarked on a whole new life appropriate to the 2lst Century. As 
the organization charged with guiding the base into its new life, we 
recognized that our first and most important task was the creation of 
jobs. Today, facilities abandoned by the military are being reborn as 
vital, thriving economic assets. New jobs--by the thousands--are 
replacing those lost when the base was closed and the property is again 
becoming a resource for the benefit and enjoyment of South Carolina's 
citizens. Back in 1993 when base closure was announced, everyone was 
pronouncing doom and gloom for Charleston. Now I can say what many 
others are saying: closure of the Charleston Naval Complex will prove, 
in the long run, to be a good thing for our community. We are a success 
story because the government was not heavy-handed with its disposal 
procedure. We benefited from cooperation with the U.S. Navy, the OEA, 
and the fact that everything flowed through a no-cost Economic 
Development Conveyance to the Charleston Naval Complex Redevelopment 
Authority. There was no map to point the way to success, but we moved 
ahead. Senator Fritz Hollings has been a true champion of the project, 
helping to secure funding when it was most necessary. If this property 
had been disposed of through a public sale or worse, land-banking, I am 
convinced that I would not be here reporting on our success.
    Thanks to cooperation and assistance from Federal and State 
officials, I can report that we currently host 74 commercial and 10 
Federal tenants at the naval complex. The important thing is that they 
all make up our naval complex family and contribute to the employment 
of 5,400 workers with a $265 million annual payroll. Overall today, 
more than $141 million has gone into renovations and infrastructure 
improvements and unemployment in the immediate three-county area is 
actually lower than it was in 1993. Hopefully, you all have a copy of 
our annual report that was produced last year. It contains all of the 
statistics and some great success stories about our tenants. There are 
many great stories to tell. Earlier this year, landmark legislation was 
passed that opened the door for the much needed State Ports Authority 
expansion at the naval complex. The RDA was directed by State law to 
turn over the leased shipyard and residential areas to the City of 
North Charleston and later transfer the southern end of the naval 
complex to the State Ports Authority for its expansion. With the 
continued cooperation and support from local governments and citizens, 
we believe that this magnificent property will serve as an economic 
engine for our State for many decades to come.

                        WHAT MADE US SUCCESSFUL

    No-Cost Economic Development.--We are a success story because the 
government was not heavy-handed with its disposal procedure. We 
benefited from cooperation with the U.S. Navy, the OEA, and the fact 
that everything flowed through a no-cost Economic Development 
Conveyance to the Charleston Naval Complex Redevelopment Authority. The 
no-cost economic development conveyance allowed us to address the 
deteriorated utilities and infrastructure without the additional burden 
of paying for property that had been donated 100 years before. Even 
with agreed-upon zoning in place, a public sale to the highest offeror, 
we believe, is a recipe for disaster.
    Interim Leasing.--To my knowledge, we have the only shipyard in 
America that has been successfully converted from public to private 
use. By ``playing the hand we were dealt'' and using the interim-
leasing option, we had an up and running shipyard 6 months prior to 
official closure of the base. Revenues from these leases allowed our 
LRA to gradually assume all of the Navy's operations and maintenance of 
the Base.
    Supplemental Funding.--Like many other State boards and agencies, 
our LRA was given no funding appropriation through State government. 
Thankfully, OEA funding was available initially to support LRA office 
activities and separate State legislation provided some additional 
funds through fees collected in Charleston County, but OEA funds 
eventually expired. While leasing income helped, it could not solely 
support operations and maintenance of the Base. Our LRA was successful 
in approaching the State legislature for funding under S.C.'s Rural 
Development Act, which provided us with the State's withholding tax for 
each Federal activity payroll on the Base. This funding source expires 
in 2012, but provides around $2 million annually.
    Federal Grant Assistance.--Charleston has been successful in 
securing approximately $38 million in grant funding from the U.S. 
Economic Development Administration. This funding has allowed and will 
allow our LRA to improve the dilapidated water, sewer and storm water 
systems left behind by the Navy.
    Lease Evalutation Criteria and Process.--As a State agency, the 
Charleston Naval Complex RDA was required to establish a tenant 
selection and approval process. Rather than going with the highest 
amount of rent offered, this process allowed our LRA to consider the 
number, quality and type of jobs created, proposed use of the property, 
capital investment, and the financial strength of the proposal among 
other items. This legal process has served us well.
    Community Effort.--After the closure announcement in 1993, rather 
than engaging in a prolonged fight against the decision, the citizens 
of Charleston took action and formed the Regional Development Alliance 
to attract business and industry to the entire area.
    Create A Stewardship of the Entrusted Property.--Select capable 
people, with no personal agendas, to serve on redevelopment boards and 
authorities. Restrict public officials from serving. In every decision, 
the overall benefit to the property and the LRA must take priority over 
the desires and mandates of any particular voting precinct or political 
subdivision.
    Staff.--Base Realignment and Closure is essentially real estate 
development with a healthy helping of politics and diplomacy. Hire an 
LRA staff with a strong background in real estate and supplement it 
with some congressional staff experience. An LRA staff member fluent in 
envirospeak should participate in environmental decision-making and 
attend every environmental clean-up team meeting.

                           WHAT DOESN'T WORK

    Fighting the Closure Decision.--Don't waste time, money and 
manpower trying to reverse the decision to close facility. Rather spend 
your efforts on recovery.
    Allowing the Navy to Retain Lease Income.--A newly formed LRA needs 
the income from interim leasing to survive. Formulas that siphon lease 
money from the LRAs are counterproductive.
    The Navy's Standard Lease.--The standard lease itself wasn't 
attractive to business and had to be renegotiated to allow some 
security for the commercial tenant. The term of the lease was entirely 
too short for substantial capital investment, and the Navy's retention 
of lease income would have been an impediment to the LRA's assumption 
of the operations and maintenance of the Base.
    The McKinney Act.--This legislation has been changed, but it should 
be eliminated and communities given the right to make decisions about 
the presence of homeless or charitable agencies. Although this is a 
noble cause, its goals may not be compatible with the highest and best 
use of the property.
    Resoration Advisory Boards.--The LRA should be the one voice of the 
community.

                         OTHER IMPORTANT POINTS

    From the beginning, Federal and commercial tenants have been able 
to operate and cooperate as neighbors at the naval complex. The 
location of the Border Patrol to the naval complex was a clear winner. 
The majority of the agency's $28 million annual budget is spent 
locally. Since 1996, the Border Patrol has trained more than 8,000 
agents at the academy.
    One of only 14 in the nation, the passport office on the naval 
complex occupies a completely renovated facility where about 160 
employees, almost all hired locally, process about 5,000 passport 
applications a day. This office alone represents an investment of $9 
million and the payroll pumps another $7 million per year into the 
local economy. The 65,000 square foot office complex also serves as a 
training facility. A 92,000 square foot State Dept. financial services 
building is now in the works. It will be the ``hub'' of the 
department's financial systems and will employ an additional 250 
workers bringing the State Dept. total to over 630 workers.
    Other Federal tenants include DFAS (Defense Finance and Accounting 
Service--426 employees); NOAA (National Oceanic & Atmospheric 
Administration--125 employees); SPAWAR Systems Center--135 employees; 
and the U.S. Coast Guard with 312 staff and crew members.
    Our first industrial tenant, Charleston Marine Manufacturing 
Company (CMMC) was in place literally within days. This company was 
formed out of two well-established Charleston companies, Detyens 
Shipyards and Metal Trades, Inc. CMMC officers signed a lease for one 
of the yard's largest facilities and, within a week, Detyens had 300 
employees working in ship repair in the giant No. 5 drydock. CMMC 
President, Dick Gregory states that ``the RDA did things that no one 
else had ever done. Companies had to prove viability and the condition 
was that the facilities had to be used.'' We all had the same 
objective: Put people back to work.
    Almost immediately after the recovery of the H. L Hunley submarine 
and its successful move to the unique freshwater tank in the Warren 
Lasch Conservation Lab at the Naval Complex, the Center became a major 
Charleston area tourist attraction. In just 3 months, the Center played 
host to some 26,000 visitors--a figure made all the more astounding by 
the fact that the visitors were only admitted on weekends. Many of the 
world's most renowned conservationists and archeologists attended a 
seminar held at the Center in 1999. Today, with a full-time staff of 
21, including 11 respected international scientists, work continues to 
attract attention from around the world.

    Senator Hutchison. Great. Thank you so much, Mr. Bryan.
    General Roberson, when the light is green that is 4 
minutes, and then when it turns red that is the end and if you 
could just summarize after that.

STATEMENT OF PAUL ROBERSON, FORMER EXECUTIVE DIRECTOR, 
            GREATER KELLY DEVELOPMENT AUTHORITY, SAN 
            ANTONIO, TEXAS

    General Roberson. Thank you very much, Senator Hutchison. I 
appreciate the opportunity to be here, and it is a particularly 
great opportunity just to get a chance to see you and talk with 
you. Senator Hutchison has been a great advocate for all of our 
issues in Texas.
    Kelly is a large part of my experience. Just for your 
background, it is a large maintenance depot, employed about 
19,000 people, closed in the 1995 BRAC. I would tell you that 
the Air Force did a great job in managing that closure, moving 
all those very critical missions and caring with a lot of 
compassion for the 19,000 people that were affected by that 
closure.
    But I would also tell you that redevelopment is hard work. 
For those of you who do not know, in 1995 I was two inches 
taller and had a full head of black curly hair. You can see 
what has happened to me in that time.
    But we have learned some lessons from the Kelly experience. 
I was intrigued when Senator Hutchison said that only half the 
property has been transferred. In all the BRAC closures, it is 
certainly clear to me that transfer of the property as soon as 
possible is in the interest of the DOD to get it off its rolls 
and in the interest of the community so that redevelopment can 
continue.
    We did an interesting thing at Kelly. We did a hot 
turnover, where even though they took 6 years to close the 
base, as they vacated specific premises we went ahead and had 
them turn it over. So we actually began redevelopment a year 
after the closure and it has been successful so far.
    I think one of the reasons for success is the no-cost EDC. 
That was very important to us and had a big impact on our long-
term business plan and it had a big impact on trying to 
negotiate loans for line of credits and capital projects from 
local banks. Not having that burden really helped us in those 
negotiations.
    Facilities are a major problem for every community and what 
we find is that most military installations, the facilities are 
not in very good condition. In fact, at Kelly we had 5 million 
square feet of facilities that we have got to demolish. They 
are just basically not commercially reusable, and that is a big 
financial burden. It would be very helpful if there were a 
supplement to the BRAC fund to assist with demolition of 
facilities that are clearly unusable.
    Utilities can be a nightmare, and I think that has been the 
case for most communities. They do not meet codes, there is no 
utility corridors, major upgrades are needed. Additionally, 
some special utilities that we had at Kelly like steam and 
compressed air were operated out of a central plant and that 
simply does not work when you have got individual tenants, 
maybe not all the facilities occupied. We are going to have to 
decommission that and set up individual systems in each 
facility. MILCON funds to address those kinds of issues would 
be very helpful.
    The environmental issues are probably the most contentious. 
I personally have come to believe that negotiating a turnover 
of the cleanup to communities with the funding to go with it 
may be the most appropriate action, that it allows them to set 
priorities and schedules.
    Access to capital is a major problem and it would be very 
helpful if DOD could or the Congress could implement a program 
like the small business loan program, where federally 
guaranteed loans could be available to communities to invest.
    I think one of the glaring errors of past BRAC rounds has 
been the lack of an inter-service approach to BRAC. I 
personally believe that an inter-service approach--that 
certainly is true I think in the area of maintenance depots, 
which all the services have--could allow significantly greater 
savings than we have realized so far.

                           PREPARED STATEMENT

    Finally, I would just like to say that I think there is an 
opportunity for partnerships in 2005. Unlike prior BRAC rounds, 
most communities and States recognize that DOD does have excess 
infrastructure and they recognize that we can be better off by 
partnering and cooperating and finding innovative ways to 
address those issues rather than going into a defensive crouch 
and trying to maintain the status quo.
    I would be more than happy to answer questions as we go 
forward. I almost made it, Senator.
    [The statement follows:]

                  Prepared Statement of Paul Roberson

    Good morning. My name is Paul Roberson--until recently, I was the 
Executive Director of the Greater Kelly Development Authority, the 
agency redeveloping Kelly AFB (1995 closure/realignment) in San 
Antonio, Texas. My BRAC experience includes involvement in the San 
Antonio Community's response to both the 93 and 95 BRAC rounds. The 
BRAC 95 Commission selected Kelly AFB for closure/realignment. Since 
1995, I have led the effort to redevelop Kelly. Additionally, through 
my association with the City of San Antonio and while serving on the 
Board of Directors of the National Association of Installation 
Developers, I have had extensive discussions with community leaders in 
other cities that have been faced with trying to mitigate the 
significant economic impact of base closure. I have also been active in 
assisting the State of Texas develop plans for the upcoming BRAC 2005. 
Thus, I have seen the BRAC process from several different perspectives, 
pre-BRAC and post-BRAC, public and private, local, State, and national.
    Because my direct experience with military base transformation is 
largely related to the realignment of Kelly Air Force Base, arguably 
the most complex BRAC action ever undertaken by the Department of 
Defense or any community, many of my observations will be based on that 
experience. However I will also offer more general observations, 
particularly as they relate to the State of Texas, before I conclude.
    For your background, Kelly was a large aircraft/aeronautical 
equipment maintenance Depot, with over 19,000 employees--mostly civil 
service, 62 percent of whom were Hispanic. As the largest employer in 
South Texas, Kelly had an enormous economic impact on the area. The 
conventional wisdom was that ``there's no way they'll ever close 
Kelly''. The reality was that the Air Force had excess capacity in its 
depot structure and the BRAC Commission closed two of their five 
depots.
    Since that fateful decision, the redevelopment of Kelly has been 
recognized by DOD and the private sector as one of the most successful 
military base transitions in the nation. In this regard, I would like 
to compliment the Air Force for the outstanding job they did in 
planning and executing the closure. The movement of a very complex and 
vital industrial mission was handled with minimal impact and with great 
care and compassion for the 12,000 people involved. This was not a 
trivial task. Perhaps, the factor that made this closure/realignment so 
successful was the spirit of cooperation and partnership exhibited by 
local leaders and Air Force officials. Within the constraints of law 
and mission essential interests, the Air Force made every effort to 
work with the Community to find solutions that supported the goals of 
redevelopment.
    And this leads to my first observation: Communities and the DOD can 
be much more successful if they approach the BRAC process, both pre- 
and post-BRAC in a spirit of partnership and cooperation. On the 
Community's part, local leaders must recognize that DOD does, in fact, 
have excess infrastructure and many installations are excessively 
expensive to operate. In fact, communities/States can and should 
cooperate with DOD in finding solutions to these issues. DOD, on its 
part, should approach the 2005 BRAC with the goal of finding ways to 
achieve reduction of infrastructure/costs and simultaneously 
acknowledging the impact to local communities and the lack of 
sufficient resources to repair neglected infrastructure. Kelly is an 
example of this partnership after a closure/realignment decision. A 
pro-active example of this cooperative spirit prior to a BRAC round is 
the Brooks City-Base project in San Antonio. Although Brooks was not 
selected by the BRAC commission for closure in 1995, San Antonio's 
leadership recognized that Brooks was very costly to operate (Brooks 
was on the DOD's 1995 list of bases recommended for closure). Together 
with the Air Force, the City developed a concept to transfer ownership 
and responsibility for the land and infrastructure to the City. The Air 
Force leases back space they need for their missions, but no longer 
have to bear the infrastructure costs associated with owning the 
property. The City is now able to lease space and develop land and 
facilities to their best use. This could well be a model for 
partnerships for some installations and communities with similar 
circumstances.
    At Kelly, we have learned that redeveloping a closed military base 
is really hard work--in fact, successfully transitioning an active 
military installation to a thriving industrial park may be one of the 
hardest jobs any community and its leadership can face. The most 
significant issues that made this so hard for Kelly--and my 
recommendations for your consideration for the 2005 BRAC--include the 
following:
    Transfer of Property.--The earliest possible transfer of property 
serves the interests of the Community and the Service. At Kelly, the 
Air Force decided to take the full 6 years authorized by law to close 
the base. This made sense because of the size and complexity of the 
industrial aircraft maintenance mission. At the time, the Community 
agreed with this decision and rationalized that this would give us more 
time to implement the Community's vision for redevelopment. 
Fortunately, we did not wait for the base to be formally closed to 
begin redevelopment. Rather, we initiated an innovative ``hot 
turnover'' process whereby the Air Force transferred by lease, 
buildings and land as they vacated premises. Thus, the redevelopment 
actually began within a year of the closure decision. This process 
worked well, and in effect we were receiving the property as rapidly as 
the Air Force could turn it over, even though the base did not formally 
close until 2001. As a general rule, turning over the property as soon 
as possible allows the community to get on with redevelopment and the 
Services to realize earlier infrastructure cost savings. Transfers 
should continue to be executed through the Local Redevelopment 
Authority as the primary representative of the community, unless there 
is an extraordinary, mutually agreeable reason to do it differently. As 
I said earlier, the property at Kelly was transferred by lease--in 
fact, no deeds will be transferred until environmental remediation 
actions are completed. Since some redevelopment ``deals'' go much more 
smoothly with deeds, this may delay redevelopment. I will address this 
issue in the section on Environmental.
    No cost EDC.--I cannot emphasize strongly enough how important the 
no-cost EDC was to the successful transition of Kelly. By getting title 
to the property at no cost, the community can concentrate its limited 
financial resources on preparing the site for redevelopment. No-cost 
conveyances generally are completed quickly, getting the cost of 
maintaining the base off of DOD's books. Prior to the no-cost EDC, it 
was not unusual for negotiations between the Service and the Community 
to drag on for years. This created a level of uncertainty that severely 
impacted redevelopment activities. The no-cost EDC also was a major 
factor in our successful negotiations with local banks for both line of 
credit and capital project loans. As a result, I strongly recommend 
continuation of the no-cost EDC, perhaps except where the value of the 
property is such that it is in the interest of the community, as well 
as the Service, to put the property up for sale.
    Facilities.--Of the approximate 14 million square feet of buildings 
on Kelly, about half are available for redevelopment. The remainder was 
either retained by the Air Force/DOD or is in such poor condition they 
are not suitable for commercial use and must be demolished. Because the 
Air Force did not originally recommend closing Kelly (it was 
recommended for downsizing in place), they did not anticipate, nor 
program funds to realign certain missions. Consequently, several Air 
Force/DOD missions have remained at Kelly in facilities that the 
redevelopment agency was required to lease back to the military. This 
accounts for approximately 2.4 million square feet. As you might 
expect, these are some of the most modern and commercially marketable 
facilities. The folks at KellyUSA jokingly state that they are looking 
forward to the 2005 BRAC to close the rest of Kelly. The Air Force does 
plan to construct new facilities to relocate these organizations to 
Lackland AFB (which is adjacent to Kelly). While the primary objective 
of this plan is to consolidate all Air Force organizations on Lackland, 
the benefit to the community will be that many commercially useable 
buildings will be available for redevelopment. In this regard, I 
recommend support of funding requests for new construction at Lackland 
that are part of the Air Force's fiscal year 2005 BRAC closure plan.
    Approximately 5 million square feet of the 14 million square feet 
of facilities at KellyUSA are in such condition they have absolutely no 
commercial reuse value. We have demolished 1 million square feet of 
buildings and an additional 4 million square feet remain to be 
demolished. This demolition must be complete to clear the way for 
construction of new facilities that meet commercial market place 
standards. The cost of this demolition is a significant burden on the 
redevelopment budget.
    Unfortunately, of the 6.6 million square feet of buildings that are 
available for reuse at Kelly, many require significant investment to 
make them commercially marketable. As a matter of fact, one of our 
large aviation tenants, Boeing, told me that the Air Force could do 
work in the facilities, but there was no way the Air Force would allow 
them to use the facilities to perform maintenance on Air Force aircraft 
In this case, we had to find $30 million in financing to upgrade the 
facilities and the ramp before the firm would agree to locate its 
repair function at Kelly.
    Facilities issues are complex (like most things in BRAC) and 
contentious. However, I recommend that at the minimum, the BRAC account 
should be supplemented to provide funding for demolition of clearly 
unusable buildings and retrofits of useable facilities to meet local 
safety and health requirements. Additionally, a ``pre-closure'' 
assessment by a certified property assessment team needs to be made of 
the total demolition requirements, including their cost, and, 
concurrently, an estimated cost to make the remaining, marketable 
facilities code compliant.
    Utilities.--One of the major issues that we faced at Kelly is that 
the centralized heating and cooling utilities were designed and 
constructed for operation across the entire base. For example, a single 
steam plant produced heat for a major portion of the buildings at 
Kelly. That concept worked well when the base was fully occupied by the 
Air Force. However, after the buildings were conveyed to GKDA, we did 
not have tenants in all of the buildings. There was simply no 
economically viable method to reduce the ``output'' of the system to 
that necessary to accommodate the needs of our tenants. Ultimately, the 
centralized systems will be abandoned in favor of new stand-alone 
components in individual buildings. MILCON funds should be made 
available for redesign and modification of such utility systems to make 
them more commercially viable.
    Records/Data.--Similar to the facility/demolition issue, a thorough 
pre-closure assessment of records, work orders, reports, maps, 
databases, warranties, maintenance logs, contracts, hardware and 
software products, utility bills, etc. would greatly benefit the 
community. In many cases there have been serious information gaps that 
create inefficiencies, unnecessary costs, and maintenance/construction 
problems. Full disclosure through accurate, field verified data on all 
facilities, utilities, contracts, and systems should be provided to the 
community upon announcement of closure/realignment.
    Personal Property.--Personal Property includes all the machinery, 
tools, furniture, fixtures, and other equipment on the base. In the 
case of Kelly, this personal property consisted of literally hundreds 
of thousands of different items ranging from major engine test cells to 
individual hand tools. No community would argue with the fact that the 
DOD Components that are being relocated must take with them the 
personal property that is required for successful mission 
accomplishment. However, under the BRAC law provisions governing use of 
personal property, any other military installation can come to the BRAC 
base and ``request'' that personal property in excess of the needs of 
the relocating unit be transferred to them. The current BRAC statute 
should be amended to narrow the current exemptions placed on personal 
property to give the community priority for personal property required 
for redevelopment second only to the needs of the relocating unit.
    Environmental.--In the case of Kelly, the environmental 
contamination of the facilities, land and groundwater was the result of 
many years of industrial uses that employed many toxic and hazardous 
materials such as solvents. Unfortunately, a significant volume of 
these contaminants ended up in the ground water below Kelly and has 
migrated for miles outside the fence underneath nearly 20,000 homes. 
The cleanup of this industrial waste has been the most contentious 
issue between citizens in the community and the Air Force. DOD, 
Congress and communities must continue to explore alternatives to the 
``traditional'' approach toward cleanup. In many cases, it may be more 
advantageous to both the Federal Government and the local communities 
to transfer funds required for cleanup to the community and allow the 
community leadership to deal with its citizens and restore the facility 
to whatever level required by the community. Such a transfer would also 
allow the Community to set the priorities and schedules for the cleanup 
and expedite the transfer of deeds.
    Access to Capital.--At Kelly, and at virtually all other BRAC 
sites, one of the major challenges, if not the major obstacle, to 
redevelopment is the ready availability of capital for investing in the 
construction of new buildings/utilities/streets, deferred maintenance 
and modernization of existing buildings or demolition of unusable 
facilities. I do not know of a single redevelopment authority that has 
not struggled with this issue. At Kelly, it is estimated that more than 
$300,000,000 in investments will be required to modernize the 
infrastructure to commercially equivalent standards. In San Antonio, or 
any other community, it simply is not realistic for the redevelopment 
authority to look to the local taxpayers to carry the total burden for 
an investment of this magnitude. However, there may well be ways that 
Congress and the Administration could help in this area. A program 
similar to the Small Business Loan program should be developed whereby 
a community could obtain low interest financing from commercial lending 
institutions, with a Federal guarantee that the loans would be repaid. 
Perhaps the Small Business Administration with very little additional 
administrative cost could administer this program. The ``risk'' to the 
Federal Government would be minimal but the benefits to communities 
adversely affected by BRAC would be tremendous.
    To summarize the Kelly experience, early transfer of the property; 
continuation of the no-cost EDC; access to funding for demolition/
upgrade of key facilities and utilities; community friendly rules on 
personal property; transfer of responsibility and funding for 
environmental cleanup; and access to low cost, federally guaranteed 
loans would significantly enhance the Community's ability to redevelop 
a closed/realigned base. I believe these lessons are applicable to any 
base selected for closure/realignment.
    Let me now transition to more general observations based on my 
discussions with communities around the country and especially my 
experience within the State of Texas.
    Role of States.--The role of State governments has varied around 
the country. Some States have played a much more active role than 
others. In Texas, the State did not take an active role in prior BRAC 
rounds. However, we anticipate the State will be very active in 
preparing for the 2005 BRAC, coordinating Communities' efforts and 
assisting Communities to work with the Military Departments in seeking 
ways to transform their installations into more cost effective 
operations. The point I would like to make is that, while the State of 
Texas wants to avoid closing bases, the attitude and approach is 
focused on partnering with DOD and finding ways to achieve mutual 
interests. This mindset is dramatically different than prior rounds 
when most States and Communities went into a defensive crouch and did 
not consider any alternative other than maintaining the status quo. 
Collectively, DOD, the Congress, and the States, need to figure out how 
to capitalize on this new attitude.
    Interservice Opportunities.--One of the most glaring errors of 
prior BRAC rounds was the absence of an Interservice or Cross-Service 
approach. Depot level maintenance is a classic example. All the 
services perform this function and therefore there are great 
opportunities to improve productivity and reduce costs by consolidating 
these Depots on an interservice basis. Numerous other functional areas 
would benefit from the same approach. I realize that this is hard, but, 
if done correctly, an interservice approach to BRAC 2005 may well be 
more productive than the actions taken in all of the prior BRACs 
combined.
    Pre-BRAC Assessments by Services.--In past BRAC rounds, there have 
been some serious mistakes. Within Texas the most glaring example was 
the closure of Reese AFB--a pilot training base. After Reese's closure 
it became painfully obvious that there was a shortage of pilot training 
capacity. While I am sure the Service and DOD were acting in good faith 
at the time, it is extremely important that the criteria used to 
determine which bases to close/realign are able to withstand close and 
aggressive scrutiny.
    Partnerships.--Let me reiterate one more time the theme that I 
emphasized at the beginning. There is a great opportunity for DOD/
States/Communities to partner and cooperate in seeking ways to 
transform military installations into more cost effective operations. 
In Texas, we are taking this approach. There clearly are going to be 
cases where an installation will be closed, but this should not destroy 
the partnership, rather, it opens up new opportunities for the 
Community and DOD to work together on ways to enhance the 
redevelopment.
    Models for Pro-Active Initiatives.--Before I complete my comments, 
I would like to briefly outline three different models that have been 
developed in San Antonio. These models represent approaches to helping 
DOD transform their infrastructure.
    KellyUSA.--Because of the unique facilities/runway at Kelly, we 
focused much of our marketing efforts to attract firms doing aircraft 
maintenance. Our successes include major maintenance operations by 
Boeing, Lockheed-Martin, and several other aerospace firms. In 
virtually all cases, these firms are doing depot maintenance under 
contract with DOD. Thus, Kelly has emerged as a private business park, 
with private business tenants performing depot level maintenance on 
military aircraft/equipment under contract with DOD. We understand the 
Air Force is very pleased with the significant cost savings over 
government depots. This is one model for bases selected for closure/
realignment: privatize the mission (where appropriate) and conduct the 
privatized mission in facilities transferred to the community. The 
Service divests itself of infrastructure and associated costs; the work 
is performed at a reduced cost; and the community gets a ``kick start'' 
toward redevelopment.
    Brooks City-Base.--Brooks has not been ``BRACed'', but San Antonio 
recognized that the base was expensive to operate. In partnership with 
the Air Force, the property and infrastructure have been transferred to 
the City, while the Air Force missions remained as tenants on City 
property. The City can now develop property not occupied by the Air 
Force for commercial purposes. While the Brooks City-Base is still in 
the early stages of development, the prospects are excellent. This 
model, or a variation of it, can be applied in a wide variety of 
situations.
    Fort Sam Houston.--This historic Army Post is using the legislation 
authorizing ``Enhanced Use Leasing'' and a partnership with a private 
developer to lease vacant facilities on the Post. If successful, this 
would be another important model to transform military installations.

    Senator Hutchison. You did make it, you did make it. And I 
certainly know of your efforts personally and I think you made 
the success by not fighting it, as you said, and hitting the 
ground running and being very creative.
    But the environmental issues, just as Senator Feinstein 
said, are still there at Kelly and that is something we must 
clear up in the next BRAC round.
    Mr. Robert Leonard from Sacramento, California.

STATEMENT OF ROBERT B. LEONARD, ASSISTANT DIRECTOR, 
            SACRAMENTO COUNTY AIRPORT SYSTEM
    Mr. Leonard. Good morning, Senator Hutchison, Senator 
Feinstein, Senator Stevens.
    Prior to assuming my current position as assistant director 
of the Sacramento County Airport System, I served as executive 
director of the Sacramento County Department of Military Base 
Conversion for 9 years. In that capacity, I led Sacramento 
County's efforts as the local redevelopment authority for 
Mather Air Force Base and McClellan Air Force Base.
    Sacramento has become one of the most experienced 
communities in the country with military base conversion as we 
have dealt with three base closures. Mather Air Force Base, 
Sacramento Army Depot, and McClellan Air Force Base have each 
closed under the then-current BRAC process. Sacramento had a 
base in the first round of BRAC, that was Mather in 1988 
announced closure, and in the last round of BRAC, 1995, with 
McClellan Air Force Base.
    We have had first-hand experience and been a direct 
participant in the evolution of the BRAC process. Although the 
BRAC process and the forms of assistance and resources that 
have been provided to base closure communities have 
significantly improved over time--and I might add the tools 
also made available to the military services working with 
communities in base closure--I along with many others believe 
there is room for much improvement.
    Some of the themes, the three themes that I want to touch 
upon, have been already briefly mentioned by Mr. Roberson: 
environmental remediation. As you are aware, the majority of 
BRAC sites have significant environmental remediation or 
cleanup needs that simply must be dealt with. LRAs, or local 
redevelopment authorities, must have certainty in site 
characterization, a remediation plan, and, most importantly, a 
remediation schedule and funding. These factors are most 
critical in the development of a realistic reuse plan and the 
attraction of private investment to support successful reuse 
and economic recovery.
    Six years ago the estimated cost to clean up McClellan was 
approximately $832 million and was projected to take 30 years. 
Today the cost is estimated to be $1.3 billion and is 
anticipated to continue far beyond 2033. Approximately $350 
million has been spent to this date.
    Although this is a long-term program, incremental progress 
on schedule is absolutely critical to support successful reuse. 
Over the past 2 years, Air Force appropriation requests for 
McClellan environmental programs have not been fully supported 
by the Department of Defense or Congress and as a result the 
cleanup schedule has been adversely affected. The achievement 
of critical incremental milestones in the remediation program 
has been delayed now 7 to 9 years and we see the impact of that 
compounding over time.
    Adequate resources must be made available on an ongoing 
basis and in turn appropriately administered to maintain the 
remediation schedules. The consequences of not doing so again 
have a compounding negative impact on the successful reuse of 
McClellan, Mather, and any other base reuse location.
    In the cases of both McClellan and Mather, there have been 
creative solutions to environmental remediation identified and 
pursued through the partnering of the county, the Air Force, 
and the environmental regulatory agencies which are a key 
player in this process also. It is not just the Department of 
Defense and the communities. These approaches have saved both 
time and money and we must continue to look for them as we deal 
with bases that are in the closing process and any future 
bases.
    Infrastructure and code compliance, the second key theme I 
would like to touch upon. As we learned early in the base reuse 
process of Mather and was reinforced with McClellan, successful 
transition of infrastructure ownership and its operation are 
critical to both the closure of the facility by the respective 
service and also successful reuse of the LRA. The hot turnover 
concept, as was previously mentioned, was also applied at 
McClellan. This was a process that saw the infrastructure 
transition years before the base closure, which allowed the 
services to focus resources, specifically the Air Force, in 
getting the base closed and allowed us to bring reuse 
activities into the base.
    No single element of infrastructure--water, sanitary sewer, 
electrical, natural gas systems, for example--can be 
overlooked. At essentially every closed military base that I am 
aware of, this basic infrastructure, which was never developed 
considering local, State codes, requires significant capital 
investment. The same also unfortunately applies to building 
codes.
    The last area I would like to touch upon is the Federal 
property transfer process. That process has improved 
dramatically over time with the introduction of the economic 
development conveyance and then in turn the no-cost EDC. These 
tools were applied at both Mather and McClellan.

                           PREPARED STATEMENT

    Although Sacramento County has no fears associated with 
future rounds of base closure--we do not have any more bases in 
our community--I would urge you to consider the no-cost EDC 
methodology for disposing of military property in the future.
    Thank you.
    [The statement follows:]

                Prepared Statement of Robert B. Leonard

    Good morning, Senator Hutchison, Senator Feinstein, and members of 
the Committee. My name is Rob Leonard. I am currently Assistant 
Director of the Sacramento County Airport System. The Sacramento County 
Airport System is comprised of Sacramento International Airport, Mather 
Airport, Sacramento Executive Airport, and Franklin Field. Prior to 
assuming this position I served as Executive Director of the Sacramento 
County Department of Military Base Conversion for 9 years. Sacramento 
County is the Local Redevelopment Authority for the former McClellan 
Air Force Base and Mather Air Force.
    Sacramento has become the most experienced community in the country 
with military base closure and conversion as we have dealt with three 
base closures. Mather Air Force Base, the Sacramento Army Depot, and 
McClellan Air Force Base have each been closed under the Base 
Realignment and Closure Act (BRAC) process. Sacramento had a base in 
the first ``round'' of BRAC (1988) and also the last (1995) round of 
BRAC. We have had first hand experience and have been a direct 
participant in the evolution of BRAC process. Although the BRAC process 
and the forms of assistance and resources provided to base closure 
communities has significantly improved over time, I along with many 
others, believe there was much room for improvement. My comments focus 
on three key areas:

Environmental Remediation
    As you are well aware, the majority of BRAC sites have significant, 
environmental remediation or clean-up needs that simply must be dealt 
with. Local Redevelopment Authorities must have certainty in the site 
characterization, a remediation plan, and most importantly the 
remediation schedule and funding. These factors are most critical in 
development of a realistic reuse plan and the attraction of private 
investment to support successful reuse and economic recovery.
    Six years ago the estimated cost to clean-up McClellan was 
approximately $832 million and was projected to take 30 years. Today, 
the cost is estimated to be $1.3 billion and is anticipated to continue 
far beyond 2033. Approximately $350 million has been spent to this 
date. Although this is a long-term program, incremental progress, on 
schedule, is critical to support successful reuse. Over the past 2 
years the Air Force appropriation requests for the McClellan 
environmental program have not been fully supported by the Department 
of Defense and Congress; and as a result, the clean-up schedule has 
been adversely affected. The achievement of critical milestones in the 
McClellan remediation program is now anticipated to be delayed by seven 
or more years.
    Adequate resources must be made available on an ongoing annual 
basis and, in turn, appropriately administered to maintain remediation 
schedules. The consequences of not doing so have a compounding negative 
impact on successful reuse of both McClellan and Mather, or any other 
base reuse location.
    In the cases of both McClellan and Mather there have been creative 
solutions to environmental remediation identified and pursued through 
the partnering of County, the Air Force, and the environmental 
regulatory community. These approaches have saved both time and money. 
We must continue to look for them and be open to them in the future.

Infrastructure and Code Compliance
    As we learned early in the reuse process at Mather and was 
reinforced at McClellan, successful transition of infrastructure 
ownership and its operation is essential to support both the closure of 
a base by the military and also early reuse success of the Local 
Redevelopment Authority. The ``Hot Turnover'' of McClellan 
infrastructure over 2 years prior to base closure is a model of success 
compared to multi-year piecemeal experience at Mather.
    No single element of infrastructure--water, sanitary sewer, 
electrical and natural gas distribution systems, and telephone for 
example, can be overlooked. At essentially every closed military base 
that I am aware of the basic infrastructure, which was never developed 
considering local or State code requirements or standards, requires 
significant capital investment. The same fact unfortunately applies to 
all buildings and structures. At McClellan the infrastructure and code 
compliance investment identified in the reuse plan is $283 million. The 
equivalent requirement at Mather is approximately $140 million. 
Sacramento County has benefited from Federal grants, primarily from the 
Department of Commerce Economic Development Administration, local and 
State investment, and also private sector investment but we still have 
a long way to go, over $330 million at the two former bases in 
Sacramento County. A Federal low-interest loan program, in addition to 
existing grant programs, may be appropriate to support both the 
improvement and operation of infrastructure in the critical early years 
of reuse following base closure.

Property Transfer
    The Federal ``process'' for disposal of surplus property at a 
closing military facility has substantially improved since the first 
round of BRAC. The introduction of the Economic Development Conveyance 
(EDC) followed by most recently the no cost EDC have made the Federal 
property disposal process much less painful for both the military 
service and the LRA. Although Sacramento County has no fears associated 
with a future round of base closures, I would urge you to consider the 
no cost EDC methodology for disposing of surplus military property in 
the future.

    Senator Hutchison. Thank you very much.
    Mr. DuBois, we went ahead and started and we will be 
through very shortly and call you.
    Mr. DuBois. No problem.
    Senator Hutchison. I know you had traffic problems.
    I would like to just ask all three of you briefly. I think 
from what you have said there are a couple of factors that keep 
recurring. One is the land transfer and second the 
environmental remediation. It has been said, by the Department 
of Defense, that one of the problems is that a community will 
not reach the decision about what it wants to do with the 
property early enough that they can do a swift transfer and the 
correct environmental remediation.
    All three of you I think said it was not a factor in your 
communities. But my question is how can we better help other 
communities who are going to face this not run into 
disagreements on land use that would cause them the delays that 
all of you have said would be devastating to your communities?
    General Roberson. Senator Hutchison, the afternoon--you may 
recall, in fact, you were at the mission when it made the 
decision in 1995. That afternoon, the Mayor of San Antonio at 
the time appointed a communitywide group of people to plan a 
vision for the redevelopment of Kelly that represented all the 
aspects of the community. They worked for several months and 
put together a vision for the redevelopment of Kelly and, 
amazingly enough, that vision is still, in broad outline, what 
we are still working on today, several years later.
    So I think the key to it is an early decision by the 
leadership of the community to get a broad involvement of the 
community and to try to hammer out a vision that everybody can 
buy into, and then use that as a blueprint for the future. If 
you do not do that, I think you can end up with the kind of 
debates and arguments that delay redevelopment over time.
    Senator Hutchison. Any other comments?
    Mr. Bryan. I think in our case under the hot turnover 
scenario as we have all mentioned, early on Governor Carroll 
Campbell sort of put together what we call the BEST Committee, 
B-E-S-T, Building Economic Solutions----
    Senator Feinstein. Pardon me, could you speak directly into 
the mike. It's hard to hear.
    Mr. Bryan. I am sorry, I am sorry.
    As I said, early on Governor Carroll Campbell put together 
a committee called the BEST Committee as a group of community 
leaders to look at this property and see what possibility it 
was best used for, and obviously after a year that plan was put 
together and it enabled us to have a hot transfer while they 
were still hammering out the cleanup, how that is going to 
occur, when it occurs.
    At this point I think we have some 350 acres out of 1,500 
that have been transferred and this process is still ongoing 
under the leasing scenario.
    Mr. Leonard. I would concur that I think the most important 
point is focused local leadership, and if you look at the 
successful case studies around the country where the local 
leadership has come together immediately following a closure 
announcement and, rather than turf wars erupting in disputes 
over who is in charge, bringing the local leadership together 
to focus in turn on a reuse plan and transition of the 
properties is absolutely critical.
    There are case studies in California where you can see both 
success and near-failure all because of the focus in 
leadership.
    Senator Hutchison. Thank you.
    My last question. I do want to get in the record the issue 
of the McKinney Act. We have faced it in BRACs, of course, but 
we are also facing it in ongoing bases that want to take out 
certain parts of a base or take out housing. So I want to ask 
each of you what your experience was with the McKinney Act and 
if you have any thoughts about eliminating it or if it could be 
reworked in any way that would not affect the ability for a 
reuse that would make sense so that it is all the same type of 
reuse.
    So anyone who would like to answer?
    General Roberson. Maybe I can start, Senator. While I am 
personally sympathetic with the goals of the McKinney Act, at 
Kelly it was a great disaster for us. We did make a significant 
amount of personal and real property available to legitimate 
homeless organizations and it worked out fine, but there was 
one group that turned out not to be a legitimate homeless 
organization that did not get property and, after going through 
the process, ended up taking us to Federal court, and that has 
lingered on for 5 years as a matter of fact and cost the 
redevelopment agency over a quarter of a million dollars in 
legal fees, and finally is almost resolved now in our favor. 
But it delayed the use of some property and obviously was a 
significant financial burden on the redevelopment agency.
    I guess I could get a little emotional about it because of 
the impact on us. But I don't see any solution but to eliminate 
the McKinney Act.
    Senator Hutchison. Mr. Leonard? Sorry.
    General Roberson. In our case, early on we brought the 
providers together to identify any of the local groups that may 
be part of the group that could utilize the McKinney Act and we 
dealt with this issue one time as we moved ahead. It was agreed 
upon, anyone that was not on this list would not qualify 3 
years down the road to come back in and try to secure a portion 
of our base.
    We successfully located some of the homeless providers and 
they are there now, but it has been an ongoing scenario of new 
folks coming in to say that they are entitled to this property 
and then we have to go back to the original scenario that we 
have, that we have dealt with at one time early on.
    Senator Hutchison. Did you give up buildings or did you 
give up land?
    Mr. Bryan. Buildings and housing.
    Senator Hutchison. So you did not have to give away land, 
or did they not move the houses?
    Mr. Bryan. No, the houses are still there and they are 
occupying the houses. There were so many of the buildings that 
they would like to have that they could not afford the 
utilities and the upkeep on them. So we had to keep juggling 
that around to giving them a supplement they could operate once 
they got there. But we did not lose any land.
    Senator Hutchison. Mr. Leonard.
    Mr. Leonard. Yes, two case studies. Mather, we as the LRA 
brought all the homeless providers together and identified a 
series of competing needs. We developed a program together and 
then in turn, through the county Department of Human Services, 
implemented that program with the county as lead agency, with 
also HUD support to make that program go, and it remains a 
success story to this date. So the county took property, real 
property, through a homeless assistance conveyance to make that 
program go.
    McClellan, a different story. We attempted the same 
approach. However, we had one provider within our community 
which did not cooperate within this process. They laid claim to 
some prime property on McClellan, validated their request, and 
secured Federal sponsorship, and we have in essence been in a 
multi-year experience of negotiating them away from that 
property to another site on the base, also providing them in 
essence a cash settlement to assist them in developing 
additional facilities and running programs on McClellan and 
also at another location.
    Although, as Mr. Roberson indicated, I too am sympathetic 
to the needs, I feel as though this is a real conflict and a 
significant complicating factor in the military base reuse 
process. So I would urge it be dispensed with.
    Senator Hutchison. Thank you.
    Senator Feinstein.
    Senator Feinstein. Thanks very much.
    I was puzzled by your testimony. You say: ``Over the past 2 
years the Air Force appropriation requests for the McClellan 
environmental program has not been fully supported by the 
Department of Defense and the Congress. As a result, the 
cleanup schedule has been adversely affected. The achievement 
of critical milestones in the remediation program is now 
anticipated to be delayed by 7 or more years.''
    This is because of lack of funding?
    Mr. Leonard. Yes, yes, because of lack of funding and also 
the application of funds that have been appropriated.
    Senator, we wanted to express our appreciation for your 
efforts over the last year in supporting our needs at 
McClellan.
    Senator Feinstein. I do not recall ever getting an 
additional request, ever having one being brought to my 
attention, and I am just asking my staff to go back and check 
now, but I do not recall it at this time. So how much money are 
you speaking of?
    Mr. Leonard. Specifically, there is a request that we are 
working on now for $20 million to support a sanitary sewer 
replacement and environmental remediation at McClellan. This is 
absolutely critical. We stand by with local funds to replace 
the sewer system. However, because of radioactive materials 
contaminating the sewer there is an additional requirement for 
Air Force address of that issue.
    Senator Feinstein. Is that the plutonium from the reactor?
    Mr. Leonard. No, that is a separate issue. We also had 
another site, referred to as CS-10, which has a $38 million 
cleanup requirement, and I believe that is being funded over a 
multi-year period. That is the plutonium site. The radiological 
issues associated with sanitary sewer represent a different 
issue for which funding is needed.
    Senator Feinstein. Well, I am concerned that you are this 
far behind. My question is what do you need this next year? You 
mentioned the $20 million for the sewer and I gather the 
community is putting in a like amount; is that correct?
    Mr. Leonard. That is correct.
    Mr. Bryan. How much do you need for the plutonium cleanup?
    Mr. Leonard. I would have to check to see what the 
additional number will be next year.
    Senator Feinstein. Well, if you would do that I would 
appreciate it. And I wish someone would talk to me directly 
about it. I would appreciate that very much as well.
    Mr. Leonard. Certainly.
    Senator Feinstein. May I ask you, Mr. Bryan, a question 
just to clear something up. What is the current relationship 
between the redevelopment authority and the State legislature? 
My understanding--I am unclear of how that status was resolved 
in Charleston.
    Mr. Bryan. I guess you are speaking of the recent 
legislation that the property would be divided between the City 
of North Charleston and the South Carolina State Ports 
Authority.
    Senator Feinstein. That is correct.
    Mr. Bryan. That legislation has been passed that a portion 
of the property would go to the City of North Charleston for a 
redevelopment project that is part of their old village, which 
is about 300 acres, 350 acres, and the rest of the 1,400 some 
acres would be the South Carolina Ports Authority to build 
their new terminal with some Federal tenants placed in those 
areas that they will have to work around.
    I have to tell you, I am concerned about the jobs that we 
have in there now with that type of scenario. But the 
legislation is passed; now it is my job to see that it goes 
smoothly towards dividing it.
    Senator Feinstein. Would you express your concerns a little 
more fully, please?
    Mr. Bryan. My concern is that the property on the naval 
base and the money spent belongs to the taxpayers of the State 
of South Carolina and that a portion of this property that 
would go to the City of North Charleston may wind up as a 
private development with private developers coming in. And when 
the legislation was passed, we did an agreement with the City 
of North Charleston on a development plan for that base that 
they would pay the redevelopment authority the market value of 
the property. When the legislation was passed, the legislation 
was passed that they get it free of charge and then they are 
able to sell it to their private developers. But the 
redevelopment authority has no relationship whatsoever to the 
developer. Ours is strictly with the city.
    Senator Feinstein. I missed that. The redevelopment agency 
has no relationship?
    Mr. Bryan. Has no relationship with the developer. Our 
relationship is strictly with the city of North Charleston. I 
have some concerns about the project, but if it does not go our 
relationship is with the city. We would have had to send a 
development of this magnitude out on an RFP.
    Senator Feinstein. So is what you are saying public land is 
being given to a private entity for a profitmaking purpose? Is 
that what you are saying?
    Mr. Bryan. What I am saying is it is being given to the 
City of North Charleston and the city is selling it to a 
private developer, yes, ma'am.
    Senator Feinstein. At market rate?
    Mr. Bryan. I hope so.
    Senator Feinstein. Thank you very much.
    Mr. Bryan. My main concern there was the jobs that are in 
place and the long-term effect of a private development 
collecting the rents and that sort of thing from these jobs and 
the long-term sustainability was my concern.
    Senator Feinstein. How many jobs are in place?
    Mr. Bryan. 5,400.
    Senator Feinstein. 5,400. So they would essentially be 
lost?
    Mr. Bryan. They have agreed to honor their term of lease. 
We do have some 30-year leases in place, but when you are 
operating a shipyard there is continual investment and I am not 
sure you continue to invest if you think you may be going away 
1 day. So I am concerned about that.
    Senator Feinstein. Let me ask you, are the people satisfied 
with that?
    Mr. Bryan. ``The people'' as?
    Senator Feinstein. In Charleston, the community.
    Mr. Bryan. I think the City of North Charleston, which the 
base is located in, is satisfied that they are getting some 
riverfront property and that sort of thing. I think the 
taxpayers as a whole for the Charleston region probably do not 
quite understand how that could happen.
    Senator Feinstein. So you are saying this would most likely 
end up being office commercial or housing and the shipyard jobs 
would be gone?
    Mr. Bryan. I surely hope not. It is a shipyard that has 700 
or 800 employees. It is just really doing a great job with 
keeping people employed and bringing ships in. As I said, it 
has been a very successful conversion and I hope that it 
continues to be a shipyard for many years.
    Senator Feinstein. Right.
    Mr. Bryan. At some point I feel that the local 
redevelopment authority would probably go away faster now in 
this scenario that the land is being divided. Once the land is 
divided and the land is in the ports authority area and the 
land is in the City of North Charleston and they start 
collecting the rents and dealing with the issues, then maybe at 
some point in that--I have devised a plan that maybe the local 
redevelopment authority will go out of existence maybe December 
31, 2004, if this plan continues in the way that it is going.
    Now, whether the City of North Charleston keeps their own 
LRA in place, I do not know. I know there has been some moves 
in the future from the city to ask the State legislature to do 
away with the redevelopment authority so that they can do their 
projects now as they would like, without stumbling blocks. That 
is really the way it is.
    Senator Feinstein. Right. Thank you. I have to think about 
this a little bit because I basically believe local 
decisionmaking should determine the use of these bases. It is 
an interesting decision for Charleston to make if they are 
going to lose all those jobs.
    Mr. Bryan. I think there was a real push to get the State 
ports authority in an area that they could have their new 
expansion. Daniel Island was a potential for years and the 
legislature has basically said you are not going there, but let 
us look at the Navy base. I think some concessions were made 
for the City of North Charleston because they had some 
ordinances in place that said there will be no port type 
activity in the City of North Charleston. So I think some 
concessions were made there, and hopefully in the long term it 
will turn out to be good.
    Senator Feinstein. Thank you. Thank you very much.
    Mr. Bryan. Yes, ma'am.
    Senator Feinstein. Thank you, Madam Chairman.
    Senator Hutchison. Thank all of you for coming here from 
your home towns to help us, because certainly this is a major 
part of any BRAC that we have and your insights have been very 
good and we will try to help other communities learn from your 
experiences. Thank you.
    General Roberson. Thank you.
    Mr. Bryan. Thank you very much.
                         DEPARTMENT OF DEFENSE

                        Office of the Secretary

STATEMENT OF RAYMOND F. DuBOIS, DEPUTY UNDER SECRETARY 
            OF DEFENSE FOR INSTALLATIONS AND 
            ENVIRONMENT
    Senator Hutchison. Now I would like to ask Mr. Ray DuBois, 
the Deputy Under Secretary of Defense for Installations and 
Environment.
    Mr. DuBois. Madam Chairwoman, can you hear me?
    Senator Hutchison. Yes, I can.
    Mr. DuBois. I want to thank you very much for rearranging 
the hearing today. To hear from folks like Paul Roberson and 
Jim Bryan and Bob Leonard is for me very informative. It is, 
after all, their experiences that have helped to inform the 
Base Realignment and Closure (BRAC) 2005 round and the process 
by which the Secretary is going to do the analysis.
    I would like to begin by saying that, notwithstanding the 
fact that I am in one of my other hats, the Director of 
Administration and Management, and therefore own the motor pool 
at the Pentagon, that still does not get me across the river on 
time sometimes. I understand there was an incident on the 
Memorial Bridge today that absolutely clogged all the arteries 
in.
    Senator Hutchison. Oh, that was why?
    Mr. DuBois. Yes, yes, ma'am.
    Now, today I am going to briefly open with a statement and, 
with your forbearance, submit for the record my written 
statement. But I thought it was important to just outline BRAC 
2005, the process, the overseas basing issues that are on the 
Secretary's desk, some reuse issues that in no small measure by 
virtue of the inputs from folks like those who were in the 
first panel, how we intend to relook at the reuse and disposal 
issues.
    BRAC environmental cleanup, of concern to this subcommittee 
and to you and Senator Feinstein, as well as to us. I did 
listen to the exchange on the McKinney Act and I might just 
make one quick comment about that, and I understand that 
Senator Feinstein made some remarks about the perchlorate issue 
that I am prepared to at least answer as I see the process 
going on in terms of looking at the reference dosage and risk 
assessments there.
    Of course, Secretary Rumsfeld appreciates the opportunity 
that you have afforded me and in turn myself as his 
representative to appear today before this Military 
Construction Subcommittee. The issues of base realignment and 
closure, both the process and product are clearly--and the 
Secretary has testified to this effect--not something that one 
wakes up in the morning and wants to do with great appreciation 
and alacrity.
    Having said that, there is no question that the critical 
importance of the rationalization of our entire military 
infrastructure for the Department is very, very important to 
him. Now, some have implied recently that the Secretary's 
attention has been somewhat diverted. I can assure you that it 
is not all Iraq all the time. There are issues pertaining to 
transformation of the Department that take up the Secretary's 
time during the day also.
    Now, BRAC--he personally has been involved in this BRAC 
kickoff, if you will, and I will address that in a moment. To 
reconfigure our current infrastructure, to include both the 
war-fighting capability and the efficiency of our business 
operations, is tantamount to success. Our expectation is by 
removing excess infrastructure, excess capacity if you will, we 
hope to save at least several billions of dollars per year. 
Now, if we were able to do that we could then focus those funds 
on facilities we actually need and turn wastes into war-
fighting, as well as quality of life improvements for the men 
and women who serve and voluntarily serve in our military.
    The Department will conduct this rationalization with an 
eye toward ensuring that we assess the capacity across 
installations maintained by the Military Services for the best 
joint use possible. This is in many ways a different approach 
than has been the case in the four prior rounds--best joint use 
possible.
    Now, we have examined carefully the experiences gained 
through the management of the previous BRAC rounds and, looking 
ahead to the next one, we have attempted to make a number of 
process improvements to enhance our ability to arrive at the 
right-sizing of our infrastructure, which will in turn 
complement and support the business transformation activities 
of the Department.
    Now, the Secretary released a memorandum, which I believe 
you have, in November of last year that, quote unquote, kicked 
off the Department's BRAC process. It created an analytical 
framework and a review and oversight process that we believe 
improves and strengthens those of previous BRAC rounds and 
which in point of fact takes into consideration several 
suggestions some Senators and Members of the House in our 
discussions over the past 2 years.
    Now, for example, early on in the process the Secretary 
will review and approve those functions within the Department 
that will receive what we call joint cross-Service analysis as 
well as establish the measurements of success, the metrics for 
that analysis. Now, while the Services, the individual military 
departments and Services, will evaluate their unique functions, 
their unique military operational functions, those functions 
which are determined to be common to more than one service, 
business-oriented, and in point of fact functions that exist in 
more than one service or reside in the private sector, they are 
going to be evaluated from the get-go in a joint cross-Service 
way. This is different from the prior rounds.
    We recently established six broad areas to examine 
functions for joint analysis. Now, you can imagine we could 
have used various terms, and I will answer questions as best I 
can on what these terms mean. But I think they are fairly self-
explanatory.
    The first category is what we call industrial activities, 
those activities that are again common to the Services across 
the board and also activities which the private sector 
performs, number one.
    Number two, supply and storage, warehousing and so forth.
    Number three, technical and laboratory.
    Number four, education and training facilities.
    Number five, medical facilities.
    And number six, a sort of catch-all category that we call 
administrative facilities. But in particular I should note that 
this last category, the administrative category, will address 
the national capital region, a region that, as we all know, has 
in excess of 100,000 military and civilian personnel in the 
employ of the Department of Defense, and every single military 
service as well as the Secretary of Defense owns or controls 
real estate in the national capital region and we believe that 
only through a joint cross-Service approach could we 
appropriately assess and rationalize that particular area.
    Now, overseas: In this subcommittee at my last appearance, 
we addressed some of the issues. But there is no question that 
our installations transformation is not limited to the United 
States and its territories. We are also assessing our 
facilities overseas to determine the proper size and mix. As 
you well know, since 1990, the Department has returned or 
reduced operations at about 1,000 overseas sites, resulting in 
a 60 percent reduction in our overseas infrastructure and in 
particular a 66 percent reduction in Europe.
    We continue to review the overseas basing requirements with 
the assistance of the combatant commanders and we are currently 
examining opportunities for both joint use of facilities and 
land by the four Services together, consolidation of the 
infrastructure, enhanced training areas--again a joint service 
assessment.
    Now, the Secretary, as you know, directed a comprehensive 
review of our overseas presence in response to the interest and 
the direction of some of the members of this subcommittee as 
well as others in Congress. It also reflected his vision, which 
was addressed in the Quadrennial Defense Review (QDR) of 
September 2001, to look at and comprehensively review that 
infrastructure that was in support of our war-fighting plans 
overseas.
    Now, it has been asked, why hasn't the Secretary responded 
to the requirement to submit to Congress a more complete report 
in this regard. We received from the combatant commanders their 
preliminary inputs last year. The Chairman of the Joint Chiefs 
of Staff, General Myers, requested that the Secretary delay his 
report to Congress in order to review those reports, those 
inputs, as well as the fact that we were about to appoint and 
announce two new combatant commanders, one in Korea, General 
Leon LaPorte, and the SACEUR or the European Commander, General 
Jim Jones, and the Secretary believed that it was important to 
get their initial views as well.
    I can assure the committee, the subcommittee, however, that 
the Secretary has in place a process which will address these 
overseas basing requirements, to include reprogramming for 
fiscal year 2003, as well as, where and when necessary, 
presenting a budget amendment to this committee in the Senate 
and your counterpart in the House, a possible budget amendment 
for fiscal year 2004, prior to your markup.
    With respect to reuse, you heard from the three witnesses 
in the prior panel that local communities, when faced with a 
closure, must address and grapple with a number of reuse and 
redevelopment issues. The closure of a military base can be a 
significant redevelopment challenge. After four rounds of BRAC, 
there have been numerous success stories and, admittedly, there 
have been some stories less than successful.
    Reusing a military base is frequently the largest and most 
complex economic redevelopment effort ever undertaken in that 
particular community. Local reuse authorities work to harness 
public and private sector resources to drive economic recovery 
and growth.
    Now, as of October 2002, the end of the last fiscal year, I 
asked for a review of how many civilian jobs were created on 
former military bases. It is in excess of 85,000, an 8 percent 
increase from the previous year.
    The timely transfer of property will always be a priority 
for the Department and I recognize the importance of quick 
access to the property in order to, yes, save DOD caretaker 
costs, but also to leverage private development financing, 
create new jobs, and generate new tax revenues.
    Each military department has an extensive and varied 
experience with BRAC reuse and disposal and I am sure you will 
address that to the witnesses who follow me. Now, in order to 
share those experiences and expertise and to ensure that the 
Department of Defense is conducting reuse and disposal in the 
most efficient and effective way possible, I have formed a 
working group called the Reuse and Disposal Group, chaired by 
my principal deputy, Mr. Philip Grone, former Deputy Staff 
Director of the House Armed Services Committee, to work with 
the Services and military departments and Members of Congress 
and interested parties in the local communities to improve how 
we go about BRAC reuse and disposal.
    I look forward to reviewing with the Congress, perhaps 
early next year, some of the ideas that we are coming up with.
    Now, in conclusion, we have tried to do much within the 
BRAC authority provided by the Congress. By consolidating and 
realigning and reducing unneeded infrastructure, the Department 
can indeed focus investments on maintaining and recapitalizing 
what we actually require, resulting in ready facilities for the 
war-fighters while more prudently using the taxpayers' money.
    Change is rarely easy. Changes that we are asking of the 
military departments and our communities are daunting. But we 
look forward to working with you on this challenge.
    Now, I did mention that I would quickly talk, if you would 
permit me, Madam Chairman, about BRAC cleanup, an issue that 
continues to, yes, in some ways vex myself and my three 
Assistant Service Secretary colleagues. But it is important to 
note that, with the help of the Congress, we have already spent 
in excess of $7.5 billion on BRAC environmental requirements, 
the majority of which of course has been devoted to BRAC 
cleanup.
    Now, it is true that there is still a cost to complete, not 
an insignificant one, one that is approximated in excess of $4 
billion to suffice the final cleanup requirements. But as I 
have testified before, oftentimes environmental impediments 
frustrate the community involved as well as the Department of 
Defense, and these environmental impediments are not 
necessarily driven by a statute, be it State or Federal. 
Oftentimes it is driven by conflicts between State and Federal 
regulators on the site and between local special interests who 
have varying degrees of desires with respect to cleanup 
remedies and land use controls most particularly.
    Now, we plan to reinvigorate, and it is in this year's 
defense authorization legislative proposal in front of you, in 
front of the authorizing committees, we plan to reinvigorate 
the President's Economic Adjustment Committee, which is an 
organization comprised of all 23 Federal agencies and 
departments, including the Environmental Protection Agency, to 
use together our respective and collective influence, power, 
and funding to attempt reconciliation at the local level and 
appropriate funding for environmental cleanup and land use 
planning.
    Lastly, the McKinney Act. The Department of Defense wants 
to go on record, I want to go on record, that we support the 
goals of the McKinney Act, but, like most other public policy 
statutes, sometimes they are difficult to administer, again 
because of local special interest conflicts, especially for us 
the quarterly requirements, the repetitive screening 
requirements.
    We believe that the McKinney Act as it applies to BRAC 
would be much more workable if it was a one-time screening 
requirement and once it has been concluded that the property is 
not suitable or there is no interest, the property should be 
free from further requirements. This constant rolling screening 
I think is an impediment to ultimate reuse.
    Now, the McKinney Act was originally designed as a property 
transfer mechanism. Many homeless assistance providers, 
however, expressed that they would rather have money than the 
property because they find that they cannot necessarily make 
use of the property that might be available to them in a BRAC 
situation. Now, of course the Defense Department is not 
authorized nor has Congress appropriated funding to us to 
satisfy what may very well be important and legitimate concerns 
on the part of the homeless organizations in that particular 
community, and therefore we get caught in this local conflict 
between jurisdictions and between interests.

                           PREPARED STATEMENT

    I think I will stop there. I do appreciate your forbearance 
in letting me address some of those issues that I understand 
came up in your opening statements. I do know that Senator 
Feinstein has some perchlorate concerns and rightly so, but I 
will wait until I get asked the question if that is all right 
with you.
    [The statement follows:]

                Prepared Statement of Raymond F. Dubois

    Chairwoman Hutchison, Senator Feinstein, and distinguished members 
of the Subcommittee on Military Construction, I welcome the opportunity 
to appear before you today to discuss the base realignment and closure 
(BRAC) process and the critical importance of the rationalization of 
military infrastructure to the Department of Defense. Rationalizing our 
infrastructure is an integral part of our effort to transform the 
Department. New force structures must be accompanied by a new base 
structure. Today I will discuss this Administration's approach to the 
new BRAC round and our progress in implementing the prior rounds.

                 TRANSFORMING BASES AND INFRASTRUCTURE

    Since 1988, the Department of Defense has closed 97 major 
installations and realigned missions at an additional 55 others. 
Combined with the over 230 minor BRAC actions undertaken during the 
four previous rounds of BRAC, the Department of Defense has 
rationalized much of its infrastructure. Since the last round in 1995, 
three successive Secretaries have argued for the need to further 
rationalize defense infrastructure. In the National Defense 
Authorization Act for fiscal year 2002, Congress was persuaded by the 
case laid out by Secretary Rumsfeld and authorized an additional BRAC 
round for 2005. We are grateful to the Congress for authorizing this 
process. BRAC 2005 will reconfigure our current infrastructure to 
improve both war fighting capability and efficiency. Our expectation is 
that by removing additional excess capacity we hope to save several 
billion dollars annually. We can then focus the funds on facilities we 
actually need and turn waste into warfighting as well as [and] quality-
of-life improvements for the men and women who volunteer in service to 
the Nation.
    Prior BRAC actions have resulted in net savings to the Department 
of Defense and its Components of approximately $17 billion, with annual 
recurring savings of approximately $7 billion. These savings have been 
thoroughly validated by the General Accounting Office. However, 
savings, while critically important, are not the only benefit--in fact, 
they are not even the primary benefit. The authority to realign and 
close bases we no longer need will be a critical element of ensuring 
the right mix of bases and forces within our warfighting strategy as we 
transform the Department to meet the security challenges of the 21st 
century.
    Transformation requires rationalizing our base structure to better 
match the force structure for the new ways of doing business. And the 
Department will conduct this rationalization with an eye toward 
ensuring we assess capacity across the installations maintained by the 
military services for the best joint use possible, if that is 
appropriate for the mission under review.
    We have examined carefully the experiences gained through the 
management of previous base realignment and closure rounds. Looking 
ahead, to the next round in 2005, we have attempted to make a number of 
process improvements to enhance our ability to arrive at a rightsizing 
of our infrastructure which will complement and support the force and 
business transformation activities of the Department.

                          CONDUCTING BRAC 2005

    The Department's BRAC 2005 round will be based upon the general 
template used in the three previous BRAC rounds. While I recognize that 
there was some criticism regarding the implementation of the previous 
Commission's recommendations, overall, the process worked well. In 
fact, the review by the General Accounting Office of the Department's 
1995 BRAC process concluded that the process was generally sound and 
well documented and should result in substantial savings. The 
Comptroller General concluded that as Congress considered the need for 
future defense infrastructure reductions that it avail itself of a 
process similar to that authorized in 1990 that govern the succeeding 
three rounds of base realignment and closure. As a caution, however, 
the General Accounting Office also recommended that the Department 
needed to strengthen its leadership within the process, should there be 
a future BRAC round, to maximize the opportunity for rationalization, 
particularly in areas that could be considered joint or common business 
and functional areas.
    Both the Congress and the Department have responded affirmatively 
to those recommendations. The Congress authorized a BRAC round for May 
of 2005 based upon the successful construct of the previous three 
rounds with the Secretary providing recommendations to an independent 
commission which then holds public hearings and issues its 
recommendations to the President who then forwards them to the Congress 
for approval on an ``all or none'' basis. Similarly, the Secretary of 
Defense, in his memorandum of November 15, 2002, that ``kicked off'' 
the Department's BRAC process created a review and oversight process 
that is substantially strengthened from those in previous rounds.
    The Secretary established an Infrastructure Executive Council, 
chaired by the Deputy Secretary, and composed of the Secretaries of the 
Military Departments and their Chiefs of Services, the Chairman of the 
Joint Chiefs of Staff, and the Under Secretary of Defense (Acquisition, 
Technology and Logistics) as the policymaking and oversight body for 
the entire BRAC 2005 process. The Secretary also established a 
subordinate Infrastructure Steering Group chaired by the Under 
Secretary of Defense (Acquisition, Technology and Logistics) and 
composed of the Vice Chairman of the Joint Chiefs of Staff, the 
Military Department Assistant Secretaries for installations and 
environment, the Service Vice Chiefs, and myself.
    This structure will permit the Secretary of Defense will approve 
key elements of the process has, in fact, established a strengthened 
joint process for BRAC 2005 that will advance transformation, 
jointness, combat effectiveness, and the efficient use of taxpayer's 
money by effectively capitalizing on the military value of our 
installations. For example, early on in the process, the Secretary will 
review and approve those functions within the Department that will 
receive joint cross-service analysis and the metrics for that analysis. 
While the Services will evaluate their unique functions, those 
functions determined to be common business-oriented (i.e., the 
functions exist in more than one service or reside in the private 
sector) will be evaluated jointly for cross-servicing.
    Along those lines, we have recently established six broad areas to 
examine functions for joint analysis. Those broad areas are: Supply and 
Storage, Industrial, Technical, Education and Training, Medical and 
Administration. We are now in the process of designing the 
organizational approach for a comprehensive analysis of these functions 
for the Secretary's approval. In the previous round, the Department 
constrained its joint cross-service analysis by limiting the authority 
of the groups conducting the analysis and assigning them a much more 
limited functional basis. Through the lessons learned from previous 
rounds and the design of a process to mitigate the constraints imposed 
in previous rounds, I am confident that BRAC 2005 will achieve its 
potential to materially improve the manner in which military 
infrastructure and supports our war fighting capability.

                                OVERSEAS

    Our installations transformation is not limited to the United 
States. We also are assessing our facilities overseas to determine the 
proper size and mix. Since 1990, the Department of Defense has returned 
or reduced operations at about 1,000 overseas sites, resulting in a 60 
percent reduction in our overseas infrastructure and a 66 percent 
reduction in Europe, in particular, and we continue to review overseas 
basing requirements of the Combatant Commanders and examine 
opportunities for joint use of facilities and land by the Services, 
consolidation of infrastructure, and enhanced training. We have 
undertaken a comprehensive review of our overseas presence, in response 
to both the interest and direction of the Congress and the Secretary's 
initiative. While this comprehensive review has not been completed, I 
can assure the Subcommittee that we are working very hard on it and 
will report to the Congress as it is completed.

                    BASE REUSE AND COMMUNITY PROFILE

    For local communities faced with a closure, of course, BRAC raises 
a number of reuse and redevelopment issues. As the Members of this 
Subcommittee know well, the closure of a military base can be a 
significant redevelopment challenge. After four rounds of BRAC, 
numerous success stories abound and, admittedly, some challenges 
remain.
    The closure of a military installation creates a hurdle and an 
opportunity for local communities to reuse large parcels of land and 
existing buildings in ways not previously envisioned. A closed 
installation can be the affected community's greatest asset for 
mitigating the impacts of the closure and charting a future that 
diversifies the local economy and attempts to build on a community's 
strengths.
    Reusing a military base is frequently the largest and most complex 
economic redevelopment effort ever undertaken in a community. Local 
reuse authorities work to harness public and private sector resources 
to drive economic recovery and growth. Reuse also creates an 
opportunity to achieve multiple community goals, including the 
diversification of the local economy through new job creation; 
expansion of the tax-base; and satisfying a range of community needs 
for new public facilities. Through the four previous rounds of BRAC, 
the Military Departments transferred about 250,000 acres of land with 
buildings and other improvements for reuse as non-Defense activities. 
As of October 2002, over 85,000 new civilian jobs have been created on 
former military bases--an 8 percent increase from the previous year.
    The Defense Economic Adjustment Program seeks to assist Defense-
impacted communities, workers, and businesses. Over the past four 
rounds of BRAC, the Department's Office of Economic Adjustment (OEA) 
has provided over $270 million in economic adjustment planning 
assistance for the preparation of adjustment strategies, reuse plans, 
and initial organizational staffing. In addition, $218 million has been 
provided by the Department of Labor for worker adjustment assistance; 
$405 million in aviation master planning and implementation assistance 
from the Federal Aviation Administration; and, $568 million from the 
Department of Commerce's Economic Development Administration for 
building construction, demolition, and other implementation activities. 
Interagency coordination with the Departments of Health and Human 
Services, Education, Justice, the Interior, and Transportation, has 
also facilitated the transfer and effective reuse of more than 154,000 
acres.
    The Department recognizes the uniqueness of each community and has 
provided a combination of technical and financial resources to support 
the needs of the impacted community. These include:
  --Organization.--A community's single point of contact for all 
        matters relating to the closure that is representative of the 
        impacted community and deliberates to reach a consensus on base 
        reuse and other local adjustment issues.
  --Plan.--Community prescription for economic recovery in response to 
        the closure, including specific details on reuse of the former 
        military facility. The effort optimally takes into account the 
        Military Department's environmental baseline information along 
        with the community's economic strengths and opportunities. Job 
        creation and tax base expansion are common goals, although 
        public activity and non-revenue-generating activity 
        (institutional use, parks and recreational areas, hospitals, 
        schools, etc.) are included as well.
  --Implementation.--community will seek to achieve a sustained mix of 
        public/private civilian activity on the former base consistent 
        with its redevelopment plan, yielding enough revenue to cover 
        the community's costs of reuse and the necessary private return 
        on investment. For some, this may take a considerable amount of 
        time.
    Federal property disposal laws and special enhancements authorized 
for BRAC locations provide a variety of acquisition mechanisms to 
satisfy a diverse number of base reuse scenarios. Traditional public 
benefit transfers have been available for public entities and certain 
eligible non-profit organizations. These include use for aviation, 
ports, prisons, education, health and historic monument purposes. BRAC 
laws added the economic development conveyance (EDC) for job producing 
activities like business and industrial uses. Initially this provision 
was for transactions at or less than fair market value. Later Congress 
made these transfers available at no cost. The fiscal year 2002 
National Defense Authorization Act modified the EDC provision to make 
the no-cost EDC a permissive action. There was also Congressional 
direction that the Secretary seek fair market value consideration for 
EDC transfers in BRAC 2005.
    Despite this change to the EDC authority, a rich array of property 
disposal and acquisition authorities and strategies remain. A recent 
example of a mixed disposal is the former MCAS Tustin where the 1,585 
acres were transferred under public benefit authorities for homeless 
and park uses, under an EDC for primarily business development, and 
much of the former military housing was sold at a public bid sale. In 
addition the historic blimp hangar will be transferred to the City of 
Tustin under an historic PBC. Numerous closed bases have been 
transferred under multiple property disposal authorities that suit the 
intended community uses.
    From 1988 through 1995, approximately 387 closure or realignment 
actions were approved and the Department has completed each action 
within its respective statutory deadline. In implementing these 
actions, the Department has sought to close the facilities quickly to 
maximize savings and make property available for community reuse 
objectives, including job creation. As of December 2002, the Military 
Departments have disposed of 271,769 acres (53 percent) of the 510,747 
acres that are being made available for disposal and local reuse. Of 
the remaining inventory, roughly 189,559 acres are projected to be 
transferred by the end of fiscal year 2004. Incidentally, approximately 
82 percent of the remaining acreage lies in 6 installations where 
environmental remediation must be completed. I am working closely with 
each of the Military Departments as they seek to transfer this property 
and remedy any impediments to disposal. The transfer of this property 
is a priority for the Department and I recognize the importance of 
quick access to the property in order to save DOD caretaker costs, 
leverage private redevelopment financing, create new jobs, and generate 
new tax revenues.
    However, impediments exist that delay property disposal. Many are 
environmental-related and have been encountered to varying degrees at 
every location. They range from conflict between Federal and State 
regulations or regulators; lack of policy on specific contaminants such 
as unexploded ordnance to fragmented relationships among the clean-up, 
disposal, and reuse interests.
    There are also some that are inherently community-based (such as 
delays in reuse planning and lack of capital for infrastructure 
improvements). Others stem from the individual Military Department 
efforts at property disposal, including inconsistent interpretation of 
BRAC laws, regulations and policy and inefficiency in program execution 
and administration.
    Still other impediments arise when multiple interests are involved 
in negotiations such as the Military Departments, local and/or State 
regulators, local authorities and private developer/third party 
interests over such items as local protection and maintenance, 
development interests, cleanup levels, and land use controls. Lastly, 
where impediments have been encountered, the Department has fostered a 
partnership with the affected community to address the issues and 
facilitate rapid reuse of the former installation.
    Each Military Department has extensive and varied experience with 
BRAC reuse and disposal. In order to share those experiences and 
expertise, and to ensure that the Department of Defense is conducting 
reuse and disposal in the most efficient and effective way possible for 
all concerned, the Office of the Secretary of Defense is forming a 
working group to examine potential improvements to the BRAC reuse and 
disposal process.

                     BRAC AND ENVIRONMENTAL CLEANUP

    Very early on, the Department decided that expeditious cleanup of 
BRAC property was a priority, and ambitiously established a goal to 
have remediation response complete or remedies in place by the end of 
fiscal year 2005. To guide our BRAC environmental remediation efforts 
consistently, we use three over-arching principles:
  --Protect human health and the environment.
  --Make property available for reuse and transfer as soon as possible.
  --Provide for effective community involvement.
    The technical challenge of remediation is finding the 
contamination; determining what is protective of human health and the 
environment; determining a remedy that is safe, cost-effective, and 
acceptable to the regulators and the community; and then implementing 
the remedy. Simple to describe, but at times very difficult to do. Not 
only is there a maze of Federal and State laws and regulations to 
navigate, as well as regulatory and community stakeholders to consult, 
but sequencing and completing the cleanup must take reuse needs, 
priorities, and timelines into account.
    The Department has made very good progress in remediation of 
traditional hazardous substances. At the end of fiscal year 2002, 79 
percent of all 4,900 hazardous substance cleanup sites had remedies in 
place or response complete, and we project having 92 percent of our 
cleanup sites at the remedy-in-place or response complete milestones by 
end of fiscal year 2005. With continued support from Congress and 
regulators, we are confident that this can happen. A few sites, due to 
complex challenges or other obligations (e.g., Chemical 
Demilitarization treaty obligations) will extend beyond fiscal year 
2005.
    Our BRAC military munitions response program (MMRP) will take 
longer to complete, but we are making progress. At the end of fiscal 
year 2002, 32 of our 74 BRAC MMRP sites are at the remedy-in-place or 
response complete milestone, and we expect that number to grow to 45 by 
the end of fiscal year 2005.
    The Department continues its efforts to move BRAC properties to 
communities faster while still maintaining our commitment to provide 
appropriate environmental restoration. One initiative is early 
transfer, in which the Components may transfer property by deed while 
environmental restoration activities are on-going. This type of 
transfer allows better integration of cleanup and redevelopment 
activities. DOD has completed 15 such transfers using the early 
transfer authority Congress provided in 1996.
    As an example, the former Naval Shipyard Mare Island represents one 
of DOD's largest early transfers. Early transfer resulted in disposal 
of BRAC property years earlier than would have otherwise been possible. 
In the case of Mare Island, the City of Vallejo entered into an 
agreement with the Navy to continue remediation. The property was 
transferred and redevelopment started much sooner than if the City of 
Vallejo had to wait for the Navy to complete the cleanup. The 668 acre 
Eastern Early Transfer Parcel transferred 4 years ahead of schedule on 
March 26, 2002, and the 2,814 acre Western Early Transfer Parcel 
transferred 10 years ahead of the previous schedule on September 20, 
2002 In another example of early transfer, the Army and the New Jersey 
Department of Environmental Protection entered into an agreement 
transferring 192 acres to the Bayonne Local Reuse Authority in December 
2002. The agreement will allow the reuse authority to perform 
environmental remediation activities in conjunction with the 
redevelopment process.
    As a further example, innovative contracting approaches are proving 
effective in leveraging the strengths and capabilities of the private 
sector to improve our remediation efforts. For example, guaranteed 
fixed price remediation'' (GFPR), focuses on the outcome--DOD contracts 
for the final remedy at fixed cost and time. During fiscal year 2002, 
the GFPR contract awarded for activities at Fort Pickett, Virginia, was 
at 15 percent less than the government estimate. The Navy also realized 
similar cost avoidance at Charleston Naval Complex by using this 
performance based contracting approach. Cost savings, of course, may 
vary from site to site, but, local communities also gain from the time 
saved in the initiation and length of remediation activities or by 
having increased certainty by securing a final remedy in place by a 
fixed date.

                               CONCLUSION

    The Department has done much within the BRAC authority provided by 
the Congress. By consolidating, realigning and reducing unneeded 
infrastructure, the Department can focus investments on maintaining and 
recapitalizing what we actually require, resulting in ready facilities 
for the war fighters while more prudently using taxpayer's money. 
Change is rarely easy and the changes we are asking of the Military 
Departments and our communities are daunting. We look forward to 
working with you on this challenge.
    In closing, I sincerely thank you for this opportunity. We 
appreciate your strong support of our military construction program and 
we look forward to continuing to work with this Subcommittee as we 
reshape our global infrastructure.

    Senator Hutchison. Thank you very much, Mr. DuBois.
    I am going to try to introduce something, and perhaps I can 
work with Senator Feinstein or others, to keep the McKinney Act 
from doing some of the things that all three of our previous 
witnesses mentioned as real problems. Not only was it never 
intended that money should be coming out of the BRAC or the 
Department of Defense as a substitute, but a quarter of a 
million dollars in legal fees ongoing really hurts a 
community's capabilities to move forward. So I hope we can make 
some changes there.
    Let me start with the issue that we have talked about many 
times, and that is the overseas bases. How, in the changing 
environment that we have now, with perhaps changing geographic 
priorities and training constraints in certain areas, how can 
you determine what you would be able to reasonably close in a 
2005 BRAC process when things are changing so much with our 
overseas commitments?
    Mr. DuBois. Yes, ma'am. As I indicated, the Secretary of 
Defense in the combatant commanders conference of now several 
weeks ago discussed this with the Joint Chiefs and all the 
combatant commanders, both the geographic combatant commanders 
and the non-geographic--STRATCOM, TRANSCOM, et cetera. They 
came to a conclusion, not surprising, that the overseas basing 
infrastructure was in point of fact a legacy of the Cold War. 
It needs to be rationalized, it needs to be reconfigured.
    The Secretary discussed with them how fast that the 
regional combatant commanders, the geographical commanders, in 
concert with the Joint Chiefs and the specified commands, could 
report to him on a long-term vision that would in point of fact 
inform the domestic BRAC process over the next 2 years. I want 
to just set that aside for a quick moment.
    The most immediate requirement, however, is, are there any 
programmed military construction projects in EUCOM or PACOM 
authorized and appropriated in the fiscal year 2003 budget, 
this fiscal year, which in the view of the combatant commanders 
and the Joint Chiefs could be reprogrammed or changed. By 
virtue of the fact that some bases--and I will speak 
specifically to Korea--have been determined now by General 
LaPorte--and the Army this morning reported to me that they 
will be able to get back to me by early next week at the latest 
with their views of General LaPorte's recommendations. Are 
there bases that are enduring and are there bases that are not?
    General LaPorte has identified those that he believes are 
enduring and those that he believes are not. Now, this issue 
obviously has a number of implications for host Nation support. 
Korea does invest a considerable amount of money in supporting 
U.S. forces in South Korea and therefore that discussion has 
yet to take place.
    Suffice it to say that we will ask Congress to reprogram 
some money in terms of Korea as well as Europe from 2003 
projects currently authorized and appropriated to other areas. 
I will give you a hypothetical that in fact is grounded in 
reality, although I hope you will appreciate the fact that I do 
not want to state specifically at this moment Camp A or Camp Y. 
But if the Second Infantry Division, for instance, in Korea was 
scheduled to get a barracks at a particular location in Korea, 
but General LaPorte thought it would be best to build those 
very same barracks at another location because the other 
location in point of fact is of an enduring quality, we will 
ask for your permission to do that--same barracks, same fitness 
center, same military construction projects, same amount of 
money, but it will be done at a different location.
    In 2004 we have asked General LaPorte to do the same thing. 
Remember that these projects, especially the 2003 projects, 
were originally planned for two and a half years ago. As you 
pointed out, Madam Chairman, life has changed. The Secretary of 
Defense has said we can no longer continue to support an 
infrastructure, given the 21st century requirements that the 
President has articulated and the Secretary of Defense is going 
to implement.
    How quickly the 2003-2004 recommendations will be presented 
to Congress. As I indicated in my opening statement, I want to 
do that before you go into markup. That is the only way that 
this will work.
    Senator Hutchison. I agree and appreciate it, because the 
timing was not going to fit. So I appreciate your really 
focusing on that and coming forward for the 2003-2004 request. 
I would like to extend that, though, the relationship to the 
2005 BRAC, and how can you go into a 2005 BRAC with the 
uncertainties that you have now and will have over the next 
year, and what kind of troop strength you might have there or 
bring home because of training constraints or change. You may 
take something out of Germany, for instance, and just bring it 
home rather than sending it to the Czech Republic.
    So how are you fitting in your foreign requirements with 
the base closure that is going to be ongoing? The last thing 
you want to do is close a base and then try, heaven forbid, to 
reopen it. You do not want to do that. So how are you going to 
assure that in 2005 when we are making the final round probably 
of base closures that you have totally in hand the information 
you need about foreign troop strength?
    Mr. DuBois. Yes, ma'am. The Secretary in fact within the 
last week has discussed with the Chairman how to answer your 
very question. Let me just say in a phrase, the domestic BRAC, 
those recommendations that will be finalized in the spring of 
2005, could not be done intelligently unless there is a 
rationalization of the overseas infrastructure. To that end, 
the Secretary and the Chairman have discussed, as I indicated, 
an integrated global presence and basing strategy approach.
    How quickly--and he has also discussed it, they have 
discussed it, with the combatant commanders and the Joint 
Chiefs. How quickly they could pull together a reasonable 
vision of what ought to be--and ``what ought to be'' means 10-
plus years out--remains to be seen. However, having been privy 
to some of these conversations, the Secretary believes that 
these kinds of initial reports and assessments from the 
combatant commanders back to my office, the Joint Chiefs, 
Office of the Secretary of Defense, and the chairman's office 
by this summer will help us create a structure and a framework 
that will have some definition, and I mean that sincerely--not 
just some amorphous, well, we think we are going to have an end 
strength of this amount over here, but some definition by the 
end of the summer.
    It is true that we have started the BRAC, domestic BRAC 
process. However, we also know, as you have said and as I have 
tried to indicate, the Secretary wants to inform that process 
with an overseas vision as we get into it in more detail this 
coming summer, so that when those final decisions are made some 
time between the January and May time frame, or January and 
March time frame of 2005, they will be fully informed by a 
vision and a strategy for presence and basing overseas.
    Senator Hutchison. Thank you.
    Let me ask my Ranking Member to see if she has any 
questions, and then I have another round.
    Senator Feinstein. Thank you very much.
    I do have four questions. I will be brief on all except the 
first, which is perchlorate. The Defense Department has said 
that it is not willing to start cleanup of perchlorate until 
there is a national standard, and this could take 3 to 5 years 
or longer. So millions of Americans are drinking contaminated 
water today.
    Companies like Kerr McGee and Goodrich, and I want to 
compliment them, have already spent millions on priority 
actions to reduce the threat, and I would like to urge the 
Defense Department to do so as well. One obvious priority 
effort is to try to stem the flow of perchlorate into the 
Colorado River from the former DoD facility at Henderson, 
Nevada, which was owned by the United States Navy from 1951 to 
1962. The perchlorate from this facility has spread to the 
water supplies of millions in Arizona, in Nevada, in California 
via the Colorado River.
    Kerr McGee, which operated the facility after the Defense 
Department, has built a state-of-the art ion exchange facility 
and taken other measures in an attempt to address the problem. 
They have been very forthcoming. The Defense Department has 
done nothing.
    I have a serious question for you which may take weeks to 
research, but I would like to ask for a thorough answer. That 
question is, given the necessary funding, what are the top 
priority sites around the country for the Defense Department to 
reduce perchlorate contamination in drinking water and what 
initial measures would the Department take?
    Mr. DuBois. Excuse me, Senator. I am just making sure that 
I have got the notes here.
    This is a very complex question. It is both science and 
science policy, and I want the Congress to understand that the 
Office of Management and Budget, the Council for Environmental 
Quality, the Environmental Protection Agency (EPA), the 
Department of Defense, NASA, and the Department of Energy, 
along with the Office of Science and Technology Advisor to the 
President, have all been meeting on a, I say regular basis, two 
or three times a week for the past month, on this issue.
    It has not gone unnoticed by those of us in the Executive 
Branch that there are clearly issues, some of which are 
mischaracterized, some of which are miscommunicated, but issues 
that nonetheless must be addressed.
    The Department is in my estimation not backing away from 
their responsibilities to clean up perchlorate. We remain 
committed to our obligations to meet the cleanup standards, and 
I underline the word ``standards,'' established through the 
environmental restoration process. Now, there is at present 
no--I repeat, no--Federal regulatory standard for perchlorates. 
EPA, as I indicated, working with the agencies that I just 
listed as well as with the States and the tribes and water 
suppliers and the public, is evaluating perchlorate as an 
environmental contaminant.
    You indicated in your statement that perchlorate has 
contaminated drinking water. Now, the question is, as I 
understand it, Senator Feinstein, what is the appropriate 
reference dose for perchlorate in drinking water that may 
create a risk or not? Given the fact that the science is in 
question both from the point of view of the folks who assembled 
the data and evaluated the data, because there is enough 
question as to what is the appropriate draft reference dose, in 
order to eventually establish a standard EPA and the executive 
branch are going to refer this issue to a panel of the National 
Academy of Sciences (NAS).
    It is not, from what I have been told, a 3 to 5-year 
proposition. We understand that the NAS is going to address 
this issue. How long it will take for them to address the 
issue, the scientific aspects of the issue, is not--I am not 
aware of. I understand, however, that it will be less than 1 
year. But I would take your question and I will ask Governor 
Whitman what is their best estimate.
    Now, EPA will not complete nor disseminate a final risk 
assessment until that NAS scientific review is concluded and 
all the comments are addressed. Again, I want to--and I take 
for the record your concerns about the Colorado River, 
Henderson, Nevada, naval site. I want to learn more about the 
technology the Kerr McGee Corporation has built, the ion 
exchange facility. I will learn more about that. The top 
priority sites that you mentioned, I will work with the three 
Assistant Service Secretaries to determine where they are.
    But I must say that, again, absent a standard, a regulatory 
standard, it does not imply nor should it be characterized that 
the Defense Department is standing in the way of cleaning up a 
potential contaminant. And I underline again the word 
``potential.''
    Senator Feinstein. Thank you.
    I would like to make this point. EPA has a current 
reference dose--it is not a standard, but it is a guideline for 
cleanup--of 4 to 18 parts per billion.
    Mr. DuBois. That is correct.
    Senator Feinstein. And the problem is we have over 200 
wells in 80 different water jurisdictions that are being closed 
because they do not meet these standards. Now, I think it would 
be very interesting--my staff has been--I have not had a chance 
to go to visit the Henderson, Nevada, site. Kerr McGee has been 
very forthcoming. They know there is a problem. They have spent 
a lot of money trying to clean it up. Goodrich I think put $2 
million into an ion exchange program to try to help a small 
community of Rialto.
    But where this is hitting it can sometimes hit all of the 
water supply. Therefore, all these children are drinking this 
water. In the mean time, you have all these agencies meeting 
and you have the EPA working, and I am told--and we have asked 
many times--it is 3 to 5 years. So it seems to me that you have 
a priority situation and that it might be a good idea to take a 
look at Henderson and talk with the people, because I think 
there are solutions out there and what I am trying to do is get 
the Department of Defense, whom I view as the responsible major 
party, participating along with the private sector and the 
State public sector and try to see if we cannot come up with 
some reasonable, some cost-effective activities that might 
reduce this threat.
    Mr. DuBois. I would embrace whatever technologies might be 
available to clean up perchlorate, irrespective of what the 
final standard might be. With respect to that, the 4 to 18 
parts per billion reference dose was not meant to be used by 
the State regulators as a standard. Rather, as I said, the 
science is in question. The EPA--and I defer to them--has 
developed clarifications to the memorandum signed by Mary Ann 
Horenco to the EPA regions and in turn to the State regulators 
that caused certain State regulators--and I have seen some of 
the letters, one in particular addressed to me on a military 
reservation perchlorate issue--caused certain State regulators 
to say, ``Oh, well, this is the standard and therefore you have 
got to clean up to it.''
    That was not the intent of Mary Ann Horenco's memorandum. 
EPA is issuing a clarification to that effect.
    Senator Feinstein. You are saying then it is okay to keep 
drinking the water?
    Mr. DuBois. Well, I am not saying that at all, Senator. I 
am saying that I do not believe that until the NAS rules on 
what the appropriate reference dose is--it may end up being far 
higher than 18 parts per billion. But I nor my colleagues in 
NASA nor the Department of Energy or the private sector, or EPA 
for that matter, have any conclusion until such time as the NAS 
study is over.
    Again as I indicated, we were told, I was told--and I defer 
again to EPA--that this particular focused assessment will not 
take more than a year.
    Senator Feinstein. Well, I am happy to hear that then. That 
is the first I have heard that. So that is good news.
    Well, let me move on. It is my understanding--and correct 
this if it is wrong--that the 2005 BRAC round will be closely 
managed by the Office of Secretary of Defense, unlike the 
previous rounds, which were more Service-driven. How will this 
round differ from prior rounds in terms of scope, focus, and 
management?
    Mr. DuBois. I have stated in conversations with you and 
with other Members of the Senate and the House that there are 
some specific differences, and it is true that the Secretary of 
Defense, in response to criticisms by Members of Congress, 
quite frankly, that his predecessors did not take enough of an 
active role early enough in the process of the prior four BRAC 
rounds to engender true cross-Service analysis, to engender 
joint use of military installations, he took that to heart, and 
in so doing he established an Infrastructure Executive Council 
chaired by the Deputy Secretary of Defense.
    Also in response to observations, comments, and criticisms 
by Members of Congress, he knew that in order to have an 
appropriate and comprehensive BRAC round the senior leadership 
of the Department, both uniformed and civilian, had to be 
involved. And on this Infrastructure Executive Council are the 
Joint Chiefs, the Service Secretaries, the Chairman of the 
Joint Chiefs of Staff, and the Deputy Secretary of Defense in 
the chair, along with Pete Aldridge, the Under Secretary for 
Acquisition Technology and Logistics.
    The General Accounting Office (GAO) report after the 1995 
BRAC round made it quite clear that the opportunity had been 
lost in terms of the way that round and the prior rounds were 
conducted from the point of view of achieving cross-Service 
analysis and joint use, joint base utilization. That, as well 
as, as I have indicated, comments from you all, said to the 
Secretary, I have got to do it differently.
    Therefore, while it is true that he, as the ultimate 
arbiter, delegated the responsibility to the Deputy Secretary, 
he has included all of the senior leadership. But it should be 
noted that there are military-unique activities, unique to the 
individual military Service, mostly operational in nature, 
which shall be analyzed by the Army, Navy, Air Force, and 
Marine Corps independently.
    But it is also true, as I indicated in my opening 
statement, that there are business operational functions and 
facilities which more than one Service is involved with and/or 
the private sector performs in this regard to some extent and 
therefore needs to be reviewed from the get-go in a joint 
cross-Service way.
    Of the six groups that I mentioned, three of them are 
chaired by senior civilians in the Office of the Secretary of 
Defense: the industrial activities group, the education and 
training group, and the technical and laboratory group, right. 
There are three of them that are being chaired by members of 
either the joint staff, the supply and storage group, or in the 
case of the administrative group the Deputy Under Secretary of 
the Army is chairing it; and the medical group is being chaired 
by the Surgeon General of the Air Force.
    We in point of fact looked at--this is like an NFL draft. 
We went out for the best athletes, the folks who we thought 
could best lead this cross-Service exercise, and we did not 
necessarily say it all had to be driven by the Office of the 
Secretary of Defense, although there is a very clear charter: 
You will look at this cross-Service. If you are the Deputy 
Under Secretary of the Army and you are chairing the 
administrative group, you have got to take off your Army hat 
and you have got to put on a cross-Service hat.
    The differences are pretty much as I have explained this 
morning. There are some minor changes that were in the BRAC 
authorizing legislation. It however makes it very clear that 
military value is the preeminent selection criterion.
    In December of this year, again under the law, the statute, 
the Secretary will report to you on what he believes the 
appropriate selection criteria ought to be, plural, and there 
will be time for public comment, time for Congress to comment, 
so that as we go into, let us face it, the really tough 
decision analytic stage, which is the calendar year 2004, we 
will have had this dialogue and deliberation with you and with 
the public and with organizations such as were represented in 
the prior panel.
    Senator Feinstein. This is very helpful.
    In your prepared statement, Mr. DuBois, you mention that 
the Defense Department has disposed of 53 percent of the 
property available from prior BRAC rounds. You also note that 
approximately 82 percent of the remaining acreage lies in six 
installations where environmental remediation must be 
completed. Could you please name those six installations and 
tell the committee the estimated cost and cleanup time for each 
of them? And if you cannot do it today, would you please do it 
in writing.
    Mr. DuBois. Yes, ma'am. I think that the three Assistant 
Service Secretaries who follow me will be able to address that 
in particular. I will say this----
    Senator Feinstein. If you could just name the six 
installations.
    Mr. DuBois. I do not have them on the tip of my tongue. I 
will submit it for the record.
    Senator Feinstein. Thank you.
    Mr. DuBois. But we have in this fiscal year under way, 
while, as you indicated, 53 percent of all prior BRAC acreage 
has been disposed of, i.e., 47 has not, with the disposal 
actions in the pipeline today, the largest of which is in 
Alaska--that is in and of itself in excess of 70 or 80,000 
acres. Were that to come to pass, we would be left with 
probably less than 10 percent of the original BRAC acreage 
closed.
    Again, I defer to my colleagues in the Services. They know 
the details of the individual----
    Senator Feinstein. You mean less than 10 percent unclosed?
    Mr. DuBois. Which have been closed but not disposed.
    Senator Feinstein. Okay, not disposed.
    Mr. DuBois. They have all been closed. It has not been 
removed from our property books.
    Senator Feinstein. Got it.
    Mr. DuBois. The six major ones--and as I said, the 
individual Services--and I believe the Army has the majority of 
them--will be addressed by the Assistant Service Secretaries. 
Notwithstanding that, I will insert for the record list of 
acreage and with the environmental remediation planned for 
those sites.
    Senator Feinstein. Thank you very much.
    Senator Hutchison. Thank you, Senator Feinstein.
    I am going to forgo my last round because we have a 12:00 
o'clock vote and I do want to get the third panel. So, Senator 
Burns, I yield to you.

                   STATEMENT OF SENATOR CONRAD BURNS

    Senator Burns. Thank you, Madam Chairman, and I appreciate 
this. With that, I would ask that I can submit my statement for 
the record.
    [The statement follows:]

               Prepared Statement of Senator Conrad Burns

    First of all, I want to thank Chairwoman Hutchison for convening 
the hearing today on this issue of Base Realignment and Closure [BRAC]. 
As we approach the forecasted date of another possible BRAC round in 
2005, many concerns and issues must be addressed. I have a number of 
questions myself and look forward to addressing some of them today.
    My home State of Montana--the small community of Great Falls, 
Montana in particular--knows all too well how painful this process can 
be. Malmstrom Air Force Base (AFB) lost nearly 700 jobs when its C-135 
aerial refueling tankers were moved to Florida as part of the 1995 
round of base closures and realignments. I know that my part of the 
world has already suffered enough job cuts and economic damage because 
of the loss of this flying mission. This process really can wreak havoc 
on small communities, further damaging already fragile local economies. 
One time closure costs and environmental cleanups, coupled with the 
long lead times necessary to close a base, can make promised savings 
hard to identify. I also question whether this is the right time to 
downsize facilities when we are facing an increased threat, both at 
home and abroad. If the government returns or sells its bases, it will 
never get the land back.
    Tens of millions of dollars have been spent at Malmstrom AFB during 
my time in the Senate, with more on the way, to improve the operational 
facilities, living conditions and quality of life for our military men 
and women. In addition, our land-based missile systems, in particular, 
remain an important leg of the Nuclear Triad and play an essential role 
in ensuring national security. While I have no doubt that with 200 
Minuteman III missiles, premier facilities, significant air space and 
little or no encroachment issues, Malmstrom AFB has and will continue 
to play a critical role in our national security, I do have a number of 
questions which I want addressed today.
    I look forward to hearing testimony from the panelists who are here 
today and listening to the discussion on this subject.
    Thank you, Madam Chairman.

    Senator Burns. I have only one question, Mr. DuBois, and 
that is how do you define ``jointness'' as it is used in the 
context of these proceedings?
    Mr. DuBois. I think ``jointness'' can be defined in any 
number of ways, but certainly at the top of the list----
    Senator Burns. When we get into problems up here, it is 
because the chairman defines it one way, I define it another 
way, and Senator Feinstein defines it another way, and then we 
argue for the next 6 months and never get nothing done because 
we do not define the thing.
    Mr. DuBois. I understand, Senator. In prior BRACs when it 
was more Service-centric, when the Navy decided that they were 
going to close or realign an installation and said, now where 
do we take these missions and facilities, to what installation 
ought they to go, they only considered other naval 
installations. This BRAC, we will insist and ensure that when 
any of the Services considers a unique function and facility 
and mission to that Service ought to be realigned resource 
closed on Base A and moved to Base B, the Base B will be not 
just that Service's infrastructure, but all the Services' 
infrastructures can be considered and will be considered.
    That is my essential definition of what joint utilization 
in this BRAC round will be.
    Senator Burns. That is the only question I have, just the 
way he defines it. I do not agree with it.
    Senator Hutchison. Well, thank you very much, Mr. DuBois.
    Mr. DuBois. Thank you.
    Senator Hutchison. I appreciate your making the effort to 
be here, and would like to now call our second panel, which is 
now our third panel: the Assistant Secretaries of the Army, Dr. 
Fiori; Air Force, Mr. Gibbs; and Navy, Mr. Arny. We will start 
with you, Dr. Fiori.
STATEMENT OF HON. MARIO P. FIORI, Ph.D., ASSISTANT 
            SECRETARY OF THE ARMY FOR INSTALLATIONS AND 
            ENVIRONMENT
    Dr. Fiori. Thank you, Madam Chairman and members of the 
subcommittee. It is a pleasure to appear before you to discuss 
The Army's accomplishments in executing four rounds of the base 
closure under the base realignment and closure authority 
provided by Congress and to briefly discuss how we organize for 
an additional BRAC round in 2005----
    Senator Hutchison. Excuse me, Mr. Secretary. Let me just 
interrupt you and say that we have a 4-minute green light and 
if you could just summarize after that.
    Dr. Fiori. This is quite quick, thank you. A detailed 
written statement has been provided for the record.
    Before commenting briefly on the execution of our BRAC 
program, I would like to say what I am sure we would all 
appreciate is the challenge confronting the military services 
today. As we meet to discuss the drawdown of our 
infrastructure, large numbers of servicemen and women are 
deployed. We take immense pride in the current skill and 
professionalism of these men and women. But as we continue to 
streamline our infrastructure using our BRAC authority, we are 
motivated by the reality that these brave people deserve the 
best living and training facilities when they return home.
    The Army has completed 112 closures and 27 realignments 
resulting from the 4 BRACs. As a result of these actions, we 
are saving approximately $945 million per year. Our BRAC cost 
through fiscal year 2003 is $5.37 billion.
    The Army is now completing the remaining environmental 
restoration activities, transferring surplus property and 
performing caretaker operations. Our budget request for this 
year is $66 million for fiscal year 2004, which will allow us 
to complete environmental cleanup and ordnance removal efforts 
to continue to render these properties safe for disposal. To 
date, The Army has disposed 46.8 percent, with 142,000 acres 
remaining. We have established a goal of disposing 100,000 
acres this fiscal year.
    Environmental restoration continues to be the challenge in 
expeditious disposal of property. To overcome this impediment 
and accomplish our objectives, we are taking advantage of 
several innovative approaches toward environmental restoration. 
Under the Comprehensive Environmental Response, Compensation, 
and Liability Act (CERCLA), the Department is authorized to 
convey property prior to completion of required environmental 
remediation. This early transfer authority, in conjunction with 
environmental services cooperative agreements, allows the 
Department to convey property years ahead of schedule and 
transfer funding to local communities for the completion of the 
environmental remediation activities.
    To date, the Army has executed four Environmental Services 
Cooperative Agreements. Two additional actions are planned for 
fiscal year 2003.
    Another approach that we are using is Guaranteed Fixed 
Price Remediation contracts, where The Army obligates funds 
necessary for regulatory closure of the specified restoration 
activities. This process is very cost-effective and accelerates 
the regulatory closures. To date, we have executed seven of 
these guaranteed fixed price contracts.
    We are continuing our assessment of our overseas 
infrastructure and are continuing to reduce the number of 
installations overseas. Since 1990, 685 overseas sites have 
been announced for closure or realignment.

                           prepared statement

    As we begin the BRAC 2005 process, which is essential for 
successfully transforming The Army, our goal is an 
infrastructure that supports our security requirements in a 
changing world. To accomplish this important task, I have 
established a Deputy Assistant Secretary for Infrastructure 
Analysis, who will assess all installations within the BRAC 
law. Lessons learned from our previous four rounds are embedded 
in our efforts to execute 2005.
    Madam Chairman, that will conclude my statement.
    [The statement follows:]

                  Prepared Statement of Mario P. Fiori

    Madam Chairman and members of the subcommittee, it is a pleasure to 
appear before you to discuss The Army's accomplishments in executing 
four rounds of base closures under the Base Realignment and Closure 
(BRAC) authority provided by the Congress and our preparation for an 
additional BRAC round in fiscal year 2005. I appreciate the opportunity 
to report on our progress.
    Congress has authorized The Army to restructure by closing or 
realigning installations four times since 1988 in order to meet 
changing requirements in a changing world. The Army's goal is to 
balance its base infrastructure with its force structure and its 
mission requirements. BRAC enables The Army to restructure The Army 
organization and reshape its infrastructure to support a transformed 
Army. BRAC also saves dollars, not only by eliminating base operations 
(BASOPS), overhead, and sustainment, restoration, and modernization 
(SRM) costs at closed installations, but also by consolidating 
functions and creating efficiencies at realigned installations. 
However, simple reductions of infrastructure or personnel do not garner 
substantial savings.
    In accordance with the Defense Base Realignment and Closure Act of 
1988, Public Law 100-526, and Defense Base Closure and Realignment Act 
of 1990, Public Law 101-510, as amended, statutory requirements to 
close and realign facilities were met. The Army completed all closures 
(112) and realignments (27) for all 4 rounds of Base Realignment and 
Closure (BRAC) as of July 13, 2001. Upon completion of the first 4 
rounds of BRAC, The Army is realizing an annual recurring savings of 
$945 million each year. However, these savings do not come without a 
short-term cost/investment. Since 1988 BRAC has cost The Army a total 
of $5.36 billion through fiscal year 2002. The Army invested $1.7 
billion (33 percent) of the $5.36 billion on facility and 
infrastructure construction or renovation at gaining installations. The 
consolidation of activities in new and renovated facilities has greatly 
improved efficiency and the quality of the workplace for Army 
employees. Approximately $2.3 billion (42 percent) funds environmental 
restoration at closing sites, a cost The Army would have to bear 
eventually. The cleanup of BRAC sites benefits The Army by avoiding 
future and potentially more expensive cleanups at these sites. The 
remainder, $1.3 billion (25 percent), funds equipment and personnel 
relocation costs. Although these savings are substantial, we need to 
achieve even more in order to fund transformation and bring our 
infrastructure assets in line with projected needs. The Army supports 
the need to close and realign additional facilities and we appreciate 
the Congress' support and authority for an additional BRAC round in 
fiscal year 2005.
    The Army's facilities strategy strives to meet the needs of today's 
soldiers while also focusing on the changes required to support The 
Army of the 21st Century. For executing BRAC requirements in fiscal 
year 2004, our budget request is $66.4 million. This budget request 
represents The Army's commitment to complete required unexploded 
ordnance (UXO) removal, environmental restoration, and minimal 
caretaking or maintenance of those surplus properties and facilities 
not yet transferred from the first four rounds of BRAC.
    The Army is committed to quickly transferring surplus BRAC 
properties for redevelopment that is consistent with local community, 
State, and Federal purposes that are determined to be most appropriate 
for the property. To date, from a total acreage disposal requirement of 
266,847 acres, The Army has disposed of 124,934 acres (46.8 percent) 
with 141,913 acres (53.2 percent) remaining. Of the remaining acreage, 
60,000 acres is a lake in California, for which the State has not 
exercised their reverter and approximately 41,000 acres is property 
that the Department of Interior has requested. We expect to 
substantially reduce the remaining acreage in fiscal year 2003. This is 
an undertaking that involves many regulatory agencies, and is focused 
on environmental, historic, and cultural requirements that must be met 
in order to transfer real property. The Army is using the authority 
that Congress has provided in a 1996 amendment to the Comprehensive 
Environmental Response, Compensation and Liability Act (CERCLA) to 
accomplish early transfers of the property to the future recipients. 
This CERCLA early transfer authority allows The Army to enter into 
arrangements whereby the future owners will undertake the final 
environmental restoration and regulatory clearances that are necessary 
for a final deed transfer of the property. It is generally more cost 
effective to allow the community that will redevelop the property to 
also undertake the cleanup, in conjunction with their redevelopment. We 
have found that those communities that have the capacity to undertake 
such tasks appreciate and prefer the early transfer authority provided 
by Congress, in conjunction with a cooperative agreement that provides 
the necessary funding for environmental restoration activities.
    Environmental considerations are the largest and most costly 
challenges to transferring and redeveloping surplus property. Federal 
and State environmental regulators concerned with risk and liabilities 
want the property cleaned to pristine conditions that often exceeds 
industry standards. These environmental challenges include cleanup 
activities involving hazardous, toxic, and radiological wastes, oil or 
solvent spills, and unexploded ordnance common on many of the surplus 
installations that were used to train our soldiers for war.
    Having completed all closure requirements, The Army is now in the 
second year of completing the remaining environmental restoration 
activities, transferring surplus property, and performing minimal 
caretaker operations. Our budget request of $66.4 million in fiscal 
year 2004 allows The Army to caretake these properties and to continue 
our environmental and ordnance removal efforts that will render these 
properties safe for reuse, facilitate disposal, and provide for 
economic revitalization. This budget request includes the resources 
required to support projected reuse in the near term and to continue 
with current projects to protect human health and the environment.
    The Army implemented innovative approaches to environmental 
restoration at BRAC sites in fiscal year 2002, approaches that 
facilitated the early transfer of several properties. The Army will 
continue to support early property transfers in fiscal year 2003 and 
beyond.
    The significant challenges posed by the removal of unexploded 
ordnance, the remediation of groundwater, and the interface of a 
variety of regulatory authorities continue to hinder the transfer of 
surplus property. A number of innovative approaches for environmental 
restoration were recently developed by The Army to expedite the 
transfer of property, while ensuring the protection of human health and 
the environment. Two innovative mechanisms are being utilized to 
complete environmental restoration efforts: Guaranteed/Fixed Price 
Remediation (G/FPR) Contracts and Environmental Services Cooperative 
Agreements (ESCA). These innovations are being employed in partnership 
with the property recipients to expedite property transfers. A G/FPR 
Contract allows The Army to obligate the BRAC funds necessary for 
regulatory closure of specified restoration activities. The Army 
retains responsibility for completion of the environmental restoration, 
overseeing the contractor and ensuring that regulatory closure of the 
property is obtained. An ESCA is a different mechanism that obligates 
Army BRAC funds under the environmental restoration program. The Army 
retains its underlying responsibility for the cleanup while engaging 
the governmental entity representing the community reuse interests to 
perform specific environmental restoration services outlined in the 
ESCA in conjunction with its redevelopment plans. This arrangement 
allows the reuse authority to leverage and harmonize its cleanup 
objectives with its redevelopment plans.
    The Army used a G/FPR to accelerate regulatory closure at Fort 
Pickett, Virginia, by more than 1 year at a cost that will not escalate 
over the course of the work. We estimate that this $2.9 million 
contract saved us $0.8 million based on our initial estimates. An ESCA 
allows The Army to transfer property and the associated cleanup 
responsibilities to a local reuse authority or developer. This allows 
the recipient to integrate cleanup with their redevelopment plans. An 
ESCA completed in 2001 was used in conjunction with early transfer 
authority at Military Ocean Terminal, Bayonne, New Jersey, saving The 
Army an estimated $5 million in environmental remediation costs. An 
ESCA will facilitate the early transfer in fiscal year 2003 of property 
at Oakland Army Base, California. The G/FPR and ESCA initiatives limit 
Army environmental remediation cost growth and facilitate property 
disposal and revitalization, in accordance with the community 
redevelopment timeframe.
    The Army is intent on transferring surplus property expeditiously, 
and we remain committed to promoting economic redevelopment at our BRAC 
installations. We support early transfer and reuse of properties 
through economic development conveyances and use cooperative agreements 
to accelerate the completion of remaining environmental remediation. 
The 2005 Base Realignment and Closure authorization greatly expands the 
Department's ability to negotiate economic development conveyances of 
BRAC property. The Department is required to receive full fair market 
value consideration, and allows the conveyance of property to any 
entity that agrees to perform environmental restoration at the site. 
This will permit us to sell excess property and help generate 
additional funds for cleanup, resulting in the property being returned 
to reuse more quickly than under the current process. The Army's use of 
leasing and award of G/FPR and ESCA contracts to complete environmental 
cleanup make surplus properties available for reuse earlier. The early 
transfer of real property assets to interested parties in the private 
sector will provide strong economic development to local communities. 
This will develop business opportunities that result in jobs and tax 
revenues. The successful conversion of former Army installations to 
productive use in the private sector benefits The Army and the local 
community.
    The Army continues to effectively execute and implement the BRAC 
program utilizing innovative tools made available by Congress. Many 
local communities do benefit from acquisition of valuable properties 
with significant reuse potential. Most recently, The Army transferred 
property at the former Oakland Army Base, California, to the City of 
Oakland using the early transfer authority and signing a cooperative 
agreement to have the City complete the remaining cleanup actions at 
the facility. This will allow the City to manage and integrate the 
redevelopment and environmental restoration of the site to maximize 
reuse potential. This approach is beneficial to both parties and allows 
The Army to benefit from the reduced costs associated with integrating 
cleanup with reuse. The community benefits from receiving the property 
earlier and starting the redevelopment process. This early transfer/
environmental cooperative agreement approach to property conveyance was 
used earlier at Bayonne Military Ocean Terminal and Fitzsimons Army 
Medical Center.
    The following summary of some of our BRAC reuses reflects the broad 
range and complexity of successful reuse of BRAC installations. These 
examples also demonstrate The Army's commitment to reuse and illustrate 
how the impact of base closures can be minimized at the local community 
level:
    Leasing of Property at Red River Army Depot (RRAD), Texas.--The 
Army leased Building 150 to the Red River Local Redevelopment Authority 
(RRLRA). The RRLRA and its first tenant, a heavy metal fabrication 
contractor that does work for the paper mills in the area, signed a 
sublease. Local media reflected favorably on The Army's support to 
communities in transforming closing and realigning bases into assets 
for economic development.
    Transfer of the Woodbridge Research Facility (WRF), Virginia, to 
the Department of the Interior (DOI).--The Army conveyed 580 acres of 
WRF (formerly Harry Diamond Laboratories) to DOI. The WRF closed 
September 16, 1994, as a result of the recommendation of the BRAC 
Commission. Pursuant to Public Law 103-307, the entire installation was 
transferred to DOI for incorporation into the National Wildlife Refuge 
System. The U.S. Fish and Wildlife Service (USF&WS) manages the 
property to provide a wildlife preserve open to the public, and for 
research, testing, and environmental education purposes.
    Sale of Former Army Materials Technology Laboratory (AMTL), 
Massachusetts Property.--The Army transferred approximately 30 acres of 
the AMTL facility located in Watertown, Massachusetts, to the Watertown 
Arsenal Development Corporation (WADC) for a purchase price of $7.5 
million. The Army also transferred via Public Benefit Conveyance the 
Commander's Quarters, a seven-acre parcel, to the Town of Watertown as 
a historical site. The range of long-term direct and indirect job 
creation was projected at 3,800 to 5,000 jobs and today Harvard 
University has acquired and uses much of the site for its publications 
operations.
    Economic Development Conveyance (EDC) of Vint Hill Farms Station.--
The Army approved an EDC application for conveyance of Vint Hills Farm 
Station to the Vint Hill Farms Economic Development Authority (VHFEDA). 
The conveyance involved approximately 686 acres of the 701-acre 
installation, and associated buildings and structures. The final 
purchase price was $925,000. The remaining 15 acres was transferred to 
Fauquier County as a Public Benefit Conveyance for recreational use.
    Conveyance of Tipton Airfield, Fort George G. Meade, Maryland, to 
the Local Community.--The BRAC Commission recommended partial closure 
and realignment of Fort Meade. Range and training areas to include 
Tipton Army Airfield were recommended for closure. Tipton Airfield 
closed September 30, 1995. Anne Arundel County, Maryland, acquired the 
property as an airport Public Benefit Conveyance through the Federal 
Aviation Administration. The deed for transfer of approximately 348 
acres was issued to Anne Arundel County Airport Authority on July 2, 
2001.
    Conveyance of Fort Holabird, Maryland, to the City of Baltimore.--
The major portion of Fort Holabird was conveyed to the City of 
Baltimore in 1983 and was developed as the Holabird Business Park. The 
Army retained two parcels for ongoing Army missions. The 1995 BRAC 
Commission recommended closure of the remainder of Fort Holabird. The 
City of Baltimore was designated as the local redevelopment authority 
(LRA). The Department of Housing and Urban Development approved the 
LRA's reuse plan, which involves incorporation of the two parcels into 
the Holabird Business Park. The LRA submitted a no-cost Economic 
Development Conveyance application on March 13, 2000, which The Army 
approved, and a deed transfer of approximately 13.3 acres was signed on 
February 12, 2002, thereby completing disposal of the property.
    Completion of Rio Vista, California, Guaranteed Fixed Price 
Remediation (GFPR) Contract.--On February 5, 2002, the former Rio Vista 
Reserve Center became The Army's first completed GFPR contract. The 
State of California regulators concurred with and signed a No Further 
Action decision document for the entire 28-acre property. The 
regulatory closure of the clean up marked the first military post in 
California to be closed clean. The GFPR process saves time, conserves 
resources and ensures regulatory concurrence. GFPR reduces Army 
liability, completes remediation faster, supports rapid redevelopment, 
and provides cost savings to The Army.
    Savanna Army Depot Activity, Illinois, Crooked Slough Backwaters 
Area to Public Access.--On May 6, 2002, The Army opened the Depot 
Crooked Slough Mississippi River backwaters area for recreational 
boating and fishing. Public access had been denied, pending assessment 
of safety concerns. Reopening the area was a direct result of 
recommendations of the Savanna Strategic Management, Analysis, 
Requirements and Technology (SMART) team, formed in August 2000 by The 
Army at the request of Congressman Manzullo. Technical evaluations and 
negotiations among Army officials, U.S. EPA, Illinois EPA, USF&WS, as 
well as interested local members of the SMART team resulted in the 
placement of a physical barrier system and/or hazard warning signs 
around specific potential ordnance impact areas, thereby allowing the 
safe opening of a majority of the Crooked Slough area to water access 
for fishing and boating. The Army is continuing its environmental 
remediation investigations within the restricted areas to determine the 
required restoration actions. This was a good news story in that The 
Army BRAC/interagency effort met Congressional and public desire for 
access and regulatory, environmental and safety concerns, while 
protecting Army interests. Congressman Manzullo hailed this decision as 
a significant step toward citizen use of the area. He also endorsed the 
establishment of a National Wildlife Refuge, an idea now under 
consideration by the USF&WS.
    Decision Document and Environmental Services Cooperative Agreement 
(ESCA) for Military Ocean Terminal-Bayonne, Bayonne, New Jersey.--The 
Final Decision Document for Nine Areas of Concern/Operable Units at 
Former Military Ocean Terminal, Bayonne (MOTBY) was approved on October 
26, 2002. The Decision Document formally identified the environmental 
remediation activities agreed to between The Army and the New Jersey 
Department of Environmental Protection for the 192 acres. This document 
became the basis for work performed by the Bayonne Local Reuse 
Authority (BLRA) under an ESCA, which allowed the BLRA to perform 
environmental remediation activities in conjunction with their 
redevelopment process. A deed to transfer 192 acres was signed on 
December 11, 2002, using The Army's early transfer authority.
    Although the extensive overseas closures do not receive the same 
level of public attention as those in the United States, they represent 
the fundamental shift from a forward-deployed force to one relying upon 
overseas presence and power projection. The Army is continuing its 
assessment of overseas infrastructure needs in an effort to reduce the 
number of installations overseas. The total number of Army overseas 
sites announced for closure or partial closure since January 1990 is 
685. Additional announcements and efficient basing initiatives will 
occur until the base infrastructure matches the force structure 
identified to meet U.S. commitments.
    The BRAC 2005 process is essential for successfully transforming 
The Army structure and the Department of Defense in response to a 
changing world and changing requirements. The Army looks forward to 
working closely with the Office of the Secretary of Defense and the 
other Services through Joint Cross-Service Groups and the DOD 
Infrastructure Steering Group and Infrastructure Executive Council to 
optimize our ability to project power globally while reducing 
unnecessary overhead wherever possible. Joint organizational and basing 
solutions is one concept that will free resources to modernize 
equipment and infrastructure, and enhance our capabilities to meet 21st 
Century threats.
    The Army will execute the requirements of the BRAC 2005 legislation 
through the Office of the Deputy Assistant Secretary of the Army for 
Infrastructure Analysis, a new organization, which will lead The Army 
Basing Study (TABS) to assess all installations in accordance with the 
BRAC law. All bases will be considered and treated equally. We will 
work with OSD and our sister services to take a hard look at the 
resources necessary to support the transformed Army now and into the 
future.
    The TABS Group will conduct a comprehensive, detailed military 
value assessment of Army installations; evaluate base realignment and 
closure alternatives; and develop, document, and publish base 
realignment and closure recommendations that are consistent with DOD 
and Army force structure plans, BRAC selection criteria, and the 
requirements of Public Law 101-510, as amended. The TABS Group will 
serve as the single point of contact in the Department of the Army for 
BRAC 2005 and will meet all legislatively-directed and OSD-directed 
BRAC 2005 milestones.

                                SUMMARY

    There are many examples of The Army's success in implementing BRAC 
per Congress' direction. There are also examples of the complex and 
difficult challenges associated with this unique task. We have learned 
lessons from our successes and from working through difficult and 
challenging tasks. We will build on these lessons and successes as we 
execute BRAC 2005. Our changing world requires changes to how we defend 
and secure this great country. We owe it to the young men and women to 
transform this Army to provide them the greatest opportunities for 
success as we send them into harms way. With your support and authority 
to execute BRAC 2005, The Army structure will be better configured to 
face the new challenges and our nation will be safer and more secure.
    Madam Chairman, this concludes my statement. Thank you.

    Senator Hutchison. Thank you very much, right on the 
button.
    Mr. Arny.

STATEMENT OF WAYNE ARNY, DEPUTY ASSISTANT SECRETARY OF 
            THE NAVY FOR INSTALLATIONS AND FACILITIES
    Mr. Arny. Yes, ma'am. Thank you very much. It is a pleasure 
to appear before you to discuss some of the lessons we have 
learned in the Department of the Navy over the last 15 years of 
base closure.
    As you know, my boss H.T. Johnson is now the Acting 
Secretary and sends his regrets. It is under his leadership 
that we are breaking new ground in BRAC implementation by 
adapting some old established closure methods. Having 
previously served as a base commander in the Air Force, a 
commissioner on the BRAC 1993 Commission, and later as the head 
of a local redevelopment authority (LRA) in Texas, Secretary 
Johnson brings a unique blend of experience and perspective to 
our most persistent base closure problem, the fact that BRAC 
cleanup and proper disposal costs too much and takes way too 
long.
    My written statement has a number of suggestions for 
process improvement, but let me just highlight a couple of 
them. Lesson number one: Public sale of BRAC property can be 
better than an economic development conveyance (EDC) for the 
Federal Government, the community, and the developers. That 
would seem counterintuitive to many people in the affected 
community since an EDC conveys the property for free as long as 
it can be shown to create jobs and provide economic benefit. 
Our experience has shown that in some situations the 
opportunity to get free Federal land becomes mired in 
protracted and often acrimonious local debates. There is an 
opportunity cost with each type of property disposal. An EDC 
can become an opportunity lost or at least delayed for years 
longer than a comparable private sector venture.
    By contrast, we are beginning to see that a public sale 
provides a win-win-win situation for the military, the 
community, and the developer because it puts all the parties 
involved back into their most familiar core roles. The 
community goes back to planning and managing development 
through its normal local land use and zoning authority instead 
of trying to directly manage redevelopment, a task for which 
they are often ill-suited. Once we sell the property, it gets 
on the tax rolls immediately, unlike a typical EDC where the 
community gets tax revenue only after the LRA-sponsored 
development is well under way.
    The developer, who was chosen competitively by the General 
Services Administration (GSA), provides the vision for economic 
redevelopment along with the critical financial and project 
management expertise, all within the community zoning rules. 
The developer has a financial incentive. He has to pay property 
taxes and interest on borrowed money. Thus he tends to get the 
job done more quickly and more efficiently.
    Let me point out a couple of other points that are often 
lost in the current debate. Local communities rarely own a lot 
of land. Most of the land is held privately. Local communities 
rarely develop property. It is developed by the private sector 
and the communities oversee the general plans and zoning that 
permits that development. These are the basics to which we are 
trying to return.
    The Federal Government, on the other hand, returns to its 
role as the property owner, disposing of the land to the 
highest bidder in a manner consistent with the local 
community's existing land rules. Thus we more quickly and 
completely dispose of excess property and gain in some 
measure--gain some measure of fair market value for the 
taxpayers' previous investment, which we can then apply to help 
defray the costs of environmental cleanup and other closing 
costs. The General Services Administration serves as our real 
estate broker, managing the property for us and with us on an 
equal basis to all parties.
    Most recently, we completed a property sale of 235 acres at 
the former Marine Corps Air Station in Tustin, California, in 
well under 1 year from start to final settlement. We received 
$208.5 million, which will be used to accelerate BRAC cleanup. 
We are very pleased with those results and, as you know, we are 
doing some other public sales.
    I will summarize my other lessons. We do not want to get 
bogged down in fed-to-fed transfers, which we have in the past. 
Some agencies have taken years to decide or they quickly decide 
to take a large parcel and then they back out later on.

                           prepared statement

    We need to examine how to do National Environmental Policy 
Act (NEPA) analysis for property disposal. We want to look at 
the ability to contract for firefighting and security guard 
services and ensure that our remedies are consistent with the 
previous land uses.
    Thank you very much for your attention.
    [The statement follows:]

                    Prepared Statement of Wayne Arny

    Madam Chairwoman and members of the Committee, I am Wayne Arny, 
Deputy Assistant Secretary of the Navy (Installations and Facilities). 
It is a pleasure to appear before you today to discuss the Department 
of the Navy's efforts to implement the decisions of the four rounds of 
base realignment and closure (BRAC). The first round, known as BRAC 88, 
was done under Public Law 100-526. The next three rounds, known as BRAC 
91, BRAC 93 and BRAC 95, were done under Public Law 101-510. I will 
collectively refer to these past four rounds of BRAC as Prior BRAC to 
avoid any confusion with the next scheduled round of BRAC in 2005.
    My statement will cover the Department of the Navy's Prior BRAC 
implementation process, the status of cleanup and property disposal, 
and some thoughts on improving implementation of BRAC 2005 decisions.

                   PRIOR BRAC IMPLEMENTATION PROCESS

Prior BRAC Scope
    Prior BRAC rounds resulted in 178 Navy and Marine Corps bases and 
activities designated for closure or realignment. Of those bases, 46 
were major closures, 89 were minor closures, and 43 were realignments. 
All 178 closure and realignment actions have been completed. What 
remains is environmental cleanup and property disposal.
    Significant savings begin to accrue after operational closure, 
i.e., when the mission functions of the bases cease, personnel billets 
are reassigned or eliminated, and real property maintenance 
requirements are reduced to a caretaker level. Savings fully accrue 
when we no longer must operate and maintain the property for its 
previous mission capability. At the end of fiscal year 2001, the 
Department of Navy had achieved a net savings of $6.8 billion, with an 
additional annual savings of $2.7 billion. These net savings estimates 
have been validated by several independent sources.

Navy's caretaker Responsibilities
    After operational closure, environmental cleanup and property 
disposal become the focus. To allow other commands to focus on their 
primary mission responsibilities, the Navy transferred all 
operationally closed bases to the Naval Facilities Engineering Command 
to conduct the cleanup and disposal. The Marine Corps retained 
management and funding responsibility for its two bases that were 
closed, relying on the Naval Facilities Engineering Command for program 
execution. Of these 178 Prior BRAC actions, 90 installations were 
designated for disposal.
    The Naval Facilities Engineering Command established Caretaker Site 
Offices at most closure sites. They are responsible for day-to-day 
property management and essential services, compliance of reuse 
activities with lease and regulatory requirements, and work with the 
local communities. Legislative jurisdiction is often a concern since it 
determines who is responsible for providing police, fire, and other 
regulatory services. Early retrocession of jurisdiction has proved to 
be helpful in establishing successful interim reuse activities. At 
sites where exclusive legislative jurisdiction has not changed, the 
Department of the Navy is often required to keep Federal employees on 
the payroll to provide these services.

Property disposal
    The final goal of BRAC is conveyance of the property to some other 
entity. In many respects, this has been a far more complex process than 
originally conceived. Property disposal is often closely linked to 
environmental cleanup. Although environmental cleanup actions had been 
initiated at nearly all Prior BRAC locations, most of the work had been 
to assess the location, type and severity of contamination. A few 
locations had progressed to planning cleanup remedies, however, little 
actual cleanup had been done.
    Between operational closure and conveyance, the Department of the 
Navy can facilitate reuse of the property by way of interim leases to 
the Local Redevelopment Authorities (LRAs), which then subleases 
property to private businesses. If desired by the LRA, the property can 
be conveyed incrementally when particular parcels satisfy environmental 
standards and the prospective owners accept the property.

The Federal Screening Process
    Following approval of each round of Prior BRAC, the Department of 
the Navy identifies excess property at closing activities to other 
Department of Defense components and Federal agencies through a Federal 
screening process. Other Defense components and Federal agencies can 
request \1\ all or part of the excess base closure property for their 
use. If a Federal agency expresses a timely interest in base closure 
property, the Secretary of the Navy would seek to align the Federal 
agency's request with that of the community. The Secretary of the Navy 
makes the final disposal decision. Conveyance and reuse decisions can 
experience lengthy delays when a Federal agency requests property and 
then delays or later opts not to accept it because of budgetary or 
other reasons.
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    \1\ Per 41 CFR 101-47.203-7.
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Economic Development Conveyances
    When the Defense Base Closure and Realignment Act of 1990 was 
enacted, Congress intended for the proceeds of property sales to help 
offset the costs of implementing base closure. The Act directed DOD to 
dispose of property in accordance with existing standard procedures, 
i.e., the Federal Property and Administrative Services Act of 1949 \2\ 
and implementing regulations.\3\ The legislative history for the 
Property Act indicates that Congress intended most property to be 
disposed by public sale to the highest bidder. Public benefit 
conveyances for less than fair market value were to be made 
``sparingly.'' \4\
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    \2\ 40 U.S.C. 472.
    \3\ 41 CFR 101 Part 47.
    \4\ H.R. 1763, 85th Cong., 2d Session, reprinted in 1958 U.S.Code, 
Cong. & Adm. News, 2861, 1866.
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    In 1993 the President announced a plan to help communities speed 
reuse and economic redevelopment of base closure property, and minimize 
the impact of the closure. The plan consisted of the following five 
initiatives:
  --Job-centered property disposal to put local economic redevelopment 
        first.
  --Fast-track environmental cleanup to remove needless delays while 
        protecting human health and the environment.
  --Transition coordinators located at major bases slated for closure.
  --Easy access to transition and redevelopment help for workers and 
        communities.
  --Larger economic development planning grants provided to base 
        closure communities.
    The plan gave rise to Economic Development Conveyances (EDC), which 
were authorized by Congress. The creation of EDCs represented a major 
legislative change because it gave preference to disposal of the 
property to local governments at less than fair market value instead of 
public sale to the highest bidder. Since that time, a total of 15,930 
acres of base closure property have been disposed of at no cost to 
communities through EDCs.

            LOCAL REDEVELOPMENT AUTHORITIES AND REUSE PLANS

    The Local Redevelopment Authority (LRA) plays a significant role in 
the base closure planning process. Members of the LRA are appointed by 
State or local governments and recognized by the Department of Defense 
as representing the voice of the community at a base closure location. 
LRAs hold public hearings and prepare a reuse plan that must balance 
the needs of the homeless people in the community, as required by law 
\5\, with efforts to stimulate economic redevelopment. They may also 
request surplus property to assist them in implementing their plan. 
Navy works with the LRA throughout this process to ensure timely 
submission of a comprehensive, feasible reuse plan.
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    \5\ Sec. 2905(b)(7) of Public Law 101-510.
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National Environmental Policy Act Compliance
    BRAC requires the Military Services to evaluate all reasonable 
disposal alternatives, including non-disposal, and their associated 
environmental consequences under the terms of the National 
Environmental Policy Act of 1969 (NEPA) before the property could be 
disposed. In 1996, the Congress amended \6\ BRAC to require the 
Military Departments to use the LRA's reuse plan as the preferred 
alternative in conducting our NEPA analysis.
---------------------------------------------------------------------------
    \6\ Public Law 104-106, the Fiscal Year 1996 National Defense 
Authorization Act.
---------------------------------------------------------------------------
    Under NEPA, we must also consider:
  --Environmental impact of the proposed disposal and the impacts of 
        all reasonably anticipated uses of the property;
  --Alternatives to the proposed disposal and reuse plan, including the 
        ``no-action'' alternative;
  --Adverse impacts on the environment under the Federal Endangered 
        Species Act and the Clean Water Act, and protected resources 
        such as historic buildings and archeological sites under the 
        National Historic Preservation Act;
  --Mitigation actions that would minimize adverse impacts on the 
        environment and protected resources such as historic 
        structures, wetlands, and habitats for threatened or endangered 
        species;
    If Navy cannot certify in an Environmental Analysis that there will 
be no significant impact, it must prepare an EIS. That involves a very 
detailed environmental analysis and formal public participation. At the 
end of the EIS process, the Department of the Navy issues a Record Of 
Decision concerning disposal of the base closure property. The Record 
of Decision represents a necessary element of the property conveyance 
process, since disposal and redevelopment cannot begin until it has 
been issued. This Record of Decision is separate from, and in addition 
to the Record of Decision required for environmental cleanup.

Environmental Cleanup
    The Comprehensive Environmental Response, Compensation and 
Liability Act of 1980 (CERCLA) requires the Federal Government to 
warrant that all remedial action required to protect human health and 
the environment has been taken prior to the disposal of surplus Federal 
property. It also requires that any additional remedial or corrective 
action discovered after disposal will be done by the United States. 
This statute is the legal basis for Navy's obligation to cleanup 
environmental contamination on base closure property. A Record of 
Decision, approved by environmental regulators, documents the remedy 
that will be used to perform the environmental cleanup. Reuses proposed 
by Local Redevelopment Authorities sometimes require clean ups in 
excess of what would have been conducted by Navy based on the 
historical use of the property or if the property had been sold.

Early Transfer
    In the past, CERCLA precluded Navy from conveying property to non-
Federal entities until all environmental remediation was complete or 
until an acceptable remedy approved by State and Federal environmental 
regulators was in place and operating satisfactorily. Section 334 of 
the DOD Authorization Act for fiscal year 1997 allowed the Department 
of Defense to convey base closure property before remediation is in 
place if approval was obtained from the Environmental Protection Agency 
when the property was on the National Priorities List, or from the 
State governor if the property was not on the National Priorities List.
    The Department of the Navy has used this early transfer authority 
eight times to convey to property developers approximately 9,500 acres 
about 5 years before otherwise possible. These early transfers have 
often combined the environmental cleanup with actual redevelopment, 
resulting in time and money savings to both the developer and the 
Department of the Navy.

Methods for Conveying Base Closure Property
    Two statutes govern the disposal of base closure property: the 
Federal Property and Administrative Services Act of 1949, and the BRAC 
statute which added the option of an Economic Development Conveyance 
under the Pryor Amendments of 1993. These statutes provide a way to 
transfer excess Federal property to another Department of Defense 
component or other Federal agency, and four primary ways to dispose of 
surplus Federal property to a non-Federal recipient:
  --Public sale to the highest bidder for fair market value. I will 
        note here that the highest bid must come close to the appraised 
        fair market value. If not, the disposal agency must give the 
        high bidder a chance to raise the bid to that level, or choose 
        not to complete the sale. Public sales can provide financing 
        terms for up to 10 years;
  --Negotiated sale to a State or local government when the property 
        will be used for an acceptable public purpose and the grantee 
        will pay fair market value. Such a sale is subject to review by 
        Congress. Negotiated sales can provide for financing terms for 
        up to 10 years;
  --Public benefit conveyance for less than fair market value when the 
        property will be put to a public purpose specifically 
        authorized by Congress (e.g., an airport, port, educational 
        facility, park) \7\;
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    \7\ See for example, 40 U.S.C. 484(k) for park, education and 
public health purposes.
---------------------------------------------------------------------------
  --Economic development conveyance (EDC),\8\ for less than fair market 
        value when the LRA's reuse plan demonstrates new jobs will be 
        created by the proposed redevelopment.
---------------------------------------------------------------------------
    \8\ Sec. 2905(b)(2) of Defense Base Closure and Realignment Act.
---------------------------------------------------------------------------
    Another method of disposal is through special legislation 
authorized by Congress for a particular property. These conveyances are 
often for nominal consideration. Hunters Point Naval Shipyard and Fleet 
and Industrial Supply Center Oakland have been the subject of such 
special legislation.
    BRAC also provides two other unique disposal opportunities that so 
far have not been used by the Department of the Navy. The first is the 
ability to convey property to private parties who will undertake 
environmental cleanup.\9\ The receiving party agrees to assume 
responsibility for the cleanup. If cleanup costs less than the fair 
market value of the property, the recipient pays Navy the difference. 
The second conveyance tool is the authority to exchange BRAC property 
for the development of military family housing at another site where 
there is a need for housing.\10\
---------------------------------------------------------------------------
    \9\ Sec. 2905(b)(8)(e) of Defense Base Closure and Realignment Act.
    \10\ Sec. 2905(b)(8)(f) of Defense Base Closure and Realignment 
Act.
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Actual Disposal
    We work closely with the LRAs as they prepare their proposed reuse 
plans for submission to us and review by the Department of Housing and 
Urban Development, who weighs the economic development aspects of the 
reuse plan with provisions for homeless people. We begin the 
environmental review required by NEPA when the LRA submits its proposed 
reuse plan. As part of the environmental impact analysis, Navy is 
required to identify and analyze measures to mitigate adverse impacts. 
Because the Navy does not control property after conveyance and the 
Navy's ability to impose land use controls is limited, most actions 
needed to mitigate adverse impacts will be the responsibility of the 
LRA. In order to ensure that mitigation measures in the Environmental 
Assessment (EA) or Environmental Impact Statement (EIS) can be 
implemented, Navy must ensure that the LRA agrees to and has the 
authority to implement the necessary actions to protect resources such 
as wetlands, threatened and endangered species, and historic and 
archeological buildings and sites.
    After the NEPA Record of Decision is issued, the Secretary of the 
Navy, after consultation with the LRA, proceeds with disposal of the 
property in accordance with the various statutory authorities. In the 
case of an EDC, the Office of the Secretary of Defense must also 
approve the conveyance. In the case of a negotiated sale, the 
conveyance must be reviewed by Congress and, as a practical matter, 
also receive the concurrence of the General Services Administration.
    In the event that a LRA requests property by a negotiated sale, we 
have an agreement with the General Services Administration that they 
manage the appraisal process. That speeds Congressional review since 
Congress routinely asks that they concur with the appraisal before 
approving the negotiated sale.

Competing Demands
    I have so far outlined the challenges in trying to dispose of base 
closure property in a manner that furthers the public interest, and as 
expeditiously as possible, within the statutory and regulatory 
framework of Federal property disposal and environmental laws. Central 
to the disposal process is the availability of adequate funding for 
environmental remediation at closed bases. We recognize that some LRAs 
and other grantees will not accept title to contaminated properties 
until the property is cleaned up. Consequently, we continue to incur 
costs associated with ownership (e.g., maintenance, protection costs) 
until cleanups are complete and approved by Federal and State 
environmental regulators.

                 PRIOR BRAC CLEANUP AND DISPOSAL STATUS

    My boss, the Assistant Secretary of the Navy (Installations and 
Environment) testified before this Committee on 4 March 2003, and he 
provided a summary of the status of our environmental cleanup and 
property disposal efforts. I will repeat some of that information here 
as a matter of convenience along with some additional details.
    The Department of the Navy has spent a total of $2.8 billion on 
environmental efforts at Prior BRAC bases through fiscal year 2002. The 
Congress has approved an additional $258 million for fiscal year 2003. 
I would note that the State of California has 21 percent of the 
Department of the Navy's Prior BRAC bases, and has received about 42 
percent of all cleanup funds through fiscal year 2002. We estimate that 
an additional $785 million is required to complete the remaining 
cleanup, including long-term operation and monitoring of cleanup 
remedies. Current projections are to complete all cleanup actions by 
fiscal year 2016. The availability of Prior BRAC land sale revenue 
could dramatically accelerate cleanup. About 66 percent of our 
remaining cost of cleanup is at Prior BRAC bases in California. We 
expect that about 40 percent of the total Prior BRAC environmental 
funding will be spent in the San Francisco Bay area.
    As of the end of January 2003, Navy had transferred 64 of the 90 
former bases planned for disposal. A total of 425 parcels of land have 
been conveyed at these 64 bases and other bases at which only a portion 
of the base has been transferred. We will need to transfer another 196 
parcels and complete all actions on the remaining 26 bases. Our plans 
call for the transfer of 58 additional parcels, including the final 
parcels at eight more bases in fiscal year 2003, and 51 parcels, 
including the final parcels at five bases in fiscal year 2004.

                     IMPROVING BRAC IMPLEMENTATION

Public Sale Is A Win-Win
    Although the EDC remains the preferred method of disposal, under 
some circumstances EDCs can be very time consuming and difficult to 
complete. When that happens, public sales have proven to be successful 
alternatives. Public sale provides a win-win situation for everyone 
because it puts all parties in their most familiar role:
  --The community plans and manages growth through local land use and 
        zoning ordinances instead of trying to manage redevelopment. 
        The property gets on the tax roles quickly. The community never 
        holds title to the land;
  --The Federal Government quickly disposes of excess property, gains 
        fair market value for the tax payers past investment in the 
        property, and can apply that revenue to defray the costs of 
        closure, realignment, and environmental cleanup. The Federal 
        Government is removed from the ill-advised role of analyzing 
        redevelopment efforts;
  --The General Services Administration becomes the real estate broker, 
        marketing the property and ensuring equal opportunity to all 
        developers;
  --The developer provides the visionary growth opportunities and fits 
        that within the community's local zoning requirements and 
        economic factors. The developer secures financing and provides 
        the project management expertise.
    The Department of the Navy public sale of 3 parcels of property 
totaling 235 acres at the former Marine Corps Air Station Tustin, CA 
brought quick resolution to long standing acrimony on reuse direction, 
generated significant revenue to pay for environmental cleanup costs, 
and will provide new jobs and economic opportunities for the community, 
while quickly bringing the property onto the community tax roles.
    Another good example is the former Army Cameron Station in 
Alexandria, VA, which was closed as part of BRAC 1988. The Army held a 
public sale of the property in 1995, and most would agree that it has 
been developed and returned to the tax rolls more rapidly than other 
property that has been conveyed to the community at no cost,
    The Department of the Navy is pursuing public sales of other Prior 
BRAC properties.

Simultaneous Redevelopment and Environmental Cleanup
    We have learned that successful cleanup and property disposal of 
large tracts of Federal property requires skillful negotiation of a 
complex mix of Federal, State and local statutes and regulations; 
Federal, State and local government skills, motivation, and 
capabilities; flexibility and innovative thought; and available funding 
to conduct the environmental cleanup. We have also found that tying 
redevelopment with actual cleanup saves time and money for both the 
developer and the Federal Government. The critical ingredient to 
simultaneous redevelopment and environmental cleanup is the 
availability of detailed studies on the nature and extent of 
environmental contamination, and the support of environmental 
regulators.

Federal Agencies Sometimes Delay or Disrupt BRAC Property Disposal
    BRAC property disposal process requires property to be screened for 
other Federal use. If another Federal Agency identifies a need for the 
property and the Navy agrees to transfer it to them, the receiving 
Federal Agency has a responsibility to accept the property within a 
reasonable time period. In several instances, receiving agencies have 
delayed acceptance of property pending completion of environmental 
remediation, even though completion of cleanup is not required for 
property transfer. In other instances, some Agencies have withdrawn 
their request for the property after a prolonged delay, thus requiring 
the disposing service to declare the property surplus years after the 
LRA has completed its outreach and reuse planning. In addition, some 
Federal Agencies have resisted taking property unless and until a 
CERCLA covenant for environmental cleanup was provided, even though 
there is no statutory requirement to do so.
NEPA Requirements for BRAC Property Disposal
    In applying NEPA to BRAC property disposal the Navy has found 
itself in the middle of disputes and legal challenges between adjoining 
government jurisdictions and different interest groups on how the 
community should proceed with reuse of the surplus Federal property, 
even though the Federal Government's ability to control future land use 
is limited. The NEPA process for BRAC property disposal can sometimes 
be time-consuming and expensive; we will continue efforts to make the 
process more efficient and enhance its value.

Contract for Fire and Security Services At BRAC Locations
    10 U.S.C. 2465 prohibits the use of appropriated funds for the 
purchase of firefighting or security-guard functions at military 
installations within the United States that were not under contract on 
September 24, 1983. At BRAC closure sites with areas of exclusive 
legislative jurisdiction, Federal employees or military members 
performed firefighting or security guard functions and the local 
government were not required to provide such services. Local 
governments have the legal obligation to provide these services in 
areas of proprietary and concurrent jurisdiction although they are 
sometimes reluctant to do so. Navy is later required to conduct 
Reduction in Force (RIF) actions to terminate employment when the 
property is disposed of or the State has agreed to a retrocession of 
exclusive jurisdiction. The ability to contract for firefighting and 
security guard functions would significantly reduce caretaker expenses.

Cleanup Standards for BRAC Property Are Sometimes Inconsistent With 
        Past Use
    Several Navy BRAC property disposals have resulted in cleanup 
actions that exceed levels that would have been implemented if DOD had 
done the clean up to a level consistent with the past and current uses 
of the property. Local communities frequently pressure the Navy to 
clean up property to a level that is inconsistent with the property's 
previous use. For example, an industrial site could be planned for 
redevelopment as a residential use or a landfill could be proposed for 
conversion to parking or storage areas.

We Can Learn From Each Other
    Each Military Department has extensive and varied experience with 
BRAC reuse and disposal. In order to share those experiences and 
expertise, and to ensure that the Department of Defense is conducting 
reuse and disposal in the most efficient and effective way possible for 
all concerned, the Office of the Secretary of Defense is forming a 
working group to examine potential improvements to the BRAC reuse and 
disposal process. The Department of the Navy supports this effort and 
looks forward to working with the other Departments and OSD.

                               CONCLUSION

    I want to thank the Chairman and members of this committee for 
holding this hearing. I hope that I have shed some light on the 
complexities involved in environmental cleanup and property disposal of 
BRAC property. I want to ensure you that the Navy and Marine Corps 
team, from the installation level to headquarters, has been working 
very hard with regulators and communities to do a responsible 
environmental cleanup that is protective of human health and the 
environment, and to help bring BRAC property back to productive use 
through economic redevelopment. We will continue to give priority 
management attention and funding to support promising opportunities for 
early transfer of BRAC property. We will pursue other public sales of 
BRAC property when appropriate and other disposal options have not 
progressed. We will use the funds generated by the sale to accelerate 
cleanup at BRAC locations.
    That concludes my statement. I appreciate the support of each 
member of this committee, and will try to respond to any comments or 
concerns you may have.

    Senator Hutchison. Thank you, Mr. Arny. I wish we had had 
the other panel here to talk back and forth because you are so 
diametrically opposed that it is hard for us to determine which 
really works better. I mean, you make a good case, but they do 
as well.
    Mr. Arny. Well, it is fairly new, and I think you also need 
to talk to the city of Irvine some time, because they have been 
a partner with us on what will be the largest public sale any 
of us have ever done. We have 3700 acres in Orange County to 
sell and it will be done through public sale.
    Senator Hutchison. Thank you. Of course Orange County is in 
a somewhat different category from some of our bases.
    Mr. Gibbs.

STATEMENT OF HON. NELSON F. GIBBS, ASSISTANT SECRETARY 
            OF THE AIR FORCE FOR INSTALLATIONS, 
            ENVIRONMENT, AND LOGISTICS
    Mr. Gibbs. Thank you, Madam Chairman, Senator Feinstein.
    The Air Force is quite proud of the record that it has had 
in working with the Base Realignment and Closure (BRAC) through 
the first four rounds. There have been 22 closures and 19 
realignments. Over 87,000 acres will eventually be transferred 
back to the local communities. Over 60 percent of those acres 
have already been transferred and another 30 percent of them 
are currently in long-term lease so that the development can go 
forward.
    From the perspective of environmental aspects of it, we 
expect to have our last remedy in place by 2005 with the 
exception of one base, and the operating and monitoring, 
however, of that cleanup will go on for 40 years in many cases, 
with one substantive exception where the monitoring will go on 
in excess of 200 years.

                           PREPARED STATEMENT

    We believe it has been a success and we believe that we are 
prepared to move forward with the 2005 round for the disposal 
of properties in a very expeditious manner also.
    Thank you very much.
    [The statement follows:]

                 Prepared Statement of Nelson F. Gibbs

                              INTRODUCTION

    Madam Chairman and members of the committee, good morning. I 
appreciate the opportunity to appear before you to discuss the 
Department of the Air Force Base Realignment and Closure (BRAC) 
program. Today, I will share with the committee our progress in 
transitioning the installations identified for closure or realignment 
in previous rounds of BRAC and how we are preparing to execute an 
additional round of base closures in 2005.
    One of the most effective tools we have to transform the military 
is through the BRAC process. The previous four rounds of BRAC approved 
22 Air Force installations for closure and 17 realignment actions, and 
the Air Force completed each action within its statutory deadline. We 
rationalized much of our infrastructure through the previous BRAC 
rounds--but much more needs to be accomplished. Transformation requires 
rationalizing our base structure to better match the force structure 
for the new ways of doing business.
    Congress authorized a Base Realignment and Closure in 2005 to 
accomplish this ``base transformation''. BRAC 2005 is the means for the 
Air Force to align our infrastructure to maximize warfighting 
capability efficiency, and meet the Nation's new defense strategy. 
Through BRAC 2005, we will eliminate excess capacity that drains our 
scarce resources from defense capability.

                   2005 BASE REALIGNMENT AND CLOSURE

    The Air Force views the 2005 Base Realignment and Closure process 
as a unique opportunity to reshape our infrastructure to optimize 
military readiness and to ensure we are most efficiently postured to 
meet new security challenges. In January of this year, we established a 
Basing and Infrastructure Analysis group within Headquarters Air Force. 
This office will serve as the Air Force focal point for the BRAC 2005 
process. Our major commands are following suit with creating their own 
analysis structures to support the BRAC process. As in previous rounds 
of base closures, we are establishing a Base Closure Executive Group 
(BCEG) composed of general officers and senior civilians representing a 
variety of functional areas, including those with ranges and airspace 
operational expertise. The Air Force Deputy Assistant Secretary for 
Basing and Infrastructure Analysis participates in meetings with his 
counterparts in OSD and the other services on BRAC 2005 planning issues 
and also on the composition of the joint cross service teams. The Air 
Force is also working on a building up it's BRAC 2005 staff in order to 
ensure the appropriate degree of corporate attention and expertise is 
given to this effort The Air Force leadership is committed to meeting 
the BRAC 2005 statutory deadlines and ensuring our analytical processes 
are comprehensive and auditable.

                            BASE CONVERSION

    The Air Force continues to work with the local reuse authority at 
each closed and realigned bases from rounds of BRAC to minimize the 
impact on local communities from the closures. The Air Force is 
disposing of over 87,000 acres at 32 locations. Base conversion efforts 
have led to the creation of over 48,000 jobs in a variety of reuses, 
including industrial, aviation, commercial, residential and educational 
activities. Thirteen airports have been created, significantly 
contributing to the United States civil aviation system. Colleges 
expanded their operations, hospitals and senior citizen housing 
complexes developed, industrial uses ranging from biotechnology to a 
state-of-the art sawmill were created, child care centers, aircraft 
maintenance operations, hotels, restaurants--the list just goes on and 
on. The important thing is these former installations are not sitting 
idle; they are being transferred and used by communities, contributing 
to their economic redevelopment and providing valuable jobs for their 
people.
    Successful redevelopment relies on the transfer of property to the 
local communities. The Air Force has deeded almost 60 percent of our 
BRAC property. We continue to increase the amount of deeded acres for 
all rounds projecting over 70 percent of our total acreage will be 
transferred by the end of fiscal year 2003. Over 90 percent of the 
property has transitioned to reuse, either by deed or utilizing long-
term leases in furtherance of conveyance. The lease arrangement allows 
the community to use the property for economic development while we 
finish our environmental cleanup responsibilities. Once cleanup 
remedies are in place, the contract we have with the community calls 
for us to convert the lease to a deed. This has proven to be an 
extremely successful tool for transitioning property for early reuse.

                           BRAC ENVIRONMENTAL

    While these facilities are being returned to their respective 
communities, the Air Force has a continuing responsibility for 
environmental cleanup from past operations and industrial activities. 
The Air Force approaches this responsibility at our BRAC installations 
with the same prudent environmental stewardship as at our active 
installations.
    Since 1991, we have spent approximately $2.2 billion in 
environmental cleanup activities at our closure installations, and for 
fiscal year 2004, the Air Force is requesting $176 million to continue 
cleanup efforts. This request allocates about 70 percent for actual 
installation of cleanup systems, cleanup systems operations, and long-
term management. The Air Force projects that over $2 billion is needed 
in future years to complete our ongoing BRAC cleanup requirements. We 
look forward to working with the Congress as we meet these goals in our 
future budget submissions.
    As the Air Force moves forward with our BRAC environmental cleanup 
program, we are seeing the results of investments made over the last 
several years. Since 1999, 12 of the 30 locations that have 
environmental restoration programs have achieved last remedy in place 
(LRIP) with 9 more locations scheduled to reach LRIP this fiscal year. 
This is a significant milestone as it means all cleanup remedies are in 
place and operating successfully. While some of those systems may be in 
place for many years to come, the Air Force ensures there is no harm to 
human health or the environment during the operations process. The $176 
million requested for fiscal year 2004 will lead to six bases attaining 
LRIP in fiscal year 2004. The Air Force plans for all our bases to 
achieve LRIP status in fiscal year 2005, except McClellan Air Force 
Base, CA, which was one of our major maintenance, repair and overhaul 
centers that closed in 2001.
    Investment in more efficient contracting approaches at our closure 
installations has successfully produced faster cleanup initiatives at 
significant cost savings. For example, a privatization contract at the 
former Lowry Air Force Base, CO, will reduce our cleanup period from 28 
years to 11 years at a cost savings of $13 million. More importantly, 
it enables us to transfer the property to the local reuse authority 
prior to cleanup using an early transfer authority. The reuse authority 
actually contracts for the cleanup and works with the environmental 
regulators. We agreed up-front to a level of cleanup and negotiated a 
price based on their ability to meet our cleanup goals. This is a win-
win for both the community and the Air Force, as it gives the community 
more control over the process and it allows the Air Force to transfer 
the property. The Air Force is also pursuing the use of performance-
based contracting for its cleanup actions. Similar to privatization, we 
will identify performance goals and rather than dictating the cleanup 
remedy, we will award the contract based on a cleanup goal. The Air 
Force plans to position 20 percent of our environmental program on 
performance-based contracts this fiscal year. As a result of these 
initiatives, the Air Force BRAC environmental program has successfully 
closed 1,100 of our 1,671 environmental cleanup sites

                               CHALLENGES

    In light of our successful execution of the BRAC program, the Air 
Force continues to address important real estate and environmental 
challenges. As we prepare for BRAC 2005, the Air Force is addressing a 
key real estate issue--how to more efficiently transfer property. We 
are already looking at lessons learned from the previous rounds of BRAC 
to identify ways to improve the process so that we can improve our 
processes for transferring property and accomplishing cleanup. We think 
some of our initiatives accomplished this already, but we recognize 
there is room for improvement. Our goal is to maximize BRAC savings to 
the Department of Defense and expedite reuse.

                               CONCLUSION

    In conclusion, we thank the committee for its support of an 
additional round of base closure in 2005 and of the Air Force's current 
Base Realignment and Closure Program. The closures and realignments of 
the previous rounds of BRAC allow us to use the savings on other Air 
Force requirements every year. With your help, we are meeting the need 
for community reuse while providing quality environmental cleanup 
efforts to ensure the protection of human health and the environment. 
We will approach BRAC 2005 with the same commitment. I will be happy to 
address any questions.

    Senator Hutchison. Thank you.

                    SALE VERSUS NON-REVENUE TRANSFER

    I would like to ask the Army and the Air Force Secretaries, 
what your view of public sale versus the non-revenue transfer 
merits are?
    Mr. Gibbs. I will pick it up first if you want.
    Senator Hutchison. Okay.
    Mr. Gibbs. The Air Force has sold in the last round 
properties which will ultimately result in approximately $70 
million of proceeds. Just under $50 million has been received. 
I think, as in many things, under a specific set of 
circumstances any one of the methods can be used most 
appropriately.
    In the case of the transfer--I would comment also, based on 
Mr. Arny's previous comment, that one of the largest delays 
that we have experienced over the years has been in dealing 
with other Federal agencies. As you know, in the waterfall 
process that we go through it basically starts there. It says 
first of all, are there other military departments that would 
want to use the land? Then it goes to other Federal agencies. 
This has been the longest delay in many instances.
    Then, moving on to the local agencies, the things that have 
caused us the greatest difficulty are where the local community 
has been unable to come to a conclusion relatively quickly as 
to what they want done with the properties. In this business, 
the longer it takes, the more difficult it becomes as positions 
become entrenched. So the speed with which we can go through 
the process will, in my opinion, enhance it, and if that would 
be through a public sale, then I personally, and I believe the 
Air Force, also, would favor that route.
    Senator Hutchison. Thank you.
    Dr. Fiori.

                     CAMERON STATION PROPERTY SALE

    Dr. Fiori. Yes, ma'am. One of our great early success 
stories in selling property was Cameron Station. Our local 
community just could not afford to assume it, even though it is 
a fairly wealthy area. We had a developer come and take it away 
and we sold it for $30 million at the time. They then met all 
the local ordinances.
    In our total sales, we have over $150 million, but none of 
these are large properties--many of our properties are 
obviously environmentally contaminated and we have had a 
difficult time with them.

                   TRANSFER TO OTHER FEDERAL AGENCIES

    Also, when we transfer our property to other Federal 
agencies, particularly the Department of the Interior, it has 
taken quite a few years. One of our recommended legislative 
corrections could easily be, let us limit the time that they 
tie up the property before we try selling it, and that would 
help us a little bit.
    The fact is I think all the BRACs from the beginning to now 
have taken a bit too long to do. By allowing us to be more 
aggressive on selling it, some of the programs which I have 
described to you which are expediting the sale of these 
properties will help. In my case, this year, I do have about 
100,000 acres out of the 140,000 remaining that I will be able 
to finally, hopefully, dispose of, and most of it is going to 
go to other agencies. It is a difficult subject.

                         ENVIRONMENTAL CLEANUP

    Senator Hutchison. Let me ask, Mr. Arny, and if either of 
you have opinions on this I would welcome those as well. That 
is, the concept that you said you do not use but is an option, 
of conveying to private parties who will undertake the 
environmental cleanup. It seems like a win-win so we would not 
keep incurring these environmental costs and that seems to be 
more expensive than the sale of the property in many instances.
    Mr. Arny. I do not know the total history on it and I will 
have to get back to you for the record. But I do not believe 
many people have approached us on that. Again, since almost 
every closure we had was through an LRA rather than directly to 
the private sector, it is my guess--and I will document it for 
the record--it is my guess that the private parties were not 
approaching the LRAs because they assumed we would do the 
cleanup in place.
    I think one of the great advances over the past few years 
has been the early transfer. We did that up at Mare Island and 
it has been very successful, because we have all our bases to 
clean up and the developer who is finally chosen by the 
community at Mare Island--Mare Island may not be number one on 
our list, but for that developer, guess what, it is number one 
for him. And using the Governor of a particular State, in this 
case the Governor of California, to adjudicate between what we 
think is the right amount of money and bringing insurance 
vehicles into place, now the community wins, because we are 
still paying for the development but we are not doing it, and 
it is now number one priority for that community. The developer 
cannot develop unless he gets it cleaned up.
    Senator Hutchison. Mr. Gibbs.
    Mr. Gibbs. We also have begun to use that mechanism. We 
entered into an agreement in Colorado where effectively, the 
cleanup is being undertaken by a private contractor. We pay for 
it, of course, but it is also backed up by insurance. This is a 
methodology that has turned out to be very effective there and 
I think we will find it being used more and more.
    We are also attempting to transfer more into performance-
based cleanups and that is in dealing principally with the 
State regulators in getting to agree on what the performance 
should be, and then it makes it much easier to do the private.
    Senator Hutchison. But you have not had experience of 
conveying with the requirement that the person who purchases or 
takes the property would do the environmental cleanup?
    Mr. Gibbs. Well, you mean take over the economic 
responsibility?
    Senator Hutchison. Yes.
    Mr. Gibbs. No, we have not, and I really would not expect 
that would be very difficult for any local to take up. One of 
the understandings is we have the responsibility to do the 
cleanup and for somebody to take that over, is a tremendous 
economic burden in many cases.
    One of the difficulties----
    Senator Hutchison. You just do not think there would be a 
market for it, is what both of you are saying.
    Mr. Arny. So far we have not seen one where they have come 
up to us.
    Mr. Gibbs. And said that they would like to actually do the 
cleanup, no. We stay behind it economically. We believe it is 
advantageous to turn it over to private companies to do and to 
manage because in many cases, as Secretary Arny says, they are 
much more focused on what needs to be done.
    Mr. Arny. I am only again guessing here, but I think that 
since, up until just recently, almost all the transfers have 
been no-cost EDCs, the more recent ones, in which case there is 
no incentive for a private sector person to come in there 
because it is going ``free'' to the local community instead of 
if it is up for public sale and the developer could make money 
off it over and above the cost of cleanup. Then perhaps there 
would be an incentive. But I will get back to you for the 
record on the history of it.
    [The information follows:]

    Section 2908 of Public Law 103-160 amended the Defense Base Closure 
and Realignment Act of 1990 (Public Law 101-510) and provided authority 
to transfer surplus property at closed bases to private parties who 
agree to perform all required environmental remediation. II This 
authority lapsed November 30, 1998. Navy did not identify any 
opportunity to use it.
    The 2002 National Defense Authorization Act restored this authority 
for closures or realignments occurring after 2001.

    Senator Hutchison. Thank you.
    Senator Feinstein.
    Senator Feinstein. Thanks very much.

                     ENVIRONMENTAL CLEANUP AT BASES

    I have three base-specific questions. The first one is on 
Hunters Point Naval Shipyard. Let me ask them together if I 
might. What is the Navy's estimated cost to complete the 
cleanup of Hunters Point and what is the budget for the current 
fiscal year and each of the next 2 fiscal years? That is the 
first.
    The second is the recent discovery of more than 100 boxes 
of previously unknown shipyard radiological documents. What do 
you expect that impact to be and will it cost more? And does 
the Navy see any remaining hurdles to moving forward with the 
conveyance agreement in the next 1 to 2 months?
    Mr. Arny. That is me. I was in a similar job in the Navy in 
the mideighties when we were wrestling with Hunters Point back 
then, so----
    Senator Feinstein. It goes on and on.
    Mr. Arny. And then I represented the Port of San Francisco 
for a while and worked for Veronica Sanchez. So I have been out 
there a lot.
    Senator Feinstein. In the mideighties?
    Mr. Arny. Yes.
    Senator Feinstein. While I was Mayor?
    Mr. Arny. Yes, ma'am, I met her back then.
    As to our cost to complete, as of this year it is $103.9 
million.
    Senator Feinstein. 129, did you say?
    Mr. Arny. $103.9 million cost to complete. The 2003 budget 
is $38 million, the 2004 budget is $24 million. I can get you 
later numbers.
    If we are successful in land sales--well, we anticipated 
$68 million of land sales for this year's budget, for 2004, and 
we have taken in more than that. We will use that money to 
accelerate cleanup.
    Senator Feinstein. How much have you taken in?
    Mr. Arny. Taken in--well, I have to take away GSA's pound 
of flesh. But we took in $208.5 million.
    Senator Feinstein. Really?
    Mr. Arny. Plus we took in--that was just on Tustin. We took 
in $15 million roughly in Key West in a negotiated sale, and 
once we are settled with a lawsuit at Oak Knoll we expect to 
take in another $10 million or so.
    Our priority on those is the money goes to the base that 
was closed or to a base--if it is a Marine base----
    Senator Feinstein. In the State?
    Mr. Arny. In the State. We have it prioritized and I can 
get you that for the record.
    Senator Feinstein. Would you?
    Mr. Arny. Yes, ma'am.
    Senator Feinstein. I would very much appreciate it.
    [The information follows:]

    We need to retain some flexibility, but any additional Prior BRAC 
land sale revenue received by the Department of the Navy beyond the $68 
million included in the fiscal year 2004 budget bill will be applied to 
accelerate cleanup and property disposal at Prior BRAC locations in the 
following general priority order.
  --The BRAC base that generated the revenue.
  --The Navy or Marine Corps military service that generated the 
        revenue.
  --DoN bases to implement an early transfer opportunity.
  --DoN bases that, with a modest infusion of additional funds, could 
        quickly complete cleanup and property disposal, thereby 
        completing actions on that base.
  --All remaining DoN bases.

    Mr. Arny. And we tend to--it is the base that was sold gets 
first priority. The service that that base was gets next 
priority, and the State--I forget where the State falls in 
there. I can get that for you, and I can get you the later 
numbers.
    Senator Feinstein. Great.
    Mr. Arny. But Hunters Point is clearly one that we would 
like to accelerate the cleanup on. Hunters Point--you talked 
about the six bases to Mr. DuBois. I would suspect that three 
of them are ours and three of them are in the San Francisco 
Bay. I would suspect they are Mare Island, Alameda, and Hunters 
Point. That is just a guess.
    Senator Feinstein. And then Alaska would be another, right? 
That would be----
    Mr. Arny. That is just huge area.
    Senator Feinstein. Right.
    Mr. Arny. It is area, not cost.
    Senator Feinstein. And the other two would be?
    Mr. Arny. McClellan maybe and--I do not know.
    Senator Feinstein. Pearl, did you say?
    Mr. Arny. No, McClellan perhaps. I am not sure.
    Mr. Gibbs. I do not know the six.
    Senator Feinstein. Well, you gentlemen will get us the six.
    Mr. Gibbs. You will get the list.
    Senator Feinstein. I appreciate that.
    Mr. Arny. As far as the boxes of material, I just got 
briefed yesterday on the HRA, Historical Radiological 
Assessment. We are working very closely with the city, as you 
know. There is a RAB meeting in 2 weeks. We will lay out ahead 
of time before the Restoration Advisory Board (RAB) with the 
city officials. The number of boxes is not quite as large as we 
thought it was, but it is still very large.
    We believe we will be ready by 1 October, I think is our 
deadline, and we have----
    Senator Feinstein. Is that for conveyance?
    Mr. Arny. No, the conveyance should be ready to go before 
then. We have separated the conveyance from--we were going to 
require the transfer of parcel A prior to conveyance. But 
because the HRA has delayed that, we are separating parcel A 
from the conveyance.
    We would, however, like the city in return for early 
conveyance, which we are ready to do, we would like them to 
take over fire and security guard service. We are paying $1 
million a year for fire and police security services. If you 
recall, the police, the San Francisco Police, are actually 
stationed at Hunters Point, but they are not to respond to 
stuff at Hunters Point.
    It is very difficult for us to hire firemen. We hire them, 
they become Federal, we train them up, and guess what, they get 
hired away by the City of San Francisco. And oh, by the way, so 
we are undermanned, our firemen respond to a fire, and the city 
also responds to the same fire.
    Senator Feinstein. I would be very happy to help with that.
    Mr. Arny. Thank you, I would appreciate that.
    Senator Feinstein. I really appreciate the work that has 
been done. So do you see any hurdles? 1 to 2 months for 
conveyance, is that about correct?
    Mr. Arny. I will have to check on the time frame. I was not 
thinking that quickly, but that could very well be the time 
frame.
    Senator Feinstein. Thank you.
    Mr. Arny. Firefighting is the only hurdle.
    Senator Feinstein. All right.

                       MC CLELLAN AIR FORCE BASE

    Secretary Gibbs, I understand that the required McClellan 
funding for 2004 is nearly $43 million and the Air Force has 
communicated to the community a commitment of $30 to $40 
million per year to be spent on remediation at McClellan over 
the next 5 years. Is that in fact correct?
    Mr. Gibbs. Yes, ma'am.
    Senator Feinstein. What is your current working estimate of 
the cost to complete the environmental cleanup at McClellan?
    Mr. Gibbs. I will give you a number----
    Senator Feinstein. And the time line.
    Mr. Gibbs. We expect that it will be about three-quarters 
of a billion dollars to complete all of the work at McClellan. 
Now, I notice that Mr. Leonard had used a number substantially 
greater than that in his estimate, so I will get back to you 
for the record specifically. I will provide you all of the 
details of the money spent to date and the amount to go.
    [The information follows:]

                             McClellan AFB
    Historical expenditures (including pre-BRAC DERA costs) for the 
environmental cleanup at McClellan Air Force Base total $402,800,000 
(includes fiscal year 2003). Our current estimated cost to complete the 
cleanup is $752,000,000 for the period fiscal year 2004 through 2034.

    Senator Feinstein. Is most of the $750 million or above 
related to the nuclear----
    Mr. Gibbs. Much of it is.
    Senator Feinstein [continuing]. Residue?
    Mr. Gibbs. Much of it is, yes, ma'am.
    Senator Feinstein. And that does not include the sewer?
    Mr. Gibbs. No, the sewer is included.
    Senator Feinstein. The sewer is included, okay. And the 
time line?
    Mr. Gibbs. The time line on the sewer is--well, there are 
discussions currently going on now with the redevelopment 
agency to see if we can rearrange the time line on that. It was 
scheduled out about 2 or 3 years from now. I do not know 
precisely when. But the agency has decided that it would prefer 
to move that up as opposed to something else. So it is a change 
in the process.

                            FORT ORD CLEANUP

    Senator Feinstein. Thank you very much.
    Dr. Fiori, the cleanup bill for Fort Ord is estimated I 
believe at $306 million. I realize that unexploded ordnance 
(UXD) is under a different account, but, given the 
concentration of UXO on Fort Ord, can you estimate the 
remaining time it will take to clean up that base and whether 
you foresee additional costs?
    Dr. Fiori. The costs are about $300 million from now until 
the end. The cleanup will not happen under the process we are 
going under today for at least another 15 to 17 years, and 
those are regulatory issues that we have to solve.
    Senator Feinstein. Let me just--you are saying the 
cleanup----
    Dr. Fiori. Of our 7,000 acres that have UXO it is going to 
take 14 years. The reason for it is, at the moment at least, at 
the present plan with the regulators of California, we are 
allowed to only burn 500 acres per year. We need to burn the 
vegetation off so we can survey the land to find the UXO. Five 
hundred into 7,000 is 14 years, ma'am.
    I am going out there and I am going to discuss this with 
Congressman Farr. Perhaps we have alternative ways to do this. 
But right now we are stuck in that regulatory climate.
    Senator Feinstein. Let me ask a couple questions. This is 
because of air pollution?
    Dr. Fiori. Yes, ma'am, the controlled burns are due to air 
pollution. They limit us to 500 acres a year. We missed this 
year as a matter of fact because the weather changed at the 
time we were going to do it, so we did not even do it this last 
calendar year.
    Senator Feinstein. Does the county want a speedier cleanup?
    Dr. Fiori. As far as I could tell at the moment, everyone 
seems to be satisfied with this except me. I would like to 
speed it up dramatically. This is my long pole in the tent of 
my remaining 40,000 acres once I get rid of my 100,000 acres 
that I plan to get rid of this year.
    But it is a regulatory issue and we are going to work on 
it. I have a task force just working Fort Ord to see what we 
could do to really expedite it and look at alternative 
technologies. But right now we literally cannot find the UXO.
    Senator Feinstein. Well, please let me know if I can be of 
help and I would be happy to.
    Dr. Fiori. I would be delighted to let you know about it, 
because it is high on our priorities, ma'am.
    Senator Feinstein. Thank you.

                      OTHER CALIFORNIA PROPERTIES

    Dr. Fiori. I do have an answer, though, about the other 
properties. A lot of them are in California.
    Senator Feinstein. Good.
    Dr. Fiori. The largest one is Honey Lake, Sierra Army 
Deport, California, 64,000 acres. I think we will be able to 
transfer that to the Department of Interior this year. So that 
is a large chunk of my 100,000. The other one, of course, is 
Fort Ord, but only 1,300 acres of my remaining 15,000 acres 
will be transferred this year. Those are the two California 
large chunks of property that we are going to try to dispose of 
this year.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Feinstein. Thank you very much.
    Thanks, Madam Chairman.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]

                 Questions Submitted to Raymond DuBois

              Questions Submitted by Senator Conrad Burns

                  BASE REALIGNMENT AND CLOSURE (BRAC)

    Question. Please explain the deliberation process the BRAC working 
group is undergoing as it develops the initial selection criterion set 
for submission to the defense committees and the deadline for this 
submission.
    Answer. The Department will ensure that the proposed selection 
criteria meet all of the requirements of the enabling legislation and 
incorporate changes that might be needed to accommodate changing 
military missions. We intend to meet all legislatively mandated 
deadlines regarding selection criteria, beginning with publication of 
the proposed selection criteria in the Federal Register not later than 
31 December 2003.
    Question. We hear that much emphasis will be placed on 
``jointness'' as it applies to military infrastructure in the 2005 
closure round. What are you initial thoughts on what areas the 
Department will be focusing on in this area?
    Answer. In the operational and readiness mission areas, the 
Department will focus on multi-service and multi-mission basing, 
leading to enhanced inter-service training and planning opportunities 
by collocating units of various military services where it makes 
military sense to do so. The Department will also place emphasis on 
jointness in common support areas by streamlining the support 
management infrastructure. We are looking for efficiencies through 
inter-service cooperation and rationalization of support requirements.
    Question. How do you anticipate assets classified as BRAC excess 
property in 1995 being considered for realignment opportunities in the 
2005 round by the Department?
    Answer. Prior BRAC rounds identified considerable excess property 
for disposal. Unless the Department identifies a need for this 
currently excess property, we will continue with the property disposal 
process.
    Question. We understand that community economic impact may play a 
lesser role with respect to decisions made for closure or major 
realignment of a base. Can you tell us what community factors may play 
a more important role in the initial selection criteria?
    Answer. Community factors have been considered in the past and will 
be considered in the future. The specific factors that will be taken 
into account will not be identified until the proposed selection 
criteria are developed and published.
    Question. Encroachment is an issue that has been continually 
emphasized as a major concern for the Department--how do you anticipate 
this being measured by the Department as it applies to the selection 
criteria?
    Answer. In the past, encroachment has been a factor the Military 
Departments considered as a component of military value. I anticipate 
that both current and potential future encroachment issues will be 
identified and considered as a part of the installation military value 
assessments during the BRAC 2005 process.

            REDUCED PRESENCE IN OVERSEAS BASE INFRASTRUCTURE

    Question. Do you see the possibility of a reduced presence in our 
overseas base infrastructure and, if so, does the Department anticipate 
increased basing of forces at CONUS bases? Will such a change in basing 
factor into the 2005 round?
    Answer. Since the Department is currently engaged in a review of 
our overseas presence and basing structure, it would be premature to 
speculate on any potential changes.
    However, to the extent that overseas forces are relocated to other 
overseas areas, there would be no impact on United States basing. If 
any overseas forces return to the United States, they would be 
stationed at a domestic installation. Regardless, it is important to 
note that decisions regarding overseas basing will be made in advance 
of the completion of the BRAC 2005 process. As such, BRAC 2005, which 
is on a later timeline, will factor overseas presence decisions into 
its analyses.

                  BASE REALIGNMENT AND CLOSURE (BRAC)

    Question. Tell us how the Nuclear Posture Review will affect the 
initial selection criteria sent to the Congress.
    Answer. The December 2001 Nuclear Posture Review (NPR) Report to 
Congress outlined a new portfolio of strategic capabilities for the 
United States. United States plans include development of new, non-
nuclear capabilities, concurrent with a reduction in the number of 
operationally deployed strategic nuclear warheads by 2012. The NPR 
report listed the planned strategic nuclear force structure for 2012 
and noted that periodic reviews of United States strategic capabilities 
would occur during the decade ahead. The BRAC force structure plan will 
reflect the most recent decisions by the Department on the strategic 
nuclear force posture, and the selection criteria will connect these 
decisions to the BRAC analysis to support the Secretary's closure and 
realignment recommendations.
    Question. What role do you see the individual services playing in 
the development of the initial selection criteria and can you give me a 
couple of examples of the kinds of themes they have discussed with OSD 
as you have moved forward in the deliberation process?
    Answer. The Department, with all of its components, will work as a 
team to develop the BRAC 2005 selection criteria. The Infrastructure 
Steering Group (ISG), chaired by the Under Secretary of Defense 
(Acquisition, Technology and Logistics), and the Infrastructure 
Executive Council (IEC), chaired by the Deputy Secretary of Defense, 
will develop the selection criteria for the Secretary's approval. 
Senior leaders from each component of the Department are represented on 
these two groups. Military value will be the primary consideration, as 
required by statute.
    Question. What different considerations will be given in the 2005 
as contrasted with the 1995 round given the new Unified Command Plan?
    Answer. The Unified Command Plan sets forth basic guidance to all 
unified combatant commanders, establishing their missions, 
responsibilities and force structure, and delineating the general 
geographic area of responsibility for geographic combatant commanders. 
One of the major differences between the 2005 BRAC round and the 1995 
round is the consideration of force structure. The BRAC Act of 1990, as 
amended, requires the 2005 round to develop a force structure plan 
based on probable threats to our national security over a 20-year 
period. The 1995 round required a force structure plan of only a 6-year 
period. To the extent the new Unified Command Plan impacts our force 
structure requirements over this extended period, those impacts will be 
considered during the 2005 BRAC analysis process.

                  IMPACT OF BRAC ON THE MILCON REQUEST

    Question. How have military construction requests been affected by 
the eventuality of the upcoming base closure round?
    Answer. The 2004 request funds our highest priorities for improving 
quality of life and resolving critical readiness shortfalls, 
irrespective of BRAC. For quality of life, the military construction 
request sustains funding for family and bachelor housing and increases 
the number of housing units privatized. We increased funding for 
facilities sustainment, raising the corporate sustainment rate from 93 
to 94 percent, which will help to preserve our facilities and reduce 
the need for future, more costly revitalizations. We also preserved 
funding for recapitalization.

                  BASE REALIGNMENT AND CLOSURE (BRAC)

    Question. What role do you see Guard and Reserve forces playing in 
any base closure or realignment recommendations?
    Answer. As in past BRAC rounds, the Guard and Reserves will be 
fully integrated in BRAC 2005. The Department views all components as 
important participants in BRAC 2005.
    Question. How will BRAC officials ensure each base is treated 
equally in this process? Will they visit each and every installation 
they are looking to realign or close?
    Answer. The BRAC 2005 process now beginning will be a comprehensive 
analysis of all military installations with the primary goal being 
enhanced war fighting capability and efficiency. The Department will do 
everything possible to ensure the BRAC process is as fair and objective 
as possible, within a very disciplined analytical framework. All 
military installations will be reviewed and all recommendations will be 
based on approved, published selection criteria and a force structure 
plan. As required by Public Law 107-107, military value is the primary 
consideration in analyzing and making closure or realignment 
recommendations.
    The independent BRAC Commission will review the SecDef's closure 
and realignment recommendations (due to the Commission by May 16, 
2005). Commissioners will be nominated by the President in consultation 
with the Congressional leadership. In previous BRAC rounds, at least 
one Commissioner visited each site recommended for closure or 
realignment. The BRAC statute, as amended to authorize the 2005 round, 
provides that the Commission may not recommend the closure of a 
military installation not recommended for closure by the Secretary of 
Defense unless at least two Commissioners visit the installation. Upon 
completion of public hearings and deliberations, the Commission must 
forward its closure and realignment recommendations to the President 
for approval not later than September 8, 2005.
    The President must approve the recommendations (on an all-or-none 
basis) and forward them to the Congress. Upon receipt, the Congress has 
45 legislative days to vote down the Commission's recommendations on an 
all-or-none basis; otherwise they take on the force and effect of law.
    Question. Some of the BRAC goals are to eliminate excess 
infrastructure and optimize military readiness. How do the BRAC 
personnel feel this will affect our homeland security mission?
    Answer. The events of September 11, 2001, have confirmed in my mind 
that the Department must act now to review our basing requirements. We 
are looking at and experiencing different threats than we were a decade 
ago, and our forces must be stationed appropriately to respond to 
contingencies and support the Global War on Terrorism.

                         EXCESS INFRASTRUCTURE

    Question. Could excess infrastructure be used for homeland security 
or to house or maintain other Federal, State, local government agencies 
that need added security since 9/11?
    Answer. Whenever the Department of Defense determines that it has 
property that is excess to its needs, that property is made available 
to other Federal agencies during the Federal screening process. If no 
Federal agency identifies a need for the property, it becomes surplus 
property and is made available for disposal outside the Federal 
Government. State and local governmental agencies may be able to 
acquire surplus property for a variety of purposes if the purpose meets 
the criteria for various public benefit conveyances under the 1949 
Federal Property Act, as amended. Additionally, State and local 
governments can negotiate to purchase surplus property if the intended 
use is for a ``public purpose'' as defined in the 1949 Act.

                  BASE REALIGNMENT AND CLOSURE (BRAC)

    Question. Will BRAC look closely at realigning bases and locating 
missions (from the same and other services) at bases where the primary 
missions cannot be moved? There are several States that have multiple 
military installations; will BRAC officials take into consideration the 
economic impact a closure would have on a State where there's only one 
base to those that have several bases?
    Answer. As in prior BRAC rounds, all bases will be treated equally 
and considered in BRAC 2005. BRAC 2005 selection criteria will be used 
to evaluate potential BRAC actions with Military Value selection 
criteria having primary consideration. For example, BRAC 2005 will be 
looking for opportunities to achieve economies by further developing 
multi-service and multi-mission installations.
    Regarding economic impacts on States with one base, as required by 
the BRAC enabling legislation, the selection criteria for military 
installations will also address the economic impact on existing 
communities in the vicinity of military installations. Regardless of 
the number of military installations in any given state, economic 
impact criteria will be uniformly applied.

           INSTALLATIONS REQUIRED TO SUPPORT MISSILE DEFENSE

    Question. Do you see any new installations' under current or future 
plans for a missile defense?
    Answer. The Department does not have plans to add any new 
installations in support of missile defense. However, we plan to expand 
facilities at existing installations as follows:

----------------------------------------------------------------------------------------------------------------
           Fiscal year (proj #)                   Project title         Project amt              Loc
----------------------------------------------------------------------------------------------------------------
               MAJOR MILCON

2003 (464) THAAD.........................  Test Facilities............      $23,400  PMRF, HI

               MINOR MILCON

2002 (463)...............................  Launch Facilities..........        1,450  PMRF, HI

   FISCAL YEAR 1996-2005 RDT&E PROJECT
                 SUMMARY

2002 (514)...............................  Site Activation Facilities.        1,900  Eareckson AB, AK
2002 (501)...............................  Missile Defense System.....      273,121  Ft Greely & Eareckson AS,
                                           Test Bed Facilities,                       AK
                                           Ph I Preparation
2002 (502)...............................  Missile Defense System,            8,200  Kodiak Island, AK
                                            Test Bed--Kodiak
                                            Facilities, Ph I.
2003 (503)...............................  Missile Defense System,          121,778  Ft Greely & Eareckson AS,
                                            Test Bed Facilities, Ph II.               AK & Beale AFB, CA
2003 (505)...............................  Missile Defense System,           14,880  Kodiak Island, AK
                                            Test Bed--Kodiak
                                            Facilities, Ph II.
----------------------------------------------------------------------------------------------------------------

               CONCLUSIONS OF THE NUCLEAR POSTURE REVIEW

    Question. Another Nuclear Posture Review will occur in 2004, is 
there any present indication that this NPR changes the conclusions of 
the last NPR regarding the continued need for the long-standing triad? 
If so, how, what, when, where, and why?
    Answer. The 2001 Nuclear Posture Review (NPR) lays out the 
direction for United States strategic forces over the next five to 10 
years. The Review concluded that the United States needs to transform 
its strategic forces, from the triad of the last 45 years into a New 
Triad. The three ``legs'' of the old triad have consisted of nuclear-
armed strike forces: Intercontinental Ballistic Missiles (ICBMs), 
Submarine-Launched Ballistic Missiles (SLBMs), and nuclear-armed 
bombers. The New Triad will comprise three legs: (1) nuclear and non-
nuclear strike forces, (2) active defenses against missiles, and (3) a 
revitalized defense infrastructure. The three legs will be supported by 
robust planning, command and control, and intelligence.
    Nuclear forces, including ICBMs, SLBMs, and bombers, will 
constitute one portion of the Strike leg of the transformed New Triad--
one that is vitally important. The NPR determined that the United 
States will deploy, at least until 2012, a force of 500 ICBMs, 14 
ballistic-missile submarines (12 operational at any time), and a bomber 
force of 21 B-2s and 76 B-52s. The number of operationally deployed 
strategic nuclear warheads on these forces will decline to 3,800 in 
2007 and to 1,700-2,200 in 2012.
    There is no requirement for another Nuclear Posture Review in 2004, 
but periodic assessments are required under the Implementation Plan for 
the 2001 NPR.
    The periodic assessments will review the progress achieved in 
establishing the New Triad. The conclusions of the assessments cannot 
be predicted in advance, but the Department of Defense currently plans 
to maintain the NPR-recommended force of 500 ICBMs, 14 ballistic 
missile submarines (12 operational at any time), 21 B-2 and 76 B-52 
bombers until at least 2012.

                             ICBM LAUNCHERS

    Question. Will the concept of 500 ICBM launchers be maintained? If 
so, how, what, when, where, and why?
    Answer. The 2001 Nuclear Posture Review (NPR) lays out the 
direction for United States strategic forces over the next 5 to 10 
years. The President and the Secretary of Defense approved the NPR 
recommendation that the United States will deploy, at least until 2012, 
a force of 500 ICBMs.
    The force of 50 Peacekeeper ICBMs is being retired in accordance 
with the recommendations of the NPR. Accordingly, the force of 500 
ICBMs envisioned by the NPR will comprise entirely the existing force 
of Minuteman III missiles.
    There are no plans to move the Minuteman III ICBMs from their 
current locations.

                  BASE REALIGNMENT AND CLOSURE (BRAC)

    Question. Presuming some missions will be realigned during the next 
BRAC, what factors will be considered in the decision-making process 
regarding placement at other bases?
    Answer. Decisions will be based on the force structure plan and the 
final selection criteria, with primary consideration on military value. 
Some of the factors that could be considered are operational and 
training effectiveness and efficiencies through joint operations.
    Question. Malmstrom AFB has experienced hundreds of millions of 
dollars in construction since 1987, with additional millions to be 
spent over the next couple of years. The funds have been spent 
improving infrastructure, operational facilities (particularly along 
the flight line), housing and other facilities designed to upgrade the 
living conditions of personnel. The estimated cost to reopen the flight 
line to a new mission is estimated at $10,000,000 to $15,000,000. With 
little or no operational encroachments, great weather and significant 
available air space, what flying missions might be considered for 
placement at MAFB?
    Answer. In accordance with the requirements of the base closure 
statute, the Department will consider all military installations 
equally, without regard to whether the installation has been previously 
considered or proposed for closure or realignment by the Department. 
The attributes of Malmstrom AFB will be considered along with those of 
all other installations.
                                 ______
                                 

            Questions Submitted by Senator Dianne Feinstein

                  BASE REALIGNMENT AND CLOSURE (BRAC)

    Question. You and other Defense Department officials have suggested 
that the target of the 2005 BRAC round is to reduce DOD's real estate 
inventory by 20 to 25 percent. That is a very significant reduction, 
particularly at a time when the Nation is mobilizing for war. Has the 
Defense Department taken another look at its estimate of excess 
property in light of the current world crises and the build up to war?
    Answer. BRAC 2005 does not have a target in terms of either 
reducing installation capacity or in savings dollars. However, the 1998 
Report of the Department of Defense on Base Realignment and Closure 
estimated the Department has substantial excess infrastructure capacity 
(20-25 percent). Notwithstanding the indications of the 1998 report, 
specific excess capacity will be determined only after extensive 
analyses are accomplished within the BRAC 2005 process. Once these 
excesses are identified, critical considerations, like technology 
changes and transformational advances, will be factored against them to 
determine the unneeded capacities that can actually be eliminated.
    The force structure on which BRAC 2005 installation requirements 
will be based will project 20 years into the future. As in past BRAC 
rounds, BRAC 2005 will consider not only peacetime garrison 
requirements, but also requirements associated with the mobilization of 
the reserve components. While the BRAC process focuses on CONUS 
installations, the requirements of the global force will necessarily 
take into account anticipated overseas basing that is largely driven by 
international security considerations. As in prior base realignment and 
closure rounds, BRAC 2005 will retain sufficient base structure 
flexibility and capacity to accommodate unanticipated changes in 
overseas basing requirements. In sum, the Department envisions 
continuing to look at the future force and mobilization requirements, 
as well as potential CONUS beddowns of forward deployed forces.

         LONG TERM STATIONING OF U.S. FORCES IN CENTRAL COMMAND

    Question. In your testimony, you note that the Defense Department 
is undertaking a comprehensive review of military property overseas. At 
the same time that the Department is looking at reducing the United 
States military footprint in Europe and Korea, the war on terror and 
the build up for war against Iraq have resulted in an expansion of the 
United States footprint in the Persian Gulf region.
    What does this mean in terms of the long term stationing of United 
States forces in the Central Command area of responsibility?
    Answer. The global positioning of all United States forces and 
their supporting infrastructure outside the United States is currently 
being examined by the Department of Defense. Secretary Rumsfeld has 
directed that a comprehensive and integrated presence and basing 
strategy looking out 10 years be developed and presented to him by July 
1, 2003. The strategy will provide an essential foundation for 
decisions concerning the appropriate locations and infrastructure 
necessary to execute the United States defense strategy today and in 
the future.

                  BASE REALIGNMENT AND CLOSURE (BRAC)

    Question. You have been quoted as saying that, for the 2005 BRAC 
round, all installations are on the table. Will there be any difference 
in the way active installations are weighted or graded versus Guard and 
reserve bases?
    Answer. All active and reserve component installations will be 
considered during BRAC 2005. They will be assessed based on enabling 
legislative guidelines, the force structure plan and approved selection 
criteria, with military value having primary consideration. In doing 
so, we will take into account the missions of reserve component 
installations. Additionally, reserve component installations often 
support units that rely upon geographic recruiting areas, a 
consideration not usually relevant to active installations.

                    ECONOMIC IMPACT OF BASE CLOSURE

    Question. What will you do differently in the 2005 round to better 
help local communities deal with the economic impact of a base closure?
    Answer. We would like to build upon the effectiveness of the 
Defense Economic Adjustment Program (DEAP) as it assists in the 
alleviation of serious community effects that result from BRAC actions. 
As an agency whose primary responsibility is national security, the 
Department relies heavily on the domestic Federal agencies to assist 
local adjustment efforts through technical and financial support. 
Therefore, we will work through the Office of Economic Adjustment, as 
it manages the DEAP, coordinates Federal adjustment assistance, and 
assists communities to organize and respond to these impacts. Among 
activities currently being undertaken to assist communities that may be 
impacted by an 2005 round:
  --Reinvigorate the President's Economic Adjustment Committee (EAC) to 
        expand its purview to address certain regulatory issues and 
        update its membership to include all Federal agencies with 
        programs that can assist local economic recovery.
  --Review activities that may be undertaken today to assist a 
        community where a substantial portion of the economic activity 
        or population of a community is dependent on defense 
        expenditures. On the basis of this effort we anticipate the 
        publication of a Notice of Funding Availability for communities 
        that would like to proactively engage in economic 
        diversification planning.
    When Secretary Rumsfeld makes his recommendations for base 
realignment and closure public in May 2005, the Defense Office of 
Economic Adjustment (OEA), will be prepared to provide responsive 
assistance for those communities that want to begin the base reuse 
planning process.

                       PROPERTY TRANSFER PROCESS

    Question. In your opinion, what property transfer process best 
allows for communities to succeed in transforming a military 
installation?
    Answer. There is tremendous variability in the type of facility, 
geographic location, private investment rates, unemployment levels, and 
other economic strengths and weaknesses at each BRAC location that 
directly affect opportunities for civilian reuse. In addressing this 
variability, and recognizing the uneven capacities of the private and 
public sectors at each of these locations, the Department needs 
flexibility in determining a responsive mix of disposal authorities to 
support a community's particular resources. Existing Federal property 
disposal laws provide for an array of methods to dispose of surplus 
property ranging from the transfer of property to another Federal 
entity, through opportunities for discounted conveyance for public 
purposes, to competitive bid sales.

                            LESSONS LEARNED

    Question. Does the DOD plan to work with communities before and 
after lists are published to provide ``Lessons Learned'' from past 
rounds?
    Answer. The DOD Office of Economic Adjustment (OEA) is available to 
discuss civilian reuse experiences from prior base realignment and 
closures. This information is available on a web site (http://
www.acq.osd.mil/oea) with links to several current base reuse 
locations, through many publications offering guidance and lessons 
learned information, and direct staff contact. There are also links 
from the web site to other Federal agencies and NGO organizations, such 
as the International City Managers Association, and the National 
Association of Installation Developers, that also have documents with 
lessons learned. This information will continue to be kept current with 
the best practices as we approach and implement BRAC 2005.

                              BRAC CLEANUP

    Question. In the 2005 BRAC round, DOD needs a better environmental 
assessment of property and a better estimate of environmental 
remediation costs upfront so we know from the outset what the problems 
are and what the cleanup costs are likely to be. How do you plan to 
achieve these standards--and to accomplish cleanup in a reasonable time 
period?
    Answer. The Department of Defense (DOD) is currently addressing 
sites on its active, closing, and realigning installations with 
potential contamination under the Defense Environmental Response 
Program (DERP). Sites subject to a future BRAC round already have the 
majority of required environmental restoration underway and are 
currently subject to DERP program management goals. These sites are 
included in DOD's current site inventory along with cleanup phase, 
costs incurred to date, and cost-to-complete information. Detailed site 
and installation-specific information regarding the status of cleanup 
is maintained at the installation and documented in the installation's 
Management Action Plan. Once the closure process begins, the Services 
and regulators may identify additional requirements as investigations 
progress potentially increasing costs.
    Additionally, DOD has undertaken an extensive, Department-wide 
effort to ensure accurate, reliable, and timely financial information, 
is available on a routine basis to support informed decision-making at 
all levels throughout the Department. Established in July 2002, the 
Financial Management Modernization Program (FMMP) is intended to 
develop a DOD-wide enterprise architecture and transition plan designed 
to transform the Defense business operations and technical 
infrastructure. The scope of this initiative encompasses those defense 
policies, processes, people, and systems, which guide, perform, or 
support all aspects of financial management within the Department, from 
the formulation of budget estimates to the preparation of management 
reports and financial statements. Specific to the DERP, the Office of 
the Assistant Deputy Under Secretary of Defense for Environment 
(OADUSD(E)) is working to align its Restoration Management Information 
System (RMIS), as well as the DOD Component's data systems that feed 
the RMIS, with the DOD-wide Financial Management Enterprise 
Architecture. Additionally, the OADUSD(E) has directed the Components 
to eliminate serious deficiencies with the preparation and 
documentation cost-to-complete estimates and material weaknesses in the 
annual financial statements. Component cost-to-complete estimates and 
the values in the annual financial statements for environmental 
restoration must be consistent with each other and able to withstand an 
audit. In summary, these DOD-wide and DERP-specific initiatives to 
improve financial management and reporting will facilitate DOD's 
development of accurate, supportable environmental remediation cost 
estimates.
    To ensure cleanup is accomplished in a reasonable time frame, 
OADUSD(E) will be working with the Components to develop goals and 
metrics for the 2005 BRAC round. ODUSD(E) will closely oversee 
Component progress using such tools as regular In-Progress Reviews.

                              BRAC BUDGET

    Question. Given the magnitude of the outstanding cleanup costs from 
the prior BRAC rounds--an estimated $3.5 billion will needed to 
complete cleanup assuming there are no more surprises out there--why 
did the Defense Department reduce the fiscal year 2004 BRAC budget 
request by 34 percent?
    Answer. The fiscal year 2004 budget request for the total fiscal 
year 2004 BRAC program (including environmental and caretaker costs) 
represents a 34 percent reduction from fiscal year 2003. When 
considering BRAC environmental costs only, the planned value of the 
fiscal year 2004 program ($412.0 million) represents a 24 percent 
reduction from fiscal year 2003 ($540.2 million). A significant portion 
of the difference is attributed to revenues anticipated from land sales 
of base closure properties, thus reducing the fiscal year 2004 budget 
request.
    Question. What are your projections for the out years--are you 
planning increases or further decreases in the BRAC environmental 
remediation budget requests?
    Answer. The President's budget will support the goal of remedies in 
place by fiscal year 2005. As the requirements decrease, the budget 
will decrease. A substantial level of total BRAC environmental 
requirements will remain beyond the current FYDP because many of the 
BRAC sites are still in the study phase and that a greater range of 
contaminants may be considered in the cleanup process leading to 
transfer of properties to communities. The Department recognizes the 
inherent advantages of transferring properties as soon as possible and 
fully funds cleanup of all properties with identified schedules for 
transfer.

             STATUS OF EXCESS ACREAGE AT SIX INSTALLATIONS

    Question. Could you identify those 6 installations and tell the 
Committee the estimated cost and cleanup time line for each of them?
    Answer. The six installations are: Adak Naval Air Station, Alaska; 
Fort McClellan, Alabama; Fort Ord, California; Fort Wingate, New 
Mexico; Savanna Depot Activity, Illinois; and Sierra Army Depot, 
California. These six installations have some sites where remediation 
under the Comprehensive Environmental Response, Compensation and 
Liability Act (CERCLA) remains to be completed. Though there are 
exceptions, generally remediation under CERCLA has to be completed 
before property can be transferred to a non-Federal entity. Through 
fiscal year 2002, the Department spent approximately $697 million on 
remediation at these six installations; we estimate the remaining 
environmental cost-to-complete, including environmental remediation, at 
these six installations to be approximately $635 million. Additional 
information on acreage, funding, and environmental remediation 
associated with each installation is shown in the table.



------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                 Environmental   Environmental
                                                                    Acreage         Acreage      Acreage with      Projected      Remediation     fiscal year
                 Installations                   Excess Acres    Suitable for   Transferred to      CERCLA       Final Cleanup   Expenditures       2003 to                 Comments
                                                                Transfer Under     Date \2\     Activities \3\    Remedy \4\    through fiscal    Completion
                                                                  CERCLA \1\                                                     year 2002 \5\    Funding \6\
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
ADAK NAS, ALASKA..............................          72,600       57,600.00            0.00       15,000.00            2008        $209,282         $50,680  Remedy selection for petroleum
                                                                                                                                                                 sites has been delayed due to
                                                                                                                                                                 negotiations with regulatory
                                                                                                                                                                 agencies to consider risk based
                                                                                                                                                                 approach to cleanup decisions
                                                                                                                                                                 for these sites. Major
                                                                                                                                                                 remaining obstacle to airfield
                                                                                                                                                                 conveyance is future funding
                                                                                                                                                                 for the airfield after transfer
                                                                                                                                                                 from Navy.
FORT MCCLELLAN, ALABAMA.......................          18,232       17,789.26        4,953.00          442.74            2011          92,873         126,352  Primary issues relate to complex
                                                                                                                                                                 unexploded ordnance activities.
                                                                                                                                                                 Army is planning on early
                                                                                                                                                                 transfers in fiscal year 2003
                                                                                                                                                                 and fiscal year 2004, with the
                                                                                                                                                                 LRA assuming cleanup
                                                                                                                                                                 responsibilities, including
                                                                                                                                                                 UXO. With this early transfer
                                                                                                                                                                 approach, not only will the LRA
                                                                                                                                                                 be able be able to control and
                                                                                                                                                                 integrate both re-development
                                                                                                                                                                 and cleanup, but the cleanup
                                                                                                                                                                 may be completed sooner.
FORT ORD, CALIFORNIA..........................          27,015        3,062.00       11,466.00       23,953.00            2011         261,168         305,755  Primary issues relate to complex
                                                                                                                                                                 unexploded ordnance activities,
                                                                                                                                                                 especially with limitations
                                                                                                                                                                 placed by chaparral habitat
                                                                                                                                                                 management plan.
FORT WINGATE, NEW MEXICO......................          21,881       21,829.00        5,429.00           52.00            2010          33,647          16,047  Army is working with the State
                                                                                                                                                                 of New Mexico on environmental
                                                                                                                                                                 issues related to OB/OD closure
                                                                                                                                                                 on the latter transfer parcel.
                                                                                                                                                                 Army currently in negotiations
                                                                                                                                                                 for fiscal year 2003 transfer
                                                                                                                                                                 of about 8,300 acres to DOI.
                                                                                                                                                                 Remaining acreage (about 8,100)
                                                                                                                                                                 planned for transfer after
                                                                                                                                                                 fiscal year 2007.
SAVANNA DEPOT ACTIVITY, ILLINOIS..............          12,606       11,821.00            0.00          785.00            2015          93,846         135,074  Complex cleanup issues related
                                                                                                                                                                 to unexploded ordnance,
                                                                                                                                                                 potential chemical warfare
                                                                                                                                                                 material, and groundwater. The
                                                                                                                                                                 Strategic Management Analysis
                                                                                                                                                                 and Requirements Team [SMART]
                                                                                                                                                                 team is working actively to
                                                                                                                                                                 expedite cleanup. Most of the
                                                                                                                                                                 property can transfer at any
                                                                                                                                                                 time by mutual agreement with
                                                                                                                                                                 DOI. Army and DOI are
                                                                                                                                                                 negotiating planned transfers.
SIERRA ARMY DEPOT, CALIFORNIA.................          64,996       64,996.00          663.00            0.00            2000           6,467           1,523  Army anticipates getting
                                                                                                                                                                 remaining MMRP work completed
                                                                                                                                                                 in fiscal year 2003. Army is
                                                                                                                                                                 intending on having property
                                                                                                                                                                 ready to revert to California
                                                                                                                                                                 in fiscal year 2003. Listing of
                                                                                                                                                                 Carson Wandering Skipper
                                                                                                                                                                 (butterfly) under ESA may
                                                                                                                                                                 impede property transfer.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Cleanup actions either completed or not required to satisfy CERCLA requirements for transfer to a non-Federal entity. Some of the acreage may have Military Munitions Response Program
  activities (e.g., unexploded ordnance clean up). Information as of September 30, 2002.
\2\ Includes property transfers to Federal and non-Federal entities, as well as long-term leases such as Lease in Furtherance of Conveyance. Information as of December 31, 2002.
\3\ Cleanup actions or further information needed to satisfy CERCLA requirements for transfer to a non-Federal entity. Note cleanup actions are taken on discrete cleanup sites within the
  listed acreage. Some of the acreage may also have Military Munitions Response Program activities (e.g., unexploded ordnance clean up). The property can be transferred to other Federal
  Agencies or can be transferred to a non-Federal entity through use of CERCLA's Early Transfer Authority. This property can also be put into reuse by non-Federal entities through a lease.
  Information as of September 30, 2002.
\4\ Projected date of having a final BRAC cleanup site at the installation having a remedy-in-place or response complete with respect to hazardous substances. This means that cleanup actions
  have been taken to satisfy CERCLA requirements for property transfer to a non-Federal entity. Information as of September 30, 2002.
\5\ Environmental remediation (traditional CERCLA-type Installation Restoration Program cleanup and Military Munitions Response Program cleanup) project costs through end of fiscal year 2002.
  Information as of September 30, 2002.
\6\ Includes environmental remediation (traditional CERCLA-type cleanup and Military Munitions Response Program cleanup) and environmental compliance costs. Information as of September 31,
  2002.

ESA=Endangered Species Act.
IRP=Installation Restoration Program; e.g., hazardous substances.
LRA=Local Redevelopment Authority.
MMRP=Military Munitions Response Program; e.g., unexploded ordnance.
UXO=Unexploded Ordnance

                   REMAINING CLOSED BASES TO TRANSFER

    Question. How many closed military bases remain to be transferred 
to the local community?
    Answer. Overall, there were 387 major and minor base closures and 
realignment actions in the four rounds of BRAC. Of this total, 82 
installations have property remaining to be transferred to other 
Federal agencies and eligible recipients, including local communities. 
The parcels range in size from 4 acres to 72,600 acres. As reported 
separately, 82 percent of this property (in acres) is at 6 
installations. However, in many instances these properties are already 
being used to develop new community jobs through interim leases, 
pending final transfer.

                  BASE REALIGNMENT AND CLOSURE (BRAC)

    Question. What is the cost to the government for maintaining closed 
military properties that haven't been transferred?
    Answer. The Department continues to dispose of surplus property 
associated with former BRAC locations as quickly as possible. Costs for 
maintaining closed military properties that have not been transferred 
fall into the operations and maintenance category, such as providing a 
level of maintenance to keep facilities from being damaged by weather, 
cutting the grass and maintaining security. In fiscal year 2002, those 
costs approximated $70 million, and have decreased to $60 million in 
2003 and $48 million in the 2004 budget request. These costs will 
continue to decrease as more BRAC property is transferred out of the 
Department's inventory.

     DEPARTMENT'S POTENTIAL LIABILITY FOR PERCHLORATE CONTAMINATION

    Question. How would you respond to Mr. Lowry and Mr. Salazar's 
concerns? Can you assure me that your proposed amendments will have 
absolutely no effect on the Department's potential liability for 
perchlorate contamination?
    Answer. The Department revised the legislative language of our 
proposed Readiness and Range Preservation Initiative (RRPI) before 
submitting it to Congress this year to address some of the concerns 
expressed by State officials last year with respect to closed ranges. 
In addition, the Department has worked with the U.S. Environmental 
Protection Agency (EPA) subsequent to submission of our legislation 
specifically to address further concerns expressed by these and other 
State officials about closed ranges and contractor activities and 
facilities. We have submitted these revisions through DOD testimony 
offered before the Readiness Subcommittee of the Senate Armed Services 
Committee on April 1, 2003, and the Senate Environment and Public Works 
Committee on April 2, 2003.
    These revisions make even clearer that our legislation will not 
alter the Department's legal obligations or responsibilities with 
respect to our closed ranges or ranges that close in the future, or 
with respect to our contractors. Moreover, our legislation also does 
not alter the Department's obligations under the Safe Drinking Water 
Act even with respect to operational ranges. Our legislation provides 
that the Department will be liable for cleanup under the Resource 
Conservation and Recovery Act (RCRA) of munitions fragments or 
constituents that migrate off an operational range if they create an 
imminent and substantial endangerment and are not being addressed under 
the Comprehensive Environmental Response, Compensation, and Liability 
Act (CERCLA). Finally, the Department's legislation does not seek to 
change the liability or cost recovery provisions of CERCLA.
    Thus, enactment of our range proposals would have no effect on the 
Department's potential liability for perchlorate contamination. The 
RCRA and CERCLA provisions would affect the timing of cleanup 
activities on operational ranges, deferring cleanup on them until they 
closed, in the absence of off-range migration.
    Question. Can you assure me that your proposed amendments will have 
absolutely no effect on the Department's potential liability for 
perchlorate contamination, and if this is correct, explain why?
    Answer. Our legislation will not alter the Department's legal 
obligations or responsibilities with respect to our closed ranges or 
ranges that close in the future, or with respect to our contractors. 
Moreover, our legislation also does not alter the Department's 
obligations under the Safe Drinking Water Act even with respect to 
operational ranges. Our legislation provides that the Department will 
be liable for cleanup under the Resource Conservation and Recovery Act 
(RCRA) of munitions fragments or constituents that migrate off an 
operational range if they may create an imminent and substantial 
endangerment and are not being addressed under the Comprehensive 
Environmental Response, Compensation, and Liability Act (CERCLA). 
Finally, the Department's legislation does not seek to change the 
liability or cost recovery provisions of CERCLA.
    Thus, enactment of our range proposals would have no effect on the 
Department's potential liability for perchlorate contamination. The 
RCRA and CERCLA provisions would affect the timing of cleanup 
activities on operational ranges, deferring cleanup on them until they 
closed, in the absence of off-range migration.

             NATIONAL ACADEMY OF SCIENCES PERCHLORATE STUDY

    Question. Can you assure me that the NAS study will rigorously 
examine potential health effects on children, which many believe occur 
at low levels of perchlorate exposure?
    Answer. EPA has decided, with the full support and in partnership 
with the Department and other Federal agencies, to submit perchlorate 
health science issues to the National Academy of Sciences (NAS) to 
resolve several underlying scientific questions about perchlorate 
toxicity and risk. We, along with EPA and others, expect the NAS study 
will be a complete, thorough, and vigorous independent review that will 
answer these substantial scientific uncertainties including the effect 
of perchlorate on sensitive subpopulations, which may include children.
    Question. How would you address the concerns some have expressed 
that an NAS panel on perchlorate might be biased in favor of industry's 
perspective?
    Answer. As this will be a review conducted by the National Academy 
of Sciences (NAS), the NAS--not the Department, EPA, or industry--will 
be selecting panel members for the study. The Department's expectation 
is that the review will be an open and transparent independent 
scientific review that will answer the underlying scientific questions 
about perchlorate toxicity and risk.

                         EARLY TRANSFER PROCESS

    Question. Could the BRAC early transfer process be streamlined?
    Answer. The Department is establishing a Property Reuse and 
Disposal working group that will be considering ways to improve the 
entire BRAC property disposal and reuse process, including early 
transfer.

                 INTEGRATING CLEANUP WITH REDEVELOPMENT

    Question. Is it more cost effective to accomplish environmental 
cleanup in conjunction with the redevelopment of the property?
    Answer. Integrating cleanup with redevelopment can increase 
efficiency, saving time and money for both the community and DOD. These 
savings can be even more dramatic if the redevelopment is consistent 
with DOD's prior land uses. This is especially true for base-reuse 
parcels where financially feasible redevelopment is ready to happen 
with redevelopers and end-users anxious to proceed. For example, under 
a traditional property transfer approach, DOD may remove soil 
contamination by physically digging a ditch, treating the soil, and 
then replacing the treated soil. Later, a developer may excavate the 
site to build the foundation for a building, install utilities, or 
change elevations to support redevelopment, again removing the soil. If 
these activities were integrated the soil could be removed and shipped 
off-site for treatment or disposal while the redevelopment is ongoing, 
eliminating the unnecessary step of replacing and again removing the 
soil. By integrating cleanup and redevelopment, four important outcomes 
can be realized:
  --Cleanup is only done once and it is done to the appropriate levels 
        for reuse
  --Property will be reused much faster, benefiting the local community 
        by creating new jobs, generating revenue, and putting Federal 
        property back on the local tax rolls much earlier.
  --DOD is removed from the business of managing property. By divesting 
        the property sooner, DOD reduces expenses associated with 
        maintaining the property. Earlier deed transfer also reduces 
        DOD's landlord responsibilities and liability as a Federal 
        property owner. Earlier transfer may also eliminate some 
        restrictions on the use of the property.
  --Significant cost savings can be realized for both DOD and the 
        redeveloper. Integrating land use planning and site remediation 
        decisions early in the remedial process and matching the remedy 
        with reuse can save money and time for all parties involved.

                      REUSE PLAN & CONTROL ZONING

    Question. Local communities generally have difficulty assuming the 
financial burden of BRAC properties. If local communities create a 
reuse plan and control zoning, could the Department advertise and sell 
the property to the private sector in accordance with their plan and 
zoning?
    Answer. Yes. There are several factors that contribute to the 
Department's ability to dispose of property through a competitive sale 
and the speed at which this could be accomplished. An adopted reuse 
plan which then is incorporated into local general plans and zoning is 
certainly critical to establishing a property's highest and best use 
for potential buyers. This also helps to minimize uncertainty in the 
marketplace where buyers may otherwise hesitate or discount their 
willingness to pay until the final use for available property is 
negotiated. Another complicating factor may be the manner in which 
communities confer development rights. Many communities confer 
development rights to the private sector in exchange for the 
construction of other ``public improvements,'' such as schools, roads, 
parkland/open space, etc. In such instances, it is incumbent for the 
community to identify as early as possible the activities or costs that 
would be the responsibility of the developer to assist the effort. 
Lastly, care must be taken to ensure there is a realistic way to 
redevelop property where a viable market may not presently exist. In 
these situations the community or another ``public'' body is often 
tasked to redevelop property that is unable to attract sufficient 
private investment. Thus, the parceling of the property becomes a 
significant issue, particularly if the community is likely to be left 
with the least marketable property.

                      PROPERTY REUSE AND DISPOSAL

    Question. Should Federal agencies that claim BRAC property be given 
a finite time period to assume control of the property?
    Answer. The Department is establishing a Property Reuse and 
Disposal working group that will be considering ways to improve the 
entire BRAC property disposal and reuse process. This issue will be 
examined in that context.
                                 ______
                                 

               Questions Submitted to Dr. Mario P. Fiori

            Questions Submitted by Senator Dianne Feinstein

                       BRAC ENVIRONMENTAL CLEANUP

    Question. The Army's fiscal year 2004 BRAC budget request is $66.4 
million, a 56 percent reduction from fiscal year 2003. How much money 
above the budget request could the Army execute in fiscal year 2004 to 
expedite its BRAC cleanup program?
    Answer. The fiscal year 2004 budget request of $66.4 million 
includes $57.3 million for environmental cleanup and allows us to 
achieve our restoration and disposal goals, within Army priorities, and 
in support of community reuse of the remaining BRAC installations. The 
funds requested are appropriate for BRAC cleanup within Army priorities 
for fiscal year 2004.
    Question. Did you request a higher level of funding from the 
Defense Department? (If so, what happened; If not, why not?)
    Answer. No. The Department of Defense supported the Army's request 
for BRAC funding in fiscal year 2004. The Army's BRAC budget request of 
$66.4 million was the correct amount for this program within Army and 
Defense priorities.
    Question. Could the BRAC early transfer process be streamlined? Is 
it more cost effective to accomplish the environmental cleanup in 
conjunction with the redevelopment of the property?
    Answer. The best way to streamline the early transfer process is to 
establish timelines for property conveyance in the public sector 
resulting from the screening process and Public Benefit and Economic 
Development Conveyances. The Department could then make properties 
available for public sale. When appropriate, an option would be early 
transfer with the price discounted by the value of the remaining 
cleanup. The Army has conveyed several properties early in conjunction 
with a cooperative agreement for the community to complete the 
remaining cleanup. Integrating cleanup with redevelopment resulted in 
efficiencies and cost savings. Bayonne Military Ocean Terminal, NJ, 
Fitzsimons Army Medical Center, CO and Oakland Army Base, CA are 
examples in the Army's experience to date.

                              LOCAL REUSE

    Question. Local communities generally have difficulty assuming the 
financial burden of BRAC properties. If local communities create a 
reuse plan and control zoning, could the Department advertise and sell 
the property to the private sector in accordance with their plan and 
zoning?
    Answer. This scenario is more in line with the traditional roles of 
local governments. The Department could work with local communities to 
define reuse through reuse planning and zoning, and then market the 
properties within those established parameters.
    Question. Should Federal agencies that claim BRAC property be given 
a finite time period to assume control of the property?
    Answer. Yes. Our experience from the first four BRAC rounds 
indicates that when other Federal agencies claim BRAC properties, in 
some cases they take years to take control of the property. The 
responsibility for cleanup of any Defense generated contamination 
should remain with the Defense Department, but transfer to another 
Federal agency should occur shortly after they claim the property.
                                 ______
                                 

                 Questions Submitted to Nelson F. Gibbs

              Questions Submitted by Senator Conrad Burns

                        BRAC SELECTION CRITERIA

    Question. Encroachment is an issue that has been continually 
emphasized as a major concern for the Department--how do you anticipate 
this being measured by the Department as it applies to the selection 
criteria?
    Answer. Until the Secretary of Defense (SECDEF) promulgates the 
selection criteria DOD and the services must use in making 
recommendations for the closure and realignment of military 
installations in 2005 it would be premature to speculate how DOD will 
measure encroachment as it applies to the selection criteria. The law 
requires the SECDEF to propose these criteria not later than December 
31, 2003, and finalize them by February 16, 2004 (Section 2913(a) and 
(b) of the Defense Base Closure and Realignment Act). The law does 
specify that the selection criteria must address, at a minimum, several 
factors, to include ``The ability of both existing and potential 
receiving communities' infrastructure to support forces, missions, and 
personnel'' and the cost impact of environmental compliance activities. 
Once these criteria are finalized by the SECDEF, the role of 
encroachment related factors in the recommendation process should be 
clarified.

                           NEW INSTALLATIONS

    Question. Do you see any new installation's under current or future 
plans for a missile defense?
    Answer. The Air Force has no current plans to build new 
installations to support deployment of the Ballistic Missile Defense 
System (BMDS) that is under research and development with the Missile 
Defense Agency (MDA).
    The Missile Defense Agency should be able to provide more insight 
into required installations/MILCON to meet BMDS requirements.

                            BASE REALIGNMENT

    Question. Will BRAC look closely at realigning bases and locating 
missions (from the same and other services) at bases where the primary 
missions cannot be moved?
    Answer. The Defense Base Closure and Realignment Act, as revised by 
the fiscal year 2002 National Defense Authorization Act to provide for 
the 2005 round of closure and realignment recommendations, specifically 
requires the Secretary of Defense (SECDEF), in making his 
determinations of levels of necessary versus excess infrastructure, to 
consider efficiencies to be gained from joint service tenancy at 
military installations (Section 2912(a)(3)(B)). The selection criteria 
that SECDEF is directed by law to develop to make recommendations for 
closure and realignment of military installations must ensure that 
military value is the primary consideration, and that military value 
must include at a minimum several specified factors, to include ``The 
impact on joint warfighting, training, and readiness.'' (Section 
2913(b)(4)). It will not be until the SECDEF proposes these selection 
criteria by December 31,2003 and finalizes them by February 16, 2004, 
that we will be able to describe the exact role joint service tenancy 
will play in the closure and realignment recommendation process. 
Certainly to the extent an installation is not closed, it may be 
considered as a gaining installation for both same and other service 
missions closed and/or realigned from other installations, in 
accordance with the promulgated recommendation selection criteria.

                              BASE CLOSURE

    Question. How have military construction requests been affected by 
the eventuality of the upcoming base closure round?
    Answer. The Air Force's military construction request is in no way 
affected by the eventuality of the upcoming base closure round. We did 
not consider the upcoming base closure round when developing our fiscal 
year 2004 military construction request, nor did we receive any 
guidance suggesting we do so.
    Furthermore, our out-year military construction programs are 
comprised entirely of validated requirements at existing Air Force 
installations. No parts of those programs are ``reserved'' for any 
requirements related to yet-to-be-determined base closure or 
realignment activities.
                                 ______
                                 

            Questions Submitted by Senator Dianne Feinstein

                      BRAC ENVIRONMENTAL CLEAN UP

    Question. The Air Force fiscal year 2004 request for BRAC 
environmental remediation and caretaker costs is $198.7 million. It is 
my understanding that the Air Force could execute significantly more 
funding in fiscal year 2004. According to my information, the Air Force 
could execute nearly $65 million in environmental clean up on top of 
the budget request. Is this also your understanding?
    Answer. The fiscal year 2004 Air Force request for BRAC 
environmental remediation and caretaker costs is $200.7 million. The 
Air Force could execute $65 million in environmental clean up on top of 
the budget request.
    Question. Did you seek a higher level of funding for BRAC 
environmental remediation in your budget submission to the Office of 
Secretary of Defense? If so, what happened? If not, why not?
    Answer. No. The Office of Secretary of Defense supported full 
funding of our fiscal year 2004 budget submission for BRAC 
environmental remediation.
    Question. Would additional funding help to expedite the Air Force 
BRAC environmental clean up program?
    Answer. While the fiscal year 2004 request reflects our 
requirements additional funding would allow us the opportunity to 
expedite cleanup requirements currently planned for future years.
    Question. What impact would additional funding have on 
installations in California, such as McClellan?
    Answer. While the Air Force is fully funded in fiscal year 2004 at 
McClellan and the other five California BRAC installations, we have 
requirements which currently would be addressed in fiscal year 2005/
2006. Additional funding would allow us to execute these requirements 
in fiscal year 2004 without negatively impacting the reuse or cleanup 
schedule.
    Additionally, we are pursuing process improvements that will have 
significant and positive impacts to the cleanup costs and schedules for 
our bases. These improvements include cleanup system optimization to 
reduce long term operating costs. We are also working cooperatively 
with the California regulatory agencies to streamline the document 
requirements and review processes.
    Question. It appears that the Navy has some assurance from the 
Department that it will be able to return proceeds from property sales 
into its BRAC environmental cleanup account. The Air Force has realized 
total proceeds of $58.4 million to date as a result of property sales 
and expects an additional $27.5 million. Does the Air Force have the 
same assurances that any proceeds realized from property sales will be 
returned to the BRAC cleanup account?
    Answer. Section 2906(d) of Public Law 101-510, as amended (10 
U.S.C. 2687, note) provides for the recovery of the depreciated value 
of Defense Commissary Agency (DeCA) or Non Appropriated Fund (NAF) 
investment in real property impacted by Base Realignment and Closure 
(BRAC) actions. Therefore, any proceeds realized from the sale or lease 
of BRAC property will be first paid to this account. After the 
unrecovered depreciated value has been recovered for the BRAC 
installation, all proceeds received will then be paid the BRAC account, 
at which time we would request the proceeds be available for 
environmental cleanup.
    Question. Could the BRAC early transfer process be streamlined?
    Answer. Yes. The early transfer authority has worked well for us in 
cases where the local reuse authority requests the early transfer. An 
improvement to the process would be to allow the Department to initiate 
and request the early transfer authority by making early transfer a 
condition of the transaction.
    Question. Is it more cost effective to accomplish environmental 
cleanup in conjunction with the redevelopment of the property?
    Answer. Yes. The Air Force's experience is that closely integrated 
redevelopment and environmental cleanup is more cost effective. The Air 
Force has worked with its BRAC communities to understand and align our 
joint priorities to achieve these efficiencies. A notable example was 
the conversion of Bergstrom Air Force Base, Texas to the Bergstrom 
International Airport, where we identified synergies between the Air 
Force cleanup program and the Airport construction plan so that the 
conversion occurred within budget and on schedule. Additionally, the 
Air Force maximizes its flexibility to customize the redevelopment and 
cleanup integration. We successfully integrated the cleanup and 
redevelopment at the former Lowry Air Force Base and believe that the 
long-term costs will be reduced through the privatization of the 
cleanup.
    Question. Local communities generally have difficulty assuming the 
financial burden of BRAC properties. If local communities create a 
reuse plan and control zoning, could the Department advertise and sell 
the property to the private sector in accordance with their plan and 
zoning?
    Answer. Yes. This is our preferred approach. Local communities, 
through planning and zoning, definitely affect the kind of development 
that can occur. This approach you describe worked very successfully at 
those locations that used it. It not only minimizes the financial 
burden on the community but it gets property very quickly on the local 
tax rolls.
    Question. Should Federal agencies that claim BRAC property be given 
a finite time period to assume control of the property?
    Answer. Yes. Property transfers to other Federal agencies should 
occur as soon as the property is vacated. Transfer of property from one 
Federal agency to another does not require Environmental Protection 
Agency (EPA) or State Regulators concurrence because ownership is not 
leaving the Federal Government.
                                 ______
                                 

                   Questions Submitted to Wayne Arny

            Questions Submitted by Senator Dianne Feinstein

              PROPERTY SALES STAYING IN NAVY BRAC ACCOUNT

    Question. The fiscal year 2004 Navy request for BRAC cleanup is 
$101.9 million, a 62 percent decrease from the fiscal year 2003 enacted 
level. However, the Navy intends to spend $180 million this year in 
BRAC cleanup--the $79 million difference being made up in anticipated 
property sales from previously BRAC'd properties.
    What assurances to you have from the Department of Defense that the 
revenue from property sales will remain in the Navy BRAC accounts?
    Answer. We have received verbal assurances from the senior 
leadership in the Office of the Secretary of Defense that land sale 
revenue from Department of Navy BRAC actions would remain available for 
us to use to expedite our BRAC cleanup actions.

                       BRAC EXECUTIONS CAPABILITY

    Question. How much money above the budget request, and the 
additional $79 million in anticipated revenue, could the Navy execute 
in fiscal year 2004 to expedite its BRAC cleanup program?
    Answer. The Navy's fiscal year 2004 budget consists of an 
appropriation request for $101.9 million plus a conservative estimate 
of $68 million from land sales and a $10.7 million adjustment providing 
a total of $180.6 million in spending authority. The Navy has 
substantial contract execution capacity in place and could readily 
obligate as much as about $500 million in fiscal year 2004 for BRAC 
cleanup under normal BRAC outlay rates. Other factors that impact 
expediting BRAC cleanup programs include regulator support for 
additional workload, timing when funds become available, and making 
sure that we get real cleanup and property disposal progress for the 
investment.

                      STREAMLINING EARLY TRANSFER

    Question. Could the BRAC early transfer process be streamlined?
    Answer. The actual time required to implement an early transfer of 
BRAC property can be relatively short. However, our experience to date 
with early transfer is that they only occur when the community is 
sufficiently motivated in taking the property, particularly when it is 
needed to implement a well financed, economically sound redevelopment 
plan. We have also found that the number of issues needing resolution 
grows proportionally with the number of approving entities involved 
(e.g., various State agencies as a precondition to gubernatorial 
approval). We continue to work with State and local officials to ensure 
that they understand the commitment of the Federal Government to clean 
up the property even if it is conveyed under the early transfer 
authority.

                   PARALLEL CLEANUP AND REDEVELOPMENT

    Question. Is it more cost effective to accomplish environmental 
cleanup in conjunction with the redevelopment of the property?
    Answer. Yes. Integrating environmental cleanup can be cost 
effective in terms of time and money for both the Navy and the 
community. Performing cleanup and redevelopment simultaneously allows 
the Department to dispose of the property sooner via an early transfer. 
Furthermore, costly cleanup expenses can be avoided with the same 
environmental remedy achieved through the normal redevelopment planning 
and construction process. In addition, parallel cleanup and 
redevelopment by the new owner supports the early transfer process by 
allowing the developer a much quicker timeline to project completion 
which fosters motivation to take the property as soon as possible.
    Cleanup performed in conjunction with redevelopment is more 
effective in terms of accelerating cleanup and property disposal 
timelines, as it is usually associated with an early transfer of 
property. A Navy Environmental Services Contract Agreement typically 
provides funding to the receiving entity that will perform the 
redevelopment, and in most cases will also do the cleanup. The 
following table lists recent examples of early transfers that included 
parallel cleanup and substantially accelerated property disposal and 
redevelopment compared to previous plans:

----------------------------------------------------------------------------------------------------------------
                  Site                         Acres                 Date                Disposal Acceleration
----------------------------------------------------------------------------------------------------------------
FISC Oakland............................             529  Jun 1999..................  Disposal 36 months early
                                                                                       st
NAS Agana...............................           1,799  Sep 2000..................  Disposal 12 months early
NTC San Diego...........................              51  Feb 2001..................  Disposal 4 months early
NSY Mare Island (EETP)..................             668  Mar 2002..................  Disposal 48 months early
NSY Mare Island (WETP)..................           2,900  Sep 2002..................  Disposal 7 to 10 years
                                                                                       early
----------------------------------------------------------------------------------------------------------------

    Cost avoidance can be achieved by integrating the cleanup actions 
with the construction effort. Cost avoidance can result from 
synchronizing the two actions, e.g., coordinating the excavation and 
removal of contaminated soil with the construction of a foundation, or 
installing a parking lot in an area for which the environmental remedy 
would be a landfill cap. In addition, the remedial action for a 
contaminated site can be tailored to the actual reuse, rather than 
setting more restrictive and expensive cleanup standards to meet 
potential reuse needs.
    Combining cleanup and redevelopment as part of an early transfer of 
property accelerates cleanup schedules and property disposal timelines, 
which speeds redevelopment and economic reuse of BRAC property. Early 
transfer also ends Navy: oversight and management of the property; 
investments for caretaker functions; participation in local 
redevelopment disputes; and escalating cleanup costs due to concerns 
over the need to conduct additional studies, or to expand the scope of 
the cleanup. It brings finality to the BRAC decision to close the base 
and dispose of the excess property.

                       BRAC SALE AND LOCAL ZONING

    Question. Local communities generally have difficulty assuming the 
financial burden of BRAC properties. If local communities create a 
reuse plan and control zoning, could the Department advertise and sell 
the property to the private sector in accordance with their plan and 
zoning?
    Answer. Yes, the Department supports a public sale with these terms 
and conditions. First, it signifies the support of the Department for 
the local community's reuse plan. Second, the reuse plan and zoning 
simplifies the property appraisal process, reduces risk for potential 
buyers, and maximizes the value of the property. Third, local zoning 
requirements could be made part of the terms of the sale, even if these 
were overlays that would not become effective until property 
conveyance. This is especially true for base reuse parcels where 
financially feasible redevelopment is ready to happen with redevelopers 
and end users anxious to proceed.

                       FEDERAL AGENCY BRAC NEEDS

    Question. Should Federal agencies that claim BRAC property be given 
a finite time period to assume control of the property?
    Answer. Generally, yes. The BRAC property disposal process requires 
that property be screened for other Federal use. If another Federal 
agency identifies a need for the property, the property is normally 
reserved and the receiving Federal agency has a responsibility to 
accept the property within a reasonable time. In several instances, 
receiving agencies have delayed acceptance of property pending 
completion of environmental remediation even though completion of 
cleanup is not required for property being transferred between Federal 
agencies. In other instances, after prolonged delays, some requesting 
agencies have withdrawn their requests for the properties thus 
requiring the disposing service to initiate disposal actions years 
after these actions would have otherwise been taken. Because these 
issues have surfaced in the past, the Department of the Navy is eager 
to work with the Department of Defense and the Military Departments on 
the Property Reuse and Disposal Working Group, where this issue and 
others will be examined in detail.

                          SUBCOMMITTEE RECESS

    Senator Hutchison. Thank you, Senator Feinstein.
    I want to thank all of you. I think we had a very good 
hearing and learned a lot that we can apply to the next round. 
Thank you.
    [Whereupon, at 12:05 p.m., Tuesday, March 18, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]


       MILITARY CONSTRUCTION APPROPRIATIONS FOR FISCAL YEAR 2004

                              ----------                              


                        TUESDAY, APRIL 29, 2003

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 4:35 p.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Kay Bailey Hutchison (chairman) 
presiding.
    Present: Senators Shelby, Stevens, Domenici, Feinstein, and 
Landrieu.

                         DEPARTMENT OF DEFENSE

STATEMENT OF JAMES L. JONES, JR., GENERAL, USMC, 
            COMMANDER, UNITED STATES EUROPEAN COMMAND
ACCOMPANIED BY LEON J. LAPORTE, GENERAL, USA COMMANDER, UNITED NATIONS 
            COMMAND, COMMANDER, REPUBLIC OF KOREA-UNITED STATES 
            COMBINED FORCES COMMAND, AND COMMANDER, UNITED STATES 
            FORCES KOREA

           OPENING STATEMENT OF SENATOR KAY BAILEY HUTCHISON

    Senator Hutchison. Thank you very much for being here. I am 
very pleased to have both of our distinguished witnesses here. 
We have tried to get together, but there have been a few things 
going on the planet that have kept us from hearing from you. 
But, frankly, I think the time has been well spent, because I 
am very pleased with the prepared statements that I have seen 
about the efforts that you are making on overseas bases, and 
this has been a priority of our Military Construction 
Subcommittee really for the last 4 years. We will look at 
overseas military basing in two key theaters of operation 
today.
    The fiscal year 2004 military construction request includes 
over $1 billion in spending for overseas facilities. More than 
70 percent of that is in Europe and Korea. The Administration 
has requested $535 million for U.S. bases in Europe, including 
$288 million in Germany and $173 million for bases in Korea. At 
the same time, new threats, a changing international political 
environment, and efforts to transform the structure of our 
military forces are leading the Defense Department to 
reconsider how we deploy forces overseas and where those forces 
will be located.
    The military construction challenge is twofold. In the 
near-term, during the time it takes to determine future 
security needs, the challenge is to ensure that expenditures 
are not wasted on facilities which may be abandoned in the 
future. The long-term challenge is to ensure far-reaching 
decisions about how to deploy forces overseas makes sense.
    Congress directed the Defense Department to submit a report 
on its overseas-basing master plan by April 1, 2002. The 
Defense Department is still studying the issue and has not yet 
submitted that report. This afternoon, Senator Feinstein and I 
introduced legislation that would establish an independent 
commission to review the overseas military structure of the 
United States and advise Congress. We look forward to passing 
that legislation this year.
    We are fortunate to have with us today the commanders of 
U.S. Forces in Europe and Korea, where so much of our military 
construction dollars are spent. Both of you have been working 
hard to transform our overseas basing from a Cold War structure 
to one more suited to the military challenges of the 21st 
century.
    I really appreciate the meetings we have had, the efforts 
you have made. Your staffs have been working with our staff, 
and I am very satisfied that we are going in the right 
direction for the efficient use of our taxpayer dollars, making 
sure we have the information about the long-term goals before 
we spend military construction dollars this year. And I also 
appreciate that the Department really stopped spending the 2003 
dollars until they were also allocated for what we are now 
calling ``enduring bases.''
    So, with that, I want to ask Senator Feinstein, the Ranking 
Member, to also make remarks that she might have, and I want to 
particularly say what a great working relationship Senator 
Feinstein and I have. She has traveled overseas to bases. I 
have traveled overseas to bases. And I think from what we have 
both learned, we have come to the similar conclusions that we 
need to look at those overseas bases, try to fit them within 
the structure of our forces as projected for the future and try 
to maximize the efficiency of our taxpayer dollars.
    Senator Feinstein.

                 STATEMENT OF SENATOR DIANNE FEINSTEIN

    Senator Feinstein. Thanks very much, Madam Chairman. Your 
comments are reciprocal. As you said earlier this morning, we 
have both been Chairs, and we have both been Ranking Members of 
this Committee, and I think, in the process, have developed a 
very positive working relationship--I, for one, very much 
appreciate that--and, in addition, a friendship which means a 
lot to me.
    You know, Madam Chairman, I have had the opportunity to 
visit both the Korean Command, under General LaPorte, in 
December, the European Command, unfortunately, not under 
General Jones, but under General Ralston, a little earlier, and 
had an opportunity to talk with both of them. And I just want 
to repeat something I said to my staff on the way coming in to 
this meeting.
    One of the really great, I think, illuminating findings 
that I have had since I have been in the United States Senate 
is really how fine the command leadership of our military is. 
And I have had the opportunity to meet four-stars, to talk with 
them, to see men, really, at the apex of their military 
careers, particularly note those who are open to comments, 
those who are not. But I guess what I want to say is how well 
served I think our Nation is by both of you and by our other 
four-stars. You are very impressive people, each in your own 
right; each different, but both highly committed, I think 
highly intelligent. It has been a very special experience for 
me, and, on a personal note, I want you both to know that.
    Madam Chairman, your timing could not be more on target, 
considering that the Department of Defense submitted a budget 
amendment to the President only yesterday that proposes to 
rescind, delete, or realign more $500 million of fiscal 2003 
and fiscal 2004 overseas military construction projects.
    I had the opportunity to talk with both generals in my 
office yesterday. I am very impressed with their commitment to 
streamlining and improving the efficiency of the United States 
military presence overseas. Their efforts to reshape the 
military forces within their commands have potential to produce 
significant efficiencies, increase responsiveness, and enhance 
the national security of the United States.
    These generals are undertaking this task at a particularly 
sensitive time in our relations with our allies overseas. I 
think it is important to repair the damage that has been done 
to the image of America overseas and to get these relationships 
back on track. Both General Jones and General LaPorte have 
assured me that they are committed to working with our allies 
and strengthening our ties to Europe and Korea, and I want to 
really commend them for these efforts.
    So thank you for scheduling this hearing, Madam Chairman, 
and I look forward to hearing from these distinguished 
witnesses.
    Senator Hutchison. Thank you, Senator Feinstein.
    Senator Stevens.

                    STATEMENT OF SENATOR TED STEVENS

    Senator Stevens. Thank you, Madam Chairman.
    I welcome each of you, Generals. I consider each of you to 
be close friends through the years we have worked together.
    I regret to tell you, I am going to have to go to a meeting 
with the Members of the House Appropriations Committee here 
soon to talk about allocations for 2004, and so I will not be 
able to stay and ask questions. But I do intend to stay and 
listen to you as long as I can.
    I welcome the initiatives, as both of the other Senators 
have said, that have been indicated to me through my staff that 
your people are about ready to present. And I think it is very 
timely for us to consider such initiatives, and I look forward 
to working with you on them.
    Thank you very much.
    Senator Hutchison. Thank you, Mr. Chairman.
    General Jones, I would like to ask you to speak first, and 
followed then by General LaPorte.

                             EUCOM OVERVIEW

    General Jones. Thank you, Madam Chairman, and thank you for 
your kind opening remarks. And, Senator Feinstein, thank you 
for your very gracious remarks. I know I do not want to speak 
for General LaPorte, but I know all of us who are privileged to 
lead the tremendous young men and women in the uniform of the 
United States today take a great pride in that privilege, and 
we are so proud of everything they do day in and day out. That 
makes our job much easier.
    And, Senator Stevens, thank you for taking time to be here 
today, and thank you for your continual support of our Nation's 
Armed Forces around the globe and the important work that they 
are privileged to do every day of the year.
    I am very pleased to appear before you to present testimony 
on the very important subject of the fiscal year 2004 Military 
Construction Request for the United States European Command. As 
each of you know full well, the area of responsibility of EUCOM 
has recently been increased to include 93 countries, a net 
increase in the land mass of 16 percent, and a net increase of 
28 percent on the seas, as a result of the revisions to the 
Unified Command Plan.
    As you also know, during the last decade our Nation reduced 
the numbers of Americans in uniform by roughly 40 percent while 
transforming the force into a 21st century capability that 
during these difficult times has made all of us extremely 
proud. In my 36 years of active duty, I have never been prouder 
of what our forces represent, not just in terms of combat 
capability, but especially in terms of what such a force means 
for the collective future of nations who are prepared to defend 
freedom wherever it might be threatened. It is not only a force 
that will win any future conflict; it is also one which will 
deter and prevent future conflicts through its positioning and 
through its engagement strategy around the world.
    I thank the Committee, the Members, and the staff, alike, 
for the attention given to the infrastructure and the quality 
of life of our men and women who serve in the vast European, 
Africa, and Near-Eastern theater. I pledge continued 
cooperation and active dialog on these important issues.
    Senator Feinstein, you mentioned my predecessor, General 
Joe Ralston, to whom I am particularly grateful for a wonderful 
turnover of this all-important command. He is one of our 
Nation's most distinguished modern-day warriors. I thank him 
for his leadership and friendship as I assumed the 
responsibility of the command. No one could have been more 
gracious, and no one could have done more to make it a better 
experience than did General and Mrs. Ralston. The Nation will 
miss them in its active-duty ranks.

                          EUCOM TRANSFORMATION

    Much has been said about the ongoing transformation of our 
Nation's Armed Forces. The United States European Command's 
Strategic Transformation Campaign Plan Proposal is based on 
several key assumptions, and they are as follows.
    The United States desires to maintain its current position 
as a Nation of global influence through leadership in the 
efficient and effective application of military, economic, and 
diplomatic power.
    The United States remains committed to its friends and 
allies through its commitment to global organizations and 
institutions, and supports treaties and international 
agreements to which it is a signatory.
    The United States remains committed to a global strategy, 
the cornerstone of which is forward-based and forward-deployed 
forces which contribute to the first line of defense, peace, 
stability, and world order.
    The United States supports in-depth transformation of its 
Armed Forces and of its basing structure, as required, in order 
to respond to 21st century threats and challenges.
    The United States will continue to seek ways to mitigate or 
offset obstacles posed by 21st century global sovereignty 
realities through a reorientation of its land, sea, air, and 
space assets.
    The United States recognizes that the current concept and 
disposition of U.S. basing within the European Command may not 
adequately support either the strategic changes attendant to an 
expanded NATO alliance or the national requirements of a 
rapidly changing area of responsibility.
    And finally, that the United States will seek to preserve 
those assets which are of strategically enduring value to its 
missions, goals, and national interests, so as their location 
measurably contributes to our global strategy, the NATO 
alliance, and our bilateral engagements in theater.

                     STATUS OF EUCOM INFRASTRUCTURE

    I have been in my current office for approximately 3 
months, and each day has been a great learning experience. With 
regard to military construction, we find ourselves at a 
crossroads despite impressive theater reforms over the past 10 
years, which, in and of themselves, produced a 66 percent 
reduction in the number of our European installations. We find 
ourselves retaining an inventory of aging facilities, many of 
which should be removed from our inventory.
    In determining the current value of our facilities in 
Europe, we used our Theater 2002 Overseas Basing Requirements 
Study, which has identified that 80 percent of all of our 
installations are of critical mission value as being Tier I 
facilities. Another 14 percent were labeled as very important 
to the theater's mission, or Tier II. Finally, 6 percent were 
deemed to be non-critical to the theater, or Tier III.
    We are using this study as a benchmark for our continuing 
evaluations of the needs of the European theater in the 21st 
century. Our needs will clearly be different than they are 
today. Determining how different is the challenge.
    At present, we face four challenges with regard to 
infrastructure. The first is to quickly and efficiently remove 
unneeded Tier II and Tier III installations from our inventory. 
This is proceeding satisfactorily, but we need to quicken the 
pace. No monies in the fiscal year 2004 request will be 
expended for these installations. This represents approximately 
20 percent of the total number of our installations in Europe.
    We need to reevaluate all Tier I facilities with regard to 
their modern suitability for supporting our alliance in our 
national engagement strategies in the new world order, or, as 
some say, ``new world disorder.'' Each European component is at 
work redefining its future basing needs while engaging with 
parent service headquarters in the context of how to obtain the 
maximum effect, theater-wide, in the pursuit of our objectives. 
This is work in progress, and it is my expectation that we 
should soon be able to better see our way ahead in this very 
important matter. We are sensitive to the Committee's 
legislative calendar, and we will keep Members and staff 
apprised in real time of our progress in this study.
    The asymmetric world and its associated threats, NATO's own 
invitation to seven new members, the deepening crises that 
threaten to engulf much of Africa, and the emergence of 
ungoverned regions from which narco-trafficking, criminality, 
and terrorism will be exported to the developed Nations, 
compellingly argues for some new basing paradigms, which will 
be different from our strategy of the past century. The key 
will be to preserve those installations that are of critical 
utility to our future goals and missions.
    Our 20th century success in developing a free and 
prosperous Western Europe has made it more difficult and more 
expensive to train our military forces. Urbanization has 
brought cities to the edge of our bases both at home and in 
Europe. Despite having been successful protectors of the 
environment on our bases for the last half of the 20th century, 
we now face concerted efforts to limit essential military 
training at sea, in the air, and on land. It is a major 
problem, and it must be addressed both at home and abroad.

                            EFFICIENT BASING

    The 21st century requires that we not only identify and 
maintain our most critical strategic infrastructure, it further 
requires that we become more agile, more expeditionary, and 
more efficient in our basing efforts on land, at sea, in the 
air, and in space. Our new bases should have a transformational 
footprint, be geostrategically placed in areas where presence 
yields the highest return on investment, be able to both 
contract and expand, as required, and should be constructed in 
such a way as to take advantage of our developing ability to 
rotationally base our forces coming from different parts of the 
world. It will also capitalize on the effectiveness of those 
forces which need to be continually and permanently stationed 
in the critical locations.
    In Europe, we will need a robust mix of each to be 
effective in the future, and we are at work to determine the 
proposals for such considerations. For example, flexible, 
forward-operating bases and smaller forward-operating locations 
and new sites for our pre-positioned equipment to augment our 
permanent strategic presence will prove to be extremely useful 
to our future requirements. We will no longer be required to 
build the small American cities of the 20th century to achieve 
our strategic goals.

                           prepared statement

    Our fiscal year 2004 request is predicated upon the 
assurance that we will not expend resources except where 
strategically warranted, that we will close unneeded facilities 
as efficiently and as quickly as possible, that we will 
identify those permanent facilities which have enduring 
strategic value for the future, and that we will look at 
better, more accessible, and more affordable training areas 
throughout our AOR; that we will begin to reshape a portion of 
our theater infrastructure to better capitalize on the utility 
of rotational forces; and that we will develop newer basing 
models which will produce greater strategic effect resulting in 
a more peaceful theater in the 21st century.
    Thank you, Madam Chairman, for the opportunity to present 
testimony before your Committee. I look forward to your 
questions.
    [The statement follows:]

           Prepared Statement of General James L. Jones, Jr.

Introduction
    Madam Chairman, Senator Feinstein, distinguished Members of the 
Committee; it is my privilege to appear before you as Commander, United 
States European Command (USEUCOM), to discuss the very exciting efforts 
underway in the European Theater to respond to the challenges and 
opportunities of the 21st Century. On behalf of the men and women in 
USEUCOM who proudly serve this Nation, and their families, I want to 
thank the committee members and staff for your unwavering support over 
this past year. Your efforts have provided us with the resources for 
mission success and have enabled us to do our part in protecting our 
democracy and in contributing to the security of our Nation. Your 
dedication to improving our important facilities and the quality of 
life of our men and women in uniform is both recognized and greatly 
appreciated.
The USEUCOM Area of Responsibility
    USEUCOM's area of responsibility encompasses a vast geographic 
region covering over 46 million square miles of land and water. The new 
Unified Command Plan, effective 1 October 2002, assigns USEUCOM an area 
of responsibility that includes 93 sovereign nations, stretching from 
the northern tip of Norway to the southern tip of South Africa, and 
from Greenland in the west to Russia's distant eastern coastline 
(Enclosure 1). The very title ``U.S. European Command'' is somewhat of 
a misnomer and does not fully capture the vastness of our area of 
operations.
    The astonishing diversity of our area of responsibility encompasses 
the full range of human conditions: some nations are among the 
wealthiest of the world, while others exist in a state of abject 
poverty; some are open democracies with long histories of respect for 
human liberties, while others are struggling with the basic concepts of 
representative governments and personal freedoms. For example, Africa, 
long neglected, but whose transnational threats, ungoverned regions, 
and abject poverty are potential future breeding grounds for networked 
non-state adversaries, terrorism, narco-trafficking, crime, and sinking 
human conditions, will increasingly be factored into our strategic 
plans for the future. The resulting change in the security environment 
has driven a change in our strategic orientation with increased 
emphasis eastward and southward.
Historical Setting
    U.S. Forces in Europe, in concert with our NATO Allies, played a 
pivotal role in bringing about the end of the Soviet Union and the 
Warsaw Pact. The dramatic collapse of the Soviet Empire brought 
tremendous opportunities for the former Warsaw Pact states. It also 
brought unprecedented uncertainty for NATO and the U.S. European 
Command. For nearly a decade after the end of the Cold War, funding for 
U.S. European Command infrastructure was virtually non-existent.
    The existing uncertainty of the future size and makeup of U.S. 
Forces in Europe led to a long period of significantly reduced funding 
for infrastructure at European bases (Enclosure 2). Assuming that we no 
longer required the same robust presence as that of the Cold War era, 
we down sized our force structure and the number of military facilities 
in theater. Since the fall of the Berlin wall in October 1989, USEUCOM 
has undergone a reduction in forces of approximately 66 percent, from 
248,000 (in 1989) to 109,000 (in 2002). We have closed 566 
installations over the past decade, along with over 356 other sites and 
training areas. This reduction equates to a 70 percent shift in 
personnel and facilities compared to Cold War Era peaks. The scope and 
rapidity with which force levels and structure were reduced in USEUCOM 
was an extraordinary accomplishment.
    During this turbulent time, my predecessors adjusted our force 
disposition in keeping with the requirements of our national strategy. 
Their efforts resulted in the beginning of our ``efficient basing'' 
programs and a number of alternative funding programs that have 
produced tangible results in our effort to provide adequate, affordable 
housing and facilities for our men and women in uniform. Although the 
end of the Cold War promised a much more stable and secure Europe, the 
scope of USEUCOM's mission grew as the newly independent states 
struggled to define their place in a free Europe. In the same period, 
USEUCOM experienced a dramatic decline in the number of installations 
and a substantial reduction and realignment of our force structure in 
theater. Consequently, we now have a greater reliance on our forward 
basing capabilities than ever before. And, I believe forward based and 
forward deployed forces will be even more important as we confront the 
security challenges of the next century.
The New Security Environment
    Today, we find ourselves at the crossroads of two centuries. While 
the bipolar security environment of the 20th Century shaped our 
command, and defined our mission, the 21st Century requires that we 
depart from the clearly defined role of territorial defense. As we shed 
the limitations of 20th Century warfare, we are emerging from a 
doctrine of ``attrition'' warfare to ``maneuver'' warfare, from 
symmetrical to asymmetrical response options, from the principle of 
mass to the principle of precision, and from large and vulnerable 
military stockpiles to a revolutionary integrated logistics concept. We 
are changing from the traditional terrain-based military paradigms to 
effects-based operations, in order to prepare for a new set of security 
challenges.
    The developed world now faces threats from sub-national or supra-
national groups; threats that are based on ideological, theological, 
cultural, ethnic, and political factors. Our new adversaries do not 
recognize international law, sovereignty or accepted norms of behavior. 
These are the challenges of the new world ``disorder.'' They demand new 
approaches and different metrics by which we allocate resources and 
develop strategies for the protection of our national interests and the 
future security of our environment.
    Our NATO allies have also recognized the dramatic changes in the 
European security environment and have responded with the most 
significant changes to the Alliance's strategic direction since its 
founding. At the 1999 Washington Summit, members approved the new 
strategic concept, defining the range of threats the Alliance would 
have to confront, and identified a broad range of new capabilities 
necessary to meet them. The same year, three new states joined the 
Alliance as the expansion eastward began. The Washington Summit set the 
stage for an even bolder expansion in 2002. During the historic Prague 
Summit last year, the Alliance again expanded, this time inviting seven 
new members to join; Latvia, Lithuania, Estonia, Romania, Bulgaria, 
Slovenia, and Slovakia (Enclosure 3). Equally significant was NATO's 
commitment to transform its military capabilities, command 
arrangements, and operational concepts. The endorsement of the NATO 
Response Force provides political guidance for the Alliance to develop 
an agile and tailorable joint military force to respond to the full 
spectrum of crisis, both within and outside NATO's boarders. NATO's 
strategic reorientation and renewed focus on relevant military 
capabilities will enhance USEUCOM's capability and ensure full 
interoperability with our most important allies as we transform our 
forces.
    To respond to the dangerous and unpredictable threats of the 21st 
Century, we are developing a strategy that matches our resources to 
needed capabilities. We shall continue to refine our strategy and 
recommend a basing plan that enhances our ability to project our 
forces, support sustained operations, and conduct engagement activities 
in the most remote regions of our theater, as required. This plan will 
reflect the tremendous importance of our main operating bases as 
strategic enablers to support operations both outside and inside our 
area of responsibility. In achieving our goals we will begin the 
process of an in-depth theater transformation that will yield a greater 
return on our strategic investment.
USEUCOM Transformation Assumptions
    Our efforts to transform USEUCOM's infrastructure are based on four 
principal assumptions. First, that the United States desires to 
maintain its current position as a Nation of global influence through 
leadership and the judicious application of military, economic and 
diplomatic instruments of power. Secondly, that the United States will 
remain committed to supporting its friends and allies through its 
involvement in global institutions and in support of treaties and 
international agreements to which it is a signatory. Thirdly, that the 
United States, by virtue of its critical contribution to the world 
order of the 20th Century, remains committed to a global engagement 
strategy. The military vanguard of this strategy will be found in our 
forward based, and forward deployed forces, which contribute the first 
line of defense to promote peace, stability, and order in our world. 
Finally, that the United States will continue to pursue in depth 
transformation of the Armed Forces. Changing our basing strategy to 
respond to the dramatically different challenges of the new century is 
a key element of this transformation.
Main Areas of Emphasis
    The challenges presented by the new security environment and 
USEUCOM's commitment to national security interests, coupled with the 
opportunities made possible by transformed forces and infrastructure, 
suggest three areas of focus: a critical evaluation of our existing 
infrastructure; a reassessment of how we assign and deploy forces to 
our theater; and new operational concepts to take advantage of 
transformational capabilities and concepts.
    To begin with, we are critically evaluating every facet of our 
European Theater footprint. The continued reduction/realignment of 
``legacy'' infrastructure that was justified by the Cold War strategy 
of the 20th Century is central to our conceptual transformation. We 
will re-orient some of the capability of our forces in a manner that 
better reflects our expanding strategic responsibilities and the 
emergence of new regional and global realities.
    Next, we are reassessing how we deploy and assign forces to the 
European Theater. We will use forces that are joint, agile, flexible, 
and highly mobile. The combination of permanent and rotational forces, 
accompanied by an expeditionary European component construct, is better 
suited to meet the demands of our fluid, complex, multi-faceted, and 
dangerous security environment.
    Additionally, we are adopting operational concepts that capitalize 
on innovation, experimentation, and technology in order to achieve 
greater effect. We are witnessing a shift from our reliance on the 
quantitative characteristics of warfare (mass and volume), to a new 
family of qualitative factors. Today, warfare is characterized by 
speed, stealth, precision, timeliness, and interoperability.
    The modern battlefield calls for our forces to be lighter, less 
constrained and more mobile, with a significant expansion in capability 
and capacity. The principle of maneuver, attained by leveraging 
technologies, reduces a unit's vulnerability while increasing its 
lethality and survivability. High-speed troop lift (on land and sea), 
precision logistics, in-stride sustainment, and progressive Command and 
Control (C2) architectures are strategic enablers that translate into 
power projection.
USEUCOM as a Strategic Enabler
    With our forward presence, bases in USEUCOM provide a springboard 
from which U.S. forces are able to rapidly support efforts beyond our 
area of responsibility. In addition to being an ``ocean closer,'' 
USEUCOM enjoys a robust and secure transportation network in Germany, 
Belgium and the Netherlands that provides a tremendous power projection 
capability and provides our Nation immense capability and flexibility 
to carry out our National Security Strategy. Nowhere is this better 
demonstrated than in the ongoing operations in Afghanistan and Iraq.
    USEUCOM's role and contributions to Operation ENDURING FREEDOM are 
significant, and go far beyond simply providing intermediate staging 
facilities. Our transportation planners have extensive experience with 
some of the best ports, rail connections, and airfields in the world, 
allowing immense flexibility in carrying out this campaign. For 
example, U.S. Army Europe rapidly established a rail line of 
communication from Bremerhaven, Germany, through Eastern Europe to 
Kabul, Afghanistan, facilitating the efficient movement of bulk 
supplies and heavy equipment. U.S. Air Forces in Europe has flown 
thousands of tons of humanitarian and military supplies into Southwest 
Asia. The Naval Air Station Sigonella and Naval Station Rota provided 
the staging and throughput for the majority of supplies moving south 
and east. The Army's 21st Theater Support Command is fully engaged in 
the effort providing thousands of tons of medical supplies, food, 
blankets, and relief support in this effort.
    The importance of USEUCOM's strategic bases is further demonstrated 
by the support provided to Operation IRAQI FREEDOM. Over 22,000 U.S. 
military personnel from USEUCOM are under the operational control of 
USCENTCOM in support of Operation IRAQI FREEDOM. Most recently, the 
173rd Airborne Brigade from the U.S. Army Southern Europe Airborne Task 
Force (SETAF) traveled 2,200 miles to successfully complete a ``combat 
jump'' into northern Iraq. The capability to successfully deploy SETAF 
is a direct result of the Efficient Basing South initiative. 
Additionally, European-based Patriot Air Defense systems have been 
deployed to Turkey and Israel reassuring these key allies of the United 
States' reliability and concern for their defense.
    European-based U.S. Air Force C-130 aircraft are moving supplies 
and equipment bound for the Iraqi Theater of Operations through Europe. 
Additionally, we are providing advanced basing support to U.S. Central 
Command and U.S. Transportation Command at Burgas, Bulgaria; Constanta, 
Romania; Ramstein and Rhein Main Air Bases, Germany; Souda Bay, Greece; 
Akrotiri, Crete; Aviano, Italy; Moron and Rota, Spain; and RAF 
Fairford, and RAF Mildenhall in the United Kingdom. So far, this 
airlift bridge has moved over 26,165 passengers and 45,188 short tons 
of equipment and provided a departure point for special operations 
aircraft, and bombers, as well as tankers to support a myriad of 
coalition forces.
    In addition to our six main operating bases, four Forward Operating 
Bases were established to support coalition operations. Most 
significantly, our forward presence enabled our B-52s operating from 
RAF Fairford to strike targets in Iraq with half the number of air 
refuelings and two-thirds the quantity of fuel. Ultimately, this 
presence enabled us to double our sortie generation rates by turning 
bombers and crews in 18 hours or less versus 48 hours from locations in 
the U.S. This was crucial to not only to strike assets such as B-52s 
but also for C-17s operating out of Aviano Air Base, Italy, which 
dropped over 1,000 Army airborne troops into Northern Iraq, opening up 
the northern front. Reduced timelines mitigate strains on PERSTEMPO, 
lessen impact on operational assets, and provide commanders greater 
flexibility on the battlefield.
    U.S. Naval bases in Europe provided logistics support to two 
carrier battle groups and one Amphibious Ready Group (ARG) operating 
with the SIXTH Fleet in the eastern Mediterranean. Air wings from these 
two carriers, and cruise missiles from other ships, conducted strike 
and close air support missions into northern Iraq, providing continuous 
air support to Coalition Forces. U.S. Marines from the Amphibious Ready 
Group were inserted into northern Iraq directly from NSA Souda Bay, 
supporting security efforts in that volatile region. Sailors from U.S. 
Naval Forces Europe's Naval Mobile Construction Battalion deployed to 
support force flow preparatory tasks in Turkey and tactical logistics 
support on the battlefield in Iraq alongside units of the 1st Marine 
Expeditionary Force.
    USEUCOM is also actively engaged in the movement and treatment of 
U.S. and allied soldiers wounded or injured in Southwest Asia. 
Casualties are transported to the Regional Medical Center in Landstuhl, 
Germany, and Fleet Hospital EIGHT, a naval expeditionary hospital that 
was set-up at Naval Station Rota, Spain. European-based intelligence 
specialists from every branch of the U.S. Armed Services are providing 
timely, accurate, and actionable intelligence to U.S. Forces engaged in 
combat in Iraq, our commanders and national leaders.
    Theater capabilities are the derivative of operational concepts 
that have been validated through combined and joint exercises. The 
Marine Corps' strategic agility and operational reach capability was 
demonstrated during the Dynamic Mix exercise conducted in Spain last 
year by the 2nd Marine Expeditionary Brigade. The derivative of this 
exercise is Task Force Tarawa, which has played a vital role in the war 
in Iraq. Exercising strategic enablers in theater, such as the Maritime 
Positioning Squadron (MPS) assets of the 2nd Marine Expeditionary 
Brigade, provides valuable lessons, increases efficiencies, and leads 
to operational success.
    The operations in Afghanistan and Iraq highlight USEUCOM's value as 
a strategic enabler and underscore the importance of regional 
engagement. In both operations, new and willing allies made significant 
contributions that resulted in increased operational reach and combat 
effectiveness for U.S. and coalition forces. These same new allies 
offer new and exciting opportunities for training and future basing.

Basing Concepts for the 21st Century
    Semi-permanent expeditionary bases, such as those utilized in 
Operation IRAQI FREEDOM, can more effectively engage and influence the 
stability of the region. Joint Forward Operating Bases such as ``Camp 
Bondsteel'' in Kosovo have proven their merit and demonstrate a visible 
and compelling presence at a fraction of the cost of a larger ``small 
American city'' base, more emblematic of the past. The strategic value 
of establishing smaller forward bases across a greater portion of our 
area of responsibility is significant and would allow us to assign and 
deploy our forces more efficiently.
    Transforming how U.S. forces are based and deployed in the USEUCOM 
area of responsibility will be a difficult process, but one, which is 
absolutely essential. To achieve our goals and meet the new security 
challenges, we must be willing to embrace institutional change and 
accept a shift in our previously understood paradigms. The importance 
of moving this process along quickly is heightened in light of the 
current disposition of our facilities and installations. The average 
age of USEUCOM's 36,435 facilities in our 499 installations is 32 
years. It is worse in family housing, where the average age in U.S. 
Army Europe family facilities, is now 48 years. In U.S. Air Forces in 
Europe, it is 43 years, and in U.S. Naval Forces Europe, it is 35 
years. Due to other pressing requirements, insufficient resourcing and 
modernization, since 1989, has resulted in 19,090 government quarters 
being officially termed ``inadequate.''
    The utilization of a rotational basing model, more flexible and 
along the lines of an expeditionary construct, will complement our 
forward-basing strategy and enable us to reverse the adverse 
proportions of our theater ``tooth-to-tail'' ratio. Rotational forces 
require less theater infrastructure and increase our agility to respond 
to changing environments at significantly lower cost than that 
generally associated with closing and moving bases. In this regard, 
rather than enabling our operations, some of our ``legacy'' bases 
(those that are not strategic enablers), can become modern day 
liabilities as we strive to deal with the security challenges of the 
new century.
    While this may represent a dramatic shift in how USEUCOM operates, 
it is not a foreign concept to our Service Chiefs. The Navy-Marine 
Corps team, for example, has been a predominantly expeditionary force 
since its inception. The Air Force has already created and implemented 
the Expeditionary Air Force model and the Army is in the process of 
creating lighter and more agile forces. Our global presence, of both 
sea-based and land-based units, redistributed more strategically, will 
achieve the desired goals of our National Security Strategy.
    This approach to transformation is not intended to undermine the 
consolidation and revitalization process related to the ``enduring'' 
infrastructure of our vital Strategic Bases. It is a continuum of our 
effort to increase efficiencies and provide greater effectiveness for 
our forces. Through the proper melding of forward basing with new and 
more agile expeditionary components, we will achieve the desired 
capability and the right balance to ensure our effective forward 
presence in the 21st Century.
    With your support, it will be possible to achieve significant 
reforms to our old and costly infrastructure in the near future. We 
have come a long way since the days of the Cold War, yet there is much 
still to do. The process to review our current infrastructure inventory 
and assess its merit through the lens of transformation is already well 
underway.

Theater Basing & Consolidation Efforts
    USEUCOM completed a deliberate and detailed internal review of 
basing requirements and infrastructure that was completed in March 
2002. This study allowed us to develop criteria by which we could 
evaluate our Real Property Inventory and determine those installations 
essential for mission accomplishment. As an example, our study 
determined that 80 percent, or 402 of the existing 499 installations in 
theater, were judged to be of ``enduring'' value (Tier I). This is to 
say, 402 European installations were assessed to be vital to the 
execution of U.S. Strategies, and worthy of regular funding and 
improvement, without which our mission may risk failure. It was 
determined that future military construction expenditures, in support 
of these installations, were both appropriate and necessary. Our fiscal 
year 2004 military construction program focuses on these enduring 
installations deemed ``vital'' by the basing study.
    The study also determined that 14 percent, or 68 of the 499 
installations in theater, were ``important'' to theater operations 
(Tier II). The study further determined that 6 percent, or 29 
installations in theater were of ``non-enduring'' value (Tier III), or 
of ``non vital'' importance to the accomplishment of our missions. Tier 
III installations only receive the minimal sustainment (Operations & 
Maintenance) funding required. They will receive no military 
construction funding. USEUCOM's fiscal year 2004 military construction 
submissions, contained in the President's Budget are only for enduring 
installations.
    This early study enabled us to accurately assess the utility of our 
bases in theater and provided us a useful benchmark to align our future 
infrastructure requirements to our new strategy. Our budget request 
reflects the relevant points from this study, along with our ongoing 
efforts to establish a force structure and basing plan that more aptly 
meets the challenges of the current security environment. Toward that 
end we are working in the Secretary of Defense's broader study on, 
``Integrated Global Presence and Basing Strategy,'' which will ensure 
that USEUCOM's footprint is properly sized and structured to meet our 
changing national security interest.
    Much of the groundwork for the study was well underway in 2000, 
when the U.S. European Command established a formal theater basing 
working group. This group brought together the basing plans of each of 
our Service Components to address issues that cross Service lines and 
best posture our in-theater forces to meet current and emerging 
threats. The release of the Quadrennial Defense Review provided the 
working group with the force structure information needed to pursue an 
appropriate basing strategy. As we restructure our footprint in USEUCOM 
we are considering future capabilities like the Army's Stryker Brigade 
Combat Team. Design and planning for the Stryker Brigade Combat Team 
conversion is underway and is reflected in U.S. Army Europe's input to 
the Future Years Defense Program.
    It is important to understand the criteria used to evaluate basing 
strategies. The March 2002 study met the strategy requirements set 
forth for that study which was primarily for fixed forces. A fixed 
force strategy is very different from a strategy using rotational 
forces working and training out of semi-permanent expeditionary bases. 
We have begun a new evaluation of our basing requirements, using 
different criteria, with an operational premise of employing some 
rotational units in theater. USEUCOM's service components are leading 
the way in this important effort and are the agents of change as we 
continue with this vital transformation.

Military Construction Requests by Service Components
    Rather than invest significant sums of money into all of our 
existing facilities, some of which may not be suited to our future 
basing needs, nor to our force requirements, we can seize the moment to 
apply the newer metrics of transformation to determine how best to 
spend, and where best to spend, our resources. The process has begun 
with the reshaping of our fiscal year 2004 military construction 
requirements.
    USEUCOM submitted a realigned MILCON program, reducing the number 
of requested projects from 50 to 37, a reduction of $164.20 million, to 
the Secretary of Defense. Theater components are realigning four non 
line item family housing projects with their services for a combined 
value of $70.90 million. We have requested that five projects for 
enduring installations, with a total value of $57.90 million, be added 
to the military construction program. Together, these adjustments will 
help set the conditions for successful transformation.

            U.S. Army Europe (USAREUR)

    U.S. Army Europe has the greatest amount of infrastructure in the 
theater and in order to ensure funding is concentrated on only enduring 
installations; USAREUR's military construction program has been 
adjusted from eleven line item projects to five, a reduction from 
$177.60 million to $121.70 million. USAREUR is working with the 
Department of the Army to realign three non-line item family housing 
military construction projects with a value of $49.90 million to 
installations that are enduring. The adjustments to the fiscal year 
2004 program will reduce older static infrastructure and improve the 
efficiency of the enduring bases.
    Consistent with the objectives of our earlier basing study, 
USAREUR's Efficient Basing East is an ongoing initiative to enhance 
readiness, gain efficiencies, and improve the well being of 3,400 
soldiers and 5,000 family members by consolidating a brigade combat 
team from 13 installations in central Germany to a single location at 
Grafenwoehr, Germany, further east. Executing this initiative will 
enhance command and control, lower transportation costs, enable better 
force protection, improve access to training areas, eliminate over 5 
million square feet of inventory, and reduce base operations costs by 
up to $19 million per year.
    U.S. Army Europe's other major basing initiative, Efficient Basing 
South, is likewise consistent with established basing objectives and is 
well into the execution phase. Efficient Basing South, which added a 
second airborne battalion to the 173rd Airborne Brigade in Vicenza, 
Italy, provides U.S. European Command with enhanced forced entry 
capabilities, increased flexibility and more efficient use of ground 
combat troops by increasing the Army's tooth-to-tail ratio. It 
addresses the theater requirement for additional light-medium forces, 
which in concert with other support modules, will deploy as part of the 
Immediate Reaction Force. The second battalion, reached full strength 
in March 2003, and recently deployed to Northern Iraq.
    In support of the Efficient Basing South initiative, the Defense 
Department's submission to the President's fiscal year 2004 budget 
includes a critical $15.5 million Joint Deployment Processing Facility 
at Aviano Air Base, Italy, to support the 173rd Airborne Brigade's 
rapid deployment mission with a heavy drop rigging facility. A project 
we have asked consideration for funding this year is a $13 million 
Personnel Holding Area to provide our troops with cover and space to 
check parachutes, weapons, and equipment before boarding their airlift.

            U.S. Air Forces in Europe (USAFE)

    U.S. Air Forces in Europe are also assessing its basing strategy in 
the theater, looking east and south to optimize access, 
interoperability, cooperation, and influence. This strategy relies on 
permanent bases, necessary to provide mobility throughput and power 
projection to Forward Operating Locations in the new NATO countries. 
Although these bases are not all main operating bases, they are geo-
strategically located in the European theater.
    U.S. Air Forces in Europe continues to consolidate some of its 
geographically disparate units throughout the region to major operating 
bases that support airlift and power projection capabilities, thus 
increasing efficiencies while reducing footprint. Fiscal year 2004 
military construction is critical for these consolidation efforts, 
focusing on improvements to infrastructure and quality of life. The 
budget contains 21 line-item projects valued at $178.07 million. 
Recently submitted transformational adjustments to the program reduce 
the line-item projects to 18, but add two projects for a combined value 
of $158.71 million. These projects provide improvements to enduring 
installations across the spectrum including a mobility cargo processing 
facility, consolidated communications facilities, aircraft ramps, and 
crash fire stations. Critical quality of life improvements that 
positively impact our mission include an airman's dormitory, Family 
Support and Child Development Centers. One non-line item family housing 
project for $21 million is also being realigned to an enduring 
installation in the theater.

            U.S. Naval Forces Europe (NAVEUR)

    Power and influence projection throughout the area of 
responsibility, strategic agility worldwide, and our ability to swing 
combat and logistics forces around the world--requires assured access 
through Air and Sea Lines of Communication. Line of communication 
control is a fundamental strategy that will be enhanced by our future 
Forward Operating Bases, and Forward Operating Locations, as they 
directly support the force flow and stability operations of the future. 
The Navy's revised fiscal year 2004 military construction submission 
contains four projects, totaling $94.90 million that will continue to 
strengthen U.S. Naval Forces Europe's support to project logistics and 
combat power east and south.
    Recapitalization of Naval Air Station Sigonella's operational base 
improves its ability to support logistics flow. The significant Quality 
of Life and operations support facilities upgrades at NSA La 
Maddalena's waterfront, the homeport of Navy's Mediterranean based 
ship-repair tender, will ensure USEUCOM maintains the capability for 
unimpeded access to repair facilities for nuclear powered warships. 
Construction of a Bachelor Quarters at Joint Maritime Facility St. 
Mawgan will eliminate serious antiterrorism and force protection risks 
and improve single sailor quality of life at this critical joint 
maritime surveillance facility. These projects will ensure that these 
critical bases can support future operations and maintain our 
surveillance coverage of the eastern Atlantic Ocean.
    U.S. Naval Forces Europe is also considering consolidating several 
satellite locations, including those in London, as a means of gaining 
efficiency and reducing the footprint to effectively respond to the 
changing theater mission requirements and transformational initiatives. 
In 1990 there were 14 major naval bases and 17,500 naval personnel 
permanently stationed at shore bases. Today, U.S. Naval Forces Europe's 
footprint has been reduced by five bases and the number of personnel 
in-theater has decreased by one third. Previous closures have 
predominately been in the United Kingdom with follow-on military 
construction focusing on enhancing Navy bases in the Mediterranean.

            U.S. Marine Forces Europe (MARFOREUR)

    U.S. Marine Corps Forces Europe is the smallest Service Component 
Command in USEUCOM. It is, however, well structured to support 
transformational concepts with its pre-positioned equipment set, the 
Norway Air-Land Brigade and Maritime Pre-Positioning Squadron-1 
(MPSRON-1). The force projection capability associated with MPSRON-1 is 
a timely and effective means to place a self-sustaining 15,000 man, 
combat-ready brigade when and where its presence is required. The 
Norway Air-Land Brigade set of equipment and supplies started in the 
mid-1980's as a pre-positioned deterrent located in Norway during the 
Cold War. Over the years, the Norway Air-Land Brigade program has 
evolved into a very cost effective, and timely pre-positioned 
capability for the entire USEUCOM area of responsibility. The equipment 
and supplies have been used numerous times during past years from the 
war in Kosovo, to the current War on Terrorism. The return that USEUCOM 
gains for the extremely small cost and physical footprint associated 
with U.S. Marine Corps Forces Europe is substantial.

            U.S. Special Operations Europe (SOCEUR)

    Special Operations Command Europe (SOCEUR) continues to examine the 
feasibility of relocation from Patch Barracks, Vaihingen, Germany, to 
other installations within the Stuttgart military community. 
Consolidation of headquarters command and staff elements is a key goal. 
HQ SOCEUR currently operates from six facilities on two installations, 
Patch Barracks and Kelly Barracks, within Stuttgart. Two of SOCEUR's 
four subordinate units are based on Panzer Kasern, Stuttgart.
    Effective 1 October 2004, SOCEUR's military personnel authorization 
increases by 79 personnel with the addition of a Standing Joint Special 
Operations Task Force. Also in fiscal year 2004, USSOCOM will fund 
approximately $11.4 million for the construction of hanger and office 
facilities for the fiscal year 2005 basing of F Company, 160th Special 
Operations Aviation Regiment, at the Stuttgart Army Air Field, totaling 
105 personnel. In fiscal year 2005, HQ SOCEUR will receive a Joint 
Special Operations Air Component consisting of an additional 32 
manpower authorizations. Basing options within the USEUCOM Theater are 
being evaluated.

            War Reserve Material
    Multi-service war reserve material in the theater is presently 
stored in several Preposition Sites throughout USEUCOM's area of 
responsibility. There is $22 million in our fiscal year 2004 military 
construction request to establish facilities to store a pre-positioning 
set of equipment that supports our basing strategy. Pre-positioned 
equipment is essential to support our rotational force concept. These 
war reserve material sites are strategic enablers that facilitate rapid 
response to crises, reduce the burden on strategic-lift assets, and 
optimize our ability to project power.

Infrastructure Investment: A Key Enabler
    It cannot be overstated--the quality of our infrastructure has a 
profound impact on our operations, intelligence capabilities, training, 
security cooperation activities, and the quality of life of our service 
members. We recognize the need to eliminate excess infrastructure, and 
the Congressionally mandated and OSD-directed Overseas Basing 
Requirements Study highlights our most recent efforts to do so. 
However, despite our continued efforts and determination, it has not 
been possible to improve existing infrastructure and reduce the 
degradation of mission readiness at existing funding levels. 
Considering the tremendous impact our infrastructure makes on all 
aspects of our mission, and the current state of our facilities, 
infrastructure investment is our most critical funding requirement.
    We have a coherent basing strategy based on current and emerging 
threats; we continue to consolidate our facilities; and, we have 
maximized the use of alternative funding sources. In addition to 
Appropriated and Non-Appropriated Agency Construction and Service 
funding, we pursue several alternative funding programs that have 
contributed to this effort. Such programs include the North Atlantic 
Treaty Organization Security Investment Program, Residual Value, the 
Payment-in-Kind program, and Quid Pro Quo initiatives. Since 1990, 
these programs have generated in excess of $2 billion for construction 
projects throughout U.S. European Command's area of responsibility.
    Significant efforts by the Service Components to consolidate, 
privatize, and outsource have reduced the requirements backlog. Our 
very successful, and still embryonic use of the build-to-lease program 
to recapitalize our family housing throughout the theater has 
substantially decreased our military construction requirements. 
However, we need to do much more in this regard, and the renovation of 
existing housing is an area that still accounts for 20 percent of the 
theater's request for military construction funding.
    USEUCOM has embraced the concept and practice of Public-Private 
Ventures with build-to-lease housing, contracted support services, and 
the privatization of utilities. We are aggressively pursuing utilities 
privatization and the use of private sector financing to improve 
utility system reliability. U.S. Army Europe started these programs in 
the 1980's with the privatization of their heating plants and systems 
and continued in 1996 with other utilities. 85 percent of U.S. Army 
Europe's heating systems have been privatized providing a cost 
avoidance of $2 billion. Since 1996, 39 percent of their utility 
systems have been privatized resulting in a cost avoidance of $27.60 
million. In fiscal year 2003, the Army's cost avoidance was $15.40 
million. U.S. Air Forces in Europe has contracted out base operating 
support functions, using private industry to provide civil engineering, 
services, supply, and other important support. United States military 
personnel and civilian employees normally hold these positions, but at 
certain locations, we have effectively transferred the workload to the 
private sector. The USEUCOM Service Components have all divested their 
family housing and presently have a mix of both Government Family 
Housing and build-to-lease family housing.
    Our fiscal year 2004 military construction request has recently 
been revised and submitted to the Office of the Secretary of Defense 
for consideration. The adjustments submitted reflect recommended 
funding support for our most strategically enduring installations, 
supports our long-term effort to capitalize on new capabilities and 
appropriately arrayed forces to enhance our theater engagement 
strategy. With the funding requested, we can continue to transform and 
align our forces in a manner that is consistent with our expanding 
strategic interests and Alliance responsibilities, while improving the 
quality of life for those who serve.

Summary
    USEUCOM is proceeding with a strategy that matches military 
capabilities with the challenges of the new century. Through the proper 
blend of our Strategic Bases with newer and more agile Forward 
Operating Bases, we will achieve the combined capability, and the right 
balance, necessary in the new millennium. I would like to thank the 
Congress for its continued support, without which our Soldiers, 
Sailors, Airmen, Marines, and Coast Guardsmen would be unable to 
perform the tasks assigned to them by our Nation. With your continued 
assistance, they will remain ready and postured forward to defend 
freedom, foster cooperation and promote stability throughout our 
theater of operations. I appreciate the opportunity to testify, and for 
the committee's consideration to my written and oral remarks.
    I look forward to responding to your questions.

                            LEXICON OF TERMS

    Main Operating Base.--Strategically enduring asset established in 
friendly territory to provide sustained command and control, 
administration, and logistical support in designated areas.
    Forward Operating Base.--Semi-permanent asset used to support 
tactical operations without establishing full support facilities. Can 
be scalable, and may be used for an extended time period. May contain 
prepositioned equipment. Backup support by a MOB may be required to 
support
    Forward Operating Location.--Expeditionary asset similar to a FOB, 
but with limited in-place infrastructure. May contained prepositioned 
equipment.
    Preposition Site.--Sites that contain prepositioned war reserve 
material (Combat, Combat Support, Combat Service Support), usually 
maintained by contractor support.
    Base.--Locality from which operations are projected or supported; 
An area or locality containing installations, which provide logistic or 
other support; and Home airfield or carrier.
    Installations.--A grouping of facilities, located in the same 
vicinity, which support particular functions. Installations may be 
elements of a base.
    Facility.--A Real Property entity consisting of one or more of the 
following: a building, a structure, a utility system, system, pavement, 
and underlying land.
    Site.--A geographic location that has one or more bases or 
facilities associated with it.

    Senator Hutchison. Thank you, General Jones.
    General LaPorte.
    General LaPorte. Madam Chairman, Senator Feinstein, Senator 
Stevens, thank you for your opening comments. I am honored to 
appear before the Committee to update you on the current 
situation in the Republic of Korea.
    First, I want to extend the thanks of all the soldiers, 
sailors, airmen, marines, and Department of Defense civilians 
who serve in Korea. Your unwavering support enables us to 
maintain readiness and accomplish our deterrence mission on the 
Korean Peninsula.
    This past year, we were able to harden theater-level 
command posts, renovate a portion of our existing facilities, 
and begin construction on several new projects, to include new 
barracks, family housing, and multipurpose facilities on our 
enduring bases. These projects continue the work needed to 
provide service members with quality facilities to work and to 
live.
    This year is a unique opportunity to significantly improve 
readiness and overall quality of life in Korea. We are 
committed to consolidating our dispersed and inefficient legacy 
installations into hubs of enduring installations that position 
units where they can best accomplish their assigned missions. 
Consolidation is a critical step toward solving systematic 
issues related to encroachment, decaying support 
infrastructure, overcrowded and inadequate housing, and 
deficient force-protection design.
    Three programs, the Yongsan Relocation, the Land 
Partnership Plan, and the future of the Alliance Policy 
Initiative, are the vehicles to implement this much-needed 
reorganization.
    Yongsan Relocation has received renewed attention this 
year. Under the original 1990 Yongsan Relocation Agreement, the 
Republic of Korea committed to fund the movement of the United 
States Forces Korea units out of Central Seoul. Due to 
President Roh's current administration's support and emphasis, 
we now have agreed, in principle, to accelerate the Yongsan 
Relocation.
    The Land Partnership Plan. The principal instrument for 
consolidating our 41 major installations and 90-plus camps and 
stations is on track. The Land Partnership Plan, signed by the 
Minister of National Defense and ratified by the Korean 
National Assembly, will ensure stable stationing of the United 
States Korea forces. It returns half of the land, 32,000 acres, 
granted to the United States forces under the Status of Forces 
Agreement. In exchange, the Republic of Korea Government will 
procure the land needed for new construction on our enduring 
installations' hubs. Moreover, the Land Partnership Plan has 
the flexibility needed to accommodate refinements in force 
structure and stationing. The Land Partnership Plan requires no 
new military construction funding; however, it depends on 
stable funding to existing military construction projects 
throughout the future years defense plan.
    To strengthen the Republic of Korea-United States Alliance 
and to ensure continued regional and peninsula security, we are 
in the midst of a Future of the Alliance Policy Initiative 
Study, a series of high-level consultations directed by the 
Secretary of Defense and the Republic of Korea Minister of 
Defense. The Future of the Alliance Policy Initiative is 
designed to strengthen the alliance, enhance deterrence, shape 
future roles, missions, and functions for the combined military 
forces, and establish a stable stationing plan. The Future of 
the Alliance Policy Initiative brings 21st century warfighting 
capability to Korea and improves combined deterrence. It 
synchronizes our efforts to consolidate United States Forces 
Korea into hubs of enduring installations through the Land 
Partnership Plan and Yongsan Relocation. We also achieve 
significant economies of scale that reduce the overall cost of 
operating our bases.
    Because of the Republic of Korea's commitments provided in 
these three innovative programs, I am confident that we can 
implement our Military Construction Plan to achieve 
efficiencies and improve readiness and overall quality of life. 
U.S. support to stable military construction budgets for 
projects in future years is essential to bringing this plan to 
fruition.
    Our strategy uses a balance of sustainment, renovation, 
build-to-lease, and military construction to address our core 
deficiencies. We prioritize military construction projects 
based on their impact on readiness, infrastructure, mission 
accomplishment, and quality of life. This approach ensures that 
we use resources to address the most pressing needs on our 
enduring installations.

                           PREPARED STATEMENT

    To implement this strategy, we need your help in two areas, 
continued stable military construction budgets and, secondly, a 
change in the rules governing build-to-lease programs in the 
Republic of Korea.
    I am confident that our strategy will prudently use 
military construction projects to improve the overall readiness 
and quality of life for the service members who serve in Korea.
    I thank you for the opportunity to appear today before this 
Committee, and I look forward to your questions.
    [The statement follows:]

             Prepared Statement of General Leon J. LaPorte

                              INTRODUCTION

    Senator Hutchison, Senator Feinstein, and distinguished committee 
members, I am honored to appear before you as Commander United Nations 
Command, Combined Forces Command, and United States Forces Korea. I 
want to express our deep gratitude to Congress for your support to our 
forces serving in Korea. Our ability to accomplish the mission in Korea 
has been possible because of the help you provided. Over the last year, 
we have had many legislators and their staffs visit Korea. They spent 
time with our service members hearing about their concerns, and seeing 
the living and working conditions firsthand. With your support we have 
made significant quality of life improvements such as workplace 
renovation, housing upgrades, and providing internet access in our 
libraries, day rooms and community centers. However, there is much more 
to be done. Your efforts and personal involvement made a tremendous 
impact on our people. On behalf of all the Soldiers, Sailors, Airmen, 
Marines, and Department of Defense civilians serving in Korea, I thank 
you for your continued support.
    This has been an extraordinary year in Korea. 2002 marked the 
fourth democratic transfer of power in the Republic of Korea, renewed 
South Korean efforts toward inter-Korean reconciliation, and the first 
World Cup hosted in Asia. In contrast, there were some discouraging 
incidents such as North Korea's calculated armistice violation in the 
West Sea, exposure of the North Korean nuclear weapons programs, a 
tragic training accident in June, and cyclic rise of anti-United States 
Forces Korea sentiment. North Korea attempted to split the Republic of 
Korea-United States Alliance by exploiting these events. Our Alliance 
weathered these challenges and continues to serve as the foundation for 
peace and security throughout Northeast Asia. These incidents have 
firmly reinforced three points: the consequences of events in Korea 
affect the entire world, continued United States presence in Northeast 
Asia is critical to regional stability, and the Republic of Korea-
United States Alliance is essential to regional security.

                CONSOLIDATING TO ENDURING INSTALLATIONS

    This year is a unique opportunity to significantly improve 
readiness and overall quality of life in Korea. We are committed to 
consolidating our dispersed and inefficient legacy installations into 
hubs of enduring installations that position units where they can best 
accomplish their assigned missions (Figure 1). Moreover, this effort is 
a crucial step toward solving systemic issues related to encroachment; 
decaying infrastructure; overcrowded and inadequate housing; and 
deficient force protection design. Momentum in three major programs 
facilitate this consolidation effort: Yongsan relocation; Land 
Partnership Plan; and the Future of the Republic of Korea-United States 
Alliance Policy Initiative.
    Yongsan relocation has received renewed attention this year. Under 
the original 1990 Yongsan relocation agreement, the Republic of Korea 
committed to fully fund the movement of United States Forces Korea 
units out of central Seoul. For a variety of reasons, relocation of 
Yongsan languished until the current Korean government placed heavy 
emphasis on moving national government functions out of Seoul. Party as 
a result of the Roh administration's emphasis, we now have agreement-
in-principle to accelerate Yongsan relocation. Next month we expect to 
complete the Yongsan relocation facilities master plan. The Republic of 
Korea will pay all costs associated with Yongsan relocation. We are 
aggressively working with the Republic of Korea government to decide 
the details of timing and final facilities for Yongsan relocation under 
the terms of the original agreements.\1\
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    \1\ The Yongsan relocation agreement provides for residual U.S. 
presence in Seoul to man headquarters billets for Combined Forces 
Command and United Nations Command. United States Forces Korea 
headquarters and operational units will move out of Seoul.
---------------------------------------------------------------------------
    Land Partnership Plan, in its first year of execution, is the 
principle instrument for consolidating our 41 major installations.\2\ 
Approved by the Ministry of National Defense in March 2002 and ratified 
by the National Assembly in November 2002, Land Partnership Plan has 
the full support of the Korean government and will ensure stable 
stationing for United States Forces Korea. Land Partnership Plan 
depends heavily on predictable military construction funding because 
the needed facilities are funded by a combination of United States 
military construction and host nation funded construction.\3\
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    \2\ As ratified in November 2002, the Land Partnership Plan 
identifies 23 enduring United States Forces Korea installations on the 
Korean peninsula. As part of the Future of the ROK-U.S. Alliance Policy 
Initiative, USFK proposed LPP refinements to further reduce the number 
of enduring installations and accelerate consolidation into enduring 
hubs.
    \3\ The Land Partnership Plan agreement provides the Status of 
Forces Joint Committee the authority to negotiate modifications to the 
basic plan.
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    Land Partnership Plan is a comprehensive, durable framework for 
United States Forces Korea stationing. It returns half of the land 
(32,000 acres) granted to United States Forces Korea under the Status 
of Forces agreement. In exchange, the Republic of Korea government must 
procure the land needed to expand our enduring installations. These 
land parcels accommodate new facilities construction and provide 
easements that reduce encroachment and improve force protection. 
Moreover, Land Partnership Plan has the flexibility needed to 
accommodate refinements in force structure or stationing to achieve 
efficiencies identified through the Future of the Republic of Korea--
United States Alliance Policy Initiative.
    The Future of the Alliance Policy Initiative is a series of high-
level consultations designed to strengthen the Alliance, enhance 
deterrence, shape future roles, missions, and functions for the 
combined military forces, and establish a stable stationing plan for 
United States Forces Korea. During these talks, the Republic of Korea 
confirmed the agreement to consolidate United States Forces Korea into 
hubs of enduring installations and to refine the Land Partnership Plan 
to implement a stable stationing plan.\4\ The details of the 
consolidation will be developed in subsequent meetings between the 
Republic of Korea Ministry of National Defense and Ministry of Foreign 
Affairs and Trade in conjunction with the United States Office of the 
Secretary of Defense and State Department.
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    \4\ The joint press statement from the first Future of the Alliance 
Policy Initiative meeting confirms ROK commitment to USFK consolidation 
and acceleration of Yongsan relocation: ``The two sides agreed to 
consolidate the USFK base structure in order to preserve an enduring 
stationing environment for USFK, to achieve higher efficiency in 
managing USFK bases, and to foster a balanced development of ROK 
national lands. Both sides agreed to continue discussion on the timing 
of the overall realignment process . . . to provide a stable stationing 
environment for USFK, the two sides agree to relocate Yongsan Garrison 
as soon as possible.''
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    With these three innovative programs, I am confident that we can 
implement our military construction plan to enhance readiness; achieve 
efficiencies; guarantee force protection; and improve overall quality 
of life. Your support to stable military construction budgets for 
projects in the Future Year's Defense Plan is essential to bringing 
this plan to fruition.
    Today I will address current and future requirements in the context 
of: the Northeast Asia security environment; the Republic of Korea 
today; the North Korean challenge to regional and global security; the 
Republic of Korea-United States Alliance; and the Fix Korea Strategy.

                THE NORTHEAST ASIA SECURITY ENVIRONMENT

    Northeast Asia is a nexus of economic might, competing interests, 
converging threats, cultures, and historical animosities. Over 17 
percent of the world's trade value is with countries in Northeast Asia, 
and United States trade with the region (over $414 Billion) is second 
only to our trade with the North American Free Trade Association.\5\ 
Many of the nations in the region--China, Japan, Russia, and the 
Republic of Korea--are contending for economic and political influence. 
Enduring cultural and historical animosities remain a dynamic political 
force. This region marks the convergence of five of the world's six 
largest militaries, and three of the five declared nuclear powers. 
Today, the current military demarcation line between North and South 
Korea is the most heavily armed in the world and remains an arena for 
confrontation. North Korea's pursuit of nuclear weapons and 
proliferation of missile technology threatens global and regional 
stability. United States presence in Korea demonstrates our firm 
commitment to defend democratic values and prevent our enemies from 
threatening us--and our partners--with weapons of mass destruction. Our 
forces in Korea send the clear message that we will stand with our 
allies and friends to provide the stability that promotes prosperity 
and democratic values.
---------------------------------------------------------------------------
    \5\ Derived from U.S. Census data. For 2002, total trade with 
Northeast Asia ($U.S. billion) are: Japan $172.93, China $147.22, 
Republic of Korea $58.17, Taiwan $50.59. Trade with NAFTA during the 
same period was $557.39 (Canada $371.39 and Mexico $232.26), (http://
www.census.gov/foreign-trade/top/dst/2002/11/balance.html, accessed 14 
APR 2003.
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The Republic of Korea Today
    The Republic of Korea today is fast becoming a global economic 
competitor. In 2002 the Republic of Korea's economy grew six percent 
while boasting the world's 11th largest Gross Domestic Product and 
third largest cash reserves.\6\ The Republic of Korea's vision of the 
future is to diversify its economy by becoming the ``transportation, 
financial, and information technology hub of Northeast Asia''.\7\ This 
vision seeks to route Northeast Asia, Europe, and the Americas trade 
through South Korea using an inter-Korean transportation system. Inter-
Korean initiatives begun by former President Kim, Dae Jung and 
continued by President Roh, Moo Hyun pursue reconciliation for 
cultural, economic, and humanitarian reasons. The Republic of Korea's 
engagement policies toward North Korea profoundly affect how South 
Koreans view their relations with the United States and North Korea.
---------------------------------------------------------------------------
    \6\ United States Department of State, Country Commercial Guide 
Korea, fiscal year 2003.
    \7\ President Roh, Moo-hyun announced his intent to position the 
Republic of Korea as the ``economic powerhouse of Northeast Asia''. In 
public appearances, he amplified this vision stating that he sought to 
make South Korea the transportation, financial, and information 
technology hub of Northeast Asia. For President Roh's national 
priorities, see Korea Herald articles at http://kn.koreaherald.co.kr/
SITE/data/htmlXdir/2003/01/11/200301110003.asp, http://
kn.koreaherald.co.kr/SITE/data/htmlXdir/2002/12/28/200212280010.asp.
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    Many South Koreans under age 45, a generation that has lived in an 
era of peace, prosperity, and democratic freedoms, have a diminished 
perception of the North Korean threat. These South Koreans see North 
Korea not as a threat but rather as a Korean neighbor, potential 
trading partner and a country that provides access to expanded Eurasian 
markets. This view of North Korea contrasts with America's view that 
North Korea is a threat to regional and global stability. This 
divergent perception of North Korea, coupled with strong national 
pride, has been a cause of periodic tension in the Republic of Korea-
United States Alliance.
    There have always been groups in the Republic of Korea that are 
critical of United States policy and claim that the United States 
hinders inter-Korean reconciliation. Demonstrations against American 
policy and military presence increased sharply during this year's 
Republic of Korea presidential election. Political interest groups made 
claims of inequity in the Republic of Korea-United States alliance a 
central issue during the presidential campaign. Opposition groups 
exploited a United States military court's acquittal of two American 
soldiers charged with negligent homicide in the tragic training 
accident that claimed the lives of two South Korean schoolgirls last 
June. Non-governmental organizations asserted that the Status of Forces 
Agreement (SOFA) was unjust and that the acquitted soldiers should have 
been tried in a Republic of Korea court rather than by a United States 
military court. During the presidential election campaign, these groups 
used biased and inaccurate media reporting to inflame anti-United 
States Forces Korea sentiments and mobilize demonstrations, a 
traditional tool of political protest in the Republic of Korea. 
Regrettably, several of these protests turned violent.
    Since the December 2002 Republic of Korea presidential election, 
anti-United States Forces Korea demonstrations have virtually 
disappeared, due in large part to positive steps taken by United States 
Forces-Korea, the United States Embassy, and the Republic of Korea 
government. Shortly after his election, President Roh, Moo Hyun voiced 
support for a strong Republic of Korea-United States alliance and 
continued United States military presence in Korea even after 
reconciliation. Since the presidential election, pro-American groups in 
the Republic of Korea have conducted demonstrations, some as large as 
100,000 people, supporting the continued stationing of United States 
forces in the Republic of Korea. The future of the Alliance involves 
the Republic of Korea assuming the predominant role in its defense and 
increasing both Republic of Korea and United States involvement in 
regional security cooperation. I firmly believe that we have an 
opportunity to revitalize the Alliance, by closely examining the roles, 
missions, capabilities, force structure, and stationing of our 
respective forces.

     THE REPUBLIC OF KOREA'S SUPPORT TO GLOBAL MILITARY OPERATIONS

    The Republic of Korea has continued their support for U.S.-led 
operations in Iraq and Afghanistan. The Republic of Korea's National 
Assembly has extended its mandate and increased its commitment of 
support forces to Operation ENDURING FREEDOM through December 2003. 
Today Republic of Korea liaison officers are planning and coordinating 
with their United States counterparts at both Central Command and 
Pacific Command headquarters. The Republic of Korea has provided 
several contingents of support troops to Operation ENDURING FREEDOM, 
including a navy transport ship moving essential airfield material to 
Diego Garcia, four C-130 cargo aircraft to support the United States 
Pacific Command's operations, a hospital unit in Afghanistan, and an 
engineering unit at Bagram Air Base, Afghanistan. In addition, the 
government of the Republic of Korea has provided $12 million of their 
$45 million pledge to fund humanitarian and rebuilding efforts in 
Afghanistan.
    In April, with President Roh's strong endorsement, the Republic of 
Korea National Assembly approved deployment of troops to the Iraqi 
theater of operations. The contribution of a 600-man engineering 
battalion, a 75-man security unit, and a 100-man medical unit to the 
Iraqi theater of operations bring needed stability operations 
capabilities to Iraq. Participation in Operations ENDURING FREEDOM and 
IRAQI FREEDOM represent another in a long series of Republic of Korea 
deployments along side United States troops during the past 50 years of 
our Alliance.
        north korean challenges to regional and global security
    North Korea is a dangerous dictatorship that continues to pose a 
direct threat to peace, security, and stability in NEA Northeast Asia. 
The Kim Regime uses illicit activities to fund the extravagant 
lifestyles of the inner circle and is using its military capabilities 
to extort resources from the international community. North Korea poses 
several threats to global stability: an economy on the brink of 
failure; an active nuclear weapons program; withdrawal from the Nuclear 
Non-proliferation Treaty; growing threat to the world through 
proliferation of missiles, chemical, and biological weapons 
technologies and possibly nuclear materials and technology; and large 
conventional force and special operations force that directly threaten 
our Allies. North Korean brinksmanship ensures that the Korean 
Peninsula remains a place of palpable danger, illustrated by the North 
Korea's unprovoked attack in the West Sea on June 29, 2002, the restart 
of the Yongbyon nuclear reactor, and their efforts to develop highly 
enriched uranium nuclear weapons. North Korea continues to flagrantly 
violate their international agreements resulting in increased regional 
tensions. The Republic of Korea and United States forces continue to 
face the possibility of a high intensity war involving large 
conventional forces and significant weapons of mass destruction 
delivered by long-range missiles.
    North Korea poses a dangerous and complex threat to peace and 
security on the peninsula and throughout the region. Their growing 
weapons of mass destruction, missile, and re-vitalized nuclear weapons 
programs constitute a substantial threat to the world. What's most 
dangerous is that they have shown willingness to sell anything to 
anybody for hard currency. They will continue to support the military 
at the expense of the general population and extort aid to prop up 
their failing economy. We see no indications that the Kim Regime will 
change the policies of brinkmanship and proliferation of missiles and 
weapons of mass destruction technologies throughout the world.

 THE REPUBLIC OF KOREA-UNITED STATES ALLIANCE: UNITED NATIONS COMMAND, 
        COMBINED FORCES COMMAND, AND UNITED STATES FORCES KOREA

    Since I took command in May 2002, I have had several opportunities 
to assess the readiness and training of United Nations Command, 
Combined Forces Command, and United States Forces Korea. Key events 
included response to the West Sea Armistice Violation by North Korea, 
security for development of the inter-Korean transportation corridors 
through the Demilitarized Zone, and security support for the 2002 World 
Cup and Asian Games.

United Nations Command
    Under the mandate of United Nations Security Council Resolutions 
82, 83, and 84, the United Nations Command in Seoul provides a standing 
coalition with 15 member nations to address trans-national interests in 
regional stability. United Nations Command led the international 
response to the June 29, 2002 West Sea Armistice violation by the North 
Koreans. This egregious, unprovoked North Korean attack in the West Sea 
that sank a Republic of Korea patrol boat, killed 6 and wounded 19 
Republic of Korea sailors. The member nations of the United Nations 
Command promptly issued strong statements denouncing the North Korean 
aggression. Facing this international censure, North Korea reluctantly 
expressed regret over the incident and agreed to the first United 
Nations Command-Korean Peoples Army General Officer talks in almost 2 
years. At the General Officer talks, North Korea guaranteed not to 
interfere with a United Nations Command-led salvage operation. Under 
the United Nations flag, the Republic of Korea's navy successfully 
salvaged the sunken boat. United Nations Command observers ensured 
neutrality and transparency of the salvage operation. The strength of 
the Republic of Korea-United States Alliance, backed by the United 
Nations Command member nations led to a successful West Sea recovery 
operation and reinforced the legitimate authority of United Nations 
Command to enforce the Armistice. United Nations Command again provided 
a stabilizing force and prevented a dangerous situation from escalating 
into open hostilities.
    Following the West Sea salvage operation, the Republic of Korea and 
North Korea held the Seventh Inter-Korean Ministerial talks, during 
which they re-invigorated efforts to establish inter-Korean 
transportation corridors. These corridors allow reconnection of rail 
lines and roadways through two designated points in the Demilitarized 
Zone to facilitate inter-Korean humanitarian visits and commerce. To 
support this Republic of Korean reconciliation initiative, United 
Nations Command worked closely with the Republic of Korea's Ministry of 
National Defense to establish special coordination measures between the 
Republic of Korea's Ministry of National Defense and the North Korean 
People's Army to speed construction and operation of the transportation 
corridors while ensuring compliance with the Armistice Agreement and 
security of the Demilitarized Zone. The first group of passengers 
crossed the Military Demarcation Line through the eastern corridor on 
14 February 2003. This was the first time in 50 years that citizens of 
the Republic of Korea crossed directly into North Korea and is a clear 
demonstration of successful cooperation between the Republic of Korea 
and United Nations Command. Figure 2 illustrates the location of the 
east and west inter-Korean transportation corridors through the 
Demilitarized Zone.

Combined Forces Command
    Combined Forces Command ensures the security of the people of the 
Republic of Korea. Combined Forces Command provides the military force 
that deters external aggression and stands ready to defeat any external 
provocation against the Republic of Korea. Combined Forces Command, 
composed of air, ground, naval, marine, and special operations 
component, conducts combined training exercises and readiness 
inspections to maintain the warfighting readiness that is essential to 
deterrence. The Combined Forces Command headquarters is a fully 
integrated staff, manned by Republic of Korea and United States 
military officers. This thoroughly integrated headquarters coordinates 
the operations that deter external aggression. In 2002, Combined Forces 
Command assisted with the successful United Nations Command salvage 
operation in the West Sea and military security support to the World 
Cup and Asian Games.
    Leveraging Combined Forces Command wartime operational procedures, 
United States Forces-Korea and Republic of Korea forces shared 
information and conducted combined exercises to deter terrorist 
infiltrators seeking to disrupt the World Cup and Asian Games. Combined 
Forces Command operated a Crisis Action Response Team to quickly 
respond to any type of incident. United States Forces-Korea provided 
unique biological defense assets to augment the Republic of Korea's 
military capabilities. Our close cooperation demonstrated the agility 
of Combined Forces Command to conduct a wide range of operations and 
ensured a secure 2002 World Cup and Asian Games.

United States Forces Korea
    United States forces in Korea are the tangible demonstration of 
United States commitment to peace and stability in Korea and throughout 
Northeast Asia. United States Forces-Korea brings the robust 
technological superiority, information dominance, and warfighting 
prowess that buttress the Republic of Korea's military capabilities. 
Our forward presence deters North Korean aggression and prevents a 
devastating war that can only have tragic consequences throughout the 
region. My command priorities--Ensure peace and stability on the Korean 
peninsula, Readiness and Training, Strengthen the Republic of Korea-
United States Alliance, Transform the Command, and Make Korea an 
Assignment of Choice--focus our resources to maintain the military 
dominance that ensures deterrence. I want to present my vision of 
improved readiness and quality of life and the key military 
construction projects that will need your support. Your continued 
support is essential to maintaining the balanced readiness that 
sustains our state-of-the-art warfighting capabilities.

Enduring Installations--the Cornerstone of Balanced Readiness
    Balanced readiness requires functional installations that meet both 
warfighting requirements and quality of life needs. Our current 
installations, a legacy of the Cold War, meet neither of these 
criteria. The existing 41 major bases are dispersed throughout Korea, 
causing substantial inefficiency in operations, logistics, and life 
support. For example, our logistics facilities are significantly 
separated from their operational unit customers, lengthening supply 
channels and delaying replenishment. Dispersion also impacts quality of 
life, requiring service members at remote installations to travel 
between 1 and 4 hours to a medical or dental appointment or use a 
commissary.
    Our facilities and infrastructure are old--one third of all 
buildings in the command are between 25 and 50 years old and another 
one third are classified as temporary buildings. They have deteriorated 
because of high operational tempo, deferred maintenance, and the 1990-
1994 military construction freeze. These deficits underscore the need 
for stable military construction to achieve consolidation and rectify 
our facilities shortfalls. Figure 3 illustrates the historical military 
construction spending in Korea.

Fix Korea Strategy
    Consolidating into enduring installations is the key to improving 
readiness and improved quality of life for United States Forces Korea. 
Our service members in Korea face challenges from decaying support 
infrastructure, inadequate force protection facilities, overcrowded and 
inadequate housing, family separation, and financial hardship. Our 
strategy to maintain readiness and improve the working and living 
conditions in Korea has six pillars: Sustain and Improve Our Aging 
Infrastructure, Renovate Where We can, Maximize Build-to-Lease, 
Minimize Build-to-Own, Achieve Environmental Standards, and Address 
Inadequate Pay. With your help, we've made significant progress 
implementing this strategy. We have upgraded much of our existing 
housing and begun construction on several of the needed additional 
facilities. Stable funding contributes to the strength of each of the 
strategy pillars.

Sustain and Improve our Aging Facilities and Infrastructure
    The first priority of our strategy is sustaining our existing 
infrastructure. Providing quality facilities allows our skilled 
uniformed and civilian personnel to work safely and efficiently. We 
prioritize Sustainment, Restoration, and Modernization funding based on 
safety of use, mission impact, efficiency, and quality of life to 
ensure that best return on investment. However, Sustainment, 
Restoration, and Modernization funding levels have resulted in a 
growing backlog of restoration requirements.\8\ Over time, lack of 
maintenance leads to failure of life support systems and degraded 
readiness and increases the frequency of emergency repairs. It also 
leads to increased costs associated with substantial restoration 
projects. Figure 4 illustrates how lack of proper maintenance required 
significant repair to one of our many sewer systems. Similar projects 
have been required to maintain our electrical power distribution, 
roads, and buildings.
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    \8\ Current Sustainment, Restoration, and Modernization backlog in 
Korea is approximately $1.1 billion: $774 million Army, $327 million 
Air Force, $1.8 million Navy. 2003 Sustainment, Restoration, and 
modernization funding is $171 million.
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Renovate Where We can
    In addition to sustaining our infrastructure, we are renovating 
existing structures to provide the capabilities we need. The fiscal 
year 2004 renovation of hardened aircraft shelters at Kunsan air base 
illustrates this process. This $7 million force protection project is 
part of a phased plan that repairs the concrete protective structures 
and utility systems that support our mission critical aircraft.
    Force protection is a key part of our renovation program. 
Protecting the force remains essential to operational readiness--I will 
not compromise the safety of our service members and their families. 
Although we continue to assess the terrorist threat as low, we remain 
vigilant and have taken critical steps to improve our security posture. 
Notable improvements this year have been increasing perimeter security 
forces, installation of closed circuit television monitors at key 
access points, fielding Portal Shield chemical and biological detection 
systems, and conducting intensive anti-terrorism and force protection 
training exercises.
    Over the past year we completed a detailed vulnerability assessment 
of our installations. This assessment identified over 130 major tasks 
required to comply with anti-terrorism and force protection 
requirements. Key requirements to improve force protection focus on 
establishing adequate standoff protection around our key facilities and 
installations and upgrading structural integrity on mission essential 
and vulnerable buildings. The total value of these force protection 
projects is $15 million. We appreciate your support to these programs 
that protect our service members and improve our warfighting 
facilities.
    In addition to workspace improvements, we are also upgrading our 
family housing, dormitories and barracks. I firmly believe that safe, 
quality accommodations improves our members' quality of life, increases 
their satisfaction with military service, and ultimately leads to 
increased readiness and retention. With your support, we have continued 
our housing renovation program and service members across the peninsula 
are enthusiastic about the results. To continue this initiative in 
2004, we will invest another $8 million in family housing.
    Korea currently has the worst unaccompanied housing in the 
Department of Defense. Overcrowding and inadequate facilities requires 
us to house 40 percent of our unaccompanied personnel outside of 
installations, causing significant force protection concerns. The Air 
Force Dormitory Master Plan and Army Barracks Upgrade and Buyout Plan 
allow us to use funds where they are most needed for renovation and 
construction. Last year we invested $130 million to renovate fourteen 
barracks buildings across the peninsula. Our plan calls for us to 
replace the last Quonset hut with permanent facilities by the 
Department of Defense target of 2008. We need your continued commitment 
to a stable Military Construction budget to continue our renovation and 
force protection improvement programs.

Use Build-to-Lease
    As we close facilities during consolidation under Land Partnership 
Plan, we will need additional facilities on our enduring installations. 
Build-to-lease is the most cost effective way to improve housing and 
facilities in Korea. We believe this program, modeled on successful 
Department of Defense programs in the United States and Europe, 
provides the answer to many of our quality of life concerns and reduces 
costs associated with new military construction. We are now exploring 
build-to-lease units at Camp Humphreys (1,500 families) and Camp Walker 
(500 families) to provide adequate housing for our military and certain 
key and essential civilian sponsored families. Build-to-Lease uses 
Korean private sector and Host Nation Funded construction where 
appropriate. These programs reduce both initial start-up costs and 
total cost of ownership. Build-to-Lease will enable use to rapidly 
replace our aging housing infrastructure and to increase our available 
family housing units.
    To fully implement the Build-to-Lease plan, I need your help to 
change the legislative rules on Build-to-Lease. First, we need to 
increase the maximum family housing lease period from 10 to 15 years 
and extend the maximum lease duration for support facilities from 5 to 
15 years. Build-to-Lease is a ``win'' for the American service members 
stationed in Korea because it will significantly raise their quality of 
life and it is a ``win'' for the American taxpayer because it reduces 
the cost of housing improvement for our service members with families.
    With increasing numbers of married service members, we recognize 
that high operational tempo and unaccompanied tours are detrimental to 
overall readiness. We must act now to reduce the perennial problems of 
family separation and poor quality of life in Korea. We currently 
provide government owned and leased housing for less than 10 percent of 
our married service members (1,862 families) compared to more than 70 
percent in Europe and Japan. Our goal is to provide quality command-
sponsored housing for at least 25 percent of our accompanied service 
members and their families by 2010. If traditional military 
construction alone were used to meet this increased demand for housing, 
it would cost $900 million.
    Increasing our rate of command sponsorship is an important step to 
enhance readiness and improve quality of life. Replacing a portion of 
the current 12-month unaccompanied tours with longer accompanied tours 
reduces turbulence that affects readiness on and beyond the Korean 
peninsula. For example, a 24 to 36 month accompanied tour enhances 
readiness by allowing leaders to develop more enduring and stable 
working relationships with our Republic of Korea partners. Longer tours 
in Korea also reduce the turbulence throughout the Services, enhancing 
readiness in units beyond the peninsula. Accompanied tours, coupled 
with adequate housing, improve the service member's quality of life by 
reducing family separation. I urge you to support all efforts to 
increase and improve the family housing in Korea.

Build-to-Own
    While ``Build-to-Lease'' is a promising option, there are some 
facilities that must be government owned. For example, Build-to-Own 
provides unaccompanied housing, administrative, operations, logistics, 
maintenance, and medical facilities that support our core operations 
requirements. These improvements are sorely needed to improve the 
efficiency of our enduring installations and the quality of life in 
Korea. As a key steward of Military Construction in Korea, I assure you 
that your appropriations will be prudently invested in the enduring 
installations that will support our service members long into the 
future.
    We deeply appreciate your support to 2003 Military Construction 
($237 million), which has vastly improved readiness and quality of 
life. We were able to harden the theater Command Post Tango and to 
begin construction on 1,792 unaccompanied housing units, a new family 
housing development at Osan air base, and a multi-purpose center at 
Camp Castle. Even with the great assistance we received in fiscal year 
2003 we continue to have substandard facilities throughout this 
command. Our fiscal year 2004 military construction projects are 
prioritized based on their impact on readiness, infrastructure, and 
quality of life. Table 1 summarizes the major military construction 
projects for the coming fiscal year. These projects have been re-
validated in the Secretary of Defense fiscal year 2003-2004 Military 
Construction budget review as essential facilities.

                      TABLE 1.--SUMMARY OF FISCAL YEAR 2004 MILITARY CONSTRUCTION PROJECTS
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
              Service                       Category                          Project                     Cost
----------------------------------------------------------------------------------------------------------------
Air Force.........................  Readiness..............  Upgrade Hardened Aircraft Shelters.......       7.0
Air Force.........................  Housing................  Dormitory (156 Room).....................      16.5
Air Force.........................  Housing................  Construct Family Housing Phase II........      45.0
Army..............................  Housing................  Barracks Complex.........................      40.0
Army..............................  Housing................  Barracks Complex.........................      35.0
Army..............................  Housing................  Barracks Complex.........................      30.0
----------------------------------------------------------------------------------------------------------------

    In addition to the previously discussed projects to upgrade 
aircraft shelters at Kunsan, we have also asked for fiscal year 2004 
Military Construction appropriations that include 111 new family 
housing units at Osan air base ($45 million) and four new Unaccompanied 
Enlisted Housing projects ($131.5 million), providing new housing for 
888 service members. These projects will reduce the number of service 
members living in dense urban areas outside our installations, improve 
force protection and reduce the high out-of-pocket living expenses 
incurred by service members and their families. They will also allow us 
to move toward our goal of increasing the command sponsored housing for 
our accompanied service members and their families. Your continued 
support to Military Construction in the Future Years Defense Plan 
enables us to implement our comprehensive construction program that 
prudently uses resources to correct the significant infrastructure 
shortfalls on our enduring installations.

Achieve Environmental Standards
    We have made significant strides in environmental custodianship. 
Caring for our environment is important to me personally and to the 
command. Our wastewater management has been a great success. Over the 
last 6 years, we invested approximately $30 million in ten wastewater 
systems and we have programmed an additional $12 million for three more 
systems. Your support to these improvements ensures safe water and a 
clean environment for all who serve in Korea. We have worked hard with 
the Republic of Korea-United States team to improve coordination on 
environmental protection measures and to share lessons learned to 
protect the environment.
    In addition, we have implemented innovative procedures that have 
decreased the operational use of hazardous materials, reducing our 
storage and disposal requirements. Computer-assisted material 
management programs allow us to better manage inventory, shift to more 
environmentally friendly alternative products, and reduce disposal 
requirements. Other initiatives include recycling used oil and anti-
freeze, and an effective battery recovery program that reconditions and 
returns batteries for use with minimum environmental impact.
    The most immediate environmental concern is with aging and 
frequently leaking fuel storage tanks, a legacy of our obsolete 
infrastructure. We are committed to resolve this problem throughout 
United States Forces Korea. We have a $100 million program through 
Defense Energy Support Center to upgrade fuel storage facilities 
throughout Korea to ensure that we meet environmental standards. To 
sustain our environmental improvements we need your continued support 
for environmental projects in 2004. These resources will be wisely 
invested in our enduring installations under the Land Partnership Plan, 
resulting in improved stewardship of the environment.
    In conclusion, I'd like to leave you with these thoughts:
    Northeast Asia is a critical region for the United States and our 
partners. The Republic of Korea-United States Alliance and our 
continued presence in the region demonstrate our commitment to ensure 
peace and security in the region. Congressional support is vital to our 
future in Korea and Northeast Asia. We thank you for all that you've 
done.
    Korea is a better place because of your efforts, and we thank you 
for all that you've done. We have made some significant improvements in 
quality of life and readiness--investments that increase our efficiency 
and will support our service members far into the future. However, 
substantial work remains to be done. To improve family housing and 
service member quality of life that is essential to morale and 
readiness, we need to increase Build-to Lease authorities in Korea. We 
also need stable military construction budgets that support to our 
critical projects. With your continued support we can implement our 
plan to make Korea an assignment of choice for all the Services.
    Land Partnership Plan is an enduring commitment to achieve stable 
stationing for United States Forces Korea. The momentum provided by the 
Future of the Republic of Korea-United States Alliance Policy 
Initiative, ensures that we can establish a stable, enduring stationing 
plan that improves readiness and overall quality of life. Because the 
success of Land Partnership Plan depends on stable military 
construction projects, I assure you that your appropriations will be 
prudently invested in enduring installations.
    You can be justifiably proud of all the Soldiers, Sailors, Airmen, 
Marines, and civilians that serve and sacrifice in Korea. Their daily 
dedication and performance reflect the trust and support that you've 
placed in them. They appreciate your efforts and continued support.

    Senator Hutchison. Yes, Senator Stevens.

                LEGAL CHANGES RELATED TO TRANSFORMATION

    Senator Stevens. Thank you very much, Madam Chairman.
    Let me ask you just one general question for each one of 
you. Do you require any changes in basic law that govern your 
military forces in order to bring about these changes you have 
just described?
    General Jones. Senator, I do not think, in terms of our 
national law, I am not aware of any changes in basic law that 
we might require.
    Senator Stevens. No treaty changes, no basic laws?
    General Jones. We may need to re-look at some of the 
understandings with which we have entered into some of our 
agreements--for instance, notably with--if we should decide to 
put some bases in the eastern part of our EUCOM AOR, we may 
have to re-look at some of the understandings with Russia, for 
example. The agreement that allowed NATO expansion was that 
there would be no major military bases. That was not defined. 
The model that we are presenting, or that we will present, has 
smaller units more oriented on engagement as opposed to 
strategically in place warfighting capability.
    So I think that as we look through all of these documents, 
we are looking at that as we go along to make sure we, number 
one, understand them all, find the ones that are still in 
existence. It is a work in progress. But, right now, I have not 
seen anything that is a show-stopper.
    Senator Stevens. General LaPorte.
    General LaPorte. Senator Stevens, the six tenets of the 
United States Republic of Korea Mutual Defense Treaty that was 
signed in 1953 are still valid today and will apply in the 
future. So I see no requirement for any national legislation or 
treaty reorganization with South Korea.
    Senator Stevens. One further. What is the time frame for 
each of you in the changes that you envision?
    General Jones. Sir, we are operating under a near-, mid-, 
and long-term plan. Near-term is 2 to 3 years. Mid-term is 5 to 
8, and long-term is 8 to 10 or 12.
    General LaPorte. The same time period that General Jones 
stated is what we are operating under.
    Senator Stevens. Thank you very much.
    Thank you very much, Madam Chair.

                       NON-ENDURING INSTALLATIONS

    Senator Hutchison. Thank you, Senator Stevens.
    First, I want to ask--I think, General Jones, you mentioned 
this, but do either of you have any military construction 
projects ongoing in bases that you do not consider to be 
enduring?
    General Jones. I am sorry, that we do not consider to be--
--
    Senator Hutchison. Enduring.
    General Jones. Oh, enduring. We probably have some projects 
that are in the defined Tier II and Tier III category, and we 
have decided, upon reexamination of both of those categories, 
that we should not continue to invest any funds in those 
particular installations. So whatever we have will be stopped.
    Senator Hutchison. And, as I understand it, you are also 
reevaluating your Tier I installations----
    General Jones. That is correct.
    Senator Hutchison [continuing]. With the thought that there 
would be no 2004 money going there, as well if----
    General Jones. We will not invest, and will not request any 
money for any installation in Europe that is not of 
strategically enduring value.
    Senator Hutchison. And what would be your--I am going to 
come to you, General LaPorte--but what would be your time table 
on the reevaluation of the Tier I?
    General Jones. I would say that within the next 60 days we 
will have that completely done.
    Senator Hutchison. Thank you. That will certainly meet with 
our time table, because we are trying to delay our----
    General Jones. Yes, ma'am.
    Senator Hutchison [continuing]. Report.
    General LaPorte.
    General LaPorte. Senator, we have two projects from 2000 
that are in the process of being implemented in the Yongsan 
relocation area. It was a medical warehouse and it was a 
modification/renovation of the hospital. Those are ongoing. 
They should be completed in the next 12 to 18 months. There is 
also one barracks from 2002 MILCON that is ongoing. Both of 
these facilities, we believe, we are going to be able to use 
into the future.
    I talked about Yongsan relocation. There will be some U.S. 
forces that will remain in Seoul as part of the United Nations 
Command and Combined Forces Command. They will be able to make 
use of these facilities.
    Senator Hutchison. Other than that, there would be none 
going----
    General LaPorte. No, ma'am.
    Senator Hutchison [continuing]. Out.

                        TRAINING SITES FOR EUCOM

    I have been concerned, from my visits around the world, 
about encroachment on training space at many overseas 
locations. It could be airspace, it could be artillery range. I 
wanted to ask each of you to what extent this has posed a 
problem for you in your areas of responsibility. And are you 
looking at the potential of rearranging your training to 
perhaps do training elsewhere, perhaps even in the United 
States with rotations back in?
    General Jones.
    General Jones. Madam Chairman, as you know, post-war Europe 
has been a tremendously successful period. Entire Nations have 
been transformed into prosperous democracies, and urbanization 
has taken hold in Europe, just as it has in our own country. 
And the bases that were built 40 or 50 years ago in areas that 
were remote locations are no longer remote. And with that urban 
sprawl comes increased concern about the environment, the 
ecology, the noise, just things that are normally attendant to 
military bases.
    And the second thing that has happened is that it becomes 
more costly. As Nations become more prosperous, the cost of 
training goes up. There is not any one thing that has changed 
the environment except that the development of the European 
theater has made it more difficult, particularly on land and in 
air space, to adequately train our units.
    Sometimes the restrictions do not seem to be much; 
sometimes they say, ``Well, we will impose ours on you''--
sometimes they will impose limits on the size of the unit; 
sometimes they will impose limits on the types of weapons that 
you can use. But in the aggregate, it becomes harder. And like 
all militaries, we tend to look for areas where we can go and 
get the units trained for the important work that they do.
    And training is extremely important, particularly as we go 
into a high-tech force in the 21st century. The transformed 
force requires training so that we can eliminate the problems 
that face us on the battlefield when we have to fight the 
Nation's battles.
    So we are always looking for ways to train better, and some 
of those bases might be back here at home, some might be 
elsewhere in our own theater, and we pledge to you that we are 
going to do a continued examination to try to find where we can 
train most efficiently and in accord with the environment that 
we happen to be in.
    Senator Hutchison. Well, one of the reasons that we have 
introduced our legislation to evaluate our overseas bases is to 
try to have all of the information on training constraints and 
other problems as we go into the 2005 BRAC. Because if 
significant units are going to be brought back, of course, we 
want to make sure we do not close a base that we are going to 
need, particularly a big training area. So that certainly will 
be part of the overall 2005 BRAC.
    General Jones. Absolutely.
    Senator Hutchison. General LaPorte.
    General LaPorte. Senator, we have over 90 camps and 
stations; and at the end of the war, we basically went aground 
where the units were and established these camps. They used to 
be at the end of dusty trails. Today, most of these camps have 
been engulfed by significant development. The prosperity of 
South Korea has caused a boom in the construction arena.
    So encroachment is an area that I am very concerned with 
and we work very hard on. Unfortunately, last year we had an 
accident as a result of encroachment because of the congestion 
associated with moving to and from a training area. So we are 
very concerned about this.
    One of the main tenets of the Land Partnership Plan is to 
address this, to move away from the crowded residential urban 
areas, such as Seoul and some of the other very congested 
areas, and move our assets to areas where we are able to 
conduct our training. We are able, with the Land Partnership 
Plan, to use training areas that, in the past, have been just 
for the ROK military; but part of the agreement was to give 
them back land and to get training time on those training 
areas.
    As we look to the future, the force we have will have more 
of a regional role, in terms of regional stability, so there 
will be training opportunities off the peninsula to look at. We 
are examining those now. Encroachment is a concern. At this 
point in time, we are able to meet all our training objectives, 
and we are just going to have to continue to work this.
    Senator Hutchison. Thank you, General LaPorte.
    I am going to come back with other questions, but I did 
want to pass it down.
    Senator Feinstein.

                  COST FACTORS IN EUCOM TRANSFORMATION

    Senator Feinstein. Thanks very much, Madam Chairman.
    Let me begin with, if I might, General Jones. As you were 
speaking, General, I was reading your written statement, and it 
is really a very solid statement. I think you point out that 
your area of responsibility includes 93 sovereign Nations and 
stretches from the southern tip of Norway to the southern tip 
of South Africa, from Greenland to the west, to Russia's 
eastern coastline. You are right, it really is a misnomer to 
say it is the European Command, because it is such a vast area.
    As mentioned in your statement, on page 4, you point out 
the crossroads of two centuries, departing from territorial 
defense and shedding the limitations of 20th century warfare to 
a very different--from symmetrical to asymmetrical responses. 
And you go on and make the case for a major reevaluation. And 
in the study that was just concluded, you determined that 80 
percent, or 402, of the existing 499 installations in theater 
were judged to be of enduring value.
    This morning, the Washington Post discussed your plan to 
develop new, quote, ``bare bones,'' end quote, training bases 
throughout Europe, and the article mentions ``relatively modest 
construction costs.''
    I do not see how they can be relatively modest if you have 
402 of 499 installations in theater of enduring value and yet 
knowing what you have to do to reposition and redeploy. Can you 
make further comment on the ``relatively modest'' figures?
    General Jones. Yes, ma'am, I think I can.
    The first point I would like to make is that the Tier I 
strategically enduring value judgments were made in 2002. I 
mentioned in my opening statement that we are reevaluating 
those, as well, and it is work in progress. I am not convinced 
that all of those are absolutely of strategically enduring 
value.
    So my commitment to you is that we will complete that 
reevaluation. We have already done Tier II and Tier III, and 
that is beyond us, but we are re-looking of Tier I, as well.
    Now, I also suggest that an installation, by DOD 
definition, can be as small as an antenna surrounded by a 
fence, and you may have a base with 14 installations on them. 
So when we say 499 installations, we should not confuse that 
with bases, because that is not the case.
    With regard to the future and the term ``modest 
investment,'' I use that term in terms of the size of the 
investment to be required. If, for some reason, we decided to 
shift one of our very strategically enduring locations, and I 
publicly used the example of Ramstein Air Base, and the huge 
cost--huge cost--it would take to simply move that facility 
somewhere else in our theater simply because we would judge it 
to be more useful elsewhere, I would think that we would not 
want to assume that kind of a burden.

                       CATEGORIZING INSTALLATIONS

    The proposal that we are working on is to identify truly 
bare-bones facilities, truly lighter footprints that can 
accommodate rotational forces, that are there for limited 
periods of time, that can practice the strategy of engagement 
along with a strategy of strategic response to a crisis, that 
can be built at comparatively very modest costs and can be 
easily contractible from being an active base to not-so-active 
base to a cold base, where we could use our strategic 
flexibility using forces that emanate both from the theater and 
from the continental United States or, frankly, anywhere else 
in the world if we wish to do so, as opposed to the 20th 
century model where we built what I call ``Small City, USA,'' 
with families and schools and basing infrastructure and PXs and 
commissaries and everything else that goes with the traditional 
mindset of an American base in the 20th century.
    I believe that we can identify the few strategically 
enduring installations that we would not want to pay the kind 
of money we would have to pay--i.e., a Ramstein Air Force 
Base--and use the strategic enduring installations as 
springboards to these smaller, more remote locations, that 
would, by comparison, be very, very modest, in terms of an 
investment.
    So it is a comparison between a 20th century model of a 
base, that was very useful to us, and the fact that the world 
has gotten smaller and we can project power coming from 
different parts of the world to do those things that we wish to 
do at a significantly--at a fraction of the cost that it would 
take to rebuild a 20th century base.

                           ROTATIONAL FORCES

    Senator Feinstein. Would that envision, then, a different 
rotation system? You would not bring families, for example? It 
would be, I guess, a base similar to that which was built in 
Kosovo, for example?
    General Jones. Camp Bondsteel would be a good example of 
what I would term a forward-operating base. I also would 
envision a family of forward-operating locations which would be 
much more modest than the forward-operating base. And the units 
that would visit those bases and operate from those bases would 
be generally rotational, whether they come from the theater or 
from the United States, and they would be there for temporary 
periods of time to do a specific mission, and then they would 
leave.
    And we are working with the services, principally the 
United States Army, because this is the service that has the 
most transformation, the most difficult time with this concept. 
But we are making good progress, and I think we will be able 
to, in time, provide a force-basing construct that will support 
a much more flexible basing strategy.

                                 AFRICA

    Senator Feinstein. Is there anything you could tell us at 
this time about Africa and what your plans would be in that 
area?
    General Jones. Thank you for that question, Senator. I 
appreciate that, because I think Africa is a continent that is 
going to be of very, very significant interest in the 21st 
century, and I think it is only a matter of time. It is 
assigned, with the exception of several countries around the 
horn of Africa, to the European Command. And, as you have 
correctly stated, it is a little bit of a misnomer to think of 
the European Command as simply in Europe. It is not.
    We have had an engagement strategy in Africa that has been 
largely reactive, reactive to crisis. Where we have had a 
proactive strategy, it is generally been confined to special 
operating forces, very small, focused efforts that have been 
important. But, in my estimation, we will have to do more in 
the future.
    I am concerned about the large, ungoverned areas of Africa 
that are possibly ``melting pots for the disenfranchised of the 
world,'' so to speak, the terrorist breeding grounds, 
criminality, people who are being recruited as we speak to rise 
up against the developed world and the democracies that enjoy a 
peaceful and prosperous way of life. And I believe that we are 
going to have to engage more in that theater.
    And part of the basing realignment and proposals that we 
are coming up with will establish some footprints at a very low 
cost, and very low manpower cost, as well, but we will 
hopefully see more visits and more presence by our American 
forces, and maybe even coalition forces, coming from the 
European theater to begin to stem the tide of what is going to 
be, I think, an extremely difficult story with regard to the 
developments of not only the southern rim of the Mediterranean, 
but sub-Saharan Africa, as well.
    Senator Feinstein. Thank you very much because, you know, 
many of us think that we have really ignored Africa, at great 
peril for the future, for exactly the reasons you are saying 
and actually looked away when huge atrocities were committed 
involving literally the destruction of millions of people. And 
I think once we let that get started, America's credibility is 
diminished, so, at the very least, we can say that there is 
going to be additional attention, and I think that is very 
welcome. So thank you.
    General LaPorte, you mentioned, in your opening comments, 
about something that we well know, and that is the 
extraordinary value of Yongsan in won or dollars, and the plans 
you have for the future of the Alliance Policy Initiative and 
the impact of that on the Land Partnership Program.
    I would like to know the extent to which this has been 
discussed with the Government of South Korea, the extent to 
which the South Korean Government looks favorably upon this, 
and the degree to which they will help in its implementation.
    General LaPorte. Senator, the meeting in December, which 
was held here in Washington, the Security Consultative meeting 
between Secretary Rumsfeld and the Minister of National 
Defense, directed this Future of the Alliance Study.
    Senator Feinstein. Could I ask you to speak a little more 
loudly? I have a cold, and both of my ears are plugged, so I am 
kind of straining to hear.
    General LaPorte. The SEM directed us to do a Future of the 
Alliance Policy Initiative. We have started those negotiations. 
Department of Defense policy is working with Ministry of 
National Defense policy. The first series of talks have been 
conducted. They were conducted at the end of April. They will 
have future talks in May. So the discussions on the roles, the 
missions, the force alignments, is ongoing.
    The first decision that has come out, of significance, is 
the Yongsan Relocation, where the Republic of Korea Government 
has endorsed the relocating of forces in Seoul south to Camp 
Humphreys, which will be an enduring installation. As part of 
the agreement, the South Korean Government will defer all costs 
associated with the procurement of land and the movement of 
facilities to that area.
    Minister of Defense Cho has given us a letter of 
commitment, through the Secretary of Defense, to purchase the 
needed land, and they will purchase that in their fiscal year 
2004 budget. So the discussions have really gone well up to 
this point, and the commitment from the South Korean Government 
has been exceptional. So I am very confident, as we continue 
these discussions and address the other issues on the table, we 
will get similar results.
    Senator Feinstein. When I was there in December with you, 
there was some concern about South Korean acceptance of our 
military. Could you update us on that? And could you also tell 
us, very briefly, what you have done to try to intermesh with 
the community on a greater basis?
    General LaPorte. Following the tragic accident that we had, 
there was some anti-American sentiment expressed, primarily 
through demonstrations. And that continued throughout the month 
of December. Following the national elections, the 
demonstrations just dropped off almost totally.
    Recently, I have been asked several times, ``Is there a 
crisis in South Korea?'' And my answer is adamantly, ``No, 
there is no crisis in South Korea.'' There would be a crisis in 
South Korea if they did not hold free and democratic elections. 
There would be a crisis in South Korea if the people of South 
Korea could not gather and speak their mind. There would be a 
crisis in South Korea if the civilian leadership did not 
control the military. Or there would be a crisis in South Korea 
if the people were unable to worship the way they want.
    Senator, last week, my wife and I went to a Korean church. 
There were 10,000 people present. And as I walked in, the 
minister said, ``They are praying for you and the United States 
Forces Korea.'' So we are getting tremendous support from the 
Korean people.
    We have developed a Good Neighbor Program. This is designed 
to increase our interaction with the media, with the 
universities, with the surrounding communities, with the other 
military units. It is an outreach program. It is working very 
well. This month, we will have a--May is Good Neighbor Month 
for U.S. forces in Korea. We have tremendous programs where we 
are teaching English in schools. We have adopted orphanages. We 
are working with the military units on better ways to move on 
the roads, to coordinate with the local authorities. So we are 
putting a great deal of effort at every level to ensure that we 
have good relationships, and I think we are seeing the benefits 
of that. The South Korean people are fully in support of the 
United States Forces Korea being on the peninsula.
    Senator Feinstein. Thanks very much, General LaPorte, 
General Jones.
    Thank you, Madam Chair.
    Senator Hutchison. Senator Landrieu.
    Senator Landrieu. Thank you, Madam Chair, and I thank the 
Ranking Member, as well, for their attention to this very 
important subject. And I wanted to just stop by today briefly. 
I am not going to be able to stay for the entirety of the 
meeting.
    But I did want to, General Jones, just commend you for your 
work in this area as you outline your vision for the direction 
for our transformational force. As you know, I had the 
opportunity over the break to be in Romania for two purposes, 
one of which was military purpose--and had a chance to visit 
the--I do not even want to use the word ``base,'' but the 
footprint, the hole that we have near Constantza for the 
operations in Iraq, which was extremely helpful. And the morale 
was very high, and what I witnessed and saw there was just a 
good partnership between the Romanian Government and our 
forces, in terms of our current operations. In looking at the 
map, having a location so close to the Black Sea, if it would 
be in Romania or Bulgaria, I think, is just crucial to our, you 
know, transformational-force concept of being able to launch 
with as little restriction and complication as possible to 
parts of the world that may need our attention.
    So I just wanted to commend you and to, again, say that, at 
least from my brief visit, and it was brief, I feel that the 
Romanian leadership would be very open to work with us, you 
know, in the appropriate ways if that would be what we would 
have in mind.
    Secondly, to say that realigning our bases in Europe in our 
current position, I think, makes a lot of sense, to sort of 
minimize our footprint where we are not so much needed, and try 
to be more strategically placed.
    I also want to support Senator Feinstein's note about 
Africa. I do think it has been a continent that has not 
received the kind of attention that it should and most 
certainly deserves, not just because of its largeness and not 
just because of its future economic opportunities, but also 
because of the complicated politics of a Nation that is, in 
some ways, still very underdeveloped in certain areas--there 
are some very developed areas--and the potential for 
fundamentalism to creep into a situation where there is some 
hopelessness, and for us to be able to be there, if possible--
we cannot be everywhere, but I want to just support that 
concept.
    Thirdly, I wanted to say I read in the paper somewhere, or 
maybe heard somewhere on the news, maybe it was a commentator, 
that said something like we need to be careful, Madam Chair, to 
not go where we are not welcomed.
    I would just want to say that we need to be where we are 
needed. And it would be nice if we were welcomed everywhere, 
but I am one that wants to be where we are needed; to be with 
our partners, to be where we are needed, to kind of carry out 
this new transformation vision. So I would hope that we would 
be guided by that fact and not just necessarily where we are 
welcomed.
    Now, that is not to say that you can bust your way in 
through every door, but I want us to be, you know, forward 
thinking and fairly aggressive in this strategy, would be, you 
know, my thinking about it.
    And, finally, I just want to commend both of you all. My 
experience now--it is just a few years, on the Armed Services 
Committee--Madam Chair, I have had the chance to visit a few of 
our installation bases around the world and, of course, through 
our country. And I want to say I do not think the military gets 
enough credit for the diplomats that you are, for the work that 
you do in terms of improving relations between countries, 
between the way--soldiers to soldiers. You may have on a 
different uniform, but fighting sometimes for the same cause. 
And I find that to be very, very helpful in America's efforts 
to get out our message, to express our values, to give an 
example of what our values are--not just talk, but actions.
    And I wanted to come to this Committee just to compliment 
you all and to say that I want to be a stronger voice in 
complimenting what the military does, because serving in 
orphanages and teaching English in school and helping the local 
people--people in Louisiana appreciate the military presence in 
Louisiana. We appreciate what the military does. And I think--
and I have witnessed and seen, other countries appreciate the 
communities, the military presence, and the good job that you 
all do as good neighbors.
    So that is just really why I wanted to come by today and 
wait my turn to speak. I have some questions, Madam Chair, to 
submit to the record, and I look forward to working with you 
and the Ranking Member, because this is a very important 
realignment, and I think this work is extremely important, that 
it get done correctly.
    Senator Hutchison. Thank you, Senator.

                          HOST NATION SUPPORT

    I would like to ask a couple of other questions, and then I 
will see if there are others from Senator Feinstein.
    I would like to know, in your two areas--now, your area is 
so big, I am really talking about Europe here--what the host-
Nation support is. And then, in Korea, what is the host-Nation 
support? Because one of the criteria we will be using in 
looking at the overseas basing is, What are the host Nations 
doing in support of our troops, and, therefore, what kind of 
efficiencies do we have?
    General Jones.
    General Jones. Thank you, Madam Chair.
    The European model does not lend itself quite to an easy 
answer in this regard, because it was not established at the 
same time as, for example, the model that--what we have in 
Japan, which I am very familiar with. And that proportion of 
host-Nation support, otherwise known as burden sharing, is a 
difficult one to grasp in Europe.
    But while we do not have the similar type of agreements 
that we have in the Asia Pacific theater, we do have agreements 
that focus on access and use of host-Nation infrastructure, for 
example, that may come to us at no cost, or special agreements 
on construction with regard to who builds it and when it 
returns back to the host Nation. With Turkey, for example, we 
have the Turkish Construction Circular. And we have an 
agreement called the Shell Agreement with Italy. These 
agreements address the way we will do construction with those 
Nations.
    The closest thing we have to infrastructure burden sharing 
is the NATO infrastructure program, and we are studying the 
2,907 agreements for burden sharing to see if we cannot provide 
a better analysis. And if I could come back to you with a more 
complete answer on that, I would appreciate it, because it is 
extremely complex.
    But what I would say, by way of a contemporary answer, is 
that, over the last 6 months, an equivalent of $127 million has 
been contributed to the United States by 27 Nations within the 
European theater for primarily force protection and use of 
their fields and ports which have facilitated our mission--
Germany, $33.75 million; the United Kingdom, $24 million; 
Greece, $16 million; Turkey $11 million; Spain, $9 million; 
Hungary, $7 million; Romania, $7 million; and Italy, $4 
million.
    So I would like to respond to the question for the record 
with the details that you deserve, but it is not quite as self-
evident as it is in Asia.
    Senator Hutchison. Well, it could be that as we go down the 
road and we are making decisions on bases, that we could be 
more specific----
    General Jones. Clearly.
    Senator Hutchison [continuing]. Because it will be part of 
the commission that we hope to set up. Part of their evaluation 
would include----
    General Jones. Clearly.
    Senator Hutchison [continuing]. Host-Nation support.
    General LaPorte.
    General LaPorte. Senator, we receive both direct and 
indirect support from the Republic of Korea. Indirectly, we 
receive support in terms of use of their ranges, use of their 
facilities.
    Force protection is provided by the Korean National Police 
at all our installations. An example would be within 24 hours 
after 9/11, South Korea put 5,000 Korean National Police as a 
force-protection force around all our installations in Korea. 
Today, they still have the Korean National Police serving as a 
force-protection element. That saves us significant dollars and 
also service-members' time.
    Direct investments, I will just give you some examples. In 
2001, South Korea provided $425 million; in 2002, $490 
million----
    Senator Hutchison. Put that in percentages of the total.
    General LaPorte. It is probably about 40--somewhere about 
40 percent, Senator.
    And then, this year we are scheduled to receive $540 
million; and in 2004, it is estimated to be approximately $595 
million.
    Senator Hutchison. You are in the 40 percent range?
    General LaPorte. Yes, ma'am.
    Senator Hutchison. I want to ask about the concept of unit 
rotations. The Army is looking at more unit rotations. The GAO 
took a look at the issue in 1994 and identified nearly a half-
dozen times over the years where the Army has tried and halted 
various efforts to employ the unit-rotation concept overseas. 
And, General Jones, unit rotations are very much a part of your 
concept, but not so much yours, General LaPorte.
    I wanted to ask you if it is something that could be done 
in Korea as a way to once again assure the training 
capabilities, or is it not as appropriate? And is it possible 
for the Army to have a unit-rotation system in Europe, but not 
in Korea?
    I would start with you, General LaPorte.
    General LaPorte. Senator, when I went to Korea last year, I 
talked to all the service chiefs of staff, and one of the 
topics we discussed was the potential for unit rotations. And I 
told them I had a very open mind and would be willing to look 
at where this would be an appropriate strategy.
    As you are well aware, we have a threat, a North Korean 
threat, that we must address each and every day. That does not 
mean that everyone has to be on a 1-year assignment. We are 
looking at it, we are talking, especially to the United States 
Army, the possibility of unit rotations--for instance, the 
Patriot batteries that are securing the air fields at Osan and 
Suwon. That is a similar task to what takes place in Kuwait and 
what used to take place in Saudi Arabia. So, theoretically, you 
could have those battery-sized locations. A battery would be 
about, say, 100 or 115 people. They could come to Korea on a 
rotational basis. So we are looking at that.
    It becomes challenging when you get into the headquarters 
elements and you get into the combat brigades that are up in 
the 2nd Infantry Division. But I will tell you, we have, the 
Army has, a significant study looking at this. I have talked to 
General Jumper about this, in terms of Air Force assets. So we 
are going to continue to aggressively look at this.
    Senator Hutchison. Anything that you would add to what you 
have already said?

                      UNIT ROTATION IN U.S. EUCOM

    General Jones. Yes, ma'am.
    We have, actually, a success story in unit rotation in 
Europe right now with the Army. All of the forces in KFOR in 
Kosovo and in Bosnia are National Guard units. The one in 
Bosnia is from Minnesota, and the one in Kosovo is from 
Pennsylvania. And these units come over on a 6-month rotation. 
They are among the most motivated National Guardsmen I have 
ever seen. They love what they do. They come into the theater, 
they make a tremendous difference, and then they go home to 
their home base.
    I want to emphasize something that General LaPorte said, 
because I think we have to be careful of what unit rotation is 
and what it is not. What it is, is that you can rotate combat 
forces, particularly light combat forces, to make a tremendous 
presence felt over a much wider area within our area of 
operation.
    I do not face the symmetrical threat that General LaPorte 
faces, and his calculus on the type of force he needs in place 
ready to respond is different from mine, because mine is more 
asymmetric. Since the disappearance of the Soviet Union as a 
threat, we are an asymmetric-based organization.
    But we can, through the proper disposition of equipment and 
combat support and combat service support that would be pre-
staged and pre-based, rotate the combat forces that would be 
lighter, more agile, more deployable that would come into the 
theater, train, operate, train, influence, shape, engage, 
whatever the case may be, and then return home to their home 
bases, whether they be in Europe or whether they be in the 
United States or sometimes, if the Korean were--or Korean 
theater is peaceful, maybe General LaPorte will send us some of 
his units, as well.
    Senator Hutchison. I was not really thinking of Guard and 
Reserve. I was thinking more of active duty, if that could be 
part of the----
    General Jones. I wanted to give you an example of a 
success, and----

                       ACTIVE DUTY UNIT ROTATION

    Senator Hutchison. Yeah. I have to say, with all due 
respect, that the leader in the effort of command and control 
by a Guard unit was the Texas unit that went to Bosnia. And I 
think that was the test, and they passed, and I think that 
really led the way. I happened to know, because I visited them 
when they were there, and it was just a wonderful experience, 
and it was something that a Guard unit could do that kept you 
from having to use active duty. But I was really thinking--in 
the active-duty terms, can you also do the rotations 
effectively and still stay up to speed and trained?
    General Jones. This is an issue that we are currently 
working on with General Shinseki and the U.S. Army, because 
they will have to respond to the input from other commanders, 
like myself, who make demands on types of units.
    But I think one point that I would like to make is that as 
we adjust our footprint, as opposed to the last time, 10 years 
ago, or 11 years ago, where we did a force drawdown in Europe, 
that force disappeared from the active structure. The 7th Corps 
disappeared from the active structure. This time, I have to 
emphasize that no one is talking about end-strength reductions. 
This is a very important distinction.
    And for a theater commander, such as myself, if we achieve 
a different basing modality from the standpoint of permanent 
infrastructure, large number of families, huge infrastructure 
costs, it will be because we can do a different--we can solve 
the problem differently with these rotational forces. But if we 
send forces home from Europe, it will be with the expectation 
that the Army, the Navy, the Air Force, and the Marine Corps 
will be able to replace in kind on a rotational basis the 
forces that we still need. So it is not a zero-sum game.
    And so I think, with regard to the Army, that is a more 
difficult challenge, and we all know, because--we all know why. 
But I think we are going to work our way through it.
    Senator Hutchison. Thank you.
    Senator Feinstein.
    Senator Feinstein. Thank you very much.

                        FORWARD OPERATING BASES

    A technical question, General Jones. We could not identify, 
in the budget document, the funding for the planning and design 
for the forward-operating bases in Eastern Europe. My 
understanding is you may want to plan and design for that, and 
perhaps in Bulgaria and Romania. How much money do you need for 
planning and design in 2004? Is it six or seven?
    General Jones. I requested, I think, $6.8 million--$6.85 
million.
    Senator Feinstein. So it is $6.5 million. That takes care 
of that.
    General Jones. And that would be to do the surveys and all 
of the studies and the--because some of these areas are still 
relatively unknown to us.

                         EFFICIENT BASING SOUTH

    Senator Feinstein. One of the things that I got involved in 
was the Efficient Basings South, when General Meigs was in 
command. And I had an opportunity to visit--I think I mentioned 
this to you--Camp Ederle in Vicenza, which, as you know, is an 
urban base in the middle of the city. And to move troops out, 
you have to drive them 2\1/2\ hours to Aviano. And we have not 
had any requests that I could see for any additional MILCON at 
Aviano.
    You added, I gather, a second airborne battalion to the 
173rd Airborne Brigade, and I think 22,000 of those dropped 
actually in Iraq----
    General Jones. Uh-huh.
    Senator Feinstein [continuing]. If my memory serves me 
correctly.
    General Jones. Correct.
    Senator Feinstein. My question is, What lessons have you 
learned from that? And do you think that Ederle is going to be 
adequate for these needs? And Aviano, as well?
    General Jones. I think the utility and the wisdom of the 
investments that we have made in that particular region and 
that particular unit are really an example of the kind of 
forces that we need in Europe for the future. They are 
expeditionary by nature. They did participate in a combat drop 
into Northern Iraq.
    As you know, when the discussions with the Turkish 
Government did not materialize with an agreement to be able to 
introduce the 4th Infantry Division by land, we had to come up 
with another scheme, and we successfully introduced almost 
6,000 soldiers, sailors, marines, airmen, into Northern Iraq by 
air. And the first regular unit that was in there, conventional 
unit, was the unit from SETAF stationed in Vicenza, the 173rd. 
And I think this kind of unit is extremely useful for the 
theater because of their agility and their mobility and their 
proximity to Aviano. I would favor considering still another 
battalion to round out the unit. If it were left up to me, I 
would probably grow that unit even by one more battalion, 
because----
    Senator Feinstein. In Camp Ederle?
    General Jones. In the area, in the vicinity. Perhaps not 
quite specifically there, because, as you said, space is very 
tight. But it is, geostrategically, very well located, in terms 
of the theater and in terms of the potential threats in the 
east and the south, and can be deployed very quickly, as we saw 
in the Iraqi Freedom Operation. So it is a very, very 
important, strategically important, area for us and a very 
modern capability that we will need in the 21st century.
    Senator Feinstein. But is there anything in this budget 
having to do either with expansion at Aviano or Ederle?
    General Jones. For Efficient Basing South, deployment 
facility phase one at Aviano, $15.5 million. For deployment 
facility phase two at Aviano----
    Senator Feinstein. Excuse me. For a deployment facility?
    General Jones. Uh-huh.
    Senator Feinstein. Which would be exactly what?
    General Jones. Essentially to facilitate the throughput of 
deploying forces from that region and facilitating the 
difficulties that you--including the modalities and basing 
arrangements to facilitate the rapid departure of troops and 
also the reentry of troops.
    And then we have $16.4 million earmarked for Vicenza, as 
well.
    Senator Feinstein. That is about a total of $30 million, 
then, to improve----
    General Jones. $34.9 million, to be exact.
    Senator Feinstein. 34----
    General Jones. Yes, ma'am.
    Senator Feinstein [continuing]. To improve deployment and 
basing----
    General Jones [continuing]. Environmental support----
    Senator Feinstein. [continuing]. At Ederle and----
    General Jones. Vicenza.
    Senator Feinstein [continuing]. Aviano Air Base.
    General Jones. Yes, ma'am.
    Senator Feinstein. Okay, that is what I wanted to know. 
Thank you very much.
    General Jones. If I could just add another remark to that. 
The Joint Deployment Training Facility provides the heavy drop-
rigging facility for the SETAF of the 173rd Brigade to deploy 
from Aviano during contingency operations, will provide space 
to support 1,000 deploying soldiers, 20-ton overhead lift for 
heavy drop-rigging, parachutes shakeout, drying tower, 
rollarized floor for heavy drop-rigging, and air/land 
palletization, a wash bay for preparation of vehicles for air/
land--quite a bit of capability there.

                         RELATIONSHIP WITH NATO

    Senator Feinstein. Thank you very much.
    As the SACEUR, would you care to comment on your role in 
revitalizing the United States and NATO relationship?
    General Jones. Well, I am privileged, Senator Feinstein, to 
have my second assignment to be the commander of the Allied 
Command in Europe. This is also a transformational period for 
the alliance. As you know, the traditional role of the Supreme 
Allied Commander Atlantic will change very shortly to be the 
Allied Commander for Transformation, and that is why the 
European theater--I am sorry, the NATO theater--the European 
theater has expanded by air and sea, because I have been 
assigned the previous operational area that SACLANT used to 
have.
    The military portion of the alliance is very strong, very 
robust. Senator Landrieu pointed out that the engagement yields 
have tremendous dividends. And after the many years of the 
alliance, we have formed lifelong friendships and partnerships 
across the 19 member Nations. And the military portion of the 
alliance is very robust and very strong, and it survives all 
kinds of strains and pushes and tugs as the diplomatic and 
political debates rage on around us.
    We are in the business of transforming NATO. NATO, as a 
political alliance, has signaled the strong message that 
members desire to expand the alliance. And as the leader of the 
military portion of that alliance, we are working hard to 
develop the NATO Response Force, which will be the engine of 
transformation for the 21st century military alliance 
capability. And this is very exciting and very promising work.
    And it provides, really, the framework for what the U.S. 
European Command is doing. As NATO expands, so, too, must we 
reevaluate the U.S.'s contribution to the alliance. But being 
able to do both of those things simultaneously is a real 
privilege and something that I----
    Senator Feinstein. Just let me tell you where I am going, 
and you might not want to comment. But when you told me the 
sheer size of the NATO military force, I found it just 
unbelievably large, at well over 2 million. And yet the basic 
inability, at least apparently, to really participate 
efficiently and quickly in any military action that might take 
place, it made me--last evening, I was thinking about whether 
the NATO people are aware of that and the fact that by their 
very bulk in size there is an obsolescence that tends to set in 
because they cannot be relevant in what you describe as the new 
asymmetrical world.
    General Jones. This is why I use the term ``NATO at the 
crossroads,'' because NATO is what it is today because of a 
very--the most successful military alliance in history. It has 
served its purpose as a defensive alliance. We built it a 
certain way. America was privileged to lead. That threat went 
away as a symmetric threat, and now we are in the business of 
reshaping the military arm that undergirds the alliance in such 
a way that it will be more useful in the future.
    On the one hand, it is extremely large, with 19 sovereign 
Nations, each of which have to decide for themselves what they 
want in their own individual militaries. My job is, I believe, 
to signal to those 19 Nations what we think, in NATO, is 
militarily relevant to the future challenges of NATO, and the 
instrument of that change will be the NATO Response Force.
    Nations will have to decide for themselves how big they 
wish their forces to be and, more importantly, how they wish to 
shape those forces. And it is a fascinating dialogue, to be 
able to go from one country to the other to present the concept 
of NATO transformation through the NATO Response Force and to 
engage in the dialogue that goes through as to how do Nations 
contribute to that NATO Response Force.
    My feeling is that, as we go down this trail together, that 
we will produce something that will be very relevant, but it 
will be different than the large monolithic threat-based 
symmetrical response force that we have had, and that NATO will 
kind of go through something that the United States went 
through in the last 10 years of gradually shrinking and 
collapsing the capabilities that are not terribly useful in the 
21st century and hopefully generating some resources from 
within to transform the force into a capable NATO Response 
Force that we all seek and the United States would absolutely 
welcome in the 21st century.
    And so I am extremely optimistic about our direction, and I 
find it very exciting to be able to participate in this 
process. It will take a little time. It will take some focus. 
But to give you a sense of how quickly things are moving, it is 
hoped that at the June ministerial that the NATO Response 
Force, which was stipulated at the Prague summit as something 
that the Nations wished to do, will receive the endorsement of 
the Ministers as saying that we endorse the concept. And by 
October of this year, we hope to be able to have available for 
other Nations to see a sample of the most expeditionary piece 
of the NATO Response Force with, say, something between 2- to 
5,000 integrated air, land, and sea forces that will be 
presented as an example of how NATO can go if it wishes to do 
so in the future. And I think this is very exciting.
    Senator Feinstein. I just want to say at least this Senator 
thinks you are really on the right track. And I think, in terms 
of really satisfying a basic need, that this is really the way 
to go. And I really very much hope that you have the 
cooperation of all those Nations that are a part of NATO.
    And I know that politically the mass means something, but 
strategically I do not really think it does. And so I think you 
are absolutely right in the direction in which you are going, 
and----
    General Jones. Thank you.
    Senator Feinstein [continuing]. To have a really leaner, 
more mobile, more modern, more transformed force would be much 
more effective in the future, and I think this is really very 
smart thinking. I just want to say that.
    General Jones. Thank you, ma'am.
    Senator Feinstein. Thank you.
    General Jones. And may I say that I am receiving--we are 
receiving, those of us who are doing this work--we are 
receiving enthusiastic support by all member Nations who, one 
at a time, have told me that they consider the NATO Response 
Force to be extremely important, and they are all looking at 
ways in which they can make a contribution, and I find that 
very uplifting.
    Senator Feinstein. Thank you very much.
    General Jones. Thank you.
    Senator Feinstein. I appreciate that. And thank you, 
General LaPorte.
    That concludes my questions.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Hutchison. Well, thank you. This has been very 
helpful. I appreciate so much--you both came a very long way to 
be here, and I am so pleased that we really were able to work 
before this. I think you have started on a path that is going 
to transform the military and certainly start the thinking 
process for assuring that we are spending our dollars on the 
strategic needs that our country has. And I appreciate both of 
your service very much and look forward to continuing to work 
with you.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]

           Questions Submitted to General James L. Jones, Jr.

          Questions Submitted by Senator Kay Bailey Hutchison

                             BASING CONCEPT

    Question. You envision a basing concept that employs semi-permanent 
bases that do not have full support facilities. Can you elaborate on 
that concept and describe in more detail what such a base would look 
like and how it would differ from a traditional European base? In 
general terms, how many such bases would be required?
    Answer. Our concept involves a network of Joint Main Operating 
Bases, Joint Forward Operating Bases, Joint Forward Operating Locations 
and Joint Pre-positioned Sites. This network will transform Unites 
States European Command's (USEUCOM's) operational flexibility to better 
prosecute the war on terrorism, respond to crisis, conduct security 
cooperation, increase stability in the region and maintain operational 
readiness through enhanced training and exercises. Our concept includes 
a reduction of permanently assigned forces to USEUCOM thereby allowing 
us to reduce the number of large main operating bases required to 
support the families and services associated with permanently assigned 
forces. An essential element of our concept is the increased reliance 
and use of forces that are rotated from the United States to Europe in 
order to conduct training exercises and other security cooperation 
activities in order to maintain a United States presence. These 
rotations would be for a short duration, perhaps 3 to 6 months, and the 
troops would use Joint Forward Operating Bases and Joint Forward 
Operating Locations as their logistical hubs.
    The following characteristics of Joint Main Operating Bases, Joint 
Forward Operating Bases, Joint Forward Operating Locations and Joint 
Pre-positioned Sites helps to explain the concept and shows how they 
differ.
  --Joint Main Operations Base (JMOB).--Strategically enduring asset 
        established in friendly territory to provide sustained command 
        and control, administration, and logistical support in 
        designated areas. Ramstein Air Base, Germany, is an example of 
        a JMOB.
  --Joint Forward Operating Base (JFOB).--Semi-permanent asset used to 
        support tactical operations without establishing full support 
        facilities. Can be scalable, and may be used for an extended 
        time period. May contain pre-positioned equipment. Backup 
        support by a JMOB may be required. Camp McGovern, Kosovo, is an 
        example of a JFOB.
  --Joint Forward Operating Location (JFOL).--Expeditionary asset 
        similar to a Forwarding Operating Base, but with limited in-
        place infrastructure. May contain pre-positioned equipment.
  --Joint Preposition Site (JPS).--Sites that contain pre-positioned 
        war reserve materiel (Combat, Combat Support, Combat Service 
        Support), usually maintained by contractor support.
    The exact number of sites is yet to be determined, however, our 
concept envisions a reduction in the number of JMOBs in EUCOM. We will 
maintain those required and consolidate or reduce the rest. We will 
build a small number of new JFOBs in Eastern Europe and in Northern 
Africa. In order to extend our reach into Eastern Europe and Africa, we 
will develop a series of JFOLs, although total number has yet to be 
determined.

                           NEW ENDURING BASES

    Question. To what extent do you envision having to reestablish new 
``enduring'' bases elsewhere in your command's area of operations?
    Answer. Our proposed strategic transformation concept does not 
establish or build new infrastructure on the level of existing full 
support facilities we have traditionally operated in Western Europe. 
Our vision is to optimize existing installations through consolidation 
and, in some cases, closure, and establish a network of joint forward 
operating bases and locations that provides employment of a rotational 
deployment concept. This structure will ensure increased operational 
capability to prosecute the global war on terrorism, respond to crises 
throughout our area of responsibility, and conduct security 
cooperation, as well as provide increased stability and enhanced 
training and readiness.

                           NEW TRAINING AREAS

    Question. Do you envision establishing significant new training 
areas further East in Europe? If so, what would be the scope of any 
such facilities?
    Answer. Although our forces may not initially enjoy the same level 
of training range capability they have traditionally had at Western 
Europe locations, we anticipate full cooperation of our future host 
nation partners in exercising our military capability to the greatest 
extent possible. Over time, as our joint forward operating base 
infrastructure matures, we envision building up instrumented ranges and 
facilities that will provide fully joint coordinated training between 
our services and allies. Realistic and demanding training has been the 
asymmetric edge of Unites States forces over the past decade. Our 
success in combat, whether ground, air or sea, has been solidly based 
in our training. We believe that new training areas in Eastern Europe 
and North Africa will provide us the opportunity to keep that 
asymmetric edge well into the future.

                             RESIDUAL VALUE

    Question. Has the United States European Command completed 
negotiations for residual value for all of the more than 560 
installations returned during the last decade? If not, how many 
installations are still in negotiation? When will these negotiations be 
completed?
    Answer. No, United States European Command has not completed 
negotiations for residual value for the more than 560 installations 
returned during the last decade.
    There have been 566 installations returned in the last decade. Of 
these 566 installations, only 26 percent, or 149 installations, are 
currently under negotiation and 417 have been completed.
    The host nations significantly impact the negotiation process for 
residual value. Our goal is to conclude these negotiations as quickly 
as possible where no residual value is anticipated. For the remaining 
installations, the goal is by the end of 2004.
    Question. What stumbling blocks have United States negotiators 
encountered during more than a decade of residual value negotiations? 
How might our strategy be adjusted should we return additional 
installations?
    Answer. There have been no stumbling blocks to date. With the 
Federal Republic of Germany, in particular, United States European 
Command has negotiated many technical arrangements over the years that 
have now resulted in a predictable and stable Residual Value 
negotiation environment and fair market returns are being realized. In 
1994, the General Accounting Office validated our Residual Value 
strategy and the Office of Management and Budget has reviewed and 
approved all of our yearly Residual Value packages. Additionally, the 
United States policy in some countries is not to seek Residual Value 
due to overarching United States political goals.
    In compliance with the Commander of United States European 
Command's intent for more forward operating bases and forward operation 
locations in countries where we now have little or no presence, the 
requirement for new construction in our traditional host nations will 
be less. We will be less likely to pursue payment-in-kind as a means of 
Residual Value with our traditional host nations due to the lessened 
requirement for new construction. In accordance with Article 48 of the 
Supplementary Agreement to the North Atlantic Treaty Organization 
(NATO) Status of Forces Agreement, whenever we do not have a need for 
facilities anymore, we must return those facilities as quickly as 
possible.

                          ENVIRONMENTAL DAMAGE

    Question. According to a 1994 GAO report, the extent of United 
States improvement and damages to the facilities in Germany figures 
prominently into the negotiated value. The Status of Forces Agreement 
with Germany explicitly cites environmental damage caused by United 
States forces as an offset of the facility's value. In the past, what 
has been the cost of environmental damage on United States facilities 
that we have returned to Germany and other European countries? In the 
future, will United States facilities that will be returned to Germany 
be evaluated for environmental damage? What are the criteria for 
assessing environmental damages?
    Answer. With regard to the return of property, there has been no 
cost for environmental damage in any host nation other than Germany. 
The cost to date for environmental remediation in Germany occurred 
during the period between 1992 and 1997 for a total of $23.8 million. 
Ongoing negotiations are considering environmental costs as part of the 
final settlement.
    United States facilities returned to Germany in the future will be 
evaluated for environmental damage. Before United States facilities are 
returned, an environmental summary report will be completed. This 
document characterizes the environmental condition of a site being 
returned. The purpose of preparing this report, among others, is to 
establish the environmental condition of the site to assist in 
determining the validity of any claim for environmental damages that 
may be asserted by the host nation following return.
    In Germany, the 1993 Supplementary Agreement to the North Atlantic 
Treaty Organization (NATO) Status of Forces Agreement states that 
German law applies within an accommodation, e.g., a United States 
installation. The appropriate criteria for environmental remediation 
shall be guided by German Federal and Lander (state) laws that serve as 
a framework for soil and groundwater remediation in German states 
containing United States Forces installations.
    As part of Residual Value negotiations, each installation 
identified for realignment is evaluated for environmental damages on a 
site-specific basis, employing a risk-based approach. Neither the NATO 
Status of Forces Agreement nor the Supplementary Agreement specifically 
obligates the United States Forces to accomplish environmental cleanup 
before return. Under Department of Defense Instruction 4715.8, the 
United States Forces are not authorized to expend funds to remediate 
environmental damages after an installation has been announced for 
return unless it is determined that remediation is necessary to avoid 
an imminent danger to life or health or necessary to sustain current 
operations in light of the projected return date. The result of failure 
to clean up the environmental damage before return is that a monetary 
claim may be asserted under Article VIII of the NATO Status of Forces 
Agreement, Article 41 of the Supplementary Agreement or may be set off 
against Residual Value under Article 52 of the Supplementary Agreement. 
The treaty obligation for the United States Forces to bear costs 
arising in connection with the assessment, evaluation, and remedying of 
hazardous substance contamination caused by the United States Forces is 
set forth in paragraph 8bis(b) of the Protocol of Signature Re Article 
63, Supplementary Agreement.
                                 ______
                                 

             Question Submitted by Senator Mary L. Landrieu

            FUTURE BASING ROLE OF EASTERN EUROPEAN COUNTRIES

    Question. General Jones, I recently returned from a trip to 
Romania, where I visited with the 5,000 Marines stationed there. 
Romania is a North Atlantic Treaty Organization (NATO) aspirant, and I 
hope the Senate will soon approve NATO's expansion and membership for 
Romania, Bulgaria, Latvia, Lithuania, Estonia, Slovenia, and Slovakia. 
These aspirants have been members of the Coalition of the Willing, and 
we should be grateful to these burgeoning democracies for supporting 
America's efforts to oust a dictator. In particular, I want to commend 
Romania for housing United States troops, opening its airspace, and 
committing its own forces to the operations in Afghanistan and Iraq.
    Regrettably, our traditional allies Germany and France were 
reluctant to support America's efforts bring freedom to the Iraqi 
people. Additionally, Germany's reluctance to allow United States over 
flight and Austria's refusal to do so complicated the United State's 
ability use its airfields in Germany. United States planes flying over 
Europe en route to the Middle East or United States also had to change 
their routes to avoid flying over Austrian airspace. There is also a 
growing sentiment in Germany against America's military presence in 
Germany. This could potentially create force protection problems for 
our 68,000 troops in Germany.
    Given the change in strategic threats to the United States, the 
lack of support faced by United States forces in Germany and Central 
Europe, and the support found for United States foreign policy and the 
military in Eastern European countries such as Romania, Hungary, 
Bulgaria, and Poland, what role can these countries have in basing 
United States troops? Do you foresee permanent basing of United States 
forces in these countries? Is the United States evaluating whether to 
increase, decrease, or keep constant its troop strength in Europe? Has 
the Department conducted studies to determine the costs associated with 
the construction of new bases in Eastern Europe? If so, what are the 
anticipated costs? If not, please make them available once formulated.
    Answer. Eastern European countries such as Romania, Hungary, 
Bulgaria, and Poland will play a very important role as we transform 
United States European Command (USEUCOM). These countries have the 
potential for hosting new and improved training facilities as well as 
Joint Forward Operating Bases and Joint Forward Operating Locations 
that will support our concept for the use of rotational forces. 
Overall, our concept does not envision creating new large main 
operating bases that have been the tradition in Europe. We envision a 
very small and limited number of permanently based United States forces 
in the new areas we move to. Only those absolutely required will be 
permanent--the vast majority will be rotational forces brought over for 
specific training and security cooperation objectives.
    We are evaluating what the troop strength in Europe needs to be. We 
have yet to determine the exact number but we have determined that we 
will reduce the number of permanently assigned forces and rely more on 
the use of rotational forces.
    We are just now beginning the process to estimate costs associated 
with our Transformation. We must conduct detailed site surveys as well 
as negotiations with the host nations in order to determine costs. Once 
we have cost estimates developed, we will provide them.
                                 ______
                                 

             Questions Submitted to General Leon J. LaPorte

          Questions Submitted by Senator Kay Bailey Hutchison

                                 KOREA

    Question. Are you giving up training areas under the Land 
Partnership Plan and if so, how will you make up for the loss of those 
facilities?
    Answer. Under the Land Partnership Plan, we are returning many 
heavily encroached training areas that are of very limited use to USFK. 
In return, we have gained guaranteed time on Korean military training 
facilities, at no cost to USFK, to meet our requirements. We have kept 
our primary training areas and the Korean government has agreed to 
remove the encroachments to increase the safety and effectiveness of 
our training. This agreement has already provided great improvements in 
the quality of training and ultimately our readiness.
    Question. You have stated that you would like to increase the 
number of accompanied tours in Korea. What are the military 
construction implications of increasing accompanied tours? Even if 
housing is privatized, won't this require additional infrastructure to 
support more families?
    Answer. Increasing the number of accompanied tours is an important 
part of our overall strategy to enhance, shape, and align our forces in 
Korea. We currently have less than 2,000 family units in Korea. My goal 
is to provide 5,500 family housing units on enduring facilities south 
of Seoul and outside of North Korean artillery range. With the increase 
of accompanied tours there will be a need to increase the supporting 
infrastructure. We plan to fund the overwhelming majority of this 
increase using Build-to-Lease and Military Family Housing Privatization 
Initiatives. The build-to-lease projects will include the needed 
facilities and infrastructure (roads, power, water, waste and 
recreation facilities) improvements associated with the increase in 
accompanied tours. Other requirements not covered by Build-to-lease 
will be met through Land Partnership Plan, Yongsan Relocation and Host 
nation funded construction as USFK consolidates units on enduring 
locations.
    Question. Following recent negotiations between Defense Department 
and ministry of National Defense officials, the press reported that 
Yongsan Army Garrison would be moved to Osan by the end of the year. 
How long do you expect the relocation to take?
    Answer. We have an agreement with the Korean government to relocate 
United States forces out of the capital of Seoul, with all expenses 
paid by the Korean government. The Yongsan facilities will be moved to 
Camp Humphries/Pyongtaek and not Osan Air Base as indicated in the 
question. Once the ROK Government processes the land and funds the 
facility construction, the Yongsan relocation will take approximately 3 
years to complete.
    Question. The Defense Department has submitted a budget amendment 
requesting that several barracks projects scheduled for fiscal year 
2004 be shifted from Camps Casey and Hovey to Camp Humphreys. This 
approach depends on the Korean government fulfilling a promise to 
provide the land for these facilities, which it has not yet acquired. 
Would you describe the steps that have to take place before we are 
ready to begin fiscal year 2004 construction projects on this land?
    Answer. The Status of Forces Agreement establishes the Facilities 
and Areas Subcommittee under a SOFA Joint Committee to consult, make 
recommendations, and execute decisions land and facility decisions. The 
United States Forces Korea Engineer and the ROK Ministry of National 
Defense (MND) Chief of Real Estate are the subcommittee co-chairmen.
The Steps in the Land Grant Process in the Republic of Korea
  --The Facilities and Area Subcommittee (FASC) conducts a joint survey 
        of the proposed area to define boundaries.
  --The FASC develops, negotiates arid forwards an ``Agreed 
        Recommendation'' to the SOFA Joint Committee, stating the size, 
        location, and any proposed land grant conditions.
  --ROK MND acquires the land for USFK as per the 25 April 2003 letter 
        from Minister of Defense to the Secretary of Defense. This 
        letter pledges to purchase all the land required to meet USFK 
        alignment need within United States government timelines.
  --ROK MND acquires the land and establishes a property vacate date.
  --ROK MND coordinates with local government officials to make any 
        required changes to local zoning restrictions for the land.
  --ROK MND completes land acquisition
  --The grant is then approved by the SOFA Joint Committee.
  --ROK MND and USFK exchange real estate documents recording the grant 
        of the property to the United States.
    ROK MND has just completed the purchase and grant of new land to 
USFK for the construction of the fiscal year 2003 Family Housing 
project at Osan Air Base following this procedure. We are confident ROK 
MND will meet our land requirements again next year.
    Question. What concerns have South Korean officials voiced 
concerning environmental clean-up of facilities to be returned to them 
under the Land Partnership Plan? Have environmental concerns halted or 
delayed any land transfers under the Land Partnership Plan? Will the 
Korean government pursue environmental testing of land returned to them 
by the United States Government?
    Answer. Under the Status of Forces Agreement (SOFA) and Department 
of Defense policy, USFK will remedy any contamination that poses an 
imminent and substantial endangerment to human health and safety. The 
Republic of Korea is then responsible to remediate by Korean law prior 
to returning the land to public use. The Land Partnership Plan (LPP) 
was negotiated under this premise and ratified by the National 
Assembly. As part of our transfer process we have worked together to 
establish a system of joint surveys and consultations with the Korean 
government prior to any transfer of land. This process will ensure a 
full understanding of the conditions of the property, and any remedial 
actions to be performed. The joint surveys and consultations fulfill 
all ROK and United States requirements under the SOFA and LPP. This 
process has resulted in the delay of 2 small properties to perform our 
initial surveys and to work through any lessons learned on these new 
procedures. It is our intent to refine this process before we begin the 
sizable land returns planned for the near future. Currently are also 
establishing new guidelines and environmental standards to be met for 
the land that will lie acquired under the LPP for caretaking and 
possible long range turnover back to the Korean government.

                         CONCLUSION OF HEARINGS

    Senator Hutchison. As I told both of you earlier, we are 
going to try to delay Military Construction because of the 
changes that are very clearly being made right now, and we 
would like to wait as long as we can. So we will wait for your 
final review of your Tier I installations. We will certainly 
work with you, as I know a lot is happening right now with 
Korea, and try to have our final bill as late as possible in 
the year.
    Thank you so very much.
    [Whereupon, at 6 p.m., Tuesday, April 29, the hearings were 
concluded, and the subcommittee was recessed, to reconvene 
subject to the call of the Chair.]


       LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

                              ----------                              
                                                                   Page
Arny, Wayne, Deputy Assistant Secretary of the Navy for 
  Installations and Facilities, Department of the Navy, 
  Department of Defense..........................................   159
    Prepared statement...........................................   161
    Questions submitted to.......................................   191

Bryan, James C., Chairman, Charleston Naval Complex Redevelopment 
  Authority......................................................   113
    Prepared statement...........................................   119
Burns, Senator Conrad, U.S. Senator from Montana:
    Prepared statement...........................................   153
    Questions submitted by.....................................176, 189
    Statement of.................................................   152

DuBois, Raymond F., Deputy Under Secretary of Defense for 
  Installations and Environment, Office of the Secretary, 
  Department of Defense..........................................     1
    Prepared statements.........................................13, 141
    Questions submitted to......................................40, 176
    Statements of...............................................10, 137

Feinstein, Senator Dianne, U.S. Senator from California:
    Questions submitted by..........38, 43, 84, 106, 180, 188, 190, 191
    Statements of......................................2, 110, 114, 196
Fiori, Hon. Mario P., Assistant Secretary of the Army, 
  Installations and Environment, Department of the Army, 
  Department of Defense..........................................    59
    Prepared statements.........................................60, 155
    Questions submitted to.....................................104, 188
    Statement of.................................................   154

Gibbs, Hon. Nelson, Assistant Secretary of the Air Force, 
  Installations, Environment and Logistics, Department of the Air 
  Force, Department of Defense..................................71, 167
    Prepared statements.........................................72, 167
    Questions submitted to.....................................106, 189

Hutchison, Senator Kay Bailey, U.S. Senator from Texas:
    Opening statements of...................................1, 113, 195
    Questions submitted by...............35, 40, 82, 104, 106, 235, 238

Johnson, Hon. H.T., Assistant Secretary of the Navy, 
  Installations and Environment (Also Acting Secretary of the 
  Navy), Department of the Navy, Department of Defense...........    47
    Prepared statement...........................................    49
    Questions submitted to.......................................    82
Johnson, Senator Tim, U.S. Senator from South Dakota:
    Prepared statement...........................................     3
    Questions submitted by.......................................39, 44
Jones, General, James L., Jr., USMC, Commander, United States 
  European Command, Department of Defense........................   195
    Prepared statement...........................................   201
    Questions submitted to.......................................   235

Landrieu, Senator Mary L., U.S. Senator from Louisiana, question 
  submitted by...................................................   237
LaPorte, General, Leon J., USA Commander, United Nations Command, 
  Commander, Republic of Korea-United States Combined Forces 
  Command, and Commander, United States Forces Korea, Department 
  of Defense.....................................................   195
    Prepared statement...........................................   211
    Questions submitted to.......................................   238
Leonard, Robert B., Assistant Director, Sacramento County Airport 
  System.........................................................   127
    Prepared statement...........................................   128

Roberson, Paul, Former Executive Director, Greater Kelly 
  Development Authority, San Antonio, Texas......................   121
    Prepared statement...........................................   122

Stevens, Senator Ted, U.S. Senator from Alaska, questions 
  submitted by....................................36, 41, 106, 109, 197

Zakheim, Hon. Dov S., Under Secretary of Defense (Comptroller), 
  Office of the Secretary, Department of Defense.................     1
    Prepared statement...........................................     6
    Questions submitted to.......................................    35
    Statement of.................................................     4


                             SUBJECT INDEX

                              ----------                              

                         DEPARTMENT OF DEFENSE

                                                                   Page
Active Duty Unit Rotation........................................   230
Additional Committee Questions...................................   235
Africa...........................................................   224
Basing Concept...................................................   235
Categorizing Installations.......................................   223
Consolidating to Enduring Installations..........................   211
Cost Factors in EUCOM Transformation.............................   222
Efficient Basing.................................................   200
    South........................................................   231
Environmental Damage.............................................   237
EUCOM:
    Overview.....................................................   197
    Transformation...............................................   198
Forward Operating Bases..........................................   231
Future Basing Role of Eastern European Countries.................   237
Host Nation Support..............................................   228
Korea............................................................   238
Legal Changes Related to Transformation..........................   219
Lexicon of Terms.................................................   209
New:
    Enduring Bases...............................................   236
    Training Areas...............................................   236
Non-Enduring Installations.......................................   220
North Korean Challenges to Regional and Global Security..........   214
Northeast Asia Security Environment..............................   212
Relationship With Nato...........................................   233
Republic of:
    Korea's Support to Global Military Operations................   213
    Korea-United States Alliance: United Nations Command, 
      Combined Forces Command, and United States Forces Korea....   214
Residual Value...................................................   236
Rotational Forces................................................   223
Status of EUCOM Infrastructure...................................   199
Training Sites for Eucom.........................................   221
Unit Rotation in U.S. EUCOM......................................   230

                      Department of the Air Force

Accommodate New Missions.........................................    73
Additional Committee Questions...................................    82
Air Force Facilities and Infrastructure..........................    71
Alameda Point Naval Air Station Funding..........................    86
Antiterrorism/Force Protection Funding Plan......................   106
Barracks/Dormitories.......................................82, 104, 106
Base Realignment and Closure.....................................76, 78
BRAC.............................................................   111
    Cleanup Program..............................................   106
C-17 Aircraft in Alaska and Hawaii...............................   109
Continue:
    Demolition of Excess, Uneconomical-to-Maintain Facilities....    76
    Environmental Leadership.....................................    74
Corporate Adjustment.............................................   110
Elmendorf Air Force Base.........................................    81
Environmental Cleanup............................................    77
Family Housing Privatization...............................84, 105, 108
FYDP and Unfunded Priorities.....................................   112
Germany..........................................................    80
Hunters Point Naval Shipyard.....................................    86
Installation Readiness.....................................83, 105, 108
Invest in Quality of Life Improvements...........................    73
Korea............................................................    80
McClellan AFB....................................................   111
Milcon Recapitalization Rate.....................................   111
Military Family Housing..........................................    72
NATO.............................................................    87
Navy.............................................................    84
Optimize Use of Public and Private Resources.....................    75
Overseas Military Construction...................................    79
Overview.........................................................    72
Privatization....................................................    80
Quality of Life..................................................    71
Recapitalization Rate......................................83, 104, 107
Sustain, Restore, and Modernize our Infrastructure...............    75
Transformation...................................................   106

                         Department of the Army

Army Family Housing..............................................    64
Base Realignment and Closure (BRAC)..............................    68
Facilities Strategy..............................................    62
Family Housing:
    Construction.................................................    65
    Leasing......................................................    66
    Operations and Maintenance...................................    66
    Privatization................................................    65
Military construction:
    Army (MCA)...................................................    62
    Army National Guard (MCNG)...................................    66
    Army Reserve (MCAR)..........................................    67
Mission..........................................................    66
    Facilities...................................................    67
Other Worldwide Support Programs.................................    64
People...........................................................    62
Planning and Design/Unspecified Minor Construction...............    67
Readiness........................................................    63
Sustainment, Restoration and Modernization (SRM).................    67
Transformation...................................................64, 66
Worldwide Unspecified Funding....................................    67

                         Department of the Navy

Environmental Programs...........................................    54
Infrastructure Efficiencies......................................    52
Legislative Proposals............................................    56

                        Office of the Secretary

Additional Committee Questions..................................35, 176
Adequacy of the Budget Request...............................35, 40, 44
Base Closure.....................................................   189
Base Conversion..................................................   168
Base Realignment.................................................   189
    And Closure (BRAC)9, 41, 43, 176, 177, 177, 178, 179, 180, 181, 186
2005 Base Realignment and Closure................................   168
Base Reuse and Community Profile.................................   143
BRAC.............................................................36, 39
    And Environmental Cleanup....................................   145
    Budget.......................................................   182
    Cleanup......................................................   182
    Environmental................................................   168
        Clean up...............................................190, 188
    Executions Capability........................................   191
    Sale and Local Zoning........................................   192
    Selection Criteria...........................................   189
Cameron Station Property Sale....................................   170
Challenges.......................................................   169
Conclusions of the Nuclear Posture Review........................   179
Conducting BRAC 2005.............................................   142
Department's Potential Liability for Perchlorate Contamination...   186
Early Transfer Process...........................................   187
Economic Impact of Base Closure..................................   181
Environmental Cleanup............................................   170
    At Bases.....................................................   172
Europe...................................................38, 39, 43, 45
Excess Infrastructure............................................   178
Family Housing...................................................     9
    Privatization................................................35, 40
Federal Agency BRAC Needs........................................   192
Fort Ord Cleanup.................................................   175
Funding and Program Highlights...................................     7
Housing..........................................................    44
ICBM Launchers...................................................   179
Impact of BRAC on the MilCon Request.............................   177
Improving:
    BRAC Implementation..........................................   165
    Business Practices...........................................    20
Installations Required to Support Missile Defense................   178
Integrating Cleanup with Redevelopment...........................   187
Korea............................................................    39
Lessons Learned..................................................   181
Local:
    Redevelopment Authorities and Reuse Plans....................   162
    Reuse........................................................   188
Long Term Stationing of U.S. Forces in Central Command...........   180
McClellan Air Force Base.........................................   174
Military Construction Accounts...................................     8
National Academy of Sciences Perchlorate Study...................   187
NATO Security Investment Program.................................     9
New Installations................................................   189
Other California Properties......................................   175
Overall Milcon:
    Budget.......................................................    37
    Request......................................................    43
Overseas.........................................................   143
Parallel Cleanup and Redevelopment...............................   192
Percentage Europe Pays in Host Nation Support....................    32
Preserving Ranges and Training Areas.............................    19
Prior BRAC:
    Cleanup and Disposal Status..................................   164
    Implementation Process.......................................   161
Property:
    Reuse and Disposal...........................................   188
    Sales Staying in Navy BRAC Account...........................   191
    Transfer Process.............................................   181
Reduced Presence in Overseas Base Infrastructure.................   176
Remaining Closed Bases to Transfer...............................   186
Reuse Plan & Control Zoning......................................   187
Road to Recovery.................................................    13
Sale Versus Non-Revenue Transfer.................................   169
Status of Excess Acreage at Six Installations....................   183
Streamlining Early Transfer......................................   191
Taking Care of:
    Our People...................................................    14
    What We Own..................................................    16
Transfer to Other Federal Agencies...............................   170
Transforming Bases and Infrastructure...........................22, 141

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