    [Senate Hearing 108-241]
    [From the U.S. Government Publishing Office]

                                                     S. Hrg. 108-241, Pt. 3

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2004

    =======================================================================

                                    HEARINGS

                                   before the

                          COMMITTEE ON ARMED SERVICES
                              UNITED STATES SENATE

                          ONE HUNDRED EIGHTH CONGRESS

                                 FIRST SESSION

                                       ON

                                    S. 1050

         TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2004 FOR MILITARY
    ACTIVITIES OF THE DEPARTMENT OF DEFENSE, FOR MILITARY CONSTRUCTION, AND
       FOR DEFENSE ACTIVITIES OF THE DEPARTMENT OF ENERGY, TO PRESCRIBE
    PERSONNEL STRENGTHS FOR SUCH FISCAL YEAR FOR THE ARMED FORCES, AND FOR
                                 OTHER PURPOSES

                                   ----------

                                     PART 3

                        READINESS AND MANAGEMENT SUPPORT

                                   ----------

                       MARCH 6, 13, 19; APRIL 1, 9, 2003

             Printed for the use of the Committee on Armed Services

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                 2004--Part 3

                        READINESS AND MANAGEMENT SUPPORT

                                                     S. Hrg. 108-241, Pt. 3

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2004

    =======================================================================

                                    HEARINGS

                                   before the

                          COMMITTEE ON ARMED SERVICES
                              UNITED STATES SENATE

                          ONE HUNDRED EIGHTH CONGRESS

                                 FIRST SESSION

                                       ON

                                    S. 1050

         TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2004 FOR MILITARY
    ACTIVITIES OF THE DEPARTMENT OF DEFENSE, FOR MILITARY CONSTRUCTION, AND
       FOR DEFENSE ACTIVITIES OF THE DEPARTMENT OF ENERGY, TO PRESCRIBE
    PERSONNEL STRENGTHS FOR SUCH FISCAL YEAR FOR THE ARMED FORCES, AND FOR
                                 OTHER PURPOSES

                                   __________

                                     PART 3

                        READINESS AND MANAGEMENT SUPPORT

                                   __________

                       MARCH 6, 13, 19; APRIL 1, 9, 2003

             Printed for the use of the Committee on Armed Services

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                          COMMITTEE ON ARMED SERVICES

                        JOHN WARNER, Virginia, Chairman

    JOHN McCAIN, Arizona                 CARL LEVIN, Michigan
    JAMES M. INHOFE, Oklahoma            EDWARD M. KENNEDY, Massachusetts
    PAT ROBERTS, Kansas                  ROBERT C. BYRD, West Virginia
    WAYNE ALLARD, Colorado               JOSEPH I. LIEBERMAN, Connecticut
    JEFF SESSIONS, Alabama               JACK REED, Rhode Island
    SUSAN M. COLLINS, Maine              DANIEL K. AKAKA, Hawaii
    JOHN ENSIGN, Nevada                  BILL NELSON, Florida
    JAMES M. TALENT, Missouri            E. BENJAMIN NELSON, Nebraska
    SAXBY CHAMBLISS, Georgia             MARK DAYTON, Minnesota
    LINDSEY O. GRAHAM, South Carolina    EVAN BAYH, Indiana
    ELIZABETH DOLE, North Carolina       HILLARY RODHAM CLINTON, New York
    JOHN CORNYN, Texas                   MARK PRYOR, Arkansas

                        Judith A. Ansley, Staff Director

                 Richard D. DeBobes, Democratic Staff Director

                                     ______

                Subcommittee on Readiness and Management Support

                         JOHN ENSIGN, Nevada, Chairman

    JOHN McCAIN, Arizona                 DANIEL K. AKAKA, Hawaii
    JAMES M. INHOFE, Oklahoma            ROBERT C. BYRD, West Virginia
    PAT ROBERTS, Kansas                  BILL NELSON, Florida
    WAYNE ALLARD, Colorado               E. BENJAMIN NELSON, Nebraska
    JEFF SESSIONS, Alabama               MARK DAYTON, Minnesota
    JAMES M. TALENT, Missouri            EVAN BAYH, Indiana
    SAXBY CHAMBLISS, Georgia             HILLARY RODHAM CLINTON, New York
    JOHN CORNYN, Texas                   MARK PRYOR, Arkansas

                                      (ii)
    ?

                                C O N T E N T S

                                  ----------

                        CHRONOLOGICAL LIST OF WITNESSES
                Military Construction and Environmental Programs
                                 march 6, 2003

                                                                       Page

    DuBois, Raymond F., Jr., Deputy Under Secretary of Defense
      (Installations and Environment)................................     7
    Johnson, Hon. Hansford T., Acting Secretary of the Navy..........    19
    Fiori, Hon. Mario P., Assistant Secretary of the Army
      (Installations and Environment)................................    33
    Gibbs, Hon. Nelson F., Assistant Secretary of the Air Force,
      (Installations, Environment, and Logistics)....................    44

        The Impacts of Environmental Laws on Readiness and the Related
                      Administration Legislative Proposal
                                 march 13, 2003

    Keane, Gen. John M., USA, Vice Chief of the Army.................    98
    Fallon, Adm. William J., USN, Vice Chief of Naval Operations.....   105
    Nyland, Gen. William L., USMC, Assistant Commandant of the Marine
      Corps..........................................................   114
    Foglesong, Gen. Robert H., USAF, Vice Chief of the Air Force.....   119

                   Acquisition Policy and Outsourcing Issues
                                 march 19, 2003

    Aldridge, Hon. Edward C. ``Pete,'' Jr., Under Secretary of
      Defense for Acquisition, Technology, and Logistics.............   158
    Walker, Hon. David M., Comptroller General of the United States,
      United States General Accounting Office........................   166
    Styles, Hon. Angela, Administrator, Office of Federal Procurement
      Policy.........................................................   176
    Soloway, Stan Z., President, Professional Services Council.......   205
    Harnage, Bobby L., Sr., National President, American Federation
      of Government Employees........................................   224

          Impacts of Environmental Laws on Readiness and the Related
                      Administration Legislative Proposal
                                 april 1, 2003

    Suarez, Hon. John Peter, Assistant Administrator, Office of
      Enforcement and Compliance Assurance, U.S. Environmental
      Protection Agency..............................................   280
    MacDonald, Julie A., Special Assistant to the Assistant Secretary
      for Fish, Wildlife, and Parks, Department of the Interior......   284
    Lent, Dr. Rebecca, Deputy Assistant Administrator for Fisheries,
      National Marine Fisheries Service, National Oceanic and
      Atmospheric Administration.....................................   291
    Pirie, Dr. Robert B., Jr., Senior Fellow, Center for Naval
      Analysis.......................................................   302
    Ketten, Dr. Darlene R., Senior Scientist, Department of Biology,
      Woods Hole Oceanographic Institution...........................   305

                                     (iii)

    Young, Nina M., Director of Marine Wildlife Conservation, The
      Ocean Conservancy..............................................   309
    Clark, Jamie Rappaport, Senior Vice President for Conservation
      Programs, National Wildlife Federation.........................   318
    Siegel, Lenny, Executive Director, Center for Public
      Environmental Oversight........................................   348
    Benevento, Douglas H., Executive Director, Colorado Department of
      Public Health and Environment..................................   393
    Cohen, Benedict S., Deputy General Counsel, Environment and
      Installations, Department of Defense...........................   401
    Mears, David K., Senior Assistant Attorney General, Office of the
      Attorney General, Ecology Division, State of Washington........   415

     Readiness of the Military Services to Conduct Current Operations and
                           Execute Contingency Plans
                                 april 9, 2003

    Mayberry, Dr. Paul W., Deputy Under Secretary of Defense for
      Readiness......................................................   539
    Schwartz, Lt. Gen. Norton A., USAF, Director for Operations, The
      Joint Staff....................................................   546
    Cody, Lt. Gen. Richard A., USA, Deputy Chief of Staff, G-3,
      Department of the Army.........................................   556
    Green, Vice Adm. Kevin P., USN, Deputy Chief of Naval Operations
      for Plans, Policy, and Operations..............................   560
    Bedard, Lt. Gen. Emil R., USMC, Deputy Commandant for Plans,
      Policy, and Operations.........................................   568
    Schmidt, Maj. Gen. Randall M., USAF, Assistant Deputy Chief of
      Staff, Office of the Deputy Chief of Staff for Air and Space
      Operations.....................................................   578

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2004

                                  ----------

                            THURSDAY, MARCH 6, 2003

                               U.S. Senate,
                      Subcommittee on Readiness
                                and Management Support,
                                   Committee on Armed Services,
                                                        Washington, DC.

                MILITARY CONSTRUCTION AND ENVIRONMENTAL PROGRAMS

        The subcommittee met, pursuant to notice, at 2:07 p.m. in
    room SR-232A, Russell Senate Office Building, Senator John
    Ensign (chairman of the subcommittee) presiding.
        Committee members present: Senators Ensign, Inhofe, Allard,
    Cornyn, Akaka, Bill Nelson, and Pryor.
        Majority staff members present: William C. Greenwalt,
    professional staff member; Ann M. Mittermeyer, counsel; and
    Lucian L. Niemeyer, professional staff member.
        Minority staff members present: Maren R. Leed, professional
    staff member; Peter K. Levine, minority counsel; and Christina
    D. Still, professional staff member.
        Staff assistants present: Leah C. Brewer and Jennifer Key.
        Committee members' assistants present: John A. Bonsell,
    assistant to Senator Inhofe; Douglas Flanders, assistant to
    Senator Allard; D. Armand DeKeyser, assistant to Senator
    Sessions; D'Arcy Grisier, assistant to Senator Ensign; Lindsey
    R. Neas, assistant to Senator Talent; Russell J. Thomasson,
    assistant to Senator Cornyn; Davelyn Noelani Kalipi and Richard
    Kessler, assistants to Senator Akaka; William K. Sutey and
    Douglas Bush, assistants to Senator Bill Nelson; Andrew
    Shapiro, assistant to Senator Clinton; and Terri Glaze,
    assistant to Senator Pryor.

           OPENING STATEMENT OF SENATOR JOHN ENSIGN, CHAIRMAN

        Senator Ensign. Good afternoon. The Readiness and
    Management Support Subcommittee meets for the first time this
    year to receive testimony on fiscal year 2004 military
    construction, family housing, and environmental budget program
    requests. This is my first opportunity to serve the Senate and
    our military forces as a subcommittee chairman, and I look
    forward to continuing the legacy of commitment and dedication
    to our armed services exemplified by my senior colleague,
    Senator Akaka, who returns to this subcommittee after 2 years
    as chairman. I feel confident that with his seasoned expertise
    and experience, we can continue this subcommittee's legacy of
    cooperation with the mutual goal of ensuring our forces are
    ready and supported with the best this country has to offer.
        I would also like to take a moment to acknowledge the
    significant accomplishments of this subcommittee under the past
    leadership of Senator Inhofe. While he has assumed the
    chairmanship of the Committee on Environment and Public Works,
    I am indeed fortunate to be able to rely on his counsel and the
    advice of this subcommittee.
        I would also like to welcome returning members as well as
    fellow new members to the subcommittee. I know Senator Akaka
    joins me in welcoming our witnesses, the Honorable Hansford T.
    Johnson, Acting Secretary of the Navy; the Honorable Mario P.
    Fiori, Assistant Secretary of the Army; the Honorable Nelson
    Gibbs, Assistant Secretary of the Air Force; and Raymond
    DuBois, Deputy Under Secretary of Defense.
        I appreciate the efforts of Secretary Johnson to be present
    in his role as the Assistant Secretary of the Navy for
    Installations and the Environment after his testimony this
    morning to the full committee as the acting Service Secretary.
    I am sure you have spent more than a few hours getting ready
    for today. My thanks for your participation this afternoon.
        This year's budget request for military construction and
    family housing continues the same stagnant funding trends as
    last year. Mr. DuBois, the Department keeps setting goals for
    facility revitalization that on paper look like vehicles of
    change moving in the right direction, but end up sidetracked by
    other priorities.
        In 2001, the Secretary of Defense directed the Department
    of Defense (DOD) components fund facilities to achieve a 67-
    year recapitalization rate, the number of years required to
    regenerate a physical plant. The fiscal year 2001 budget
    request reflected a positive step in reversing years of
    decline, but in the fiscal year 2004 budget request the
    recapitalization rate for the Services will range from 145 to
    180 years, a substantially regressive slide from the fiscal
    year 2003 budget.
        Another issue of concern is that the majority of military
    construction funds requested by the Department for fiscal year
    2004 actually adds more square footage to support new missions,
    rather than recapitalizing or replacing existing deteriorated
    facilities and infrastructure. That means more facilities that
    will eventually have to be recapitalized. This trend has a more
    significant impact in the Reserve and Guard components, where
    their substantially smaller construction programs are consumed
    by new mission projects to the point where only one or two
    recapitalization projects can be funded per year.
        In August 2002, the Department published a facilities
    recapitalization front end assessment, establishing a standard
    measurement and proposed procedures for using data to aid in
    budget development. The goal stated in this assessment was to
    achieve the desired 67-year recapitalization rate by 2007. This
    goal has now slipped to 2008, and it is proposed in the Future
    Years Defense Program (FYDP) to be achieved by tripling the
    level of military construction investment by 2008 to levels
    never seen before in the military budget requests.
        We continue to see underfunded budget requests, with the
    promise of more adequate levels in the outyears, but those
    years never seem to materialize. One glimmer of hope for this
    trend is the 2005 round of base closure and realignment, which
    will allow the Department to remove excess capacity and
    facilities while maximizing warfighting capability and
    efficiency. This reduction will result in a more realistic rate
    of facility recapitalization, assuming the Department follows
    through with their plans to increase funding for military
    construction and restoration accounts through fiscal year 2009.
        The Department has proposed an average facilities
    sustainment funding level, the maintenance and repairs
    necessary to keep facilities in working order, at 93 percent of
    the requirement, just shy of the goal of 100 percent. This is
    an excellent strategy to keep the infrastructure from getting
    worse, and we support this request, but the proposed budget
    request for the restoration and modernization accounts does
    little to address the 70 percent of Army facilities, or 66
    percent of Air Force facilities, that are rated C-3 or worse in
    the installation readiness report, meaning that major
    deficiencies exist in a facility that significantly degrade
    mission effectiveness. These deficiencies can only be corrected
    with substantial facility restoration and modernization funds
    from both the military construction (MILCON) and operations and
    maintenance (O&M) accounts. Those funds are not currently
    proposed.
        The Services have historically responded to this
    restoration underfunding by diverting sustainment dollars to
    critical repair projects, some costing tens of millions per
    project. This is the migration the General Accounting Office
    (GAO) recently observed in a February 2003 report, where
    obligated sustainment funds at the installation levels range
    from 35 percent to 77 percent. The high sustainment funding
    level has not been realized at the installation level.
        Both the Army and the Navy are addressing this migration of
    funds in part by establishing new installation agencies with
    regional offices to centrally manage facility accounts. We
    applaud their attempts to find efficiencies through regional
    management and look forward to hearing about the resulting
    increased funding levels at the installation level over the
    next year.
        During this hearing, we will also review the Department's
    fiscal year 2004 environmental programs. I would like to hear
    about the environmental budget reductions between fiscal years
    2003 and 2004, the status of Federal standards of perchlorate
    and trichloroethylene, and other environmental initiatives that
    support quality of life and the mission.
        It is my understanding that many of the funding reductions
    are as a result of management efficiencies and environmental
    cleanup successes. I look forward to hearing more about each
    one of your success stories in this area.
        I am concerned, however, about the ongoing controversy
    among regulators, commercial developers, defense contractors,
    and the Department of Defense over the Environmental Protection
    Agency's (EPA) consideration of drinking water standards for
    perchlorate, a soluble, oxygen-rich chemical used in rocket
    fuel and other explosives. Perchlorate has been detected in the
    Colorado River in Nevada, Arizona, and California. As a result,
    I am sensitive to the need to regulate perchlorate. However, I
    believe that Federal drinking water standards should be based
    on sound science.
        The EPA's January 2002 risk assessment document proposed a
    standard of one part per billion for perchlorate, despite the
    availability of new data that supports a higher risk base
    threshold. The EPA's process for trichloroethylene risk
    assessment is equally troubling, because it reflects major
    departures from EPA guidelines for carcinogen risk assessment.
    The cost implications of a lower cleanup level based on the
    assessments could be enormous, because trichloroethylene, or
    TCE, is such a pervasive contaminant.
        I know the Department of Defense has worked hard to address
    both these regulatory concerns, and I am interested in hearing
    more about your effort. We understand that the Department is
    attempting to modernize, transform, improve morale, act as good
    environmental stewards, and evaluate its base structure while
    at the same time fighting a war in a constrained fiscal
    environment. These are the right things to do.
        No doubt competing requirements and high priorities have
    resulted in some hard decisions. Military construction and
    facility O&M accounts have taken their share of the budget
    reductions. Future assessments may also negate facility
    recapitalization requirements, resulting in cost avoidance
    savings. The Department has used this rationale in justifying
    the recent low levels of military construction investment, and
    this subcommittee sees the rationale to want to make smart
    business decisions on the infrastructure we will retain.
        This logic must be applied overseas as well. This budget
    contains requests for over $1 billion in overseas construction
    and installation support at a time when new initiatives are
    being vetted with the Department to establish the most
    efficient basing of our forces overseas. While the budget
    request supports limited consolidations of overseas forces, DOD
    may be proposing investments at locations that do not support
    the long term national security interests of our country.
        While I am firm supporter of the process we have authorized
    for the Department to reduce and realign base structure within
    the United States, it will be difficult to defend that
    authorization if we do not know for sure what forces we plan on
    bringing home from overseas locations.
        I look forward to hearing from all of you on these issues,
    and hope we can work together during this cycle to find ways to
    improve the quality of life and work environment for both our
    active and Reserve components. Your prepared statements will be
    made part of the record. Therefore, I urge you to keep your
    oral statements to not more than 5 minutes in order to allow
    sufficient time for questions.
        Now, Senator Akaka, I turn the floor over to you for any
    opening statements, and before you got here I said what a great
    job you have done the last couple of years, and I am looking
    forward to working with you.

                  STATEMENT OF SENATOR DANIEL K. AKAKA

        Senator Akaka. Thank you very much, Mr. Chairman. I deem
    myself fortunate and look forward to working with a good
    friend, one that I have come to respect very much. I want to
    welcome you, Senator Ensign, as the new chairman of the
    Readiness and Management Support Subcommittee, and I know that
    together we can continue the valuable work accomplished by this
    subcommittee in support of our military missions and our men
    and women in uniform, as well as their families.
        I would also like to welcome our newest members and
    recognize Senator Inhofe for his distinguished service as both
    past chairman and, most recently, ranking member of this
    subcommittee. Over the past several years I have had the honor
    of working with him to tackle many important issues together,
    and I know that all of us will benefit greatly from the wealth
    of knowledge he brings from his leadership on this
    subcommittee.
        I thank our witnesses for joining us today to discuss the
    fiscal year 2004 budget request, military construction, family
    housing, environmental, and other installation programs of the
    Department of Defense. I look forward to your testimony and to
    your continued partnership with this subcommittee as we address
    the many significant readiness issues and challenges that we
    face both today and also in the future. I have had the
    experience of working with you already, and I look forward to
    working closely with you in this Congress.
        I ask that you outline for the subcommittee not only the
    funding levels and major programs in this budget, but also the
    philosophy and priorities you used in putting this budget
    together. Our military is still adjusting to a new threat
    environment. Budget priorities have been placed on fighting the
    global war on terrorism, on transformation initiatives, and on
    modernization efforts in support of our critical military
    missions. While all of these are important priorities, they
    should not replace our previous commitment to improving the
    quality of life. Improvement to our military installations and
    the housing that we provide for our servicemen and women and
    their families remains important.
        I am disappointed that the fiscal year 2004 budget request
    of $9 billion for military construction and family housing is
    $1.5 billion below the level provided by Congress last year.
    Without a sustainable funding path for our facilities and our
    housing, we risk undermining not only the mission goals we are
    working so hard to achieve, but also the quality of life we are
    working so hard to provide for our men and women in uniform, in
    both the short and long terms.
        In an effort to prevent the continuing deterioration of
    installations and to improve and sustain the condition of our
    facilities moving forward, DOD has set forth several key
    objectives across the Services, including fully funding
    sustainment, reaching a 67-year average recapitalization rate
    by 2008, and eliminating almost all inadequate housing across
    the Services by 2007.
        While progress has been made toward these facilities
    improvements, our ability to achieve these goals is based on
    unprecedented levels of investment in the budget outyears.
    Relying on large funding increases in the future is a risky and
    unrealistic strategy. Decisions we make today regarding our
    installations will have significant long term consequences for
    our overall mission in the future, and I am confident that we
    will achieve a more realistic sustainable funding path for
    military construction as we move forward.
        Turning now toward environmental programs, the Department
    as a whole has spent roughly $45 billion on its environmental
    programs over the last 10 years, and each of the military
    Services has worked hard to ensure that it can comply with
    applicable environmental laws and regulations in a manner that
    has a minimum impact on military training and readiness.
    Looking at the past decade, I do not question the Department's
    environmental record, but I am concerned that this year's
    budget proposes a reduction of $400 million, or almost 10
    percent in the Department's environmental programs.
        I recognize the successful execution of environmental
    programs and how it can reduce costs over time. However, this
    reduction comes at a time when we face huge problems with
    cleanup of unexploded ordnance (UXO), which we have hardly
    begun to address, and when we continue to move back the
    deadlines for addressing environmental problems with formerly
    used military sites. Accordingly, I am deeply disappointed by
    the Navy's decision to reduce the budget for its environmental
    programs by more than $200 million, or almost 20 percent.
        I am even more disappointed by the Army's decision to
    deliberately underfund its environmental compliance program,
    providing only 79 percent of the funding which the Army itself
    has determined is necessary to assure compliance with
    applicable environmental laws and regulations. Even the
    Department's proposed budget for pollution prevention and
    environmental technology, the spending that will help us
    address the environmental problems of the future, is down by
    more than $125 million, or almost 30 percent from last year's
    appropriated level.
        Four years ago, when a previous administration proposed to
    underfund a number of key environmental accounts, this
    committee issued the following warning in our report on the
    National Defense Authorization Act for Fiscal Year 2000, and I
    am quoting:
        ``The environmental programs of the DOD and Military
    Departments are essential for the protection of human health
    and safety of installation personnel and the public. Moreover,
    good faith support for funding levels necessary to meet
    environmental requirements, enables the DOD and Military
    Departments to sustain installation and training operations
    through and establish credibility as responsible stewards of
    over 25 million acres of public lands. If that credibility is
    placed in doubt because of inadequate funding for environmental
    programs, public support could fade, and regulatory scrutiny
    could intensify, potentially resulting in unnecessary
    operational impediments.''
        This year, the Department of Defense has once again asked
    Congress to enact a range and readiness preservation initiative
    which would exempt certain DOD activities from a number of
    environmental laws. One of the arguments the Department makes
    in support of the legislative proposal is that its track record
    as a good environmental steward of Defense lands demonstrates
    that it can be counted upon to act in an environmentally
    responsible manner even if it is exempted from the
    environmental laws.
        I do not believe that the funding decisions that I have
    described in this year's budget are consistent with the kind of
    good environmental stewardship which the Department has made a
    centerpiece of its case for legislative exemptions from the
    environmental laws. I believe it is our responsibility to carry
    out our activities in a way that protects the environment and
    earns the trust of the American people, especially those who
    live on and near our installations.
        I hope that the witnesses will be able to address these
    concerns, as well as any challenges that they may face or other
    questions we might have regarding this year's budget request. I
    look forward to your testimony.
        Thank you very much, Mr. Chairman.
        Senator Ensign. At this point, unless any Senators have an
    overwhelming desire to make an opening statement, all opening
    statements will be made a part of the record. We look forward
    to the testimony from our panel, and we will start with
    Secretary Johnson, and your full testimony will be made a part
    of the record.
        Secretary Johnson. Sir, if I may, I would like to defer to
    our Deputy Under Secretary of Defense. He has some overarching
    comments, if he may.
        Senator Ensign. Try to keep your comments within the time
    period.

    STATEMENT OF RAYMOND F. DuBOIS, JR., DEPUTY UNDER SECRETARY OF
                DEFENSE (INSTALLATIONS AND ENVIRONMENT)

        Mr. DuBois. On behalf of the Secretary of Defense, Donald
    Rumsfeld, I am very pleased to be here, and thank you for very
    much for this opportunity to appear with my three colleagues,
    the Assistant Service Secretaries for Installations and
    Environment (I&E).
        I want to make a quick reference to Senator Akaka's comment
    about philosophy and not just numbers. I think it is important
    to note at the onset of this hearing that Secretary Rumsfeld
    has adopted a different way of approaching, managing, and
    investing in the so-called installation and environment
    portfolio, or as some have referred to, the ``quality-of-life''
    portfolio.
        It is more than just military construction appropriations
    and family housing. It also includes utilities and energy
    management, safety, occupational health, environmental funding
    both in the cleanup arena and conservation programs arena. It
    also includes contributions from other appropriations account,
    such as the personnel account, the O&M account, especially the
    research and development (R&D) account, and also other
    appropriated funds such as the working capital funds.
        Now, with this definition in mind, the fiscal year 2004
    budget request in support of the total DOD I&E portfolio is
    nearly $20 billion, when one defines it as I have, and if you
    add base operations on top of it, that is to say, the O&M
    funding that we invest in all of our installations around the
    world, you are closer to $40 billion. In short, one should not
    judge the quality-of-life investment solely on military
    construction appropriations.
        Now, one of the cornerstones, as both the chairman and the
    ranking member have addressed, of that portfolio is military
    family housing. The President and the Secretary of Defense
    early on in this administration made it a top priority, and to
    that end, we have employed a three-pronged approach to
    eliminating inadequate housing: 1) increase the basic allowance
    for housing; 2) increase housing privatization; and 3) sustain
    military construction for housing. The fiscal year 2004 budget
    request is on a glide path to reduce out-of-pocket expenses for
    our military personnel to zero in 2005. It reduces from 7.5
    percent in 2003 to 3.5 percent in 2004, and zero out-of-pocket
    housing expenses in 2005.
        The housing privatization efforts have gained traction. The
    calculus of housing privatization, the rate of increase, is
    increasing. We are achieving success, and by the end of fiscal
    year 2004, the budget that the President presented to Congress
    will have in excess of 102,000 military family units contracted
    to be privatized.
        Now, military construction, as I said, is the third leg of
    this very important approach to resolving inadequate military
    housing. We are requesting $4 billion in new budget authority
    for family housing construction and operations and maintenance,
    and we believe this will enable us to continue to achieve our
    goal of reducing all inadequate housing, or nearly all, by
    2007.
        Now, we are also focused on improving the work environment,
    and thus the readiness of our military, through proper
    facilities sustainment and recapitalization. There is no
    question that full sustainment does improve the performance of
    our facilities. It reduces those life cycle costs. We maximize
    our return on capital investments in new footprint construction
    only by maintaining an appropriate level of repair and
    replacement. These facilities deteriorate over time. They also
    become obsolete at some point in the future. We must not only
    repair, we must replace.
        Now, sustainment in the repair sense is, however, not
    enough. As I indicated, restoring and modernizing and replacing
    is also quite crucial to our program. Our request of $3.4
    billion for restoration and modernization (R&M) does maintain,
    in the Secretary's view, his commitment to improving that work
    environment and achieving the 67-year recap rate by the goal of
    2008.
        You mentioned, Mr. Chairman, overseas basing and overseas
    presence strategy, and I would be glad to address that in
    questions and answers. It has received a lot of attention
    lately, as well it should.
        Now, on the environmental front, a number of references
    were made by both the chairman and the ranking member, to the
    readiness initiative with respect to our training ranges. We
    can certainly get into that during the questions and answers,
    and I understand we also have a hearing next week specifically
    focused on encroachment, and the details, of course, will come
    out, as it should in that hearing.
        You mentioned, Mr. Chairman, the issue of perchlorate. I
    will be glad to answer the questions on perchlorate, as I have
    been intimately involved in discussions over the past several
    months with the EPA, the Office of Management and Budget (OMB),
    the Council on Environmental Quality (CEQ), the Department of
    Energy, and NASA on this very crucial issue. It is a science
    issue, it is a science policy issue, and it is also an enormous
    issue pertaining to potential costs to the Department and to
    industry.
        Briefly, as I indicated, both today we can address these
    issues on Range Readiness Preservation Initiative (RRPI), as
    well as next week, but we, the Secretary of Defense, and the
    President, have asked Congress again to address the five issues
    that were not embraced in the last legislative cycle, that is
    to say, our request on clarifications for the Endangered
    Species Act, the Marine Mammals Protection Act, and the three
    media statutes, the Resource Conservation and Recovery Act
    (RCRA), the Comprehensive Environmental Response, Compensation,
    and Liability Act (CERCLA), and Clean Air Act, and I and my
    colleagues are prepared to answer any of your questions in that
    regard.
        In closing, this subcommittee--and I must say, Mr.
    Chairman, your opening statement and that of Senator Akaka
    represent a very clear articulation of the challenges and the
    complexities that we, the managers of the installation and
    environment portfolio, face every day, the hard choices that we
    and our colleagues at the Pentagon have gone through to
    determine what a suitable appropriation request will be. In
    that regard, this subcommittee is instrumental in helping us--
    yes, helping us come to the right conclusions and yes, helping
    the entire Department to an appropriate level of funding for
    infrastructure and sustaining quality-of-life investments.
        Thank you very much.
        [The prepared statement of Mr. DuBois follows:]

                  Prepared Statement by Raymond F. DuBois, Jr.

        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 11.
    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.

                           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 18 projects, which include 27,884 military family housing
    units. We also have one award in its final stage of approval--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 first 17
    projects we've analyzed 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 $276 million of
    military construction funding that would otherwise have required over
    $2.7 billion for those awarded 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
    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 four dollars 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 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.

        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.
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        \1\ Funding levels reflect total requirement (TOA).
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        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 poses 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 to 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 define 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 have 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 05 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 Ensign. Thank you. Secretary Johnson.

    STATEMENT OF HON. HANSFORD T. JOHNSON, ACTING SECRETARY OF THE
                                  NAVY

        Secretary Johnson. Thank you, Mr. Chairman, Senator Akaka,
    distinguished members of the subcommittee. I am proud to appear
    today as Assistant Secretary of the Navy for Installations and
    Environment. I would like to highlight a few items that we have
    in this area.
        First of all, we have had a very difficult time, as you are
    well aware, balancing our need for readiness, our increase in
    aircraft and ship procurement with our facilities and
    environment. I think facilities and environment have fared
    fairly well.
        Housing is always a great concern to all members of the
    military. We find, as I will point out in a minute, we have
    done pretty good in family housing. This year, if we had to
    err, we erred in favor of better bachelor quarters. We put $269
    million in the bachelor quarters. As we have talked about
    before, we had some 18,100 sailors that did not have a bed
    ashore, we call it ``homeport ashore,'' and we are making good
    progress. In Hawaii we have already done a lot; and in Guam, we
    have three projects this year that will make a big difference.
        When we provide for homeport ashore, we are going to build
    to the ``one-plus-one'' DOD, and I think your standards, but to
    get sailors off of ships earlier, we will put two people to
    each single room initially. Any room ashore at all is much
    better than their accommodations on the ship. We will go back
    to ``one-plus-one'' when we get there, of course.
        We have had great success with the public-private ventures
    in family housing. We are going to try this year to propose
    three sites to do bachelor quarter pilots. We will do a pilot
    at Norfolk, San Diego, and also at Camp Pendleton, where we
    bring in a private contractor to build dormitories, and we will
    be their partner, as we are with family housing.
        We have a little bigger problem with the bachelor housing
    than the family housing, because we have to make sure that
    those rooms will be filled, and we also have to make sure that
    if, for some reason, everybody goes away, the dormitory is
    severable, so we will build it on the edge of a base.
        Going back to family housing, we have been very successful.
    We let a contract just last week for Beaufort and Parris
    Island. That is the second largest one we have done. It is
    1,700 units. That is working very well, but we also find with
    your great support the basic allowance for housing has
    increased, particularly in the high rent areas, and more and
    more of our members want to live on the local economy. We think
    that our sailors and marines are Americans first, and if they
    can live on the local economy, that is what we would like.
        We see a decline in the requirement a little bit. We still
    are able to fill all of our quarters, but we are very pleased
    with that result.
        The MILCON program is a robust one. It is nearly $1.2
    billion. It is near where we proposed last year. It is under
    the final President's budget. This year, besides the bachelor
    quarters, we are also placing emphasis on counterterrorism,
    continuing that effort that we began last year.
        We also have several large projects. One of them is in
    Florida, at Blount Island. Blount Island is where our maritime
    prepositioned ships operate from, and we are going to buy some
    land at Blount Island as well as the safety buffer for the
    ammunition requirements.
        We are also planning to build some outlying fields for the
    new F/A-18E/F that are coming to the east coast, and we are
    doing test facilities for the next generation launch system, so
    we are moving forward.
        In the sustainment-restoration area, we are doing pretty
    well in sustainment. The Navy has improved from 84 percent to
    93 percent this year. The Marines have held at a very
    respectful 97 percent, which is probably as high as we need to
    go. As you mentioned in your statements, we have not done as
    well on the restoration. We should get down to 67 years.
        The Marines have done pretty well. They went down from 156
    to 88 years. The Navy did not do as well. They went from 116 to
    140 years. In all cases, by the end of the Future Years Defense
    Plan (FYDP) we will meet the required 67 years. We all have a
    lot of work to do in the restoration models as well as how we
    perform to meet those.
        We are working very hard to manage risk to limit the
    degradation of our operational capabilities as well as
    training, quality of life, and facilities.
        We worked very hard on our shore infrastructure, and we
    have done as the Army had already done and you took note in
    your opening comments. We are going to one client for all
    installations. In the past, we passed the money through a
    couple of levels, and each level sometimes some of it got lost
    going through that level. We want to make sure that the money
    that you give us goes directly to the installations, and we are
    confident that will work well. We are about 6 to 9 months
    behind the Army and are learning from them, but we are very
    confident of it.
        You talked about the environmental program. It has declined
    about $200 million, but there are some reasons for that. First
    of all, we meet all of our requirements, and at the Kaho'olawe,
    as Senator Akaka will know very well, we do not have that next
    year, and that was around $75 million there. We will finish
    Kaho'olawe on November 11 of this year, and we will move
    forward from that.
        Also in the prior Base Realignment and Closure (BRAC)
    cleanups, our BRAC environmental went down. It went down
    because we are selling some land, and the revenue from those
    land sales go into environmental cleanup, so the actual funding
    in there is increased because of the land sales, but as far as
    you are concerned it has gone down, but we have taken care of
    that with the land sales.
        We are very pleased with our activities with the prior BRAC
    land sales. It is working quite well. We have a good
    partnership with the General Services Administration (GSA), and
    more and more of the local reuse authorities are realizing that
    it is better if we sell the property than them trying to
    develop it. Originally, everybody wanted to give everything to
    the community, but they find it is much easier now--we have a
    couple of cases where they are saying, please, take this burden
    off our back and go sell it and get it back into the economy.
    It increases the tax base, also.
        I recognize the Vice Chiefs are going to talk about the
    environment, but certainly everybody at the table strongly
    supports the things that Mr. DuBois talked about, and we are
    strongly behind the environmental efforts. We are trying to
    find a balance, not be exempted.
        Thank you very much, sir.
        [The prepared statement of Secretary Johnson follows:]
                 Prepared Statement by Hon. Hansford T. Johnson
        Mr. Chairman and members of the subcommittee, 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.
        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,
    (MILCON) 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 $236 million 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 MILCON
    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. 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, $11
    million in fiscal year 2004 for caretaker costs, which 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 bases.
    ---------------------------------------------------------------------------
        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:

              1. 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 National Defense Authorization Act for
            Fiscal Year 2001 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.
              2. 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.
              3. 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 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-18E/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, 1 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 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 64 bases to date; 8 more bases are
    planned in fiscal year 2003, 5 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 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 National Defense Authorization Act for Fiscal Year 2002 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 warfighting,
                    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 8 installation claimants across 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 manhours 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

    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 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.
    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--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 Surveillance Towed
    Array Sonar System Low Frequency Active (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 National Defense Authorization Act for Fiscal Year 2003 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.

                             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 Congress to begin
    design work in earnest.

                                   CONCLUSION

        In conclusion, I would ask the members of this subcommittee 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 subcommittee, and will try to respond to any comments or
    concerns you may have.

        Senator Ensign. Secretary Fiori.

     STATEMENT OF HON. MARIO P. FIORI, ASSISTANT SECRETARY OF THE
                  ARMY (INSTALLATIONS AND ENVIRONMENT)

        Secretary Fiori. Mr. Chairman, members of the subcommittee,
    I am very pleased to appear before you to review the Army
    Fiscal Year 2004 Military Construction program. The Army's
    overall budget request for fiscal year 2004 supports the Army
    vision, transformation, readiness, and people. Our military
    construction budget request of $3.2 billion will fund our
    highest priority facilities and family housing requirements.
        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 2004 budget includes facilities to support both the
    active and Reserve components in this transition.
        First, I would like to tell you briefly about how we are
    transforming installation management. Recognizing the
    requirement to enhance support for 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. 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.
        Second, in support of Army transformation, our budget
    contains $329 million for 17 projects at core 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.
        A second facet of the Army vision is readiness. Army
    installations are our Nation's power projection platforms, and
    they provide critical support to the Army in joint operations.
    We have requested funding for key projects that specifically
    focus on readiness. These include live-fire ranges,
    maintenance, test, and deployment facilities, Army National
    Guard readiness, and Army Reserve centers. These critically
    needed projects constitute about $266 million.
        Our 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 requirement
    for permanent party soldiers will be funded.
        According to our surveys, adequate and affordable housing
    continues to be a major concern to soldiers and their families.
    With the approval of the fiscal year 2004 budget, the out-of-
    pocket expenses for soldiers will be reduced to 3\1/2\ percent
    and, as Mr. DuBois said, by 2005 they will be brought down to
    zero.
        This year's budget expands family housing privatization and
    increases improvements in existing housing. It supports our
    goal to have contracts in place by 2007 that will provide
    adequate housing to all on-base military families. 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 will
    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, we transferred 1,823
    existing homes, and the partner-developer will construct 840
    more. So far, 618 homes have been constructed and 943 have been
    renovated. Families have moved into those homes, and the
    process has been very positive to date.
        In closing, Mr. Chairman, I sincerely thank you for the
    opportunity to outline our program. As I visited many
    installations, I have witnessed the progress that has already
    been made, and I attribute much of the success directly to the
    longstanding support of this committee and your staff.
        I look forward to answering any questions of the
    subcommittee, including those relating to the environment.
        [The prepared statement of Secretary Fiori follows:]

                   Prepared Statement by Hon. Mario P. Fiori

        Mr. 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 subcommittee, 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
    authorization of appropriations and 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 warfighting 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 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 1 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 U.S. 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 (AP\3\) 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 AP\3\
    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 2 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, an 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                   ($000)      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
    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 four 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 3 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
        In addition to MCA and AFH, the third area in the facilities arena
    is the O&M portion of the 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
    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 O&M 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. Our budget includes 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 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. This budget will 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

        Mr. 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
    authorization of appropriations and appropriations of $2,935,927,000
    for Military Construction, Army, and Army Family Housing.
        The request for authorization of appropriations and appropriations
    is $168,298,000 for Military Construction, Army National Guard, and
    $68,478,000 for the Military Construction, Army Reserve.
        Mr. Chairman, this concludes my statement. Thank you.

        Senator Ensign. Secretary Gibbs.

     STATEMENT OF HON. NELSON F. GIBBS, ASSISTANT SECRETARY OF THE
         AIR FORCE, (INSTALLATIONS, ENVIRONMENT, AND LOGISTICS)

        Secretary Gibbs. Mr. Chairman, Mr. Akaka, other
    distinguished members of the panel, I have submitted a written
    statement. In the interests of time, I will try to be very
    brief.
        I am here today to discuss with you the Air Force portion
    of the President's budget request as it relates to military
    construction, military family housing, dormitories, and
    sustainment, restoration, and modernization of those
    facilities. That request is approximately 5 percent higher in
    2004 than it was in 2003, an increase of approximately $200
    million.
        In the area of the environment, the budget request this
    year is down approximately 2 to 2\1/2\ percent, and I will be
    happy to discuss with you during the question and answer period
    the specific reasons why that occurs.
        I thank you for the opportunity to be here, and I look
    forward to the questions that you may have of me. Thank you
    very much.
        [The prepared statement of Secretary Gibbs follows:]

                   Prepared Statement by Hon. Nelson F. Gibbs

                                  INTRODUCTION

        Mr. Chairman and members of the subcommittee, good morning. 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 subcommittee 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.

        Mr. Chairman, Air Force missions and people around the world
    clearly depend upon this subcommittee'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, a $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 8 bases, and supports privatization of nearly
    7,000 units at 7 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 9 U.S. bases and 3 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 subcommittee. 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 1990s, 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, Mr. Chairman, I thank the subcommittee 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 Ensign. Thank you, Secretary Gibbs. We appreciate
    your brevity.
        Let me start with a question on the recapitalization rates.
    In discussions with the Secretary of Defense on this next round
    of BRAC, and I have a question about the overseas stuff in a
    second, but let us just assume what is going to happen in the
    United States.
        If we were successful reducing our bases by about 20, 21
    percent in the United States, what would be the effect then on
    the recapitalization rate?
        Mr. DuBois. Mr. Chairman, I think it is important to note
    that the Secretary, when he used that 20 to 25 percent figure,
    was referring to a 1998 study based on excess capacity. There
    is no question in my mind that we are not going to reduce our
    installations by 20 to 25 percent. Remember that BRAC is a
    realignment exercise first and foremost. It is not a closing
    exercise.
        Senator Ensign. Let us just say that, whatever the
    projection out there that you all think now, in 2003 numbers,
    what is the effect going to be on recapitalization?
        Mr. DuBois. I think it potentially has two positive
    effects. Number 1, if one closes certain bases and moves those
    missions to other bases, you will have new construction done
    under the BRAC MILCON account. You are thereby entering into
    the inventory brand new buildings which automatically reduces
    in the calculation your recap rate.
        Number 2, we would hope that a rationalization would, in
    point of fact, reduce the numbers of facilities. We have a
    replacement value of $600 billion worth. By reducing the
    numbers of facilities, especially the older ones----
        Senator Ensign. Do you have any idea of a number?
        Mr. DuBois. No, sir. That is sheerly hypothetical at this
    point.
        Senator Ensign. I guess it is something that should be
    looked at, if you have an idea of approximately what the goal
    of DOD has for closing bases. They have a target list, I am
    sure, in mind. I know it is not a public target list, that
    would certainly seem to be able to be factored in a range from
    this level to this level on how it is going to affect some of
    these numbers.
        Mr. DuBois. I will only say, sir, there is no target list.
    We are beginning this process. In fact, we are having our
    second, only our second infrastructure steering group meeting
    tomorrow afternoon with the Vice Chiefs and these three
    gentlemen.
        Senator Ensign. I will just say it for the future, then. As
    you are studying this, there would be a number that I think
    would be very helpful to have for this subcommittee.
        Mr. DuBois. To both us and you.
        Secretary Gibbs. Senator Ensign, if I may.
        Senator Ensign. Yes.
        Secretary Gibbs. The Air Force intends, given the current
    stock of facilities that it has, to meet the Department of
    Defense goal for recapitalization in 67 years in 2006 and 2007.
    To the extent there is a reduction in the overall stock
    requirement due to the BRAC initiative, we would be in the
    enviable position of either beating that particular statistic
    very handsomely, or reallocating funds, if we choose to
    maintain it at that level, reallocating funds for other
    activities. So either way it should be a winning combination.
        Senator Ensign. I would like to turn very briefly to some
    environmental questions, especially addressing the perchlorate
    problem. In January 2002, the Environmental Protection Agency
    published its second draft risk assessment document for
    perchlorate, which contained a proposed standard of one part
    per billion. Any of the four of you feel free to answer this
    question: Do you believe that this proposed standard is
    supported by sound science; if not, what efforts have been made
    to address this concern on behalf of the DOD, and assuming a
    standard of one part per billion, what are the estimated costs
    for site characterization and cleanup?
        Mr. DuBois. Mr. Chairman, the Department of Defense, and I
    will be quite blunt about this as I believe that NASA and the
    Department of Energy share our concerns, has serious science
    policy concerns over the EPA's draft report.
        Now, we have been in negotiations, as I indicated, with the
    EPA, and at the behest and under the tutelage, if you will, of
    the Office of Management and Budget, with the CEQ there, the
    Department of Energy, and NASA to address our concerns.
        Now, to resolve our concerns, I believe I can say that the
    interested parties have agreed to refer this issue, this
    perchlorate toxicity issue, to the National Academy of Sciences
    for further review. It is not necessarily a de novo review, as
    they say, but it is going to be a thorough review of both the
    evidence, the data collected, and how it was collected, how it
    was analyzed by EPA in order to have as objective an assessment
    as possible.
        Now, unfortunately the news stories and some of the State
    regulatory authorities have misinterpreted, and I underline
    that word, misinterpreted, EPA's draft reference dose as the
    safe limit for perchlorate consumption. In reality, a reference
    dose is defined by EPA as, ``an estimate, with uncertainty
    spanning, perhaps, several orders of magnitude,'' and this is
    something that gets lost in the articles in the press.
        Therefore, designing this ballpark estimate is merely the
    starting point for EPA's process of setting safe drinking water
    standards, and this is especially true, I think, Mr. Chairman,
    of the perchlorate reference dose, which is a draft, which is
    being referred, as I indicated, for further review to the
    National Academy.
        Now, unfortunately, and I want to emphasize this, because I
    think it is important for the American public to understand,
    regulatory action based on misinterpretation of this draft
    reference dose is incorrect and, in my view, bad public policy.
        Senator Ensign. Do any of the rest of you want to comment
    on that, just very briefly?
        Secretary Johnson. Certainly Mr. DuBois knows more than I
    do, but we have excited the American people with little science
    to back it up. We recognize there are some challenges here, but
    there has been no proof at all, from the scientific standpoint,
    on the proper levels.
        Secretary Gibbs. Sir, members of my staff participate with
    Mr. DuBois' staff in some of the discussions we have been
    having with the council and with EPA. Being a resident of Los
    Angeles and drinking Colorado River water, it is of particular
    concern to me as an individual. In reading the local newspapers
    I was interested in a quote from one of the water managers out
    in the desert area east of Los Angeles about this particular
    issue. Basically what he said was that we need to get on with
    something, and we should not spend a great deal of time arguing
    about whether it is one, two, or three. I think having a more
    reasonable level to begin the process, rather than wasting a
    lot of time, would certainly move the ball forward.
        Senator Ensign. Senator Akaka.
        Senator Akaka. Thank you very much, Mr. Chairman.
        Mr. DuBois, with the 2005 BRAC round still ahead, and it is
    ahead of us and drawing closer, I will ask for the record
    again, as I did last year--all I need is a simple yes or no
    answer, and this is the question: Did the administration use
    future BRAC rounds as a consideration in the preparation of
    fiscal year 2004 budget requests?
        Mr. DuBois. The answer, in short, is that we did not. Now,
    Senator, the building of our budget request this year for
    military construction and all the ancillary and associated
    accounts and references that I made during my opening statement
    was done in concert with our colleagues in the acquisition
    area, the research and development area, the personnel area,
    the O&M area, and procurement.
        As Secretary Johnson said, the procurement issues are very
    important, as are these, but I can say categorically we did not
    build the MILCON account for fiscal year 2004 with any future
    number, installation, facility, or potential goal in mind. We
    did it on the basis of mission-critical requirements both here
    and abroad. Now, I can address those in more detail later, and
    we believe it to be the right amount.
        I defer to my three colleagues if they want to add to that.
        Secretary Johnson. We certainly did not intentionally or,
    to my knowledge, unintentionally consider BRAC in any way in
    developing our recap rate or MILCON program.
        Secretary Fiori. The answer is no, sir.
        Secretary Gibbs. No, sir.
        Senator Akaka. Secretary Fiori, could you please outline
    the current plans for the fifth and sixth Stryker Brigade
    Combat Teams? What are the military construction requirements,
    including land acquisition, needed to support the expected
    fiscal year 2005 implementation of the fifth Stryker Brigade,
    and how many of these requirements are actually funded?
        Secretary Fiori. Yes, sir. We are still studying and have
    to report back to the Secretary of Defense, and the Secretary
    of Defense has to make a decision on whether to proceed on the
    fifth and sixth Stryker Brigades. The money requested in the
    military construction budget, particularly for the fifth
    Stryker Brigade that may get to Hawaii, is for items of
    acquisition for training needs. They are for facilities that we
    will need if it is a Stryker Brigade, or whatever the future
    brigade is.
        We are moving to a lighter, faster force, and the
    facilities that we are requesting in the 2004 budget request
    would support that. There is no difference of my requirements
    for 2004, even if we do not go after a ``Stryker Brigade.'' The
    things that we requested we would need to support our forces in
    Hawaii.
        The sixth Stryker Brigade in Pennsylvania, the National
    Guard is not requesting much money this year. It is more for
    planning, and it is in my budget request, the exact things that
    we are looking to spend for Pennsylvania.
        Senator Akaka. Secretary Fiori, 4 years ago the Air Force
    came to us with a budget that underfunded its environmental
    compliance accounts. This committee stated the following in its
    report, and I quote:
        ``Insufficient funding to meet Air Force compliance
    requirements suggests a distinct lack of support for
    installation commanders. These commanders could be subject to
    criminal sanctions for such deficiencies. The Air Force has
    suggested that installation commanders will likely avoid fines
    and penalties by using funding for readiness priorities to pay
    unfunded compliance requirements. The committee views this as
    an unacceptable result.''
        This year, the Army has done the same thing, proposing a
    budget that would reduce compliance spending by $89 million
    from last year's level, and funding over 79 percent of the
    expenditures needed to comply with requirements of law and
    regulation. My questions are, why has the Army decided to put
    its installation commanders at risk by requiring them to risk
    fines and even criminal penalties for noncompliance, and which
    readiness accounts does the Army expect its installation
    commanders to raid to pay for unfunded compliance requirements
    to avoid such sanctions?
        Secretary Fiori. Sir, we are funding in the 2004 budget
    $552 million for compliance. We believe that is sufficient for
    our compliance requirements. We do not use readiness accounts.
    Particularly this year, where the Installation Management
    Agency (IMA) controls the money, our readiness accounts, in
    general, are not in the domain of the garrison commander. So
    should he have additional fines, which we are reducing
    dramatically over the years, by the way, the IMA will be
    required to find the money to help pay for those things.
        Right now, we do not have a serious problem whatsoever in
    the compliance area, nor do I anticipate one. My request was
    about $71 million less than last year. It is a risk we are
    willing to take, but we are not putting the garrison commanders
    at risk at all. The risk is more an Army risk, should we have
    some significant fines, or some serious noncompliance problems,
    which we do not anticipate having.
        Senator Akaka. Thank you. I appreciate your responses.
        Mr. Chairman, my time has expired.
        Senator Ensign. Senator Allard. We are going by the early
    bird rule.
        Senator Allard. Thank you, Mr. Chairman. Mr. DuBois or
    Secretary Fiori, whichever one of you feels most qualified to
    take this, a group of programs, what we call the formerly used
    defense sites (FUDS) programs, those requirements have been
    increased dramatically, I understand, from the original
    estimates. Are the budget requests continued in a way that we
    can meet those increased program requirements?
        Secretary Fiori. We have submitted a budget of $213 million
    for FUDS this year, and we feel this will carry us along. Quite
    honestly, it is maintaining a balance between a lot of
    different issues, FUDS plus unexploded ordnance and also our
    long-range cleanup issues. We are picking those cleanup issues
    and characterizing them as we speak throughout the country. It
    is a large mortgage. It could overwhelm my budget if I try to
    fix it in 5 years. I have heard various estimates of how many
    years it will take to fix, but none of them are particularly
    satisfying right now.
        This is where we are. We are not endangering anyone. We are
    not breaking any laws, and they are in protected areas where we
    know they are.
        Senator Allard. So the answer is that no, you are not
    keeping up with the increased requirements. Are the new program
    requirements going to be readjusted to the real amount of
    dollars needed to finish the program successfully?
        Secretary Fiori. We are going to do our best to try to
    balance the requirements we have with the money we have and go
    after the ones that are most critical to clean up first.
        Mr. DuBois. Senator Allard----
        Secretary Fiori. Maybe I could get some more help from OSD
    on this one. [Laughter.]
        Mr. DuBois. It is a question of who is most qualified and
    who is most comfortable in answering the question.
        Let us be perfectly clear, Tier 1 FUDS, those that are
    determined to have a potential for an immediate health or
    safety impact are going to be addressed, and we adjust every
    year to the recharacterization, if you will, of some of these
    FUDS.
        Now, in a little place not far from where we are sitting,
    where I did some of my growing up as a child, we found things
    that we did not know that were there. They were undocumented,
    and in Spring Valley (Washington, DC) came as a shock to
    everyone, including myself, who had lived there. The fact is
    that we had to adjust, in that year's accounts, fiscal year
    2002, upwards of $60 plus million to immediately address that
    issue.
        Now, where did that $60 million come from? The FUDS account
    was not plussed up during the middle of the fiscal year. It
    came from Tier 2 and Tier 3 FUDS that have been postponed in
    terms of being addressed, but I think it is important to know
    that the Secretary will make the adjustments as necessary in
    Tier 1.
        [The information referred to follows:]

            Current Funding and Formerly Used Defense Sites Cleanups

        In March 2000, the Department researched five management options
    aimed at enhancing formerly used defense sites (FUDS) overall program
    management and execution. Each option featured varying levels of
    contract management and private industry involvement: (1) U.S. Army
    Corps of Engineers (Corps) and contractor managed cleanups; (2) Corps
    and industry competed contracts; (3) total program management by
    contract; and (4) industry proposals. The Department decided to retain
    Corps management of the program, based on the Corps' demonstrated
    expertise, experience, and geographic capability, but would continue to
    pursue innovative contracting methods in an effort to further increase
    overall efficiency and effectiveness of FUDS cleanups.
        The Corps currently uses a variety of contracting approaches,
    including fixed-price, cost-reimbursement, incentive, indefinite-
    delivery, and contractor managed cleanups for FUDS. At Rocky Mountain
    Arsenal, the Army implemented a Program Management contract to manage
    the cleanup, which has resulted in both accelerated cleanup and
    significant cost savings. Other innovative contracts under
    consideration by the Corps include the Guaranteed Fixed Price
    Remediation (GFPR) contracts and State and local government entity
    cleanups.
        The GFPR contracting approach, currently used by the Army at BRAC
    installations, emphasizes performance to achieve defined cleanup
    objectives, helping to limit risks from uncertainties normally
    encountered in traditional fixed-price contracting.
        The Environmental Services Cooperative Agreement (ESCA) is an
    agreement authorized under the Defense Environmental Restoration
    Program (DERP) statute (10 USC 2701(d)) between the Army and a State or
    local governmental entity for environmental restoration services. Used
    in Army BRAC transfers, the Army retains lead agent oversight, while
    the State or local public entities (Local Reuse Authorities) or
    qualified conservation entities receiving property for conservation
    conduct the cleanup. Applicability of ESCAs has been interpreted as
    limited only to a State or local public entity or a non-governmental
    organization receiving a conservation transfer. Army is evaluating the
    need for additional authority for application of ESCA to the privately
    held properties in the FUDS program.

        Senator Allard. In order to meet some of those program
    demands, does it make sense to do some privatization efforts on
    some of those programs?
        Mr. DuBois. Privatization of cleanup of the FUDS?
        Senator Allard. Privatization of cleanup.
        Secretary Fiori. Most of our cleanup, per se, is being done
    under contract. The Corps of Engineers is in charge, and they
    get contractors to come in. So I guess that would be
    privatization. There are potential ways to clean up BRAC sites
    that we could work out for contractors. It would be trading
    land for cleanup. We have done that type of thing.
        Senator Allard. In Colorado we have some cleanup sites
    going, Rocky Flats, for example, where the contractor is
    cleaning that up, basically.
        Mr. DuBois. The DOE is paying for it.
        Senator Allard. They are paying for it, but the contractor
    has put out the plan and organized it and gone ahead and done
    it, and they are ahead of schedule. We put some incentives in
    there. They are ahead of schedule, and things are moving along
    very well. We are under budget, actually, and so I wondered if
    the same philosophy cannot be applied to the cleanup of some of
    these FUDS.
        Mr. DuBois. The FUDS program is an OSD or Department-level
    program, and the Army's executive agent and Secretary Fiori and
    I will look into this and report back to you.
        Senator Allard. That is all I ask. Thank you.
        There is a requirement in an international treaty that the
    United States destroy our chemical munitions stockpiles by
    2007. How well are we progressing towards that goal, and does
    this year's budget request continue sufficient funding for the
    United States to meet the 2007 deadline, as required by that
    international treaty on destroying our chemical munitions
    stockpile by 2007?
        Mr. DuBois. The oversight for that chemical
    demilitarization program is with Secretary Aldridge, the Under
    Secretary of Defense for Acquisition Technology.
        Again in this case, as it was in the FUDS case, the Army is
    the executive agent for that program. The management
    responsibility within the Department of the Army is with the
    Assistant Secretary of the Army for Acquisition, Logistics, and
    Technology (AL&T). It is no longer in the portfolio of
    Secretary Fiori. I would be glad to address the specifics of
    your issue, or send up here Dale Klein, who is the Assistant
    Secretary of Defense for Chemical and Biological Issues, who
    has the, if you will, oversight day to day, or Secretary Claude
    Bolton of the Army, Assistant Secretary for AL&T, who can give
    you more detail on that particular program.
        It is a program, no doubt, no question, of high political
    visibility, and one that takes a considerable amount of time of
    Mr. Aldridge, and he will be responsive to your questions.
        Senator Allard. Very good. Lance Landry or Jayson Roehl in
    my office, I would like to have them come and sit down and talk
    about the program.
        Mr. DuBois. I know the Pueblo issue is well-known to those
    of us who have touched upon this issue.
        Senator Allard. Thank you, Mr. Chairman.
        Senator Ensign. Prior to your arriving, Senator Inhofe,
    both myself as the new chairman and our past chairman sang your
    praises. You were not here to hear them.
        Senator Inhofe. You can do them again if you would like.
    [Laughter.]
        Senator Ensign. You were the next person to arrive, so we
    will turn the questioning over to you.
        Senator Inhofe. Do not count this against my time. Let me
    just say how much I appreciate your comments. [Laughter.]
        For about 6 years with Danny Akaka I was either ranking
    minority or chairman, and I have been very distressed over our
    readiness situation, so I will be very active on your
    subcommittee here, since under Republican rules you cannot
    chair a whole committee and also a subcommittee, so I will be
    looking forward to working with you on this.
        Secretary Gibbs, were you there this morning when we had
    Secretary Roche and the rest of the Secretaries?
        Secretary Gibbs. No, sir, I was not.
        Senator Inhofe. During that time I spent some time giving a
    lot of credit and expressing my appreciation to Secretary Roche
    in that he made one of his first trips--I think he said it was
    his first trip after confirmation with me to go and really
    spend some time on ALCs. We went to Tinker, we looked at the
    history behind it, the national security ramifications of the
    potential of being dependent upon a sole source, and just
    talking about what core work really is, and no serious
    investment has been made in it, and yet we are supposed to have
    this capability.
        Now, your workforce shaping initiatives, they have worked
    out real well. I know that in the case of Tinker we are now
    cranking those KC-135s through in 200 days instead of 400 days,
    and so I was very complimentary of him, but I am also aware
    that you are the guy that did the work, so let me thank you
    very much for that.
        I understand the $150 million that is going to be going to
    the ALCs, do you have any indication, or can you share with me
    how that will be divided up, what priority is going to be used?
        Secretary Gibbs. The $150 million that the Senator is
    referring to, for those of you who may not be that familiar
    with the program the Air Force is running, is a special set-
    aside program to reinvest in its three organic depot activities
    to try to make up for substandard amount of investment over the
    decade of the 1990s.
        Specifically in the 2004 budget we started out with $150
    million, and we had it until the last moment of the budget
    process, but there is something I learned this time. There is a
    thing called negative inflation that flows through the process
    at the last moment, and that cost us $5 million, so I have to
    report to you we only have $145 million in, not the $150
    million we requested.
        From a budgetary perspective, it effectively is included in
    three different places. There is a piece of it that is in the
    military construction budget. There is a piece of it that
    really is buried in O&M, and there is a third piece that is
    really in the sustainment type accounts.
        The amounts are spread across the three different depots
    based upon a competition that is held. The depots, up through
    their Major Command, Air Force Materiel Command (AFMC), suggest
    particular projects to the AFMC ranking authority, and based
    upon, to a certain extent objective, but somewhat subjective
    judgment of the command, the projects either win and are funded
    or do not win.
        Senator Inhofe. Okay. I do not want to run out of time too
    quickly here. Is it safe to say, though, that this money is not
    going to replace the existing MILCON or anticipated MILCON?
        Secretary Gibbs. No, it did not.
        Senator Inhofe. All right, that is fine. Thank you very
    much for all your work in that.
        Mr. Chairman, this morning I was reading some of the things
    that General Jones was talking about, and I was really
    interested, as--when I was chairing this subcommittee we took
    the time to go all around the world, as well as here in the
    United States, and look at some of the installations, the
    conditions of the buildings, and I particularly was concerned
    about Germany. Some of the work we are doing there now,
    particularly on family housing, is doing real well.
        As I understand, General Jones is talking about, and I just
    read this, primarily two things. One is, we might be giving
    serious consideration to moving from Western Europe to Eastern
    Europe, and to me this is a very attractive notion because of
    the environmental encroachments that we are having in Germany
    and other places. I think he mentioned Poland, Bulgaria, and
    Romania.
        I have been spending some time talking to some of the
    people from these countries, and specifically the other day,
    Valentyn Zaichuk, who is the Chief of the Verkhovna Rada
    Administration Staff (Urkainian legislature) in the Ukraine.
    They would love to have the opportunity to extend to us an
    invitation to use their facilities to build ranges, and I think
    we would have a lot fewer problems.
        The other idea that he mentioned was that we might change
    this, instead of moving families over for an extended period of
    time, to have a rotation, where they would leave families home
    and maybe go over for 2, 3, or 4 months, as we have done in
    some other places. Now, if that is true, that would certainly
    affect any future BRAC round that would come up. So I guess
    what I would like to ask anyone who would like to respond to
    this, what these two prospects look like to you, whether you
    think they are a good idea and, if so, how that might affect
    BRAC rounds.
        Mr. DuBois. Senator Inhofe, in the Quadrennial Defense
    Review (QDR) published in September 2001, the Secretary of
    Defense made it very clear that his charge from the President
    to reform and reshape the global footprint was a necessary
    ingredient to transforming the military.
        In that light, and since his memorandum to the combatant
    commanders of that summer 2001 to ask them to look at their
    overseas basing strategy, he, the Secretary of Defense, has
    concluded that the global presence, our global presence and our
    global infrastructure, is in point of fact an inherited global
    presence and global infrastructure, as it is a legacy of the
    Cold War. It is a legacy of the Cold War, it is a legacy of the
    Warsaw Pact, facing NATO troops in the inter-German border and
    the North German plains.
        The world is different today, significantly, and we have an
    obligation, in the Secretary's view, to ask the combatant
    commanders, especially the new combatant commander in Europe,
    Jim Jones, to assess the military construction currently in the
    pipeline, as well as projected, to determine whether or not
    those decisions, which arguably were made 2, 2\1/2\, 3 years
    ago, are still directly supporting the military requirements
    that we have today.
        How this unfolds, how the Secretary and the Joint Chiefs
    and the combatant commanders, with General Myers and General
    Pace, integrate the future global presence with the future
    global infrastructure, is going to be a process that is going
    to take probably another 4 to 5 months, but I will say this,
    and you are quite right in connecting the two, Congress
    authorized the BRAC in 2005, a domestic BRAC. The Secretary of
    Defense, of course, does not need the authority to look at how
    we reorganize or reconfigure outside the United States and its
    territories. He, however, is very cognizant of the fact that
    one cannot do an effective domestic BRAC, prior to an effective
    international or overseas BRAC, if you will.
        He had a meeting, actually, now I guess it is 3 weeks ago,
    with all combatant commanders and the Joint Chiefs and
    discussed this very issue, and they are all seized with it.
        Senator Inhofe. That is good. Mr. Chairman--if the rest of
    you for the record could just submit something in writing--I am
    very much interested in this--if you have any thoughts on it, I
    would appreciate it.
        [The information referred to follows:]

        Secretary Johnson. The Department of the Navy will work with the
    combatant commanders, the major claimants, and the Office of the
    Secretary of Defense on facilities issues arising from any proposals to
    relocate overseas naval forces.
        Secretary Fiori. 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 of Defense 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 of Defense 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.
        Secretary Gibbs. BRAC law has in fact incorporated overseas basing
    factors into the BRAC 2005 round. Section 2912 of the BRAC law requires
    that DOD's infrastructure inventory be conducted ``world-wide'' and
    specially consider ``[t]he anticipated continuing need for and
    availability of military installations outside the United States,
    taking into account current restrictions on the use of military
    installations outside the United States and the potential for future
    prohibitions or restrictions on the use of such military
    installations.'' Accordingly, DOD's analysis and determination of
    excess infrastructure inside the United States must and will consider
    overseas installations. The Secretary of Defense on March 20, 2003,
    directed combatant commanders to make recommendations for appropriate
    locations for the global positioning of our forces and supporting
    infrastructure outside the United States so we are able to determine
    future infrastructure needs now and in the future.

        Senator Inhofe. I know my time is up. I have two committee
    hearings taking place right now, and I am chairing the other
    one and I have to leave. Could I have one more minute? Would
    that be all right, Senator Pryor?
        Senator Pryor. That is fine.
        Senator Inhofe. Thank you very much. There is an outrageous
    article this morning that I saw that someone who is supposed to
    know what he is talking about, but obviously he does not, made
    the statement. It says that there has been no degradation in
    training as a result of environmental encroachment. I would
    just like to ask if any one of the four of you agrees with that
    statement.
        Secretary Johnson. No, sir.
        Secretary Gibbs. No, sir.
        Secretary Fiori. No, sir.
        Mr. DuBois. No, sir.
        Senator Inhofe. Thank you. Finally, this would be to you,
    Mr. DuBois, on the matter of perchlorates. I have to pronounce
    it before I can address this in my hearing of the Committee on
    Environment and Public Works.
        But as far as that is concerned, I would suggest to the
    Ranking Member we are going to be taking this up in my
    committee, too, and we are interested, and all I am asking for
    is sound science, and I know that is outrageous to some people,
    but I am going to be doing it anyway.
        Mr. Chairman, thank you for your indulgence.
        Senator Ensign. Thank you, and I would like to welcome one
    of the new members of the subcommittee, Senator Pryor.
        Senator Pryor. Thank you. I look forward to working with
    you, Mr. Chairman. It is great to be here.
        I did not have questions as much as a couple of
    observations, and that is, having been around some of our
    military facilities in Arkansas, mainly Little Rock Air Force
    Base and the Pine Bluffs Arsenal, I have witnessed first hand
    the conditions of some of those facilities.
        For example, at Little Rock Air Force Base, I think they
    have done a good job in trying to modernize their housing, but
    there is still quite a bit of housing at the air base that is
    very antiquated. I can see how it would be very unattractive
    for the people stationed there to live there, and certainly
    raise families there. It is something I really do want to work
    with you all on, to try and make sure we have the right kind of
    housing and solutions that make sense, both fiscally, and also
    for morale purposes and security purposes and everything else.
        In addition to that, the Pine Bluff Arsenal, which has the
    only white phosphorous manufacturing facility, I think, in the
    Western Hemisphere and the only one in the DOD, of course, but
    that is a facility that, if my history was correct, was built
    in World War II. Even though the arsenal's mission has been
    greatly expanded and changed over time since its original
    construction, they still are using some of those World War II
    era buildings, and even though they have some state-of-the-art
    things like the nerve gas disposal facility they have been
    building and working on and testing, where they will destroy
    tons of lethal gas agents there. I just want to work with you
    all to upgrade our military facilities again in ways that make
    sense.
        I look forward to not just having some oversight, but
    having some input, and to help you all accomplish your mission
    as best you can, and I know you have a very full plate, and I
    just look forward to working with all of you on these matters.
    Thanks for being here today.
        Mr. DuBois. Senator Pryor, Secretary Gibbs may want to
    address the Little Rock Air Force Base issue, but I note in my
    briefing materials here that the Air Force does have it
    scheduled for a housing privatization program for award in this
    fiscal year to address 1,535 military family housing units.
        Senator Pryor. Great.
        Mr. DuBois. So it is in the queue, as it were.
        Senator Pryor. That is great news, and I know that when I
    was there a few weeks ago we looked at various options, and
    they were very hopeful that would happen and be a reality, so I
    do appreciate you all being mindful of that. Thank you.
        Senator Ensign. We will go with a second round of
    questions. I have some questions.
        Mr. DuBois, you were asked in last year's hearing by
    Senator Inhofe what support is the United States getting to
    maintain or build new facilities from various countries in
    Europe, the Pacific, or Southwest Asia. You responded that,
    ``burden-sharing reports will be published soon, and we are
    exploring additional opportunities to increase burden-sharing
    by our allies.''
        I want to ask the same question. What support is the United
    States getting to maintain or build facilities from various
    countries in Europe, Korea, or Southwest Asia, and what
    progress has been made on exploration of additional
    opportunities to increase burden-sharing?
        Mr. DuBois. Mr. Chairman, I will refer to Korea first.
    Secretary Dov Zakheim, the Under Secretary of Defense
    (Comptroller), negotiated on behalf of the United States
    Department of Defense, or renegotiated, if you will, a special
    measures agreement with the Republic of Korea, which is
    basically your host nation funding mechanism. As a result, the
    Republic of Korea funding construction for the United States
    forces in Korea increased by over 35 percent.
        With respect to the Government of Japan, as you may know,
    that government provides us with about $680 million per year in
    construction under the Japanese Facility Improvement Program
    (JFIP). Those two programs alone are very impressive in terms
    of their contributions to our presence.
        Senator Ensign. What was the total dollar number in Korea?
        Mr. DuBois. The total dollar number in Korea in calendar
    2003--Korea is $156 million, projected in calendar 2004, $170
    million. I might add there are two pieces to the Korean host
    nation funded construction program. The program that funds and
    supports quality of life and other nonreadiness type
    construction, and then the combined defense improvement
    program, that constructs combat readiness facilities, so I gave
    you the first number for calendar 2003 of $156 million. That is
    the first category, called life, nonreadiness. The second
    category is $60 million, which is combat readiness facilities,
    so that in calendar 2003 the programs will be funded to the
    level of $215.9 million by the Government of Korea.
        Now, you asked also about Europe. We do not have any
    burden-sharing programs per se, or burden-sharing agreements in
    Europe. Does that mean that there ought to be? I would
    obviously defer to this subcommittee, as well as the full
    committee to deliberate on that issue. It is true, however,
    that when we do close bases in Europe, we do have an agreement
    that we negotiate what is called a residual value.
        Some Members of Congress have asked when we close a base,
    are we not taking on a liability to environmentally clean it up
    in Western Europe, for instance. What we try to do is to
    calculate a residual value. That is to say, the improvements
    that we have made, the U.S. taxpayer has made to the facilities
    on that particular foreign installation has a value. We net out
    the estimated remediation costs that would be required, and a
    check is then cut to the United States Government. It is a
    negotiation that is difficult, but it is essentially the model
    that we try to follow, but more particularly to your question
    about burden-sharing, we do not have any burden-sharing
    agreements in Europe.
        Senator Ensign. Just one comment from the chair, and that
    is, from this Senator's point of view I think it is outrageous
    we do not have burden-sharing in Europe. Not just considering
    what is going on at this point, but I think it should have been
    going on all along.
        I think that the Europeans have developed this false sense
    of security in thinking that negotiations can solve all the
    problems in the world because of the United States military and
    the protection we are giving them, and for them not to be
    sharing significantly in that cost I think is something that
    this subcommittee and the full committee should take a serious
    look at and work with the Department of Defense and the State
    Department to try to address that problem.
        Secretary Johnson, do you want to comment?
        Secretary Johnson. Our only overseas Marine Corps
    facilities are in Japan, and the JFIP that Ray talked about
    contributed $310 million in 2003. We had $140 million of that
    for the Marine Corps. Not to disagree with my partner here, in
    Italy, our European Center for the Navy, Italy did provide the
    land for us to build houses on. They also provide, through
    leases, support and housing facilities. They do not give money,
    as Mr. DuBois said, but we do have good relationships with
    them, and we have done some magnificent things. I think you
    have visited there and have seen the housing and facilities
    that we have built in Italy, with their full cooperation, but
    not the revenue-sharing that Japan has done.
        Secretary Gibbs. In the case of the Air Force, we receive
    funding either for our individual-use facilities or joint-use
    facilities in excess of $500 million a year from the three
    countries you mentioned, the largest piece being in Japan,
    where we have three major Air Force bases.
        In the case of Europe, although we do not have country-to-
    country arrangements, particularly on the two Air Force bases
    in Germany, in excess of $100 million is being used for NATO
    joint use type facilities on those two bases, and we also have
    an agreement with various levels of the German Government, from
    the federal down through states and local communities, to bear
    a substantial portion of the move costs and rebuilding as we
    are vacating the main transshipment terminal at Rhein-Main
    Airport and consolidating it in Ramstein Air Base. They have
    committed in excess of $350 million to that series of projects
    both at Ramstein Air Base and also for runway additions and
    repairs over at Spangdahlem Air Base.
        Senator Ensign. Thank you. Just very briefly--my time has
    expired--I will let Secretary Fiori answer in just a second,
    but Secretary Johnson, I would like to submit a question for
    the record on Fallon Naval Air Station. It is an environmental
    question dealing with the water treatment plant, with the
    cancer cluster that was up there and the recent reports about
    tungsten and about the Navy's contribution.
        Secretary Johnson. We would be very pleased to answer that,
    and we have not had any more cases recently.
        Senator Ensign. You have seen the reports in the papers
    lately about tungsten. I guess that is maybe possibly going to
    be difficult.
        Secretary Johnson. We certainly will talk about that, but
    we had nothing to do with tungsten, and we are working with the
    State, of course.
        Senator Ensign. Secretary Fiori.
        Secretary Fiori. I would just add to what Mr. DuBois said.
    As far as Korea, I am a beneficiary of most of the $215
    million. In calendar year 2004, we will be getting about $236
    million in Korea, and $680 million in Japan. We are the
    executive agent, and so we distribute that and control it in
    Japan. But turning back facilities and payment in kind, our
    records show that we have received $182 million in cash, and
    $853 million in payment in kind for services in Germany over
    the years.
        Senator Ensign. Senator Akaka.
        Senator Akaka. Thank you, Mr. Chairman. DOD Instruction
    (DODI) 4715.6, which establishes budgeting requirements for
    environmental compliance, states that DOD components shall fund
    ``all projects and activities that are currently out of
    compliance, or will be out of compliance if funding is not made
    available.''
        Secretary Fiori, is the Department of the Army in
    compliance with this DOD instruction?
        Secretary Fiori. Sir, I have not read the detailed
    requirements of DODI 4715.6. I do know that we are meeting all
    the compliance requirements for our facilities today and in the
    budget year.
        Senator Akaka. Thank you.
        Secretary Johnson, the Navy will be transferring access to
    Kaho'olawe to the State of Hawaii on November 11, 2003. Title
    IX of the Fiscal Year 1994 Defense Appropriations Act
    envisioned at that time clearance of 100 percent of the island.
    Ten years later, we are aware of the challenges and limitations
    that have prevented such results, and these are my questions.
        What actions have been taken by the Navy to maximize
    clearance efforts in fiscal year 2003? How much of the island
    will be cleared by November 11, 2003, and given the fact that
    unexploded ordnance will remain on Kaho'olawe after access is
    transferred to the State, what are the Navy's plans with
    respect to the discovery of undetected ordnance after November?
        Secretary Johnson. Yes, sir. As you well know, better than
    I, it has been a very difficult task, and I think we
    collectively have come up with the best solution we can. We
    have tried to maximize the cleanup within the budget. Also, we
    said last year that the budget was as much as we could spend,
    so the maximum effort by November 11, and we worked with the
    local Kaho'olawe Island Reserve Commission (KIRC) organization
    to prioritize the areas that we will clear. I will get back for
    the record the actual numbers.
        [The information referred to follows:]

        The Navy expects to be able to clear ordnance on the island of
    Kaho'olawe on a total of 19,500 net acres to the Tier 1 (surface)
    standard, of which 2,500 net acres are further cleared to the Tier 2
    (subsurface from 1 to 4 feet) standard by November 11, 2003.

        Secretary Johnson. Certainly there will always be the
    potential for new finds of UXOs. The agreement that we are
    working with the State of Hawaii and the KIRC is to agree on
    the circumstances to go back--remember, there are two tiers.
    Tier 1 is no access, but we do ground clearance. Tier 2 would
    go down to 4 feet, I believe.
        We propose that anything that is in Tier 2, we will clean
    it to the depth cleared whenever we find it, and at Tier 1,
    anything that would affect Tier 2 we certainly will clear that,
    and anything outside those two tiers that will affect the
    access in Tier 2, we will do that.
        The law says any time anything is found, we hope to
    transfer this to the Army under FUDS. We recognize the
    ongoing--and the best intentions, you can clear all the UXOs,
    and the ground process, they come up out of the ground on
    occasions, as they did in Spring Valley, so to say we ever
    clean it perfectly is an overstatement in anybody's words.
        Senator Akaka. Secretary Gibbs, could you please discuss
    the Air Force plans for the C-17 bed-down? What are the
    military construction requirements of the C-17 bed-down, and
    which of these requirements are funded, and the final question,
    is the C-17 bed-down plan fully updated to reflect the air
    mobility force structure plan, and if that is not so, then what
    needs to be adjusted?
        Secretary Gibbs. Sir, all of the known requirements for the
    C-17 bed-down within the FYDP, the 5-year planning cycle, are
    fully funded. There may be additional requirements as the last
    units come on for that particular weapons system, but
    everything that is required within the FYDP is fully funded.
        Senator Akaka. Secretary Fiori, the Army Corps of Engineers
    determined more than a year ago that a FUDS at Waikaloa and
    Waimea, Hawaii, has a medium to high potential for human health
    and safety risk from unexploded ordnance.
        Last spring, our committee report directed the Army to
    develop a comprehensive plan for addressing risks to human
    health and safety at Waikaloa and Waimea FUDS. A report on this
    plan was due to the congressional defense committees on
    February 2. You have notified us that it will not be available
    until July 31, and my question is, what is the current state of
    the Army's effort to assess risks to human health and safety at
    Waikaloa and Waimea?
        Secretary Fiori. Sir, I am afraid I am going to have to
    take that for the record. I have a perfect opportunity when I
    go visit the U.S. Army Corps of Engineers tomorrow to get a
    good answer from them.
        Sir, I would like to address your previous question. I am
    not familiar with the DOD instruction, but I will review it to
    make sure that I understand the nuances of what the instruction
    says, just to confirm the fact that we are, in fact, meeting
    those requirements, and I will put that on the record also.
        [The information referred to follows:]

                 Waikoloa and Waimea Formerly Used Defense Site

        The Army has conducted an investigation of the 123,000-acre site
    and has identified 11 areas, comprising 48,000 acres, which could pose
    a medium to high explosives safety risk. In December 2002, the Army
    awarded a contract to begin munitions removal on three of the areas
    determined to pose the highest explosives safety risk. The
    environmental cleanup planned for the Waikoloa and Waimea formerly used
    defense site will be one of the largest, most complex, and most
    expensive undertaken. At current funding levels, the entire cleanup
    cannot be fully resourced in the near term. The number and diversity of
    munitions that have been identified and are suspected to be present at
    the site and the proximity of these munitions to residential areas
    complicate response actions. The Army has also initiated an outreach
    program to ensure all residents and property owners are informed of the
    possible risks and reporting procedures should munitions be
    encountered.

                             DOD Instruction 4715.6

        Yes, the Army is in compliance with the DOD instruction on funding
    environmental compliance requirements. The Army environmental quality
    must fund policy requires that commands and activities must fund their
    environmental requirements at a level to ensure compliance with legally
    mandated standards.

        Senator Akaka. Thank you very much for that response to my
    previous question.
        My time has expired, Mr. Chairman.
        Senator Ensign. Senator Nelson.
        Senator Bill Nelson. First of all, Secretary Johnson, why
    don't you put on the record what you and I talked about
    yesterday with regards to the Marine Corps on Blount Island.
        Secretary Johnson. Yes, sir. Blount Island is the home
    station, if you will, for all the Marine preposition ships.
    This year, we have money in to buy the Blount Island real
    property that we are occupying, but we also have funded
    activities that will allow us to enforce the explosive safety
    arc around Blount Island. Two weekends a month we handle
    ammunition, and we have to have a rather large safety arc of
    activity and control the activity within the arc when we are
    offloading the ammunition.
        That seems to be in good shape. There are three tenants, if
    you will, three partners there. We have agreements with one.
    The second one seems straightforward. The third one,
    Jacksonville Port Authority, we think we are close with them
    also, sir.
        Senator Bill Nelson. Thank you. I suppose I might address
    this to Mr. DuBois. Over a year ago--as a matter of fact, it
    was about a year and a quarter ago, I had asked DOD for an
    explanation, classified if necessary, about the former
    activities at the old Boca Raton Airfield in Florida, because
    this has been shrouded in secrecy. This is testing that was
    done back in the 1950s, apparently when we were trying to
    figure out how we were going to kill the Soviet wheat crop, and
    so they were testing a spore to kill wheat.
        They were testing it in Florida because we do not grow
    wheat in Florida, and that was tested at several different
    places, but specifically at Boca Raton, and I was first told to
    buzz off, and I do not do that very well. So, I persisted, and
    that briefing is going to come in another week or two, about a
    year and a quarter after I first asked for it. I do not want
    you to have to get involved in that, because it looks like it
    is finally going to come to fruition, but from the standpoint
    of the public concern about public safety, I clearly do have a
    role and a responsibility.
        Now, over the years, the Armed Forces have used various
    military installations for the storage and the testing of
    chemical and biological weapons. Understandably, there is some
    perception out there in the community that this might have some
    problem with regard to community health. At the same time,
    clearly we have a need, for the protection of the United
    States, to go about testing, anticipating, understanding, and
    mitigating the vulnerability of our forces to chemical or
    biological attack.
        So the question is, how do you do this in concert with the
    needs of the community, particularly something that testing was
    done half a century ago? When you look at just the question of
    use of property, long since, this is not a military facility.
    It is now Florida Atlantic University and the Boca Raton
    General Aviation Airport, but there is a portion of this
    airport that is not developed, which is thought to be the area
    of the old testing.
        It is about 60 acres, and so the concerns, in the midst of
    high density urbanization, is this property contaminated in
    some way? Is its value less than what otherwise its fair market
    value would seem to be?
        So I want you to contemplate what can be done to protect
    both military secrets and restore public confidence in the
    safety of former military property that has been in the past
    involved in chemical and biological testing activities. Would
    you contemplate that, please?
        Mr. DuBois. Senator, with respect to a situation such as
    you are addressing, I am glad that the Department has finally
    responded to your request for a briefing. I will be as
    interested in its brief as you are.
        I think that it is important to note that we have
    situations such as Boca Raton, and I have been to Florida
    Atlantic University. As I mentioned before you came in today,
    when it comes to places like Spring Valley here in the Nation's
    capital, we are unfortunately presented with prior issues,
    undocumented, but when we find out, as the Army has done, I
    think, fairly well, the Army Corps of Engineers with respect to
    Spring Valley, it is acted upon. Moneys are moved to address
    these so-called Tier 1 situations.
        On the other side of that coin, if you will, I think you
    have raised a very interesting and very important question, and
    that is, how do we go about the testing, research, and
    development on weapons of mass destruction, specifically
    chemical and biological ones, which, as we all know, there is a
    fellow in Baghdad who has no compunction about using them. If
    our troops go into battle, it is of grave concern to the
    President and the Secretary what they may face in that regard.
        We maintain testing, we maintain research and development
    on detection, defenses in that regard, as well we should. The
    extent to which we keep them classified so that potential
    enemies do not know our ability to detect and defend is an
    important one. There will no doubt be--if you so desire, if the
    chairman so desires, we can go into closed hearing and discuss
    some of those issues, but I appreciate your bringing them up.
    Your concern is shared.
        Senator Bill Nelson. Thank you, Mr. Chairman, and after I
    get my briefing and find out what happened 50 years go, let us
    have a conversation.
        Mr. DuBois. Yes, sir.
        Senator Ensign. Senator Pryor.
        Senator Pryor. I have a quick follow-up, if I may, on
    Senator Inhofe's points a few moments ago about the
    environmental considerations with facilities and locations. All
    four of you said that you do not agree with the statement made
    in the paper that, I have forgotten exactly the phrase he used,
    but basically the environmental concerns have not encroached on
    your ability to do what you need to do, and I would like to
    hear from all four of you specifically why you disagree with
    that, and I do not need a lengthy answer, but just a couple of
    minutes from each, if possible.
        Mr. DuBois. Senator, that article was, needless to say,
    very troubling to me, and I am being charitable. Insofar as all
    four of us at this table have repeatedly gone on the record
    publicly before the press, before Congress, and in meetings
    with nongovernment organizations, conservation organizations,
    environmental organizations, to try to express and articulate
    as best we can the narrowness of the provisions which we have
    suggested, to have a newspaper article which in this particular
    case misrepresents a GAO report--and I made sure that I was
    correct in this regard. I mean, the article says, the GAO
    report says that encroachment is not a problem, that DOD can
    and should do a better job of quantifying the impacts of
    encroachment.
        The second clause is correct, and I testified to that
    effect last year, but the report, and I quote page 9 of that
    very report from June 2002, and it says, ``over time, the
    impact of encroachment on training ranges has gradually
    increased. While the effect varies by Service and individual
    installation, in general, encroachment has limited the extent
    to which training ranges are available, or the types of
    training that can be conducted.'' So when I read things like
    this in the newspaper, it is disturbing.
        The quote that was referred to by the Administrator of EPA,
    Governor Whitman, while I have not seen the transcript from her
    testimony in front of the Environment and Public Works
    Committee of the Senate, I will say this. Last year, over a
    period of approximately 100 days, as a number of the staffers
    in this room appreciate and understand, I was in high level
    negotiations with EPA, with the Department of Commerce, the
    National Oceanic and Atmospheric Administration (NOAA), with
    the Council on Environmental Quality, and OMB, so that when the
    administration put forth its proposals last year, as is the
    case this year, it is the administration's proposal fully
    supported by the EPA Administrator, Secretary of Commerce, the
    head of NOAA, the head of the Fish and Wildlife Service, et
    cetera.
        The other issue, and I just think it is worth the time
    spent this afternoon, the term exemption, the Department asking
    for blanket exemptions, this is a myth that keeps getting
    repeated and repeated and repeated in the media. We are not
    asking for blanket exemptions.
        We have been as clear as we possibly can be that the
    clarifications we are asking Congress to address have to do
    with only military training readiness activities on operational
    ranges. It does not apply to any of those activities that this
    Department every day undergoes. Paint shops and wastewater
    water plants, construction, everything the rest of the society
    has applied to them in terms of environmental statute continues
    to apply to the Department of Defense.
        I think Secretary Johnson made an interesting comment to me
    this morning, and I think it bears repeating.
        Secretary Johnson. I cannot remember the comment, but when
    you go out to Camp Pendleton, we have 17 miles of beach, and we
    can use under certain conditions 200 yards for amphibious
    assaults, and we have examples like that. We are not asking
    for, certainly, to change all the laws. We are asking for
    balance, and we are getting good support within the
    administration.
        Mr. DuBois. I apologize, it was Nelson's well-articulated
    words to me before the hearing started.
        Secretary Gibbs. I will speak to it generally. There is
    degradation in training, but the military that I work with in
    the Air Force works very hard to ensure that training is
    obtained in other manners.
        To give you one example, down on the Barry Goldwater Range,
    relative to the Pronghorn Saw Net, we have a requirement that
    before we use the range we employ five biologists whose full-
    time activity is to watch over the antelope, and before we use
    the range, they have to find all the antelope and make sure
    they are not any place in the range that we are going to use on
    that particular day. If they are, on a number of occasions we
    have had to cancel training, because the antelope were moving
    across a section of the range we wanted to use.
        Does that mean that our pilots do not get trained? No. The
    pilots are going to get trained. We are going to find a way to
    do it, but it has impinged upon it.
        The comment that Mr. DuBois and I were talking about
    earlier, and it was brought on by this article, in the comment
    about exemptions--we are not asking for exemptions. Let me pick
    two particular pieces in the legislation relative to CERCLA and
    RCRA. We are talking there about ordnance on active ranges, and
    what we are asking really for is for Congress to declare their
    intent, and was it Congress' intent to include the discharge of
    live munitions on an active military range as a discharge, as
    it is defined in those two pieces of legislation.
        In a way, we are just trying to anticipate a problem. If we
    do not get a definition now, there is every likelihood we are
    going to end up in litigation by someone coming to us saying
    that is a discharge, we will spend 5 to 10 years in litigation,
    it will significantly impact training, we will spend a lot of
    money in terms of defending a net, and eventually we will come
    back to Congress and say, please, now, after the fact, define
    it for us, after the courts finish going through the issue.
        We are just trying to get ahead of the problem in those two
    particular cases. A similar kind of concept in the legislation
    we are asking for is the discussion of using the planning
    mechanisms that we have now in force, and we use with DOD in a
    number of cases, to look after endangered species without
    having to go through the full ramification of having the
    critical habitat designation, which makes it a very
    bureaucratic process.
        In all I have found since I have been here in the last
    month, and working with the people on my environmental staff
    and with the active offices out on the program, the military
    services really do try very hard and actually do a very good
    job in these particular areas. So, what we are saying is,
    please define them for us so that we can make sure we can get
    on and we are doing it in the way you had intended it to be
    done.
        Secretary Johnson. We have become the best stewards,
    because all the endangered species migrate to our ranges, and
    our young men and women take good care of them, but we have to
    find the right balance to do what the ranges are there for.
        Secretary Fiori. Sir, each of us was frustrated by this
    article today. We are good stewards of the environment. We can
    prove that, and in quantitative matters. The number of species
    we have that we take care of does affect our training.
        The red-cockaded woodpecker at Fort Bragg, we have learned
    how to live with the bird. We are looking at mechanisms to move
    it out of our training areas so we can do training without
    putting ropes or white lines around a tree. You cannot get but
    so close to keep disturbing them. We even have time frame
    issues on training for certain species that are in certain
    areas of our many ranges.
        So it does affect our training, and our people work very
    hard to get their training anyway. Ultimately, as we go to a
    faster, lighter force, we are going to need more area. We have
    to figure out how to do it smartly, and the blanket exemption
    idea is just not true.
        Senator Pryor. Thank you, Mr. Chairman.
        Senator Ensign. Thank you, and I want to thank the entire
    panel. I think it has been a very productive first hearing of
    this subcommittee in the 108th Congress. I look forward to
    working with each and every one of you. You have some huge
    challenges ahead of you, especially in the world that we are
    facing today, so thank you all for being here, and this hearing
    is adjourned.
        [Questions for the record with answers supplied follow:]

                  Questions Submitted by Senator James Ensign

                        FACILITY RECAPITALIZATION RATES

        1. Senator Ensign. Secretary Gibbs, the 2004 budget request for
    military construction and restoration accounts is described in
    Department of Defense (DOD) press releases as ``supporting the
    reduction of the current recapitalization rate of its facilities to 67
    years by 2008.'' This represents a 1-year slip compared to last year's
    goal of 2007 for the same level and assumes unprecedented amounts of
    investment over the Future Years Defense Program. In addition, the
    overall recapitalization rate across the Services remains around 140
    years, 50 years more than fiscal year 2002 rates. I am concerned about
    the continued unrealistic level of recapitalization rates for the
    Services. Unfortunately, the 2004 budget request for Air Force
    construction continues a disconcerting trend with a proposed investment
    level equal to 180 years in comparison to last year's rate of 165
    years.
        What funding levels for both military construction and restoration
    funds are required to achieve the 67-year cycle and when does the Air
    Force intend to provide the funds to support this goal?
        Secretary Gibbs. The Air Force requires approximately $2 billion
    per year in the military construction and O&M restoration and
    modernization accounts to recapitalize existing facilities and
    infrastructure at a 67-year rate. That $2 billion should be comprised
    of approximately $1.3 billion in military construction and
    approximately $700 million in O&M restoration and modernization
    funding.
        The facility funding in the fiscal year 2004 budget request
    supports a 180-year recapitalization rate. This is an improvement over
    the fiscal year 2003 rate, which was 284 years based on the fiscal year
    2003 budget request and 195 years based on the enacted fiscal year 2003
    budget.
        The Air Force future years defense plan allows us to meet Office of
    the Secretary of Defense's (OSD) 67-year recapitalization rate goal by
    fiscal year 2008.

        2. Senator Ensign. Secretary Gibbs, do you believe that competing
    Air Force priorities in readiness, acquisition, and modernization will
    allow you to meet OSD goals to achieve a 67-year facility
    recapitalization rate by 2008?
        Secretary Gibbs. We continue to build our future years defense plan
    based on our most urgent and compelling requirements. In doing so, our
    current plan meets OSD's 67-year recapitalization rate goal by fiscal
    year 2008.

        3. Senator Ensign. Secretary Johnson, Secretary Fiori, and
    Secretary Gibbs, assuming the current balance between operations and
    maintenance accounts versus military construction, what overall amount
    of military construction funding for your Service per year is required
    to meet the OSD goal?
        Secretary Johnson. Investment resources utilized to reduce the
    recapitalization rate are a combination of military construction and
    operations and maintenance funding. Total investment resources needed
    to meet the DOD goal of a 67-year recapitalization rate within each
    year of the FYDP are as follows:

                            [In millions of dollars]
    ------------------------------------------------------------------------
                  Fiscal Year                     Navy         Marine Corps
    ------------------------------------------------------------------------
    2004..................................           1,567              285
    2005..................................           1,600              290
    2006..................................           1,604              294
    2007..................................           1,665              301
    2008..................................           1,700              307
    2009..................................           1,735              315
    Average...............................           1,645              298
    ------------------------------------------------------------------------

        Secretary Fiori. The Army is currently investing $1.1 billion
    against the OSD recapitalization goal, with approximately $35 million
    from operation and maintenance funds. The cost to the Army to meet a
    67-year recapitalization rate would be $2.5 billion annually.
        Secretary Gibbs. In order to recapitalize our facilities at a 67-
    year rate, we estimate that approximately $1.3 billion of our annual
    military construction request would need to be dedicated to facility
    restoration and modernization.

                 MIGRATION OF OPERATIONS AND MAINTENANCE FUNDS

        4. Senator Ensign. Secretary Johnson, the General Accounting Office
    released a report last month that suggested changes in funding
    priorities and strategic planning were needed to improve the conditions
    of military facilities. There is a lack of consistency in the Services'
    information on facility conditions, making it difficult for Congress,
    DOD, and the Services to direct funds to facilities where they are most
    needed. In addition, facility sustainment funds are routinely held back
    at various headquarters levels to fund other priorities. As a result,
    while the Services intended to fund sustainment across the board at 78
    to 98 percent, a survey of bases across the country revealed
    sustainment funding ranging from 35 to 77 percent of installation
    requirement. What is happening at the installation level to the funding
    you ask for and we provide for sustainment?
        Secretary Johnson. The Navy is presently in the first year of the
    transformation to sustainment, restoration, and modernization (SRM)
    execution. Three impacts on the delivery of sustainment funds to
    installations have been identified.
        The first is the migration of funds to other operation and
    maintenance (O&M) accounts. The Navy is consolidating installation
    management from eight commands to a single Commander Navy Installations
    who will receive and allocate O&M funds to the installations.
        The second is resource flow patterns. The GAO surveys were
    conducted in mid fiscal year 2002 when resources had been withheld in a
    typical pattern to ensure availability for priority O&M accounts. The
    Navy has recognized that resources are flowing in a ``bathtub profile''
    with a large percentage of resources arriving late in the fourth
    quarter causing inefficiencies. Commander Navy Installations will be
    charged with the responsibility to level resource flow across the
    fiscal year to ensure the best sustainment program efficiencies.
        The third is ``SRM awareness.'' With the advent of the new SRM
    program, installation leadership is not yet fully aware of the scope of
    sustainment. Sustainment includes recurring and preventative
    maintenance as well as replacement of the components. Many Installation
    level managers have not yet realized that final piece--replacement is
    part of the Sustainment function. Additionally, higher dollar value
    projects and other requirements that are resourced at higher management
    levels can include Sustainment functions and should be included in the
    Sustainment rate calculation. Navy installations are typically not
    including these resources provided outside of installation funding in
    their anecdotal statements on the level of sustainment funding. The
    Navy is transforming its Facility Management policies to align them
    with the new SRM facility investment structure.
        Sustainment funding migration is a recognized issue. It will take
    time to fully resolve. The first steps have been taken with the
    creation of a Commander Navy Installations to lead the effort.
        The GAO report indicated that the Marine Corps did not have the
    problem with its installations receiving a small percentage of the
    sustainment funding. The one Marine Corps base visited by GAO, Marine
    Corps Combat Development Command (MCCDC) Quantico, VA, was funded at 97
    percent of sustainment. This was expressly noted as an exception to the
    low funding levels found at other Services' bases. The report went on
    to explain the procedures the Marine Corps uses to control funding:
    ``According to Marine Corps officials, their Service does not permit
    sustainment funds to be taken away from installations by intermediate
    commands without the explicit permission of Headquarters' facilities
    staff.''

        5. Senator Ensign. Secretary Fiori, the Army recently established
    an Installation Management Agency (and the Navy is working in the same
    direction) to centralize control prioritization of facility
    requirements. Will this new agency ensure a greater percentage of
    sustainment funds are invested at the installation level?
        Secretary Fiori. Yes. Garrisons will receive almost all of the base
    support funds that are allocated to the Installation Management Agency
    (IMA). Effective fiscal year 2003, concurrent with the activation of
    the Army IMA, the Army implemented a policy that any request to migrate
    base support funds to mission programs must be approved by Army
    leadership. This policy should ensure a greater percentage of
    facilities sustainment funds are distributed to the installations.

        6. Senator Ensign. Secretary Johnson, Secretary Fiori, and
    Secretary Gibbs, please provide by installation what percentage of the
    sustainment requirement was executed in fiscal year 2002?
        Secretary Johnson. The Department of the Navy cannot readily
    provide what percentage of the sustainment requirement for each
    installation was executed in fiscal year 2002 because the data is not
    available. Fiscal Year 2002 Facility programs were executed in the
    previous ``Real Property Maintenance (RPM)'' mode. The execution
    reports were structured for the RPM metrics that did not separate the
    sustainment function from the recapitalization function. The Department
    of the Navy Facility Cost Accounting Code (CAC) structure has been
    converted to the SRM metrics beginning with fiscal year 2003. The
    Department will be able to report sustainment execution at all
    organizational levels with the modernized CAC structure beginning with
    fiscal year 2003.
        Secretary Fiori. The fiscal year 2002 Army-wide average for
    sustainment was 71 percent. Unfortunately, we cannot provide
    comparisons of funding versus requirement at the installation level.
    The reason is that the Department of Defense generates requirements
    using the Facilities Sustainment Model, which is a macro level tool
    that is useful on an Army-wide basis.
        Secretary Gibbs. The Facilities Sustainment Model (FSM) is a macro-
    level tool, designed to address sustainment requirements in aggregate.
    Due to the cyclical nature of many sustainment requirements (upon which
    the model is based), FSM may not be pinpoint accurate for a specific
    12-month period at installation level. This is because, at the
    installation level, certain specific sustainment actions may not be
    required every year. The model does take this reality into
    consideration however, and averages the cyclical requirements across
    years. Therefore, accuracy improves over longer time periods.
        Accuracy also improves as installations are aggregated into Major
    Command (MAJCOM) total costs. This is because while some installations
    within a MAJCOM may not require a specific sustainment action during a
    given year, others within the MAJCOM will.
        As we reported in our fiscal year 2002 financial statements, we
    executed 68 percent of the Facilities Sustainment Model requirement Air
    Force wide in fiscal year 2002. Over a 12-month period, individual
    installations would vary significantly from the overall Air Force
    average--even if the overall Air Force average were 100 percent. We
    have addressed this issue in our response to a recent recommendation
    from the General Accounting Office. We are improving from the fiscal
    year 2002 level in fiscal year 2003 and have budgeted 95 percent of
    required sustainment in fiscal year 2004.

        7. Senator Ensign. Mr. DuBois, what is the Department doing to get
    their hands around the problem of inconsistent information, varying
    methods for data collection, and different assessments of facility
    conditions?
        Mr. DuBois. We are working to implement a new quality status
    indicator (or ``Q'' rating) that will be reported within the
    Department's standard real property inventories. These ratings--which
    we plan to collect from the military departments and Defense agencies
    beginning in October 2004 will avoid subjective judgments of condition
    and instead rely on a quantitative assessment of the investment needed
    to achieve a ``Q-1'' status. This is the third leg of our evolving
    sustainment, restoration, and modernization paradigm. When fully
    operational, it will allow us to more accurately quantify and report
    those restoration requirements that go beyond normal rates for
    sustainment and recapitalization of facilities.

                    USE OF MILITARY PAY FOR RECAPITALIZATION

        8. Senator Ensign. Mr. DuBois, the Department published a
    Facilities Recapitalization Front-End Assessment in August 2002 that
    identifies and adds new funding programs to determine the final rate
    for facility recapitalization. One fund source identified is ``military
    pay appropriations that support recapitalization.'' Can you elaborate
    on what facility programs military pay will support?
        Mr. DuBois. To be precisely clear about our requirements, our
    models and metrics identify all potential sources of funding--even
    those that are relatively small. Military pay provides a modest
    contribution to facilities sustainment and a very small contribution to
    facilities restoration and modernization. Our requirements models count
    this funding as a contribution that would otherwise be paid for from
    operations and maintenance appropriations. Military members perform
    some facilities sustainment work in each of the four military Services,
    although practices vary by military department and the largest
    contribution is in the Air Force and Marine Corps. Only the Navy uses
    military members for certain recapitalization (restoration and
    modernization) tasks.

        9. Senator Ensign. Mr. DuBois, can you give a general estimate of
    the amount of military pay appropriations that is proposed to be spent
    on facility recapitalization in the 2004 budget?
        Mr. DuBois. $5 million in the Navy.

                            UTILITIES PRIVATIZATION

        10. Senator Ensign. Mr. DuBois, Congress granted the Department the
    authority to take advantage of private sector financing and
    efficiencies by entering into privatization agreements for deteriorated
    utility systems (electrical distribution, water, waste/sewer, and
    natural gas--2,600 systems total, valued at $50 billion). Utility
    systems had suffered from years of under-funding and low priority. DOD
    has made slow progress citing industry complexity and inconsistent
    initial results. A new privatization goal has been established to
    complete evaluations of all systems by September 2005 to determine
    candidates for privatization. In your written statement you say,
    ``Congressional support for this effort in fiscal year 2004 is
    essential to maintain the procurement momentum and industry interest.''
    What do you perceive to be the level of industry interest in taking
    over deteriorated utility systems and what can Congress do to maintain
    the level of interest?
        Mr. DuBois. The level of interest has varied. In general, utility
    providers have expressed interest and provided proposals on systems.
    The components have found adequate competition for DOD utilities
    privatization on larger installations near metropolitan areas,
    especially where the systems are currently operated and maintained near
    industry standards. There has been less interest in systems in poor
    condition or located on small installations in rural areas. In
    particular, many utility privatization solicitations for Air National
    Guard installations did not receive an industry response. In areas
    where utility systems did not receive interest, the components are
    collecting information from potential utility providers. This
    information should assist efforts to obtain adequate interest in the
    future.
        Most importantly, Congress can help maintain the level of industry
    interest by supporting the level of funding requested by the components
    in the President's fiscal year 2004 budget request. These requests are
    based on the current schedules developed by each Service to complete
    utility privatization decisions by September 2005. Additionally,
    Congress could help simplify the utilities privatization effort by
    deleting the requirement to provide a 21-day notification prior to
    proceeding with a utility conveyance. With over 1,300 evaluations
    scheduled for completion during the next 30 months, this notification
    requirement will continue to cause unnecessary delays in completing the
    actions. The Services have taken a number of steps to improve the
    process used to evaluate systems for privatization and obtain proposals
    from the industry.

        11. Senator Ensign. Secretary Johnson, Secretary Fiori, and
    Secretary Gibbs, recognizing the slow pace, what problems are you
    experiencing in your privatization initiatives and what lessons have
    you learned?
        Secretary Johnson. The Department of the Navy has not experienced
    any major problems with the Utilities Privatization program, and is on
    schedule to meet the Department of Defense goal of completing a source
    selection decision on each system by September 2005. The Department has
    established a thorough and methodical approach to utilities
    privatization. This approach includes an open-ended performance based
    request for procurement that allows industry sufficient time to
    assemble a team and prepare an offer.
        Secretary Fiori. Utilities Privatization contracts are non-
    traditional 50-year contracts that require significant capital
    investment. The procurement process is complex and is successful when
    the Government partners with the utility provider. We have made
    significant progress in developing a standard procurement process. With
    the assistance of industry, we have developed a standardized utilities
    privatization Request for Proposal format that promotes competition
    among the broadest selection of providers, including municipal,
    private, regional, district or cooperative utility companies, and other
    interested parties. In addition, we maintain two Centers of Expertise
    for utilities privatization acquisition. One is located at the Defense
    Energy Support Center, Fort Belvoir, Virginia, and the other at the
    Huntsville Engineering and Support Center, U.S. Army Corps of
    Engineers, Huntsville, Alabama. The contracting specialists at both
    centers are well trained in the procurement process.
        Secretary Gibbs. The Air Force has developed a pace for the
    utilities privatization program that is measured, balanced, and
    accountable. We are overcoming several issues perceived by industry as
    barriers to privatization, including the lengthy solicitation process
    timeline, our caution in granting access to Air Force installations,
    and the complicated Federal source selection process.
        The most significant lesson we have learned is how important it is
    for us to educate potential offerors on how to deal with the Federal
    acquisition process and prepare responses to Requests for Proposals.
    Most prospective offerors are long-established utility companies with
    little or no experience with Federal acquisition requirements. For the
    uneducated or inexperienced, the process can be overwhelming.
    Additionally, most offerors have little understanding of Air Force
    installation access requirements and our determination to keep bases
    physically secure. There are also some inherent differences between
    various types of offerors, e.g., regulated vs. non-regulated and
    publicly owned vs. for profit, which cannot be overcome by the Air
    Force. In some cases these differences further impede or slow-down the
    competitive process, or otherwise make it more costly to privatize
    systems. In nearly every case, we have found the best solution has been
    to interact often and candidly with industry offerors to reach a mutual
    understanding.

     MILITARY CONSTRUCTION RECOUPMENT THROUGH THE NATO SECURITY INVESTMENT
                                    PROGRAM

        12. Senator Ensign. Mr. DuBois, many of the military construction
    projects in the 2004 program have been certified as not eligible for
    funding through the North Atlantic Treaty Organization (NATO) Security
    Investment Program, yet these same projects are required to support
    NATO missions. An example would be the Consolidated Combat
    Communication facility at Ramstein Air Force Base for over $19 million.
    What is the Department doing to rigorously vet these projects through
    the host nation and following up on requests for reimbursement and can
    you assure that full reimbursement has been received for qualified
    projects?
        Mr. DuBois. The NATO Security Investment Program provides the
    minimum fixed and mobile infrastructure necessary for NATO wartime,
    crisis, peace support, and deterrence operations and NATO-unique
    training requirements--as determined by and prioritized by NATO
    Strategic Commanders. Minimum refers to Minimum Military Requirement or
    MMR, which means providing the least possible to satisfy the
    requirement. This is accomplished by strict eligibility criteria,
    austere construction standards and by NATO control of the detailed
    scope of a project. When U.S. facility requirements exceed NATO's MMR,
    the U.S. must nationally fund this.
        Each DOD Service component in Europe is responsible for reviewing
    future projects and, where eligible, seeking NATO funding. They ensure
    maximum use is made of the NATO Security Investment Program.
        Eligibility is based upon a number of key concepts in addition to
    the MMR, such as whether the project supports a NATO requirement rather
    than a national requirement. If a particular project is deemed
    eligible, then it is included in a capability package and NSIP funding
    is sought. If the project is not eligible, then the component may
    prefinance the project using U.S. funds.
        Prefinancing does not end the components efforts to seek NATO
    funding. Each prefinanced project is tracked by the components and
    continuing efforts are made to seek NATO funding.
        The Combat Communication Facility at Ramstein is being tracked by
    U.S. Air Force Europe (USAFE). The project has been pre-financed, and
    USAFE is working with NATO in an attempt to get some portion of it
    accepted as a NATO requirement. Since the scope of the project greatly
    exceeds the NATO MMR, only a minimal amount of NSIP funding can be
    expected.

                          FALLON, NEVADA WATER SUPPLY

        13. Senator Ensign. Secretary Johnson, a leukemia cluster was
    identified in Fallon, Nevada, with 16 cases diagnosed in children from
    1997 to 2002. The expected rate for leukemia in a town the size of
    Fallon is one case every 5 years. The final report from the Centers for
    Disease Control and the Agency for Toxic Substances and Disease
    Registry indicated there was no link between environmental causes and
    the leukemia. Nevada State health officials have initiated studies of
    similar northern Nevada communities. Though Fallon's last case of
    leukemia counted in Nevada health statistics occurred over 15 months
    ago in December 2001, health officials will not declare the cluster
    over for another 3 to 4 years.
        Extensive Federal and State studies of Fallon drinking water
    resulted in finding arsenic, tungsten, and six other metals (antimony,
    barium, cesium, cobalt, molybdenum, and uranium) at elevated levels.
    Though the Navy has contributed some $6 million to the construction of
    Fallon's new water treatment plant, there are doubts as to whether or
    not the new water treatment plant will resolve issues regarding the
    metal substances other than arsenic. Furthermore, I am aware that the
    Navy currently provides filtered and bottled water to all Navy homes
    and facilities.
        Please provide the Navy's position with regard to the Fallon water
    supply in general and, in particular, are you investigating the Navy's
    possible contribution to the elevated metal content of the water?
        Secretary Johnson. No scientific or medical data exist linking
    acute lymphocytic leukemia, in general, or the Fallon childhood
    leukemia cluster, in specific, to environmental causes or metals in
    drinking water. However, the Navy and the City of Fallon are
    cooperating in the development of a water treatment facility in
    response to Environmental Protection Agency notices of violation for
    their common water source exceeding the maximum contaminant level of
    arsenic in drinking water. Arsenic is the only substance in the City/
    Naval Base water supply that does not currently meet State and Federal
    safe drinking water standards. Though there are no historic or current
    data which indicate that the health of Navy personnel (or the civilian
    residents of Fallon) has been adversely affected by local drinking
    water, the Navy elected to make filtered and bottled water available to
    Naval personnel and dependents ordered to Fallon until the local water
    supply meets Federal standards. According to all existing studies,
    including recent studies conducted by the Centers for Disease Control
    and the Agency for Toxic Substances and Disease Registry, the water
    supply for the City of Fallon, Naval Air Station Fallon and local wells
    have not been impacted by site-related contaminants from the Naval Air-
    Station (this includes metals and volatile organic chemicals/fuels).
    The studies state that elevated metals in the local water supply are a
    result of local geology and natural erosion processes.

        14. Senator Ensign. Secretary Johnson, what actions have you
    implemented to ensure the Navy is not contributing to a water problem
    yet to be discovered?
        Secretary Johnson. Naval Air Station (NAS) Fallon maintains
    extensive environmental monitoring and compliance programs and is
    regulated by State and Federal laws and inspections. Additionally, NAS
    Fallon maintains an Arsenic and Total Dissolved Solids Plan to ensure
    minimization of such products discharge to surface waters from the
    station's wastewater treatment plant. Reducing the release of these
    contaminants to local surface waters will help minimize infiltration
    into the ground and potential contamination of groundwater. NAS Fallon
    is upgrading a number of sewer systems to provide for such
    minimization. NAS Fallon also operates a ``Hazardous Material
    Pharmacy'' (HazMart) for the authorization, purchase, storage, and
    issuance of hazardous materials utilized by the installation. Mandatory
    training of hazardous material handlers is also conducted to ensure
    proper management of such products. Through training and the HazMart
    process, NAS Fallon reduces the storage and use of hazardous products.
    This translates to less generated waste, and a lower potential for
    releases that may otherwise impact local waterways and groundwater.
    Finally, the Navy environmental team at NAS Fallon has developed
    partnerships with local, State, and Federal agencies, as well as a
    number of environmental, conservation and Native American organizations
    to work on regional issues, share information and develop a common
    vision for environmental restoration, land use, resource conservation,
    community health and development.
                                     ______

                   Questions Submitted by Senator John Cornyn

                      DORMITORY FACILITIES AT SHEPPARD AFB

        15. Senator Cornyn. Mr. DuBois, I commend you for the work that you
    are doing to ensure that the men and women who serve in our Armed
    Forces have top-notch housing facilities. It is essential that we
    continue to invest in quality-of-life improvements, such as improved
    housing, especially right now when we are asking for such a tremendous
    sacrifice from not only the Service members, but their families as
    well. I am particularly interested in what the Air Force is doing to
    improve dormitory facilities. I recently visited with some
    representatives from Sheppard Air Force Base, and they expressed the
    urgent need to renovate some of the dormitories at that installation.
        I understand that the Air Force has a Dormitory Master Plan which
    prioritizes dormitory military construction projects. Could you provide
    me a better understanding how the Air Force goes about prioritizing
    which dormitories get renovated? Please elaborate where the dormitories
    at Sheppard Air Force Base are on any such priority list.
        Mr. DuBois. The Air Force Dormitory Master Plan is a comprehensive,
    requirements-based plan, which identifies and prioritizes their
    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 the Air Force is now concentrating on the final two
    phases of the investment strategy.
        The Air Force currently has a deficit of 11,400 rooms, and their
    existing inventory includes 3,700 inadequate rooms. Their program to
    eliminate the remaining dormitory room deficit is prioritized based on
    the size of deficit at each installation. Those installations with the
    largest dormitory room deficits are highest on the priority list. Once
    the Air Force eliminates its deficit they will focus on its inadequate
    rooms. Dorm ``adequacy'' is based on the condition of its building
    systems, i.e., heating, ventilation, and air conditioning; electrical;
    roof; doors; windows; plumbing. Those dorms with the worst building
    system condition receive the highest priority for renovation or
    replacement.
        Sheppard AFB has two types of dormitories, both are included in the
    Dormitory Master Plan. The first type of dormitory is permanent party.
    These dormitories house unaccompanied E1-E4 airmen assigned to the
    installation in a permanent duty status. These dormitories are built to
    the Air Force standard where each airman gets a private room and
    private bath; every four airmen share a common kitchen and living area.
    The second type of dormitory is a student pipeline dormitory. Pipeline
    dormitories are used to house airmen who have completed their Basic
    Military Training and are now receiving additional career-field
    specific training. While living in pipeline dormitories, they are still
    under control of training instructors. Two airmen share one room and
    one bathroom. Based on the current dormitory room deficit and
    condition, the Air Force is making, and has programmed, significant
    dormitory investment for Sheppard AFB. They are constructing one 144-
    room permanent party dormitory at Sheppard AFB in their fiscal year
    2003 program and have included a 300-room student dorm in their fiscal
    year 2004 budget request. Additionally, they have programmed four
    additional dormitory projects for Sheppard AFB in their future years
    defense plan.

                                   BRAC 2005

        16. Senator Cornyn. Mr. DuBois, there has been much talk recently
    about how this round of BRAC will not be entirely Service specific, but
    also have as a primary objective how the DOD can ``implement
    opportunities for greater joint activity.'' I understand that the
    Infrastructure Executive Council will recommend to Secretary Rumsfeld
    in April what facility categories or functions should be considered for
    joint-Service consolidation and which should remain Service-centric.
    Could you give me a better understanding on the process of how you are
    determining which functions will be viewed as joint rather than Service
    specific for the purposes of BRAC?
        Mr. DuBois. The Infrastructure Steering Group (ISG), a senior BRAC
    oversight group chaired by the Under Secretary of Defense (Acquisition,
    Technology, and Logistics), is responsible for recommending to the
    Infrastructure Executive Council for the Secretary's approval those
    functions that may receive joint cross-Service analysis. These
    recommendations will be based on the guidance contained in the
    Secretary's November 15, 2003 memorandum, Transformation Through Base
    Realignment and Closure. If a function is either common (conducted in
    more than one Service or Agency) or business-oriented (not exclusively
    conducted by the military), then that function is eligible for joint
    cross-Service analysis. The ISG is currently deliberating on what
    specific functions will receive joint cross-Service analysis.
                                     ______

                 Questions Submitted by Senator Daniel K. Akaka

                    ANTI-TERRORIST/FORCE PROTECTION FUNDING

        17. Senator Akaka. Mr. DuBois, according to the administration,
    homeland defense funding drops in the fiscal year 2004 budget request
    due to one-time force protection investments in 2003. Out of the
    approximate $2 billion decrease across DOD, homeland defense funding
    for MILCON, which represents much of DOD's Anti-Terrorist/Force
    Protection (AT/FP) funding, drops from $733 million to $82 million. Is
    this attributable to the one-time investment last year?
        Mr. DuBois. The Department's AT/FP program has been evolving since
    September 11. The fiscal year 2003 MILCON appropriation included the
    one-time investment of $733 million funding which paid for numerous
    anti-terrorism projects required as a result of current threat
    assessments. This $733 million was requested as part of the Defense
    Emergency Response Fund for fiscal year 2003. The Department, however,
    began integrating AT/FP investments into individual MILCON projects
    beginning with the fiscal year 2002 program.
        In addition to the $82 million investment level identified by
    Congress for AT/FP projects, the fiscal year 2004 MILCON budget request
    also includes an additional $49 million for AT/FP requirements as a
    result of the new AT/FP standards incorporated into the design and cost
    of all other MILCON projects across the Department.

        18. Senator Akaka. Mr. DuBois, what progress have we made in the
    buy-out of AT/FP requirements for our installations?
        Mr. DuBois. The fiscal year 2003 Defense Emergency Response Fund
    addressed the most urgent and immediate anti-terrorism requirements.
    The Department has just begun addressing AT/FP requirements for all of
    its buildings and will continue as buildings are restored and
    modernized over time.

        19. Senator Akaka. Mr. DuBois, are we almost finished, or should we
    expect additional requirements in fiscal years 2005, 2006, 2007, and
    the future?
        Mr. DuBois. We currently invest in AT/FP requirements, and we
    anticipate that these requirements will continue into the out-years. As
    threats change, and as criteria and technology evolve, the level of
    investment will also fluctuate.

                                QUALITY OF LIFE

        20. Senator Akaka. Mr. DuBois, funding for a number of budget areas
    that directly affect quality of life for our servicemen and women and
    their families has decreased in this year's budget request. Some
    examples include a $1.5 billion drop in overall MILCON, a $200 million
    cut to family housing, and a reduction that brings Army restoration and
    modernization (R&M) down to 10 percent of the fiscal year 2002 level.
    What impact will cuts such as these have on the quality of life and
    work of our servicemen and women and their families?
        Mr. DuBois. The fiscal year 2004 President's budget request for
    military construction is roughly equivalent to the 2003 request.
        We do not anticipate any negative impacts on the quality of life
    and work life resulting from our budget request. We continue to improve
    the quality of life and work for our Service members. The 2004 request
    reflects 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
    increased funding for facilities sustainment, raising the corporate
    sustainment rate from 93 to 94 percent, which will improve the work
    environment by preserving our facilities and reducing the need for
    future, more costly revitalizations. We also preserved funding for
    recapitalization, another component of our plan to improve the work
    environment.

                                   DEMOLITION

        21. Senator Akaka. Mr. DuBois, what is the Department's current
    guidance to the Services on demolition of excess infrastructure?
        Mr. DuBois. The current guidance--which expires at the end of this
    fiscal year 2003--is the same guidance that has been in place since
    fiscal year 1998. That is the guidance that directed the disposal of 80
    million square feet of identified excess facilities over 6 years. We
    are on track to finish that effort this year. For the future, we have
    funded a continuing demolition program for each military Service
    through fiscal year 2009.

        22. Senator Akaka. Mr. DuBois, are the Services' funds for
    demolition adequate?
        Mr. DuBois. Yes.

        23. Senator Akaka. Mr. DuBois, are we continuing to support
    facilities that we do not need?
        Mr. DuBois. Yes. The April 1998 Report of the Department of Defense
    on Base Realignment and Closure estimated approximately 23 percent of
    DOD's base capacity is excess to support forces projected for 2003. In
    its review of that report, the GAO stated: ``. . . our prior work
    supports the report's general conclusion that DOD continues to retain
    excess capacity.'' However, any estimate of excess capacity is just an
    estimate--only a thorough BRAC analysis can indicate where unnecessary
    infrastructure can precisely and prudently be eliminated.

        24. Senator Akaka. Secretary Johnson, Secretary Fiori, and
    Secretary Gibbs, could each of the Services please discuss their
    demolition programs?
        Secretary Johnson. Demolishing excess facilities which have
    outlived their life cycle usefulness is a key component in properly
    managing our ashore infrastructure since it eliminates associated
    maintenance and repair requirements for these obsolete buildings. Where
    applicable, the Department of the Navy complies with the National
    Historic Preservation Act before undertaking demolition. The Department
    of the Navy utilizes military construction funds, operations, and
    maintenance funds, and Navy Working Capital funds to demolish old,
    excess facilities in compliance with State Historic Preservation Act
    standards.
        Secretary Fiori. In fiscal year 2004, the annual target of 2.7
    million square feet is funded at $36 million. The Army is on track to
    meet the Defense goal to eliminate 53.2 million square feet of excess
    capacity by the end of fiscal year 2003. The Army will fund at a
    minimum of $30 million each year between fiscal years 2005 and 2009 to
    demolish excess capacity.
        Secretary Gibbs. We have pursued an aggressive effort to demolish
    or dispose of facilities that are not economical to sustain or restore.
    From fiscal years 1998 through 2002, we demolished more than 12 million
    square feet of non-housing building space in support of Defense Reform
    Initiative Directive #36. We expect to demolish an additional 2 million
    square feet in fiscal year 2003, for a total reduction of 14 million
    square feet and thereby meet the Defense Reform Initiative Directive
    goal. 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. 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 do not need
    and cannot afford to maintain.

        25. Senator Akaka. Secretary Johnson, Secretary Fiori, and
    Secretary Gibbs, what are each of you doing to eliminate excess
    facilities?
        Secretary Johnson. The Department of the Navy is relying heavily on
    its demolition programs to eliminate old, excess facilities. Where
    applicable, the Department of the Navy complies with the National
    Historic Preservation Act before undertaking demolition.
        Secretary Fiori. The Army has a Facility Reduction Program with a
    plan to demolish 53.2 million square feet (MSF) of unneeded facilities
    between fiscal years 1998 and 2003. To date, we have demolished 47.5
    MSF. We expect to meet our goal by the end of fiscal year 2003. In
    fiscal year 2004 we plan to demolish an additional 2.7 MSF.
        Secretary Gibbs. The Air Force continues to eliminate excess
    infrastructure through our operation and maintenance-funded demolition
    program. Beyond Defense Reform Initiative Directive #36 (fiscal year
    2004 and beyond), we plan to continue to reduce footprint through
    facility consolidation, which will enable demolition/disposal of excess
    facilities (subject to funds availability). This approach considers
    consolidating several compatible functions into one facility, then
    demolishing/disposing of resultant excess buildings.

                                BRAC LAND SALES

        26. Senator Akaka. Secretary Johnson, could you please describe the
    Navy's practices to date for clean-up and disposal of bases closed in
    the BRAC rounds of 1988, 1991, 1993, and 1995?
        Secretary Johnson. The Department of the Navy seeks to transfer
    surplus property as quickly as possible to local communities. While we
    often use leases as an interim step to facilitate reuse, our focus has
    been on moving to final transfer of the property. This helps the
    community with reuse and job generation and saves the Navy from
    extended carrying costs. The Department of the Navy uses all available
    tools to accomplish this goal. Some highlights of the Department's
    efforts are:

             Use of the standard Federal conveyance mechanisms as
            well as the BRAC-unique method of Economic Development
            Conveyance;
             Close coordination with environmental regulators to
            expedite the characterization and clean-up remedy selection;
             Clean-up actions focused on those parcels where early
            reuse is most promising;
             Offering the community the use of early transfer
            authority to convey property before remediation is in place;
             Use of Environmental Services Cooperative Agreement to
            provide funding to support clean-up or caretaker efforts after
            conveyance;
             Integration of the environmental clean-up into the
            redevelopment construction effort to save time and money for
            both the developer and the Department of the Navy;
             Immediate conveyance of the cleaned portions of
            parcels, while other areas undergoing remediation are conveyed
            later; and
             Use of land sale revenue provides additional funds
            that are used to accelerate clean-up.

        To date we have fully transferred 64 installations. Of the
    remaining 26 installations, over half of the land has already been
    conveyed. By the end of this year, we expect to have 18 installations
    containing 12,000 acres still to be disposed.

                      MANAGEMENT OF INSTALLATION PROGRAMS

        27. Senator Akaka. Mr. DuBois, in 1999 DOD developed a standard
    rating scale known as ``C-Ratings'' in order to assess the condition of
    military facilities in each Service. Even though this standard was
    established, a recent GAO report published just last month states that
    there still exists a lack of consistency in how the Services define
    each C-Rating, as well as how often they conduct their assessments, and
    how broad a range of facilities are included in their studies. These
    inconsistencies pose a challenge to the ability to direct funds to the
    facilities that are in the most need of funding, and they also remove
    the ability to accurately track progress made in addressing the Office
    of the Secretary of Defense's goals to reach a 67-year recap rate and
    to eliminate inadequate facilities. Has there been any consideration by
    DOD to create more of a consistent rating scale by modifying how these
    ratings are defined and determined by the Services and if not, why not?
        Mr. DuBois. The Department is continuing to consider how to manage
    and report on military installations and facilities. The guidance and
    definitions for facility C-Ratings were established for the
    Installations' Readiness Report, which the Department submits to
    Congress in accordance with public law. The foundation for this report
    lies with facility condition assessments conducted at military bases.
    DOD is moving now to require common condition reporting. This will help
    overcome some of the inconsistencies GAO found in the Services'
    assessments and in the Installations' Readiness Report C-Ratings as
    well as improve each Service's ability to prioritize work and direct
    funding. The Installations' Readiness Report is the Department's
    initial attempt to establish a correlation between facilities and
    readiness. As that report matures, the Department meets with Service
    representatives to refine its application and enhance its validity with
    the purpose of creating more consistent ratings.

                        INSTALLATIONS MANAGEMENT AGENCY

        28. Senator Akaka. Secretary Fiori, the Army established the IMA in
    October of last year to handle the management of its installations
    programs. How is the Agency structured?
        Secretary Fiori. The IMA is a field operating agency for the
    Assistant Chief of Staff for Installation Management. IMA consists of a
    headquarters element and seven regions worldwide. IMA headquarters,
    located in Crystal City, VA, provides installation management planning,
    programming and budgeting guidance to the regions. The region offices
    manage execution functions for all Army installations and garrisons
    within a geographical area. Three of the regions are outside the
    continental United States in Europe, Korea and the Pacific. The four
    regions in the continental United States align with other Federal
    regions (Federal Emergency Management Agency and Environmental
    Protection Agency). In addition, the Installation Management Board of
    Directors (IMBOD) advises IMA leadership on compelling installation
    issues. The IMBOD consists of 11 senior Army executives (to include
    General Officers, Assistant Secretaries, other Senior Executive Service
    members and the Sergeant Major of the Army) who meet quarterly to
    recommend strategic goals and objectives; recommend program, resource
    and finance strategies; and monitor performance measures and standards.

        29. Senator Akaka. Secretary Fiori, could you please discuss the
    specific problems you hope to address?
        Secretary Fiori. The transformation of installation management,
    represented by the IMA, is a supporting initiative to the overall Army
    transformation. Through the IMA, the Army has created a corporate
    structure for managing all of its installations. IMA uses the corporate
    management structure to streamline procedures for managing
    installations. IMA will conduct business process re-design to develop
    more efficient and effective region and installation management
    business practices. In addition, by shifting the installation
    management responsibility from 14 land-holding major commands (MACOMs),
    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. MACOMs 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.
        IMA enhances the Army's ability to provide consistent and
    standardized services from installation to installation. Soldiers and
    their families can better predict the level and quality of housing,
    child development, safety, recreational programs, educational
    opportunities and overall well-being support services as they move from
    one Army home to another.
        This transformation streamlines the flow of funding directly from
    IMA to garrison commanders; therefore, they can better plan and execute
    installation support programs. In addition, IMA seeks efficiencies by
    maximizing technological enhancements and standardizing statements of
    work and business processes.
        IMA positions installations for Army and Department of Defense
    transformation initiatives. Clearly, IMA represents a new commitment to
    improve installations, preserve the environment, enable well-being of
    soldiers, civilians and family members and support mission readiness of
    all stakeholder units.

        30. Senator Akaka. Secretary Fiori, what are the benefits to the
    Army?
        Secretary Fiori. An important part of the Army's overall
    transformation, IMA is another facet of the Army's effort to streamline
    operations to become more efficient and responsive in meeting a wide
    range of missions. IMA provides the Army with a structure focused
    solely on installation management support requirements and assets. IMA
    furthers the Army's long-standing programs to provide the best quality
    of life possible for soldiers and their families. IMA enables the
    development of multi-function installations to support evolving
    structure and needs. IMA also provides maximum management flexibility
    through a geographic focus, instead of a functional focus as in the
    past.

        31. Senator Akaka. Secretary Fiori, the primary purpose of the IMA
    is to create efficiencies, but one result has been that funds
    previously available to base commanders for their facilities are now
    directed through the regions and the overall IMA organization. What
    solutions might exist to address the shortfalls that base commanders
    previously depended upon to address maintenance problems for their
    facilities?
        Secretary Fiori. Prior to this reorganization, separate Army MACOMs
    managed installation operations. Each MACOM commander divided his
    attention between installations and performing his primary mission.
    Examples of primary missions include training soldiers, maintaining
    ready forces, developing/maintaining/providing supplies and equipment,
    and operational testing. Previously, major command commanders received
    funds from the Department of Army to perform both installation and
    mission functions. With these funds came a level of discretion to
    reprogram between installation and mission accounts. As a consequence,
    installations often suffered, and soldiers encountered a wide disparity
    in terms of services and infrastructure provided from one installation
    to the next.
        Centralized installation management will allow MACOM commanders to
    focus on their primary mission with the Installation Management Agency
    having the responsibility of managing installation support operations.
    A primary goal of the Installation Management Agency is to establish
    common levels of base support services. With the Installation
    Management Agency focusing on improving the quality of installations,
    better installation management decisions can be made. Centralized
    management of our installation operations ensures that the Army has a
    strong installation advocate and provides better control over
    installation funds.
        The separation of mission and installation support functions and
    their respective funding support provides increased controls for
    ensuring funds will be spent for their intended purpose. To migrate
    installation support funds to support other activities requires the
    approval of Department of Army and provides added control over their
    being used in areas other than their originally designated purpose.

        32. Senator Akaka. Secretary Fiori, what is the current status of
    the IMA and any future plans for the organization?
        Secretary Fiori. Currently, IMA is at initial operating capability.
    IMA is meeting the mobilization, deployment, redeployment, and other
    related support requirements of the Army. IMA is creating partnerships
    with Network Enterprise Technology Command (NETCOM) and the Army
    Contracting Agency to improve efficiencies. Recruiting continues to
    fill vacancies at headquarters and regions. The Army Reserve integrated
    its headquarters engineering functions into the IMA Headquarters, with
    an additional policy office established at the Assistant Chief of Staff
    for Installation Management. The transfer of the remaining headquarters
    base operations functions will be accomplished in conjunction with the
    Army Reserve Restructuring initiatives.
        Starting in fiscal year 2004 headquarters, IMA will fund the
    garrisons directly. Volunteers will move among region offices into
    permanent positions (right skills in the right locations). Garrisons
    will be on the IMA table of distributions and allowances (TDA). By the
    end of fiscal year 2004 region TDAs will be adjusted to reflect
    business process redesign and full operating capability will be
    achieved.

        33. Senator Akaka. Secretary Fiori, how have current operations and
    funding to support them affected the Army's implementation of IMA?
        Secretary Fiori. Current operations have not expressly hurt Army's
    implementation of IMA but have made IMA's mission much more complex.
    The requirement to cash-flow or borrow against current funds to support
    the global war on terrorism and Operation Iraqi Freedom has put
    pressure on an already constrained base support program. In addition to
    the cash-flow complexity, installation facilities and services are
    operating at increased levels to support soldiers and their families,
    driving costs further above budgeted levels. As a consequence, the
    Army's cash position is getting perilously low, and we urgently need
    full restoration in the form of a supplemental appropriation. IMA has
    instructed installation commanders that support of current operations
    supercedes other requirements and to fund these needs as they arise. In
    order to remain solvent many installation commanders have deferred
    facility restoration and modernization projects to conserve funds for
    these needs. Without adequate restoral from requested supplemental
    appropriations, installation facilities will continue to deteriorate
    and many vital services will suffer.

                           NAVY INSTALLATION COMMAND

        34. Senator Akaka. Secretary Johnson, in your written testimony you
    discuss the creation of the Navy Installation Command planned for
    October 2003 with an associated cost savings estimate of $1.6 billion
    over the next 6 years. What are the factors of this initiative that
    account for the estimated $1.6 billion cost savings?
        Secretary Fiori. We anticipate savings in personnel, facilities and
    base operational costs due to:

             Streamlining of shore installation management
            procedures and policies;
             Elimination of redundant headquarters management
            functions and cost;
             Greater contractual efficiencies to provide facilities
            services;
             Simplification of the budgeting and funding process;
             Increased consistency in standards and levels of
            performance for base operations across Navy installations;
             More focused support from contractors and support
            organizations;
             Expansion of regional management concept in providing
            installation support; and
             Greater use of information technology tools to
            increase efficiency.

        35. Senator Akaka. Secretary Gibbs, what steps has the Air Force
    taken to efficiently manage its installations and to ensure that the
    correct facilities are receiving the funding that they need?
        Secretary Gibbs. The Air Force considers its installations critical
    to operational success. We fly and fight from our installations, both
    overseas and in the United States. 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. We believe that facility
    management success begins at the bottom--direct installation commander
    involvement is crucial.
        Accordingly, ultimate responsibility for an installation rests with
    the installation commander. Installation commanders are kept apprised
    of facility related issues and control the major facility management
    priorities for the installation. They ``own'' indigenous facility
    management capabilities--facility operations and maintenance;
    engineering planning, design, and construction management; fire
    protection; and environmental management.
        The Air Staff and MAJCOMs employ facility management staffs to
    support installations with continuity of management standards and
    certain core technical expertise not practically staffed separately at
    each installation.
        Although the Air Force takes a generally decentralized approach to
    installation management, certain programs are managed centrally at the
    Air Staff.
        Military construction project prioritization. Installations develop
    and submit military construction project programs to the MAJCOMs
    (including the Air National Guard and Air Force Reserve), who in turn
    submit MAJCOM military construction programs to the Air Staff. The Air
    Staff uses the Air Force MILCON Model to develop a single, integrated
    priority list (IPL). The resultant IPL emphasizes overall Air Force
    priorities, which stem directly from installation commander priorities.
        Military family housing and dormitory investment prioritization.
    The Air Force's family housing and dormitory master plans are road maps
    for meeting OSD's housing and dormitory investment goals. The Air Staff
    centrally manages these plans, in order to provide consistent facility
    standards and investment recommendations across all MAJCOMs and
    installations. Our annual housing and dormitory budget requests are
    developed using these plans.
        Environmental restoration. The restoration program and funding
    strategy are aligned with Defense Planning Guidance restoration program
    goals to address Air Force-wide ``worst first'' requirements, based on
    risk to human health and the environment.

                              HOUSING INITIATIVES

        36. Senator Akaka. Secretary Johnson, Secretary Fiori, and
    Secretary Gibbs, it seems that each of the Services has a different
    approach to addressing inadequate housing concerns. Could each of you
    please discuss your priorities for improving both barracks or
    dormitories and family housing?
        Secretary Johnson. Eliminating inadequate family and bachelor
    housing is a high priority for the Department of the Navy. We are on
    track and aggressively pursuing the elimination of inadequate family
    and bachelor housing by fiscal year 2007.
        Secretary Fiori. The Army places a very high priority on improving
    housing for single soldiers and families. The fiscal year 2004 budget
    contains $737.9 million in Military Construction, Army funds to improve
    barracks for 5,500 soldiers bringing our extensive capital investment
    campaign to 79 percent of completion. Three years ago we had a program
    to improve our family housing by 2014. Today, thanks to significant
    funding and an aggressive privatization program, we have plans and
    funding in place to eliminate our inadequate housing by 2007. Further,
    DOD has raised housing allowances so families living off post are able
    to find adequate housing.
        Secretary Gibbs. 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 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 priority for family housing investment is to eliminate all of
    our inadequate housing. The Family Housing Master Plan is our roadmap
    and outlines our requirements for revitalization, divestiture through
    privatization, and demolition. Currently, the Air Force has 40,000
    inadequate units in its inventory. With the exception of four bases, we
    will eliminate all of our inadequate housing in the United States by
    2007. The remaining U.S. bases will be complete in 2008, and inadequate
    bases at our overseas bases will be eliminated by 2009.

        37. Senator Akaka. Secretary Johnson, Secretary Fiori, and
    Secretary Gibbs, please discuss your experience with privatization
    programs to date.
        Secretary Johnson. The Department of the Navy has executed 9
    Public-Private Venture Family Housing projects to date (Corpus Christi/
    Ingleside TX, Kingsville TX, Everett 1 and 2 WA, Camp Pendleton 1 CA,
    San Diego 1 CA, New Orleans LA, South Texas, and Beaufort/Parris Island
    SC) resulting in the privatization of over 8,300 homes. These 9
    projects conveyed 1,100 adequate homes (no renovation work required)
    and will result in the renovation, replacement or new construction of
    over 7,200 homes over the first few years.
        The Department of the Navy has realized over $746 million in
    initial construction for a Government investment of only $159 million.
    This is over four times as many homes as we would have been able to
    address utilizing traditional methods, with quality that surpasses
    traditional military construction projects.
        The Defense Authorization Bill for Fiscal Year 2003 contained pilot
    Public Private Venture (PPV) authority for acquisition or construction
    of bachelor housing. This legislation gave the Department of the Navy
    authority to pursue no more than three unaccompanied bachelor housing
    PPV pilot projects. We are developing pilot unaccompanied housing
    privatization projects for Hampton Roads, VA; Camp Pendleton, CA; and
    San Diego, CA. We hope to be able to complete the concepts for these
    projects before the end of this fiscal year.
        Secretary Fiori. The 1996 Military Housing Privatization Initiative
    (MHPI) improves housing much faster and at less expense than
    traditional military construction (MILCON). The Army's flexible
    procurement approach reduces time, costs, and allows for the
    collaboration with a development partner to design and build integrated
    residential communities. We have seen significant progress at the 4
    installations that have transitioned to privatized operations. Over 700
    new homes have been constructed, more than 1,000 homes renovated; and
    over 700 new homes are under construction. We have learned and applied
    many lessons in the process.
        Key stakeholder involvement is critical to the success of the
    project (e.g., local governments, school districts, businesses,
    employees, and soldiers and their families). Key issues such as
    schools, infrastructure upgrades, environmental issues, historic
    preservation compliance, housing market analysis, basic allowance for
    housing surveys, and other issues must be addressed early on and during
    the entire process. The Army developed RCI minimum standards for new
    and replacement housing to ensure quality housing and communities for
    all installations. The RCI program is also developing standard
    boilerplates where appropriate, but generally each Community
    Development and Management Plan is negotiated to reflect the unique
    characteristics of the installation and local community. Further, as
    the process evolves and the different review agencies gain familiarity
    with the program/projects, review times are being reduced.
        The Army is implementing a portfolio management process for
    monitoring construction, renovation, operations, and project finances.
    The goal of portfolio management is to systematically oversee the
    management of real estate assets to protect the government's interests
    over the 50-year term of the projects.
        Secretary Gibbs. We have had success with our program to date, with
    five projects awarded. While this equates to less than one project per
    year since we received the Military Housing Privatization Initiative
    authorities in fiscal year 1996, we expect to award an additional eight
    privatization projects in the next 12 months.
        While each project is different, we have been successful in
    leveraging private-sector funds in each housing privatization project,
    with an average in excess of 6: 1. This means that for every dollar of
    government funds we commit to the project, we get better than six
    dollars in equivalent military construction, a very good return on our
    investment.
        The projects that have been awarded to date were pilot projects,
    and we have learned many lessons from each of these projects as well as
    the projects that are currently in solicitation. We are incorporating
    these lessons into each new project. For example, we use a generic
    Request for Proposal template to accelerate and standardize the
    submissions and evaluations, and we benchmark the fees and construction
    costs the developers propose to ensure that we are getting a good deal
    and maximize the benefit to the government.
        In terms of quality of life on the part of the military member and
    their families, they are very satisfied with the quality of the homes
    and with the operations and maintenance by the real estate management
    firms. Despite initial misgivings on the part of some commanders, the
    projects are now well received by the commanders, as they see the
    benefits to the member and to the Air Force.

        38. Senator Akaka. Secretary Johnson, Secretary Fiori, and
    Secretary Gibbs, what are your plans for privatization in the future?
        Secretary Johnson. The Department of the Navy ultimately plans to
    privatize approximately 69 percent (53 percent Navy and 95 percent
    Marine Corps) of its worldwide family housing inventory by the end of
    fiscal year 2007 in order to eliminate all inadequate family housing
    and improve community support facilities for marines, sailors, and
    their families.
        The quality of homes and services obtained through public-private
    venture initiatives has been excellent and residents have been pleased.
    Privatization initiatives will not only accelerate the improvement of
    family housing, but will ensure the homes and facilities are maintained
    in good condition over the next 50 years.
        We are developing pilot unaccompanied housing privatization
    projects for Hampton Roads, VA; Camp Pendleton, CA; and San Diego, CA.
        Secretary Fiori. The Army's RCI program includes 28 projects
    totaling over 71,000 houses in the U.S. projects at Forts Carson, CO;
    Hood, TX; Lewis, WA; and Meade, MD (consisting of over 15,700 houses)
    have been implemented, and the remaining 24 projects are in progress or
    planned through fiscal year 2005. Our plans are to transition these
    projects to privatized operations in a timely manner, while ensuring
    the long-term value and stability of the privatization agreement.
    Ongoing and future project information is provided below.
        The Army has selected partners for nine additional projects: (1)
    Fort Bragg, NC; (2) Presidio of Monterey and Naval Postgraduate School,
    CA; (3) Fort Campbell, KY; (4) Fort Belvoir, VA; (5) Fort Hamilton, NY;
    (6) Fort Irwin, Moffett Community Housing and Parks Reserve Forces
    Training Area; (7) Fort Stewart and Hunter Army Airfield; (8) Forts
    Eustis, Story, and Monroe; and (9) Fort Polk. Installation teams are
    collaborating with these partners to develop 50-year business plans
    called Community Development and Management Plans. Transfers of assets
    and operations are expected to occur in late fiscal year 2003 and
    fiscal year 2004.
        The Army has four projects in various stages of procurement: (1)
    Picatinny Arsenal, NJ; (2) Walter Reed Army Medical Center, DC; (3)
    Fort Detrick, MD; and (4) Fort Shafter and Schofield Barracks, HI.
        The Army plans to solicit partners for the remaining 11 projects in
    fiscal year 2003 and 2004: (1) Fort Leonard Wood, MO; (2) Fort Sam
    Houston, TX; (3) Fort Bliss, TX; (4) Fort Drum, NY; (5) Carlisle
    Barracks, PA; (6) Fort Benning, GA; (7) Fort Rucker, AL; (8) Fort
    Gordon, GA; (9) Fort Knox, KY; (10) Fort Leavenworth, KS; and (11)
    Redstone Arsenal, AL.
        The Army is also implementing a portfolio management process for
    monitoring construction, renovation, operations, and project finances.
    The goal of portfolio management is to systematically oversee the
    construction, operations, finances, and management of the project to
    ensure operational compliance and financial stability over the 50-year
    term of the projects.
        Secretary Gibbs. We plan to award eight projects in the next 12
    months, and we continue to analyze our U.S. bases for additional
    privatization opportunities. We may add as many as 19 additional
    privatization initiatives to meet our aggressive 2007 timeline. In the
    end, we expect to privatize roughly 60 percent of our U.S. housing
    inventory.

        39. Senator Akaka. Secretary Johnson, could you please give us an
    update of the Navy's Homeport Ashore initiative?
        Secretary Johnson. 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 National Defense Authorization Act for Fiscal
    Year 2001 that allowed the payment of BAR to E4s without dependents who
    are assigned to sea duty. The Navy expects to achieve its ``home port
    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.

        40. Senator Akaka. Secretary Johnson, in your written testimony you
    state that the Navy ``relies first on the local community to provide
    housing for our sailors, marines, and their families.'' Given today's
    threat environment, how does the Navy propose to address force
    protection concerns for those sailors and marines living off base on
    the local economy?
        Secretary Johnson. The Navy's force protection plans for families
    living in the private sector are much the same as for civilians.
    Currently, about three out of every four Navy families live in the
    private sector, side by side with their civilian counterparts. Security
    and protection for these families are provided through the existing
    network of Federal, State, and local law enforcement authorities
    currently protecting all of our citizens.
        The dispersal of military personnel into the private sector reduces
    the exposure of military personnel to force protection threats.
        The regular training and awareness provided active duty members on
    the issue of anti-terrorism and force protection contributes to the
    safety of military families regardless of where they live.

                            UTILITIES PRIVATIZATION

        41. Senator Akaka. Mr. DuBois, in last year's testimony you stated
    that the Department was in the middle of reviewing the direction to the
    Services to privatize all utility systems by September 2003. As a
    result of your review, have you adjusted the completion milestone for
    utilities privatization? If so, what is the new completion target date?
        Mr. DuBois. Yes, following a review of each of the Service's plans
    for completing utility privatization evaluations, the Deputy Secretary
    of Defense directed the Defense Components to make source selection
    authority decisions on all utility privatization evaluations by
    September 30, 2005.

        42. Senator Akaka. Mr. DuBois, what were the factors that
    contributed to the decision to move back the completion date?
        Mr. DuBois. The DOD Utilities Privatization Program has proven to
    be more complex and time consuming than originally envisioned. The
    Defense Components have taken longer to complete evaluations than was
    anticipated when the previous completion date was set in 1998. In the
    fall of 2001, industry representatives indicated that the quantity of
    utility privatization solicitations was too great for them to complete
    quality proposals prior to the closure dates. With over 750
    solicitations already pending and the potential for another 500 being
    issued, it was prudent to refine the guidance to incorporate numerous
    lessons learned by the Components in new solicitations to make a number
    of process improvements. The Components are aggressively executing
    their utility privatization programs on schedule.

        43. Senator Akaka. Secretary Johnson, Secretary Fiori, and
    Secretary Gibbs, could each of you please discuss the status of your
    utilities privatization efforts?
        Secretary Johnson. The Department of the Navy is following a
    thorough and deliberate process of privatizing its utility systems. As
    of March 2003, the Department has issued requests for proposal (RFPs)
    for 618 of 662 utility systems, or 93 percent. Of these 618 proposals,
    RFPs for 278 systems, or 45 percent, have closed, and these systems are
    now being evaluated, and three systems have been privatized. A total of
    24 systems have been exempted from privatization due to security
    concerns prior to issuance of an RFP, or due to economic reasons as a
    result of the RFP.
        Secretary Fiori. The Army has a successful utilities privatization
    program. At overseas locations, we use host nation laws and regulations
    and international agreements to privatize eligible systems. We have
    privatized 215 of 589 systems in Europe. In Japan and Korea, 128
    systems are exempted because privatization is not possible. We are
    focused on privatizing large systems in the United States and have
    privatized 67 and exempted 27 of 351 eligible systems. The remaining
    257 systems are in various stages of the privatization procurement
    process.
        Secretary Gibbs. In accordance with OSD guidance, the Air Force
    will attempt to privatize its utility systems through competitive
    sourcing first, followed by sole source negotiations with the local
    provider if there is no market interest. Of the 499 utility systems
    available for privatization, there are 194 utility systems still
    remaining to go through a privatization evaluation. These systems will
    be released by May 2004, under revised Request for Proposal and Right
    of Way templates that were developed in conjunction with utility
    industry representatives. In addition, we have developed a Request for
    Proposal template specifically for sole-source solicitations with
    regulated utility providers. We anticipate these efforts will increase
    interest in Air Force systems and streamline the evaluation process.

        44. Senator Akaka. Secretary Johnson, Secretary Fiori, and
    Secretary Gibbs, how many of your utilities systems have been
    identified as candidates for privatization?
        Secretary Johnson. The Department of the Navy has 662 utility
    systems that have been identified as available to privatize. Of these,
    24 systems have been exempted to date for either security or economic
    reasons. The remaining 638 systems are candidates for privatization. Of
    these, three systems have been privatized.
        Secretary Fiori. The Army identified 351 systems for privatization
    in the United States. Of these, the Army has privatized 67 and exempted
    27 with the remaining 257 currently available as candidates for
    privatization.
        Secretary Gibbs. Of the 650 utility systems in the Air Force, 499
    are available to privatize.

        45. Senator Akaka. Secretary Johnson, Secretary Fiori, and
    Secretary Gibbs, approximately what percentage of your utilities
    systems do you expect to be able to privatize?
        Secretary Johnson. The Department of the Navy has not made any
    predictions of what percentage of its utility systems will be
    privatized. Not all utility systems have the same potential to provide
    industry with the return on investment they feel necessary before they
    make a proposal. The final number of awards will be dependent upon
    industry's ability to develop innovative proposals. The Department's
    open-ended performance solicitations are meant to facilitate industry's
    ability to develop these business opportunities.
        Secretary Fiori. We are advertising 100 percent of our systems for
    privatization. There are a total of 940 systems in Europe and the
    United States. Of that total we expect to privatize approximately 80
    percent.
        Secretary Gibbs. Based on the level of interest and the economics
    of the proposals we have received to date, we estimate privatizing 20
    percent of our candidate systems.

        46. Senator Akaka. Secretary Johnson, Secretary Fiori, and
    Secretary Gibbs, are you on track to meet the date set by the Office of
    the Secretary of Defense?
        Secretary Johnson. In its 9 October 2002 ``Revised Guidance for the
    Utilities Privation Program,'' the Office of the Secretary of Defense
    established a date of 30 September 2005 for the Services to have a
    source selection decision for each of its utility systems. The
    Department of the Navy is on schedule to complete the utilities
    privatization process to meet this goal.
        Secretary Fiori. Yes, the Army is on track to complete a
    privatization evaluation for each utility system by September 30, 2005
    as set by the Office of the Secretary of Defense.
        Secretary Gibbs. The Air Force has developed a very aggressive
    schedule that will allow us to meet OSD's 30 September 2005 completion
    milestone.

                   OVERSEAS BASING AND MILITARY CONSTRUCTION

        47. Senator Akaka. Secretary Johnson, Secretary Fiori, and
    Secretary Gibbs, could each of you please discuss the support you
    currently receive through host nation construction programs such as
    Japan Facilities Improvement Program (JFIP) in Japan and the Funded
    Construction Program in Korea as well as support in Europe?
        Secretary Johnson. The Navy and Marine Corps receives host nation
    funded construction (burden-sharing) support from Japan and Korea. The
    Japanese Facilities Improvement Program is funded by the Japanese
    Defense Agency and supports four categories of projects: force
    structure or mission increases, family housing and community support,
    Japanese initiatives including environmental and safety issues, and
    service initiatives. In Korea, two cost sharing programs are in use
    including the Combined Defense Improvement Fund (CDIP) and the Republic
    of Korea Construction Fund (ROKCF). The CDIP supports construction of
    facilities to improve combat operations, war reserves and combined
    U.S./Korea operations. The ROKCF supports quality of life and sole U.S.
    use projects. In Europe, we use every available funding source,
    including the NATO Security Investment Program (NSIP) for those
    eligible projects, residual value and payment-in-kind in partnership
    with the host nations.
        Secretary Fiori. The host nation funded construction programs
    consists of the Facilities Improvement Program (FIP) in Japan, the CDIP
    and the ROKFC program in Korea. In Europe, we also have a payment-in-
    kind (PIK) program in Germany under which we use residual value to
    build facility.
        The primary host nation funded construction program is the FIP,
    which has provided about $700 million of construction per year. The
    program was implemented in 1979 and over the past 20 years, the
    Government of Japan has built $19 billion of new quality of life and
    operational facilities for our U.S. service members.
        In Korea, the CDIP was initiated in 1982 by the Republic of Korea
    (ROK) to share the financial burden of maintaining U.S. forces in
    Korea. The CDIP funds projects that support only warfighting and
    operational facilities and total about $50+ million of construction per
    year.
        The ROKCF program was established in 1991. It provides well-being
    facilities, infrastructure, as well as warfighting projects. The ROKCF
    program funds about $135+ million of construction per year.
        Residual value is a method for Germany to provide compensation for
    the Army's improvements to facilities on installations we return to
    Germany. PIK is residual value that comes in the form of construction
    credits. The PIK program awarded $244 million in construction projects
    through fiscal year 2002.
        Secretary Gibbs. The Air Force receives support, in the form of
    host-nation funded construction, from NATO, Japan, and Korea. In recent
    years, that support has averaged roughly $300 million per year. The
    funds provided by these countries are used to construct facilities that
    directly support Air Force missions, as well as facilities that support
    quality of life for Service members and their families stationed
    overseas.
        For example, The NATO contribution helps offset construction
    supporting the Air Force's roles in the NATO mission. The Japan
    Facilities Improvement Program (JFIP) supports ``defensive''
    warfighting capabilities, such as aircraft shelters, and may be used to
    replace ``offensive'' capability facilities that predate 1979. The
    Korean CDIP funds combined Republic of Korea-United States warfighting
    requirements; while the ROKCF program funds mission support and
    quality-of-life requirements.
        In addition, under the Rhein Main transfer program, Germany is
    helping to pay for facility construction at Ramstein and Spangdahlem
    Air Bases necessary to relocate the missions currently at Rhein Main
    Air Base. In total, Germany is investing nearly $400 million to help
    pay for construction associated with this relocation. The majority of
    this construction will occur in 2004 and 2005.

        48. Senator Akaka. Secretary Johnson, Secretary Fiori, and
    Secretary Gibbs, what is the status of each of these programs and how
    do we currently benefit from these partnerships?
        Secretary Johnson. All of these programs are active and help share
    the financial burden of a forward deployed posture. In fiscal year 2002
    we received $341 million from the JFIP program to include $80 million
    for improvements to the Yokosuka Carrier Pier, and $4.5 million from
    ROKCF to include a $3.8 million Medical Clinic in Chinhae. In Europe,
    we use every available funding source, including the NATO Security
    Investment Program (NSIP) for those eligible projects, residual value
    and payment-in-kind in partnership with the host nations.
        Secretary Fiori. The various host nation funded construction
    programs continue to be active and important programs for our forces
    overseas by providing quality of life and operational facilities at
    little or no cost to the U.S. taxpayer.
        Secretary Gibbs. The Air Force receives support, in the form of
    host-nation funded construction, from NATO, Japan, and Korea. In recent
    years that support has averaged roughly $300 million per year. The
    funds provided by these countries are used to construct facilities that
    directly support Air Force missions, as well as facilities that support
    quality of life for Service members and their families stationed
    overseas.
        For example, The NATO contribution helps offset construction
    supporting the Air Force's roles in the NATO mission. The Japan
    Facilities Improvement Program (JFIP) supports ``defensive''
    warfighting capabilities, such as aircraft shelters, and may be used to
    replace ``offensive'' capability facilities that predate 1979. The
    Korean CDIP funds combined Republic of Korea-United States warfighting
    requirements; while the ROKCF program funds mission support and
    quality-of-life requirements.
        In addition, under the Rhein Main transfer program, Germany is
    helping to pay for facility construction at Ramstein and Spangdahlem
    Air Bases necessary to relocate the missions currently at Rhein Main
    Air Base. In total, Germany is investing nearly $400 million to help
    pay for construction associated with this relocation. The majority of
    this construction will occur in 2004 and 2005.

        49. Senator Akaka. Secretary Fiori, could you please give an update
    on the Army's Efficient Basing East (EBE) initiative? What were the
    reasons to pursue these initiatives, and what are the benefits or cost
    savings that we expect to gain?
        Secretary Fiori. EBE will consolidate the activities of 13
    installations in Germany onto one installation in the Grafenwoehr area,
    allowing for the closure of 12 aging inefficient installations and the
    partial closure of a 13th. EBE will enhance unit readiness and
    effectiveness by improving command and control by consolidating a
    brigade now scattered over 25 square miles to one location. It will
    enhance force protection by reducing the number of installations that
    must be guarded. Training will improve by relocating units closer to
    major training areas. Soldier quality of life will also be improved
    because new housing, and renovated or new mission facilities will be
    provided in lieu of currently occupied poor condition and inefficient
    pre-WWII facilities.
        EBE is a 5-year phased program (fiscal years 2003-2007). The total
    cost for EBE military construction, Army (MCA) construction is
    estimated at $558.2 million. In fiscal year 2003, projects for site
    preparation, utilities infrastructure, and barracks are funded at $69.9
    million. In fiscal year 2004, $76 million has been requested to
    construct troop barracks, troop support facilities, maintenance
    facilities, and operations facilities. In fiscal year 2004, Department
    of Defense Education Activity has programmed $37.1 million for school
    projects and Department of Defense Health Affairs has programmed $12.6
    million for a dental/health clinic expansion. Army family housing
    requirements will be satisfied with construction of 1600 build-to-lease
    units in fiscal years 2005-2008.
        Approximately $19 million annually in estimated savings will be
    achieved once EBE is completed. Savings will be from reduced base
    operational costs and installation management overhead because of a
    reduced footprint and eliminating small, costly, and inefficient
    installations. Additional savings will also be realized from reduced
    operational training costs.

        50. Senator Akaka. Secretary Fiori, could you please give an update
    on the Land Partnership Plan with Korea?
        Secretary Fiori. The Land Partnership Plan (LPP) agreement 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 locations 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 1 July
    2003. The LPP has a provision to modify the installations specified if
    needed.

        51. Senator Akaka. Secretary Johnson, Secretary Fiori, and
    Secretary Gibbs, recently there has been discussion surrounding the
    increased strategic importance of both Guam and Hawaii in considering
    future forward presence in the Pacific. Could each of you please
    discuss future strategic considerations for both Guam and Hawaii as
    they relate to your respective missions?
        Secretary Johnson. The Navy and Marine Corps has long recognized
    the strategic value played by both Guam and Hawaii in support of the
    Joint Force. Both are essential to maintaining the U.S. forward Naval
    presence within the Asia Pacific Rim and significantly improve the
    operational flexibility and efficiency of Naval forces.
        Together with the Office of the Secretary of Defense, we are
    studying various options for both Guam and Hawaii as we move forward
    with the Navy and Marine Corps' new Global Concept of Operations
    (CONOPs). Under the Global CONOPs, today's carrier battle groups
    (CVBGs) and amphibious ready groups (ARGs) will be re-configured into
    carrier strike groups (CSGs) and expeditionary strike groups (ESGs). In
    addition, the CONOPs also envisions surface action groups (SAGs)
    devoted to theater ballistic missile defense. Both Guam and Hawaii are
    being reviewed in various contexts to ascertain the best way of
    maximizing the forward deterrent value of these forces.
        The Navy has already taken steps to improve its forward deployed
    posture by implementing a plan to homeport three fast attack submarines
    (SSNs) in Guam. Submarine Squadron 15 was established in Guam in fiscal
    year 2002, the U.S.S. City of Corpus Christi arrived in October 2002,
    the U.S.S. San Francisco arrived in December 2002, and the U.S.S.
    Houston is to arrive in 2004. Forward basing SSNs in Guam reduces
    transit time to/from station, equating to greater time ``in theater''
    and additional mission days to fulfill national and fleet requirements.
    Guam is 2,100 nautical miles (7 full steaming days) closer to the
    Arabian Gulf than Norfolk and Pearl Harbor, and as such, it is uniquely
    positioned to support continued Naval forward presence in the Pacific
    in the future. Additionally, its status as a U.S. territory allows
    storage and loading of pre-positioned war munitions without the need to
    obtain the consent of a foreign government. Moreover, Guam can be used
    as an intermediate staging base and safe haven for potential non-
    combatant evacuation operations within the Pacific theater. Finally,
    both Guam and Hawaii do not have any diplomatic issues to address.
    Guam, as a U.S. territory, is the only guaranteed fail-safe against the
    loss of basing rights in East Asia.
        Hawaii is home to the Commander, U.S. Pacific Fleet, U.S. Submarine
    Force, three submarine squadrons and their 25 submarines assigned to
    Pearl Harbor. COMNAVMIDPAC Headquarters and numerous surface warships
    are homeported in Pearl Harbor, Hawaii. The Pacific Fleet's Maritime
    Surveillance and Reconnaissance Commander's headquarters (with four VP
    and VPU (P-3) squadrons) are located at MCB Kaneohe Bay. These forces
    are approximately 1 week closer to the Asia Pacific region than are
    West Coast forces, and thus, add flexibility/quicker response times to
    mission essential tasking. Pearl Harbor is the largest U.S. Naval Base
    outside of the continental United States. Consideration is being given
    to a proposal to relocate additional warships from the West Coast to
    Pearl Harbor to take advantage of Hawaii's proximity to the WESTPAC
    theater of operations. However, considerable infrastructure would be
    required to make such a move. Lastly, NCTAMS PAC is the main hub for
    Pacific Command (Joint) Communications.
        Secretary Fiori. East Asia and the Pacific will continue to be a
    region of strategic importance and is the focus of the Army's
    transformation efforts. Given the vast expanse of the Pacific Ocean and
    the great distances between the Continental United States (CONUS) and
    East Asia, stationing U.S. Army forces forward is absolutely critical
    to reducing response time for potential contingency operations in the
    region. Hawaii and Guam are key locations for basing of forces and
    providing sustained logistical support to Army forces.
        In the future, Hawaii will continue to be an important forward base
    in support of U.S. military objectives in the Pacific. The 25th
    Infantry Division will play a critical role in the Army's efforts to
    transform the Legacy Force into the Objective Force of the future that
    will provide Commander, Pacific Command (PACOM) with a more lethal and
    survivable force that maximizes the use of the latest information
    technology. Starting in fiscal year 2004, military construction
    resources will be dedicated to preparing facilities in Hawaii for
    interim and future transformation efforts. Key programs include
    upgrades of training facilities, expansion of troop barracks and
    construction of an information systems facility.
        Guam's location provides the Army with an indispensable support
    base for operations in the East Asian Littoral. While there are no
    active Army combat forces stationed on Guam, Guam provides important
    logistical and maintenance support for the Army vessels that make up
    the Army Pre-positioned Stocks (APS) 3 afloat fleet. With its airfield,
    seaport and strategic location, Guam can serve as an Intermediate
    Staging Base (ISB) to support contingencies in the East Asian Littoral,
    as well as Northeast Asia. The Army National Guard has a construction
    project in the Future Years Defense Program for a Combined Maintenance
    Facility on Guam.
        Secretary Gibbs. Both Hickam Air Force Base, Hawaii, and Andersen
    Air Force Base, Guam, are important strategic enroute locations for air
    power projection in the Pacific theater. The robust infrastructure, to
    include extensive airfield pavement and fuel storage, at both locations
    make them key in creating and sustaining the airbridge connection
    between the continental United States and points in the Pacific region.
    With the global war on terrorism and heightened tensions in Southwest
    Asia, combined with the loss of our military installations in the
    Philippines, these bases have become increasingly vital.

        52. Senator Akaka. Secretary Johnson, Secretary Fiori, and
    Secretary Gibbs, what kind of MILCON requirements do you foresee in
    support of these missions?
        Secretary Johnson. No additional military construction is currently
    needed at Guam to support the homeporting of three fast attack
    submarines.
        The Navy is considering a proposal to relocate additional warships
    from the West Coast to Pearl Harbor to take advantage of Hawaii's
    proximity to the WESTPAC theater of operations. However, considerable
    infrastructure would be required to make such a move. If this proposal
    is considered to be in the best interests of the Navy, infrastructure
    requirements (if necessary) would be reflected in future budget
    submissions.
        The roles of Guam and Hawaii in the Marine Corps strategic basing
    plans are under study. When the Marine Corps strategic plans are
    complete, MILCON requirements will be programmed accordingly.
        Secretary Fiori. The Army is planning to make significant MILCON
    investment in Hawaii in support of our presence in the Pacific.
    Currently known Military Construction, Army (MCA) requirements that
    support the Hawaii transformation and combat systems include various
    training facilities, land acquisition, airfield upgrades, maintenance
    facilities, barracks and road improvements. The Army National Guard and
    Army Reserve have requirements that include training and maintenance
    support facilities and an Army Reserve Center.
        The Army National Guard has a requirement for a Combined
    Maintenance Facility on Guam.
        Secretary Gibbs. At Hickam AFB, we are bedding down C-17s, which
    will drive over $100 million in military construction requirements.
        We are considering a number of permanent beddown options at
    Andersen AFB. If we decide to beddown any new missions at Andersen AFB,
    we will require military construction projects to enhance the flight
    line and base operations, construct additional personnel housing,
    improve the utilities infrastructure, and provide community support
    facilities.

                                    VIEQUES

        53. Senator Akaka. Secretary Johnson, what are the MILCON or land
    acquisition requirements associated with the Navy's Training Resource
    Strategy and the cessation of training at Vieques?
        Secretary Johnson. There are no MILCON projects for Training
    Resource Strategy (TRS) in the fiscal year 2004 future years defense
    plan. We are in the process of determining possible facility needs at
    NAS Key West in support of TRS.
        The Training Resource Strategy uses existing Department of Defense
    ranges and training facilities along the East and Gulf coasts. The Navy
    is providing minor construction enhancements and repairs to existing
    facilities in order to provide the support needed for TRS requirements.
        There are no known land acquisition requirements associated with
    TRS.

        54. Senator Akaka. Secretary Johnson, how many of these
    requirements are funded across the future years defense plan?
        Secretary Johnson. All minor construction enhancement and repairs
    to existing facilities in order to provide support needed for TRS
    requirements are accounted for in the fiscal year 2004 future years
    defense plan.
        There are no MILCON projects to support TRS in the fiscal year 2004
    future years defense plan. However, if it is determined that MILCON is
    needed to satisfy TRS requirements, these projects would be included in
    future budget submissions.

                             ENVIRONMENTAL PROGRAMS

        55. Senator Akaka. Mr. DuBois, last year, Congress appropriated
    $478 million for pollution prevention (also called ``P2'') and
    environmental technology, the budget categories designed to help us
    with the environmental problems of the future. This year, the
    Department has requested only $362 million for P2 and technology, a
    reduction of almost 30 percent. Does the administration believe that
    its budget fully addresses all potential areas of environmental
    research and pollution prevention that would have a long-term payback
    for the Department, and that nothing has been left on the table?
        Mr. DuBois. The Department has made great strides in implementing
    pollution prevention and there continue to be areas in environmental
    technology, including pollution prevention, that are ripe for
    investment.
        Yes, the Department of Defense's budget request does fully address
    our pollution prevention needs. The Department's pollution prevention
    program has evolved over the past several years. The DOD components
    have achieved all of the pollution prevention goals previously
    established. They have also worked diligently to incorporate pollution
    prevention into every day decision making across all missions and
    functions. Many of the pollution prevention investments have been
    initial purchases of equipment and material substitution, which the DOD
    components have completed. Instead of using pollution prevention funds,
    the various functional areas are now investing in the new generations
    of equipment and materials that are both more efficient and less
    polluting, as part of normal equipment cycles and budgets. In addition,
    many of the investments in compliance, while they address a traditional
    compliance driver, are focused on the front end of a process or a
    material substitution--prevent the creation of pollution rather than
    collecting and treating pollution. The next evolution is the
    establishment of environmental management systems (EMS). Effective EMS
    will further help installations and activities identify, prioritize,
    and address risks--risks to mission, risks to resources, risks to the
    environment (pollution).
        Executive Order 13148 established new pollution prevention goals--
    reduce Toxic Release Inventory (TRI) emissions 40 percent between 2001
    and 2006. We have just received the 2001 TRI numbers. The DOD
    components are now analyzing the TRI numbers and identifying areas that
    are economically and technically feasible for reductions. They will
    budget to address these problems in future budget requests.
        The Department is committed to sound investments in technology,
    including the Strategic Environmental Research and Development Program
    (SERDP). As reflected in the President's budget, the Department
    continues to be strongly committed to SERDP. This technology program is
    critical to meeting our environmental obligations, preserving access to
    DOD ranges, and lowering the environmental costs across the Department.

        56. Senator Akaka. Secretary Gibbs, we have been told that the Air
    Force has agreed to indemnify Lockheed Martin approximately $100
    million for the cost of remediating perchlorate in the ground water at
    a Lockheed plant. Section 348 of the National Defense Authorization Act
    for Fiscal Year 1998 required the Department to develop uniform
    guidelines for cost recovery and cost-sharing in environmental
    remediation. Section (c)(2) of that provision specifically required the
    Department to develop a process to ``identify any negligence or other
    misconduct that may preclude indemnification or reimbursement by the
    Department of Defense for the costs of environmental restoration at (an
    environmental remediation) site or justify the recovery or sharing of
    costs associated with such restoration.'' Is it true that the
    Department has agreed to indemnify Lockheed-Martin $100 million for
    perchlorate releases at one of its defense plants?
        Secretary Gibbs. Current policies and procedures under the Defense
    Contracting Audit Manual, Section 7-2120.3 (2002) allow contractors to
    recover environmental costs from the United States as a cost of doing
    business absent a showing of gross negligence or willful misconduct.
    While the Air Force has a continuing dialogue with Lockheed Martin
    about perchlorate clean-up at one of its facilities, there is no
    agreement to indemnify it for any portion of the clean-up.

        57. Senator Akaka. Secretary Gibbs, has the Department conducted a
    legal analysis to determine whether it is required to indemnify the
    contractor for such clean-up?
        Secretary Gibbs. A legal analysis has been initiated therefore the
    issue of indemnification has not been resolved. Issues of potential
    negligence or misconduct have yet to be fully investigated or
    addressed. Be assured that any agreement in this matter will be fully
    investigated and analyzed in accordance with applicable law.

        58. Senator Akaka. Secretary Gibbs, did the analysis specifically
    address the question of possible negligence or other misconduct by the
    contractor?
        Secretary Gibbs. As previously indicated, the analysis has been
    initiated therefore, the issue of indemnification has not been
    resolved. Issues of potential negligence or misconduct have not yet
    been fully investigated. Please be assured that this matter will be
    fully investigated and analyzed in accordance with applicable law. Any
    future agreement will be made on the basis of that investigation and
    the applicable law.

        59. Senator Akaka. Secretary Gibbs, may we have a copy of any such
    analysis?
        Secretary Gibbs. We do not have a completed analysis at this time.
    Once completed, if the analysis is not otherwise privileged from
    disclosure, we would be pleased to provide you a copy.

        60. Senator Akaka. Secretary Gibbs, in view of the fact that this
    $100 million expenditure could just be the tip of the iceberg in terms
    of perchlorate remediation, would you agree that the Department has a
    strong interest in developing more cost-effective means of remediation?
        Secretary Gibbs. The Department has and continues to have a strong
    interest in developing more cost-effective remediation technologies.
    The DOD Strategic Environmental Research and Development Program
    (SERDP) has recently developed new remediation technologies that will
    significantly reduce the cost of perchlorate clean-up. These
    technologies are now undergoing field testing under the Environmental
    Security Technology Certification Program (ESTCP); In addition to
    investing in improved remediation technologies, the DOD through SERDP
    plans a significant future investment to develop perchlorate
    replacements to avoid future contamination.

        61. Senator Akaka. Secretary Gibbs, can you tell us how much the
    Department proposes to invest in such technology in this year's budget?
        Secretary Gibbs. The DOD through the SERDP and the Environmental
    Security Technology Certification Program (ESTCP) invested $1 million
    in fiscal year 2002, is investing $1.1 million in fiscal year 2003 and
    plans to invest $1.5 million in fiscal year 2004 in perchlorate
    remediation technology.

                                RANGE MANAGEMENT

        62. Senator Akaka. Mr. DuBois, Secretary Johnson, Secretary Fiori,
    and Secretary Gibbs, DOD is actively engaged in a number of activities
    to operate and fund ranges. These include normal testing operations,
    Service and joint training, and experimentation. Given the increasing
    pressures on range requirements, including increasing weapon ranges and
    challenges of urbanization, it seems that the imperative for maximizing
    the use of DOD ranges is growing. To that end, what are each of you
    doing to ensure that range use for all three purposes (testing,
    training, and experimentation) is being optimized?
        Mr. DuBois. The pressures and demands facing our range
    infrastructure are certainly increasing. DOD recognizes that we must
    find flexible and creative solutions to be able to continue to test and
    train effectively. While our existing range lands are clearly critical
    to the military mission, we realize that we cannot easily expand or
    duplicate these capabilities elsewhere to satisfy emerging needs. DOD
    is responding aggressively to optimize the use of our ranges. The
    Sustainable Ranges Initiative is identifying range requirements,
    documenting capabilities and shortfalls, and considering utilization
    solutions as one aspect of a comprehensive solution to long-term
    preservation of our Nation's test and training capabilities.
        The distinction between testing and training ranges is already
    blurred. Many of our premier test ranges are heavily involved in
    Service and joint training activities, and vice versa. Eglin AFB, FL,
    is a prime example; as a premier Air Force test range, it supports a
    wide range of weapons systems and ordnance testing, while
    simultaneously sustaining a spectrum of Air Force, sister Service and
    joint training and experimentation needs. San Clemente Island, CA, a
    naval training range supporting the Pacific Fleet, conversely supports
    a number of testing activities for the Navy and sometimes other
    Services. Many other test and training ranges support each other's
    requirements, and this trend towards increasing collaboration will
    continue. As you note, joint training and experimentation capabilities
    are also of increasing importance to our Nation's defense. The Joint
    National Training Capability, a new DOD initiative to meet today's
    joint force training needs, will stress the development and
    implementation of joint training/exercise capabilities at many premier
    ranges. This and similar DOD efforts are leading the way to more
    integrated range use.
        Secretary Johnson. Department of Defense ranges serve a wide
    variety of users who, in turn, have a wide variety of requirements that
    must be met. Historically, we have managed our ranges based on their
    principal mission and the associated instrumentation required to
    support that mission. ``Customers'' utilize the ranges that best fit
    their respective circumstances and needs. For example, training events
    are nearly 20 percent of the Navy Test and Evaluation (T&E) range
    customer base, where they perform training missions such as Electronic
    Warfare (EW), Mining Exercises, Air-to-Ground ordnance delivery,
    undersea warfare and missile shoots. Similarly, operational T&E is
    normally conducted in conjunction with fleet training events using
    training venues. Various events in T&E, training and experimentation
    are conducted where it makes the most sense to accomplish the task.
        In order to bring together the range managers and range users at
    all levels, the VCNO chartered the Navy Training Range and Oparea
    Organization (NTROO) in the fall of 2001. With a 2-star executive
    steering group and membership across all Navy disciplines, NTROO
    ensures a better coordinated plan to address range needs and concerns
    through a regularly held collaborative venue. The organization includes
    not only training range members, but also representatives from the T&E
    ranges and Marine Corps Training and Education Command.
        For the East Coast, the implementation of the Training Resources
    Strategy (TRS) will increase the use of some of the CONUS-based ranges
    as a result of the closure of Vieques. However, this increased activity
    at the ranges fits well within their operating capacity, and TRS
    encourages greater joint interaction opportunities since we are using
    multiple resources in closer proximity to our force's home bases. Using
    existing range capabilities and capacities regardless of Service
    affiliation optimizes training. Optimized use of these ranges is
    further enhanced by ongoing regional range cooperative agreements used
    to link range missions together in an effort to share limited resources
    supporting Service training and test requirements. Examples of these
    efforts include, but are not limited to, Navy SEALs training at the
    Army's Aberdeen Range, Ft. Knox, KY, and the USMC's Chocolate Mountain
    Range in Arizona. Under TRS, aircraft from carriers in the Gulf of
    Mexico will use Eglin AFB's range of real world electronic threats and
    deliver live ordnance against defended targets.
        Though the Marine Corps does not have any ranges specifically
    dedicated to testing or experimentation, it does have extensive
    training lands that have been subjected to all of the pressures of
    urbanization and that face the ongoing challenge of meeting the
    changing training demands dictated by new weapon systems and new
    tactical employment doctrine. The Marine Corps established an Office of
    Range and Training Area Management in October 2001 and that office has
    embarked upon a three-part program to sustain, upgrade, and modernize
    ranges to assure their continued accessibility and viability.
        To preserve and protect our ability to train today and in the
    future, the Department of the Navy is fully supporting the Range
    Readiness Preservation Initiative currently before Congress. The
    provisions approved by the last legislative session included the
    critical ability to acquire buffer lands around our ranges to assist in
    mitigating the impacts of urbanization. We have a number of initiatives
    underway to make use of that legislation by obtaining land that would
    help in buffering both the direct effects of urban building at base
    boundaries and the secondary consequences of urban growth that have
    made our bases ``islands of biodiversity'' in otherwise unconstrained
    urban growth areas. In addition, to better optimize our use of ranges
    today, the Marine Corps has partnered with the United States Army to
    develop a web-based range scheduling and utilization program that will
    provide efficiencies in range usage, promote cross-Service utilization
    of ranges, and help relate our ranges to the readiness of our bases and
    forces. The program will also allow us to better articulate the value
    of ranges that are threatened by encroachment and to better plan for
    future range development.
        To ensure that our ranges meet our future training needs, the
    Marine Corps has commissioned a study to assess future training
    requirements and their associated range requirements and has
    articulated, and begun to fund, a range investment strategy that will
    permit our ranges to meet both emerging Service and joint training
    standards.
        Secretary Fiori. Let me address how we are optimizing testing,
    experimentation and training range assets in the Army. Some of our test
    activities, particularly operational tests, and most experiments are
    already conducted on installations that house operational units or
    schools that are primarily focused on training. So, training ranges are
    used for testing and experimentation. An example of that is Fort Hood,
    TX. Our four major test ranges: Aberdeen Proving Ground, MD; Yuma
    Proving Ground, AZ; Dugway Proving Ground, UT; and White Sands Missile
    Range, NM, are uniquely configured to test specific families of weapons
    systems and weapons systems capabilities. However, their ranges also
    routinely host training. Such training is primarily conducted by the
    Reserve component (RC), but is not limited to our RC. Active component
    units engaged in supporting operational tests at those locations will
    take advantage of time and facilities there to conduct training. In
    addition, we are continuously seeking synergism and commonality in
    range technology (targetry and instrumentation) for the testing and
    training range functions. Finally, we are undertaking the development
    of an Army Range and Land Strategy that will review capabilities and
    attributes of all ranges to seek improved dual testing and training use
    and to support the Secretary of Defense's Training Transformation (T2)
    initiative.
        Secretary Gibbs. The Air Force is continually assessing the
    adequacy of its ranges in relation to mission. Adequacy can be thought
    of in terms of time, proximity, volume, and attributes. Time relates to
    having ranges and airspace available when they are needed. Proximity
    relates to the distance traveled to a range or airspace. Volume relates
    to the physical dimensions of the range or airspace. Attributes relate
    to things such as terrain, scoring systems, instrumentation,
    facilities, etc. that are necessary to accomplish a given mission. When
    a range is judged to be inadequate for a mission an assessment of the
    tradeoffs among the various variables needs to be made. In cases where
    a change needs to be made that will establish, change the use of,
    modify, or delete ranges and airspace a review process exists to vet
    how best to meet the requirement in the broader context of total ranges
    and airspace available. For instance, although a range may already
    exist to meet a particular mission requirement, the time that would be
    spent in just traveling back and forth to it would make it more cost
    effective to build a new range closer to the user. Analysis such as
    these have resulted in the Air Force opening 5 new ranges over the last
    5 years while shutting down two and relinquishing another approximately
    140,000 acres of public land deemed no longer critical to mission
    accomplishment.

        63. Senator Akaka. Mr. DuBois, Secretary Johnson, Secretary Fiori,
    and Secretary Gibbs, are the funding structures (i.e., revolving funds
    vs. appropriations, Service vs. joint funding) appropriate for and
    adequate to support the best use of our military land? If not, what
    changes would you propose?
        Mr. DuBois. As a rule, existing funding structures are appropriate
    to support the best use of military lands. In general, range funding
    should continue to flow through the appropriations cycle to the
    Services, allowing them to address their Title 10 range management
    responsibilities in ways most appropriate for their needs. DOD has no
    concrete recommendations for change at this point in time. We will
    continue to assess the situation and work with Congress as necessary to
    address emerging range funding issues.
        Secretary Johnson. Yes. The current systems meet the needs of both
    the suppliers and users of range services.
        There are some concerns in planning for future range usage because
    of the emerging and still evolving joint training standards that may
    dictate particular range technologies that have not been resourced. We
    will continue to work closely with the Joint Forces Command and the
    Office of the Secretary of Defense to ensure that we are appropriately
    positioned and resourced to support the goals of training
    transformation as they pertain to ranges and training areas.
        Secretary Fiori. The Army's current means of funding ranges
    involves a number of appropriations. We believe the current system of
    funding by appropriation within the Services serves our needs.
        Secretary Gibbs. I believe adequate mechanisms are being pursued to
    make the best use of our military lands, although all these efforts are
    in the early stages and will require some time. A number of
    appropriations support the use of our military lands with a diverse mix
    of functional communities managing these funds. Our operators use
    operation and maintenance funds to fulfill day-to-day test and training
    activities at our ranges. For example, the civil engineers fund for
    functions like natural and cultural resource management. There are also
    active duty, Guard, and Reserve components responsible for the ranges--
    each with different funding sources.
        In order to better understand how this all fits together, our range
    community is working towards building a comprehensive range plan that
    will delineate requirements and costs for ranges along various
    investment areas. We have also instituted an Air Force Ranges
    Investment Council. This body reviews investments being made in USAF
    ranges by the test and training communities to ensure compatibility and
    synergy while minimizing unnecessary duplication.
        Finally, we are pursuing capabilities based planning and
    programming to help us define the test and training requirements that
    underpin our range requirements. From the joint perspective, we are
    working with OSD, JFCOM, and the other Services to build a Training
    Transformation Implementation Plan that will help us further make the
    best use of our lands and resources.

        [Whereupon, at 3:55 p.m., the subcommittee adjourned.]

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2004

                                  ----------

                            THURSDAY, MARCH 13, 2003

                               U.S. Senate,
                  Subcommittee on Readiness and
                                    Management Support,
                                    Committee on Armed Services
                                                        Washington, DC.

        THE IMPACTS OF ENVIRONMENTAL LAWS ON READINESS AND THE RELATED
                      ADMINISTRATION LEGISLATIVE PROPOSAL

        The subcommittee met, pursuant to notice, at 2:10 p.m. in
    room SH-216, Hart Senate Office Building, Senator John Ensign
    (chairman of the subcommittee) presiding.
        Committee members present: Senators Inhofe, Ensign, Levin,
    Akaka, E. Benjamin Nelson, Clinton, and Pryor.
        Majority staff members present: William C. Greenwalt,
    professional staff member; and Ann M. Mittermeyer, counsel.
        Minority staff members present: Maren R. Leed, professional
    staff member; Peter K. Levine, minority counsel; and Christina
    D. Still, professional staff member.
        Staff assistants present: Michael N. Berger, Andrew W.
    Florell, and Jennifer Key.
        Committee members' assistants present: John A. Bonsell,
    assistant to Senator Inhofe; Russell J. Thomasson, assistant to
    Senator Cornyn; Davelyn Noelani Kalipi, assistant to Senator
    Akaka; William K. Sutey, assistant to Senator Bill Nelson; Eric
    Pierce, assistant to Senator E. Benjamin Nelson; Andrew
    Shapiro, assistant to Senator Clinton; and Terri Glaze,
    assistant to Senator Pryor.

           OPENING STATEMENT OF SENATOR JOHN ENSIGN, CHAIRMAN

        Senator Ensign. Good afternoon. The Subcommittee on
    Readiness and Management Support is meeting to review a series
    of environmental issues that the administration has identified
    as having adverse impacts on military readiness. We will also
    address the administration's related legislative proposals.
        Senator Akaka will be here shortly. I look forward to
    working with him. In an effort to accommodate his interests,
    the subcommittee will hold a second hearing that will address
    the interests of States and environmental interest groups. I
    believe that together these hearings will reflect a shared
    desire to seek meaningful and informative testimony that will
    help the subcommittee to better understand these environmental
    issues and the administration's legislative proposal. I know
    Senator Akaka joins me in welcoming the distinguished
    witnesses.
        I very much appreciate the participation of General John
    Keane, Vice Chief of the Army, Admiral William Fallon, Vice
    Chief of Naval Operations, General William Nyland, Assistant
    Commandant of the Marine Corps, and General Robert Foglesong,
    Vice Chief of the Air Force.
        Specifically, the issues that the subcommittee will cover
    in this hearing will relate to endangered species and critical
    habitats, marine mammals, general conformity under air
    pollution controls, and the management of munitions and
    unexploded ordnance on active ranges. I anticipate that we will
    be exploring both the individual and cumulative impact of these
    issues.
        I am aware that the military departments have been
    grappling with these issues for several years. In fact, last
    year, Congress received the administration's legislative
    proposal for the first time. Unfortunately, those proposals
    were submitted relatively late in the year, and it was
    difficult for Congress to address them in any kind of
    meaningful way.
        This year, it is my hope that a valuable record will be
    developed as these issues are revisited in this Congress. The
    administration's proposed legislative changes have triggered
    controversy over the fear that this is an attempt to roll back
    important environmental laws. It is my understanding, however,
    that efforts to provide training flexibility within the
    existing statutory and regulatory framework have resulted in
    litigation.
        Recently, a Federal district court in Arizona held that the
    natural resource management plans could not be used as a
    substitute for critical habitat designation under the
    Endangered Species Act. The Marine Corps Air Station at Miramar
    was confronted with a similar challenge. Both cases raise
    concerns about the ability of the U.S. Fish and Wildlife
    Service to use management safeguards as a substitute for
    critical habitat designation under current law.
        The Marine Mammal Protection Act has been the basis of
    several lawsuits that impacted the Navy's ability to implement
    mission-critical low range, low frequency sonar and stopped the
    testing of whale-tracking sonar that could help vessels avoid
    hitting whales.
        These cases suggest that the current definition of
    ``harassment'' has profoundly affected both vital training and
    research. On April 14, 2002, a coalition of environmental
    groups sued the Army and asserted that munitions deposited on
    the range at Fort Richardson, Alaska violated environmental
    laws. These groups are seeking a permanent injunction to halt
    live-fire training at Fort Richardson. If the court rules
    against the Army, this case would establish a bad precedent for
    other live-fire military training ranges.
        I would like to hear about the impact of environmental laws
    on readiness, particularly in light of the increased litigation
    in this area. With the possibility of war in Iraq, I am very
    concerned about environmental restrictions that may diminish
    the quality of testing and training capability within the
    military departments. I fundamentally believe that it is
    possible to strike a balance between environmental requirements
    and the need to ensure the readiness of our Armed Forces.
        That said, I hope that Congress, the administration, and
    other stakeholders will work cooperatively, as this
    subcommittee and other committees of jurisdiction review these
    environmental restrictions on training and the administration's
    related legislative proposal.
        All of your prepared statements will be made part of the
    record, and I urge you to keep your oral statements to less
    than 5 minutes, if possible, in order to allow sufficient time
    for questions.
        Senator Akaka is not here, so we will reserve his time for
    making an opening statement when he makes it.
        I also want to welcome Senator Inhofe, who is going to be
    chairing. I am also on the Budget Committee and we are doing a
    lot of votes today, so Senator Inhofe may be chairing quite a
    bit of this. He has shown a lot of leadership, and certainly
    with the chairmanship of the Committee on Environment and
    Public Works, he will be handling this issue as well. I welcome
    Senator Inhofe to the table. There is nobody else here, so if
    you would want to make any opening remarks, please proceed.
        Senator Inhofe. I have an opening statement I will submit
    for the record. I had the honor of chairing this subcommittee
    for a number of years, and since I am now chairing a full
    committee, the Environment and Public Works Committee, that
    means I cannot chair a subcommittee.
        Senator Ensign. I appreciate that. [Laughter.]
        Senator Inhofe. Which you appreciate, yes. But anyway, this
    has been something--I want to submit my entire statement for
    the record and then say that in talking to many of the people
    that have come into my office to get good examples, it is just
    shocking what is going on today. I think a lot of you know--
    certainly Admiral Fallon knows this because of the Pace-Fallon
    report that you went through--I spent 3 years of my life trying
    to keep live fire at Vieques, because we are losing our ranges
    all around the world, and because of losing that live-fire
    capability. To show this is a life and death issue, we actually
    lost five lives, four of whom were Americans, at the Adari
    Range in Kuwait. The accident report said they did not have
    adequate training because of the restrictions and encroachment
    on that training range, so it is a life or death issue.
        We look at places like Camp Pendleton. It has 17 miles of
    shoreline, but you can only use about 200 yards of it for
    amphibious landings, and it is all encroachment problems. So I
    think this is something, all these frivolous lawsuits by these
    great American organizations, Friends of the Earth and all of
    that, they just put us in a situation where they do not seem to
    have any concern over the fact that we have to train these
    people. I become more and more convinced, Mr. Chairman, that
    many of these people do not think we need a military anyway.
        So it is a serious problem. It is one that I am glad you
    are addressing, and at the same time, we are going to be
    addressing it from our other committee also.
        [The prepared statement of Senator Inhofe follows:]

                 Prepared Statement by Senator James M. Inhofe

        As the United States prepares for war to disarm Saddam Hussein, our
    troops are facing a growing crisis in training and readiness. This is
    not because we don't have the finest men and women serving our country.
    We do. The problem stems from the extreme agenda of some environmental
    groups whose hostile lawsuits threaten to impose dangerous burdens and
    restrictions on training bases nationwide.
        Environmental groups such as the Natural Resources Defense Council
    and the Center For Biological Diversity have launched an unconscionable
    war on the military. They believe there are no compromises, even when
    the issue involves protecting and preparing our troops for battle. They
    would rather file a lawsuit--something they're quite good at, by the
    way--than find common sense solutions to balance environmental
    protection with the best military training available.
        These lawsuits are gradually eroding not just the land available
    for training and readiness, but are constraining and seriously
    undermining the actual training exercises and live-fire simulations
    that are so critical to prepare for real-life combat.
        Despite the claims made by environmental groups, the Pentagon has
    demonstrated a strong commitment to environmental stewardship. The
    evidence is overwhelming. But land development is fast encroaching upon
    military facilities, driving wildlife and endangered species into the
    relative sanctuary of training ranges.
        The military has made environmental accommodations time and time
    again, but there is only so much it can do. The flood of environmental
    lawsuits is diverting the military away from its all-important training
    mission. As a result, training slowly but surely is dying a death of a
    thousand cuts.
        There are too many egregious examples to recount here. But let me
    briefly mention the situation facing Camp Pendleton in California,
    which is considered the premier training base for the Marines. Because
    of a lawsuit filed by the Natural Resources Defense Council to list the
    Gnatcatcher as endangered, 57 percent of the base became ``critical
    habitat,'' which in effect means no training and readiness exercises in
    that area.
        Also, there are 17 miles of beach at Camp Pendleton. Because of
    environmental restrictions, only 200 yards of beach are available to
    practice amphibious landings. All military vehicles that come ashore
    during an amphibious landing are restricted to designated roads. Troops
    can only come ashore in single file columns, which is hardly a good
    simulation of actual warfighting conditions.
        To help stop the degradation of training on our bases, the Pentagon
    has proposed reasonable, commonsense legislation to clarify existing
    environmental laws. Notably, the Pentagon is not seeking blanket
    exemptions from current laws. In fact, many of the Pentagon proposals
    were first implemented by the Clinton administration's U.S. Fish and
    Wildlife Service.
        For example, allowing the military to use Integrated Natural
    Resource Management Plans in place of critical habitat designations--a
    key component of the Pentagon's proposal--was initially implemented
    during the Clinton administration. This will enable the military to
    protect natural resources while carrying out critical training
    exercises.
        The increasing burdens and restrictions on training simply cannot
    be tolerated any longer. We are morally obligated to ensure that our
    troops are fully trained and prepared for war. Protecting our natural
    resources is important, but protecting the lives of the men and women
    who serve our country is absolutely essential.

        Senator Ensign. I would like to welcome the ranking member
    of the subcommittee, and welcome any opening comments you may
    have.

                  STATEMENT OF SENATOR DANIEL K. AKAKA

        Senator Akaka. Thank you very much, Mr. Chairman. Thank you
    for calling this hearing today, and I want to welcome our
    panelists to this hearing. It is our responsibility as a
    subcommittee to examine issues impacting military training and
    readiness, and I have no doubt that our military has had to
    adjust training practices and incur added expenses to address
    concerns about critical habitats, the marine environment, air
    space management, spectrum availability, air pollution,
    unexploded ordnance, and even noise pollution.
        Despite these training challenges, the Chairman of the
    Joint Chiefs of Staff and the military service chiefs have
    testified before our committee that our Armed Forces are more
    ready today than they have ever been before, great news for us.
    That is because the military services have gone the extra mile
    to find constructive ways to comply with the applicable laws
    and regulations with a minimum impact on training and
    readiness. It takes hard work with regulators and impacted
    communities on a case-by-case basis to achieve these solutions,
    but the payoff comes in the credibility the Department of
    Defense has earned as a good neighbor and a faithful custodian
    of public lands.
        In my State of Hawaii, I have worked with the military to
    try to address issues raised in the community about the impact
    of training on cultural and historical sites, endangered
    species, fire damage, and other issues. By working together in
    this way, I am hopeful that we can continue to find
    constructive ways to reconcile military training requirements
    with conflicting priorities.
        I am also hopeful that this kind of cooperative, case-by-
    case approach can help us avoid recurrences of the situation in
    Vieques, where festering disagreements between the Department
    of Defense and the local community will soon result in the
    cessation of military training at one of the Navy's most
    important facilities.
        Legislative action to exempt the Department from an
    environmental requirement may be necessary in some cases, as it
    was last year when we acted on the Migratory Bird Treaty Act,
    but it must always be a last resort, not a first resort. Where
    we do act, I believe that our legislation should be as narrowly
    tailored as possible to avoid unintended side effects.
        Last week, the administration submitted a legislative
    proposal that would exempt a wide range of DOD activities from
    the Endangered Species Act, the Marine Mammal Protection Act,
    the Clean Air Act, and the Solid Waste Disposal Act, each of
    which was rejected by the last Congress. These proposals
    deserve the close scrutiny that we will start to provide with
    today's hearing.
        As we address the issues before us today, we should keep in
    mind that the positive relationship between our military
    installations and the governments and citizens of the States
    and communities in which they are located is dependent to a
    significant extent upon the Department's role as a good
    neighbor and a faithful steward of the public lands. I believe
    that we should do everything in our power to avoid enacting
    overreaching legislative proposals that would undermine the
    positive relationship.
        Mr. Chairman, these are very difficult issues, not only
    because of the competing interests of military readiness and
    environmental protection, but also because of the complexity of
    some of the statutes and regulations involved. That is why I
    appreciate your decision to schedule a second hearing on this
    subject at which we will have an opportunity to hear from the
    representatives of some of the 23 environmental groups and 33
    State Attorneys General who contacted the committee in the last
    Congress to express concerns about the administration's
    legislative proposal. I hope that we will be able to listen
    together to the broad range of views on these issues and to
    work together to develop a common understanding and
    constructive approach to the problem.
        Thank you very much, Mr. Chairman. I look forward to the
    testimony of our witnesses.
        Senator Ensign. General Keane, we will start with you.

      STATEMENT OF GEN. JOHN M. KEANE, USA, VICE CHIEF OF THE ARMY

        General Keane. Mr. Chairman, Senator Akaka, Senator Inhofe,
    I am honored to be here today with my fellow service Vice
    Chiefs, and appreciate the opportunity to appear before the
    subcommittee to discuss this important issue.
        We are a Nation at war, and clearly the events of the last
    year and a half in Afghanistan and in the Philippines
    demonstrate that our soldiers are trained and ready. This state
    of readiness, however, does not just happen. It requires tough,
    realistic training under demanding battlefield-like conditions
    to effectively meld soldiers and equipment into the best
    fighting force in the world.
        I talked to a wounded young soldier from the Tenth Mountain
    Division, who fought in one of the battles of Operation
    Anaconda in Afghanistan. He was in a 12-hour fight against a
    force of al Qaeda that outnumbered them six to one, and our
    soldiers won that fight. Given those odds, I asked him at
    Walter Reed Medical Center what he thought made the difference
    in the fight. He said, ``sir, they were as tough as we are.
    They gave no quarter. They did not back up. Fundamentally, the
    difference was our skill. We shot better than they did, and we
    fired and maneuvered better than they did.''
        That is the essence of our training, and it produces those
    kinds of extraordinary results. Our soldiers cannot fight with
    confidence without realistic live-fire and maneuver training,
    and we need training areas, maneuver land, and live-fire ranges
    to make this happen.
        The first time soldiers conduct a realistic operation
    cannot, cannot be during time of war. We must train as we
    intend to fight, and it is becoming increasingly difficult to
    do so under such environmental restrictions. A 2002 General
    Accounting Office (GAO) report confirmed that encroachment is
    having a negative impact on training at every Army facility
    surveyed. That report found that encroachment is diminishing
    training realism and restricts the types, locations, and time
    of training events, and confirms the need for congressional
    action to clarify our environmental legislation.
        The Army's major concerns are training restrictions that
    stem from two major issues. The first is the management of
    threatened and endangered species, and the second is expanded
    application of environmental regulations to the use of military
    munitions.
        In terms of our management of threatened and endangered
    species, there are 172 endangered species on 99 Army
    installations. Critical habitat has been designated on four
    installations. At three of those four installations, the
    endangered species has not arrived yet.
        That includes Fort Lewis, where 72 percent of the training
    land is designated as critical habitat for the Northern Spotted
    Owl, who has yet to arrive, and I ask, does this pass the
    common sense test? At Fort Bragg, we have other restrictions
    that impact our training, as well as other installations
    supporting the Red-Cockaded Woodpecker.
        What I would like to do is point out to you some of the
    restrictions that are currently imposed on us at Fort Bragg so
    you can understand the magnitude of what our soldiers and our
    leaders have to deal with. I refer to the handout and the chart
    that is before you here.
        [The information referred to follows:]

        It encumbers the circumference of Fort Bragg, and you can
    see that the impact area is in purple, the drop zones where us
    old folks maintain our youth are in yellow, and the Red-
    Cockaded Woodpecker cavities and the endangered plants are in
    green and red respectively.
        Around each cavity tree, or red area that is depicted on
    your map, which are plentiful in number and cover, as you can
    see, the vast majority of the 130,000 acres at Fort Bragg,
    there is a 200-foot buffer around each tree. Within that
    buffer, there is no bivouacking or occupation for more than 2
    hours, there is no use of camouflage, no weapons firing other
    than 7.62 millimeter and .50-caliber blank ammunition, no use
    of generators, no use of riot agents, no use of incendiary
    devices, no use of white smoke, and no digging tank ditches or
    foxholes. Vehicles cannot come closer than 50 feet.
        The impact is profound. We must work around all of these
    restrictions to conduct realistic training. At times it is
    artificial and, as you can imagine, it frustrates our leaders
    and soldiers. I ask again, does this pass the common sense
    test? It is tough explaining that to our leaders and our
    soldiers.
        The Readiness and Range Preservation Initiative (RRPI)
    proposal related to the Endangered Species Act that we are
    proposing seeks to codify the existing U.S. Fish and Wildlife
    Service policy of using management plans to serve as an
    alternative to designating an area as critical habitat. These
    so-called Integrated Natural Resources Management Plans
    (INRMPs) have already proven to be a successful method of
    managing an endangered species at a number of Army
    installations, to include Fort Bragg.
        The problem is that their use of the INRMPs for this
    purpose is under challenge, as you pointed out, Mr. Chairman,
    and it involves the court case in Arizona which jeopardizes the
    progress we had made managing the endangered species using the
    INRMP. This is a major step back for us.
        Our other concern relates to the application of Resource
    Conservation and Recovery Act (RCRA) and Comprehensive
    Environmental Response, Compensation, and Liability Act
    (CERCLA), and the provisions of the RRPI seek to clarify
    Congress' original intent in the application of these statutes
    as they pertain to military live-fire training and operating
    military ranges. The current statutory language can be used to
    shut down live-fire training, and to require investigation and
    cleanup of munitions. This would make it nearly impossible for
    the Army to fulfill its national security mission.
        As you mentioned, the Army at Fort Richardson is currently
    engaged in a lawsuit in which the plaintiffs allege violation
    of RCRA and CERCLA associated with firing munitions at Eagle
    River Flats Range. In other words, the munitions are solid
    waste or hazardous waste. If the court agrees with the
    plaintiff, then live-fire training and testing operations at
    every Army range, which are more than 400 in number, could be
    subject to the same code, and would effectively shut us down.
    This is an absolute train wreck for the Army, and would have a
    dramatic impact on readiness, and we have to ask, was this
    really the intent of Congress when we enacted these laws to
    protect our environment?
        The RRPI proposals affecting RCRA and CERCLA look to
    clarify that live-fire training does not constitute disposal of
    solid waste or release of hazardous substances. We do not
    desire the elimination of environmental laws. What we desire is
    targeted legislation appropriate to provide the flexibility
    needed to accommodate both military needs and environmental
    requirements. We believe this issue is a national priority, and
    we are convinced that we can provide for a national defense
    while still protecting the environment.
        Thank you, Mr. Chairman. I look forward to your questions.
        [The prepared statement of General Keane follows:]

                 Prepared Statement by Gen. John M. Keane, USA

        Chairman Ensign, Senator Akaka, and distinguished members of the
    subcommittee, thank you for this opportunity to testify before you on
    the fiscal year 2004 Defense Department RRPI legislative proposals.
        I would first like to thank you for your continued interest in this
    subject and for the action taken in the National Defense Authorization
    Act for Fiscal Year 2003 to grant the military departments the
    authority to establish buffer zones around our ranges to manage
    encroachment and ensure compatible land use. This legislation will not
    only help prevent urban development that threatens testing and
    training, it will facilitate preservation of needed habitat for
    potentially imperiled species and lessen the need for additional legal
    restrictions on military installations. Your support of this
    legislation is a significant step in the right direction, but there is
    more work to do. If enacted by Congress, the legislative proposals
    within the fiscal year 2004 DOD RRPI will assist us in our continuing
    struggle to achieve an appropriate balance between maintaining military
    readiness and protecting the land and resources America entrusts to us.
        Today our Army is engaged throughout the world--fighting the global
    war on terrorism, providing peace and stability to regions throughout
    the world, and preparing for a potential war in Iraq. Every day our
    soldiers demonstrate that they are trained and ready to respond to
    these requirements--to fight and win the Nation's wars. This state of
    readiness, however, does not just happen. It requires realistic, multi-
    echelon training under battlefield-like conditions to meld soldiers and
    equipment into the best fighting force in the world.
        During the 12-day battle of Operation Anaconda, our soldiers often
    fought outnumbered against a tough, determined enemy that gave no
    quarter and did not back down. That battle typifies combat for our
    soldiers--a close-range test that is fundamentally about will and
    skill. More than anything else, our success in the Shah-i-Kot Valley
    came down to our soldiers' skill--we shot better than they did and we
    fired and maneuvered better than they did. It was our training that
    made the difference. Maneuver land and live-fire ranges are an
    essential element of this training process--without them, our soldiers
    cannot develop the confidence and skill demonstrated during Operation
    Anaconda. We must retain those resources that allow our forces to
    maintain the level of readiness the American people have come to
    expect, and deserve.
        Thirty years ago, we were less aware of the environmental impact of
    our training. Looking back, we could have done a much better job
    protecting the natural resources entrusted to us. As the consciousness
    of America was aroused to protect our natural resources, so too was the
    consciousness of the United States Armed Forces. We changed attitudes
    and behaviors through education; we committed significant resources to
    the preservation of our lands--to include $74 million for compliance
    with the Endangered Species Act over the past 5 years alone; and, in
    the process, amassed a good record of environmental stewardship. The
    Army does not seek to eliminate its responsibility to protect the
    environment. Rather, we need to ensure the application of existing law
    does not preclude us from conducting quality training.
        The fiscal year 2004 DOD RRPI proposals address several of the
    Army's concerns regarding environmental encroachment, training
    restrictions that stem from the management of threatened and endangered
    species and the expanded application of environmental regulations to
    the use of military munitions. One proposal confirms an existing U.S.
    Fish and Wildlife Service policy that allows integrated natural
    resource management plans to make the designation of critical habitat
    on DOD lands unnecessary. The other proposal confirms that military
    munitions on active military ranges should not be subject to hazardous
    waste or Superfund clean-up requirements. These RRPI provisions will be
    a major step forward in providing the legislative clarification we
    require to continue to train and maintain the best military force in
    the world.

             THREATENED AND ENDANGERED SPECIES AND CRITICAL HABITAT

        The RRPI proposal related to the Endangered Species Act (ESA) and
    critical habitat (CH) seeks to codify the U.S. Fish and Wildlife
    Service (FWS) policy of allowing the existence of FWS-approved INRMP to
    serve as an alternative to designating CH. The Sikes Act requires
    military installations to prepare plans that integrate the protection
    of natural resources on military lands with the use of these lands for
    training. The Sikes Act also requires installation personnel to consult
    with the FWS and concerned State agencies as the INRMP is prepared and
    to seek their concurrence, as well as public comment, on the final
    plan.
        ``Critical habitat'' as defined in section 3(5)(a) of the act
    includes both areas within the geographical area occupied by a species,
    at the time it is listed, on which are found physical or biological
    features that are essential to the conservation of the species and that
    may require special management considerations or protection; and areas
    outside the geographic area occupied by a species at the time it is
    listed that are essential for the conservation of the species.
        Army lands host 172 Federally listed species on 99 installations.
    The FWS has designated critical habitat on 14 installations to include
    Fort Lewis, Washington and Fort Irwin, California--two installations
    that are critical to maintaining the warfighting readiness of the Army.
    Designation of critical habitat on Army installations adds management
    costs and reduces the availability of land on which to train. New
    designations require installations to enter into consultation with the
    FWS and limit or cease training activities while consultation is
    conducted. Each time the Army proposes an action that may adversely
    modify the habitat we must enter into consultation. However, large
    scale programmatic consultations can address most of the training needs
    of a military installation, potentially precluding the need for
    separate consultation on individual actions. Use restrictions and
    consultation requirements can even apply when critical habitat is
    designated on military installations where the species in question does
    not reside. For example, at Fort Lewis 72 percent of the training land
    is designated as critical habitat for the Northern Spotted Owl and yet
    the owl is not resident anywhere on the installation. This scenario is
    also found at two other Army installations.
        At the National Training Center (NTC) in Fort Irwin, California,
    22,000 acres are designated as critical habitat for the Desert
    Tortoise. This designation has effectively eliminated maneuver training
    on the 22,000 acres and reduces the amount of training that can be
    conducted on the installation by limiting maneuver training to only one
    area--the central corridor. We need two corridors to conduct the kind
    of training required on the modern battlefield. After almost 20 years
    of effort, the expansion of the NTC and reopening of these 22,000 acres
    to training are nearly a reality. We are committed to the protection of
    endangered species here, but these efforts come at a cost. In 2000,
    Congress authorized the expenditure of up to $75 million to acquire and
    manage additional land for preservation of and mitigation measures for
    the Desert Tortoise and Lane Mountain Milkvetch. We are in the process
    now of working with FWS and state regulators to define the scope of
    these requirements. Only after we implement the mitigation measures
    will it be possible for the Army to use these areas.
        In addition to the Army installations where critical habitat has
    already been designated, the FWS has proposed to designate habitat for
    146 additional species in Hawaii. This proposal affects seven Army
    training facilities to include the Pohakuloa Training Area where we
    already have a $25 million Multi-Purpose Range Complex that never
    opened due to endangered species management requirements.
        The Army has been very successful protecting endangered species by
    working with adjacent landowners to achieve mutual conservation goals.
    These installation programs are recognized as models for balancing
    military missions with species conservation on a regional level. As a
    matter of policy, we also develop specific Endangered Species
    Management Plans for each listed species in consultation with the FWS
    and National Marine Fisheries Service (NMFS). We regularly consult with
    these two agencies under Section 7 of the Endangered Species Act (ESA)
    to fully consider the effects of military activities on listed species.
    These programs are a testament to the Army's commitment to balancing
    the management of the land entrusted to our care to meet the
    requirements of both the military mission and protection of threatened
    and endangered species.
        The Army also actively participates in the development of Recovery
    Plans for endangered species. Based largely on our active role, and on
    the existence of approved INRMPs, a number of Army installations have
    avoided the need to designate critical habitat. By allowing approved
    INRMPs to preclude the need to designate critical habitat, the FWS
    provides military installations with the flexibility to manage their
    natural resources to support the military mission while providing for
    the protection of endangered species.
        INRMPs take a more holistic approach to managing natural resources
    than critical habitat designation and have proven to be a successful
    method of managing endangered species habitat at a number of Army
    installations. They strike the necessary balance by integrating
    military training needs with natural resources management practices to
    ensure that the imperatives of national defense and species protection
    are both met. Management under an INRMP, in lieu of critical habitat
    designation, allows Army commanders increased flexibility to use the
    land on the installation to meet changing mission needs.
        Nonetheless, a Federal district court in Arizona recently decided
    FWS' reliance on INRMPs to provide adequate habitat protection in lieu
    of designation of critical habitat is unlawful. The Army is concerned
    this court decision will call into question all of the instances where
    critical habitat has been avoided based in part on the existence of an
    INRMP. This case reinforces the need for Congress to pass the RRPI
    provisions to explicitly support our common sense approach.

        RESOURCE CONSERVATION AND RECOVERY ACT (RCRA) AND COMPREHENSIVE
       ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT (CERCLA),
                          COMMONLY KNOWN AS SUPERFUND

        The number of live-fire exercises conducted by the Army cannot be
    reduced without serious degradation to readiness and the concurrent
    increased risk to our soldiers. The Army determines live training
    iteration requirements based on the premise that certain skills are
    perishable and must be periodically exercised. Army standards identify
    the minimum number of times and specific firing events on which a
    soldier must train to achieve a given level of proficiency. Many ranges
    operate at maximum capacity so that units can meet the standard. Any
    further limitations placed on training facilities would inevitably
    cause a reduction in live training below that needed by soldiers to
    remain minimally proficient.
        Under the current statutory language, it is likely that the use of
    environmental statutes, such as the CERCLA and the RCRA, can be used to
    shut down live-fire training and to require investigation and cleanup
    of munitions and munition-constituents on operational military ranges.
    This would make it nearly impossible for the Army to fulfill its
    national security mission.
        The RCRA and CERCLA provisions of the RRPI seek to clarify
    Congress' original intent in the application of these statutes to
    military live-fire training and operational military ranges.
    Historically, environmental regulatory agencies have used great
    discretion in the application of RCRA and CERCLA to operational ranges.
    They recognize that these facilities are extremely valuable national
    assets and the training conducted on them is critical to national
    security. They also recognize that the typical application of these
    statutes is to clean up the impacts associated with past practices at
    industrial or waste management facilities that are being put to other
    uses or to respond to accidental releases or spills of hazardous
    substances.
        For these reasons, the EPA has never required a RCRA corrective
    action to respond to the effects of military training on operational
    ranges. Environmental regulators have only used CERCLA authority in a
    very small number of cases on operational ranges and only in cases
    where they have determined the conditions pose an imminent and
    substantial endangerment to human health or the environment. The RRPI
    provisions seek to codify this historic practice and prevent expanded
    application of these laws beyond Congress' original intent.
        In our view, a clarification of the statutory framework applicable
    to military training operations is an appropriate manner in which to
    address this issue. The development of Federal, State, and local
    environmental statutes and requirements addressing waste management,
    pollution elimination, and clean-up of contamination did not take into
    account, nor foresee, application to military training lands and
    military weapon systems. Regulators themselves are vulnerable to
    citizen suits for not vigorously applying these and other environmental
    laws to munitions and munitions constituents on operational ranges.
        The Army at Fort Richardson, AK, is currently engaged in a lawsuit
    in which the private party plaintiffs allege violation of RCRA and
    CERCLA associated with firing munitions at Eagle River Flats (ERF)
    range. The RCRA allegation is that munitions fired into ERF--an
    operational range--are subject to state solid waste requirements under
    RCRA. If munitions used for their intended purpose are considered solid
    waste subject to RCRA's waiver of sovereign immunity, the Army could be
    forced to seek an operating permit and to perform corrective action or
    remediation of ERF. Live-fire training during the remediation would be
    impossible and the only mortar and artillery impact area at Fort
    Richardson would be unavailable for training.
        The court challenge alleges that CERCLA is rightfully applied to
    the act of firing munitions onto an operational range and that the
    continued presence of those munitions on the range constitutes a
    release of hazardous substances requiring reporting, characterization,
    and remediation. If the court agrees with the plaintiff, then live-fire
    training and testing operations at every Army range (more than 400
    sites) could be subject to CERCLA response requirements. These
    findings, along with the potential for further lawsuits, could compel
    EPA and state regulators in all U.S. regions to enforce the same
    standards on other military ranges. Live-fire training would be
    severely constrained throughout the Department and military readiness
    would decrease dramatically.
        Live-fire training is essential and is often the capstone-training
    event of a unit's training cycle. The United States set aside areas
    specifically for this purpose as well as to isolate the dangers
    associated with this training from the public. These areas are DOD's
    operational ranges. They are crucial to maintaining national security
    and comprise just over 1 percent of the U.S. land mass. The activities
    conducted on this land ensure the security of the United States and
    that the young men and women of the U.S. military are ready to do what
    is asked of them. The relatively small portion of the U.S. that is set
    aside to ensure military readiness provides tremendous benefit to the
    entire Nation and the necessary training and testing conducted on this
    land should be protected.
        The RRPI proposals affecting RCRA and CERCLA clarify that live-fire
    training does not constitute disposal of solid waste or releases of
    hazardous substances. Furthermore these proposals seek to codify the
    existing practice by the Environmental Protection Agency and state
    environmental regulatory agencies and remove ambiguity currently in the
    law. This clarification will help protect the Army and DOD from the
    immediate vulnerability of citizen lawsuits.
        Furthermore, RRPI proposals confirm that the cleanup of military
    munitions is not required so long as munitions remain on operational
    ranges where they were fired. The policies governing cleanup of
    munitions located off an operational range and munitions causing
    imminent and substantial danger on-range would remain unchanged--as
    would policies governing cleanup of former ranges and other defense
    sites.
        These provisions do not seek to avoid the Army's responsibilities
    to cleanup formerly used defense sites or to protect the environment
    from potentially harmful impacts. Rather, they seek to clarify and
    affirm existing policies and ensure that military ranges, set aside to
    allow live training and contain potential impacts, remain available to
    the soldiers that need to train for combat. I do not believe that
    Congress enacted RCRA and CERCLA with the intent that they be used to
    deny the military use of designated training areas. We therefore
    request that Congress alleviate this line of litigation by clarifying
    language in RCRA and CERCLA.

            ARMY STEWARDSHIP OF LIVE-FIRE TRAINING AND TESTING AREAS

        Although the Army is concerned with the impact that environmental
    encroachment has on training, we are also mindful of public concern for
    the potential impact that training and testing may have on the
    environment. We are aggressively developing and implementing an
    effective, comprehensive Sustainable Range Program. As part of this
    effort, we continue to implement studies and local community outreach
    programs to better understand and manage the environmental implications
    associated with live-fire training.
        The Army is conducting Regional Range Studies designed to gather
    credible data on the true environmental impact of live-fire training
    and weapons testing. The concept is to study ranges at different
    installations representing a wide variety of climatic, geologic, and
    ecological settings. The program includes the development of field
    assessment protocols, field studies and a lessons-learned report that
    will include a tool to prioritize future range assessments. Soil,
    surface water, sediments, ground water, and vegetation are sampled and
    analyzed for explosives and metals related to live fire. Small mammals
    are also studied to determine ecological impacts. Field protocols are
    being developed and will be continually refined over the course of the
    Regional Range Study.
        The Army is studying the behavior of military-specific chemical
    compounds and the potential effects they may have on human health and
    the environment. The major objective of this project is to identify
    available data for modeling of chemicals typically associated with
    munitions and their respective emissions and to compile toxicity
    benchmarks for these chemicals. Our findings will help develop
    strategies for the removal or destruction of harmful byproducts, or to
    design processes and products that minimize environmental impact.
        Testing and training ranges produce scrap metals as byproducts of
    live-fire training. We regularly remove this scrap from the range as
    part of maintenance operations. Much of the range scrap contains
    valuable metals that can be recycled and some of this scrap may contain
    hazardous residues that are handled in compliance with state and
    Federal requirements. In response to issues associated with the removal
    of range residue, the Army is chemically characterizing this material
    and developing best management practices for solid wastes generated
    from the use of munitions at Army troop training ranges.
        We are also investing in research and development to eliminate
    potentially harmful compounds from our ammunition throughout their
    lifecycle. The most notable of these efforts is the Army's ``Green
    Bullet.'' The Army has developed a substitute, non-toxic material
    (tungsten/tin or tungsten/nylon) for the lead core bullet of our 5.56mm
    (M-16) round. We have authorized the procurement of approximately 5
    million rounds this year and expect to complete our transition to the
    ``Green Bullet'' by fiscal year 2005. A similar effort is underway for
    our other small arms rounds including 7.62mm and 9mm rounds. The Army
    also recognized the need to eliminate potentially harmful dyes from two
    smoke grenades and developed alternative materials for these smoke
    grenades.

                                   CLEAN AIR

        The RRPI proposal affecting the application of the Clean Air Act to
    military training seeks a 3-year window for new operations to come into
    conformity with State Implementation Plans. As the Army transforms and
    fields the new weapons systems for the Stryker Brigade Combat Teams and
    the Objective Force, we require this 3-year window to develop methods
    of compliance that do not cause unacceptable training impacts. We also
    recognize that the RRPI Clean Air Act provision is extremely valuable
    to our sister Services and will allow them vital time to plan for and
    execute stationing decisions for their fighter and bomber aircraft.

                          MARINE MAMMAL PROTECTION ACT

        DOD also seeks to clarify the definition of the term ``harassment''
    within the Marine Mammal Protection Act (MMPA) to make it more
    consistent with what we believe was Congress' original intent. Although
    the Army has not identified any specific training constraints
    associated with application of this statute to Army operations, we
    believe it is a common sense and important modification for all
    Services. Given the joint nature of military operations, any
    degradation in the ability of our sister services to conduct realistic
    training impacts directly upon the Army's ability to effectively
    execute complex joint operations.

                          NATIONAL SECURITY EXEMPTIONS

        The existence of National Security Exemptions is frequently used as
    an argument against the legislative clarifications proposed in DOD's
    RRPI. Although some environmental statutes do allow for national
    security exemptions, they were never intended as a permanent solution
    to recurring requirements. Such exemptions are generally reserved for
    approval at the presidential level, apply only to very specific
    activities at individual sites, and remain in effect for only 1 year.
    The readiness activities we are concerned with are not ``one-time''
    events. They are part of the day-to-day training regimen of our
    soldiers and it is simply unrealistic to expect the military to request
    exemptions for training that must occur on a regular basis. Rather, we
    should resolve the basic issue through the clarification of Congress'
    original intent.

                                   CONCLUSION

        The Army is committed to its responsibility as an environmental
    steward for the 16.5 million acres America entrusts to us. However, we
    are equally committed to another precious resource that America
    entrusts to us--her sons and daughters. We are obligated to provide our
    soldiers with the most realistic training scenarios possible to prepare
    them for the rigors of war. The Army will never abandon its
    environmental responsibilities, but we must have land to train.
        Unless we can resolve several issues at our key training areas, we
    face the very real possibility that we will lose some of our critical
    training areas or, at a minimum, we will be forced to deny our soldiers
    the opportunity to participate in the number and type of exercises
    required to learn and retain perishable skills.
        For nearly 228 years, the Army has kept its covenant with the
    American people to fight and win our Nation's wars. In all that time,
    we have never failed them, and we never will. Building and maintaining
    an Army is a shared responsibility between Congress, the
    administration, those in uniform, and the American people. Working with
    Congress, we will keep the Army ready to meet the challenges of today
    and tomorrow.
        Thank you, Mr. Chairman and distinguished members of the
    subcommittee, for allowing me to appear before you today. I look
    forward to working these issues with you.

        Senator Ensign. Admiral.

     STATEMENT OF ADM. WILLIAM J. FALLON, USN, VICE CHIEF OF NAVAL
                               OPERATIONS

        Admiral Fallon. Thank you very much, Mr. Chairman, Senator
    Akaka, Senator Inhofe.
        Senator Ensign. I am sorry, we had a vote that started. I
    think we can hear one more statement and then we can go and
    come back. We will hear from Admiral Fallon and then we will
    recess and we will come back and reconvene.
        Admiral Fallon. Mr. Chairman, distinguished members of the
    subcommittee, it is truly an honor to be back before the
    subcommittee to represent the United States Navy to testify on
    this very, very important matter for us. We need high-quality,
    realistic training. Without it, we do not feel we are going to
    be in a position to carry out our responsibilities to organize,
    train, and equip our forces.
        As with General Keane, we have had recent combat
    experience, and if I could relate a couple of anecdotes, I also
    had a chance to visit one of our servicemen, a Navy SEAL who
    was critically wounded in the same battle at Operation Anaconda
    up on the mountains in Eastern Afghanistan. This young man lost
    a leg as a result of his wounds, and he spent an overnight on a
    mountain alone. He survived because of his guts, determination,
    and the teamwork of his fellow SEALs, and because he was aided
    by members of all the other armed services that were
    coordinated in that battle.
        He credited his survival to his training. Sometimes we can,
    I think, forget about the impacts, or do not realize how
    significant seemingly minor restrictions on training can be,
    but there is a direct tie here. This SEAL and his fellow team
    members have only a few places in the United States where they
    can actually train with live fire. One of them happens to be
    out in the Chocolate Mountains of California.
        Because of critical habitat designations, the places where
    they can do small arms live-fire training is effectively
    limited to one sector of the compass. This is not the kind of
    environment they encountered in Afghanistan. It is not likely
    to be what they will encounter should they be called upon in
    Iraq and other places. These are the kinds of things that we
    do, our people are interested in trying to accommodate both
    sides of this issue. We often make compromises, but the end
    result I think has a major impact when our forces go forward
    around the world.
        One other comment, an example from Afghanistan. 80 percent
    of the sorties that were launched from our aircraft carriers
    did not have their targets fixed before they came off of the
    decks of the carriers. They were able to be highly successful
    in their efforts because of the confidence they had in their
    training, in the fellows, in the teams that they had practiced
    with in their live ordnance training prior to that time, and it
    is these critical competencies that we are very mindful of and
    seek to retain.
        Our forces today are very well-trained. Senator Akaka, you
    mentioned the high readiness levels that we enjoy, and I will
    tell you right now that your Navy is in great shape. Witness
    the number of ships, two-thirds of the Navy, almost 70 percent
    of our entire Navy is forward-deployed as we sit here today.
    Their training levels are high, their readiness levels are
    high, but there are many factors that go into those readiness
    levels. I will tell you, and tip my hat to you and to your
    colleagues, the most important factor that I think is at play
    here is that our people are there in the numbers that we need
    to sustain the effort that we have ongoing. The reason that we
    are manned at about 99 percent across-the-board in the Navy
    today is because our people have made the decision to stay with
    us. We were able to recruit high-quality people and, more
    importantly, to retain the people that we have, and that would
    not happen, first and foremost, without the support that you
    and Congress have given to them over the past year, and 2 years
    in particular, I salute you for that.
        There are lots of other factors. One of the most critical
    things is the issue we are facing today. How do we sustain this
    readiness, and how do we ensure the readiness in the future for
    our people who are going to come behind that, given the
    environment? The reality today is that we are facing an
    increasingly challenging task to provide appropriate training
    because of this constant pressure and encroachment from a whole
    range of issues, most of them large, when taken individually,
    but collectively are really beginning to have an effect.
        We are committed to maintaining the readiness of our
    forces, and we are also committed to maintaining the
    environment. We believe we are good stewards of the
    environment. We would invite you, and certainly the American
    people, to come look at our record over the past couple of
    decades, and I think we will demonstrate pretty clearly not
    only our good intentions, but the results.
        We ask your support today, and we need your help. There are
    existing laws on the books that are being interpreted in ways
    unintended, based on our read of the history, which are
    severely inhibiting our ability to carry out our
    responsibilities in the readiness area. What we are seeking is
    a rebalancing of these issues. We intend to react and
    accommodate both imperatives for ourselves and the American
    people, but we really need your help.
        If I could give you a couple of examples of the challenges
    we face today, I have a chart up.
        [The information referred to follows:]

        We have an event that just occurred here in the last week.
    Out in Hawaii, Senator Akaka, on the Island of Kauai, we have a
    facility on the west coast--you can see in the picture, I hope
    you can see this at least to some degree from the podium. This
    facility is the Pacific Missile Range facility. It is very,
    very narrow, less than a \1/2\-mile wide, a strip about 7 miles
    long that runs down the coast.
        The issue today is that just last week significant portions
    of this very narrow coastal strip have been designated a
    critical habitat for a grass that does not even exist on those
    lands. This is the kind of thing that we are facing today on an
    increasing basis.
        This facility, I believe, is one of our most critically
    important installations as we look to the future. This is
    primarily because, as we attempt to come up with a missile
    defense system for this Nation, it is ideally located in one of
    the very few largely uninhabited areas with a large water and
    land air space adjacent to it in which we can test the long
    range missiles. The missiles that we think we are going to need
    and employ. We have had a number of shots here in the last year
    launching out of this facility, and so encroachment in this
    area is going to have an immediate and severe effect on that
    program and other ongoing activities.
        One other area which has been severely impacted this year
    is related to the Marine Mammal Protection Act. We have a
    system, a new system called low frequency active sonar, or LFA,
    for short. We have been attempting to test this system for 7\1/
    2\ years.
        We have had an environmental impact statement done and
    concluded an agreement with the regulatory agencies. We have
    currently been enjoined by a court which has effectively
    stopped, or actually severely restricted the training. We have
    a limited period in which we can do some testing, but for
    example, the area that we had already agreed in the
    environmental impact statement has been reduced by 90 percent.
    We are restricted to severe limits on what we need to do.
        This system is important because in today's world, the
    submarine threats that we face are different from what they
    were in the Cold War. We are faced now with very, very quiet
    diesel submarines operating coast to coast. The way we used to
    go about detecting these submarines primarily was by passive
    acoustic means, where we would listen, pick up these sounds of
    these moving, typically nuclear submarines. These new boats
    operate in a very different manner. They are very quiet. They
    sit still, and we have found that one of the very few ways that
    we can find them is to actively seek them, and hence LFA. We
    are not going to be able to bring this forward if we do not get
    some help in this area right now, and we are severely
    restricted.
        So we think we really need to provide comprehensive
    training. We are asking for your help to try and rebalance
    this. I thank you for your attention. I have a written
    statement that I have submitted for the record, and I stand by
    to answer your questions when we reconvene. Thank you, sir.
        [The prepared statement of Admiral Fallon follows:]

               Prepared Statement by Adm. William J. Fallon, USN

                                  INTRODUCTION

        Mr. Chairman and members of the subcommittee, thank you for this
    opportunity to share my views regarding the growing negative effects of
    encroachment on military readiness and training prior to sending
    American sailors into combat. I appreciate your attention to this vital
    and timely topic, which is of great importance to national security and
    the environment.

                                   READINESS

        I am pleased to report today that the readiness of the Navy is
    excellent, as evidenced by the large percentage of our fleet that is
    forward deployed in support of the global war on terrorism and
    defending our vital interests elsewhere in the world. Indeed, 208 of
    our 305 ships--representing fully 68 percent of our force--are
    underway, including 7 aircraft carrier battle groups, 10 amphibious
    ready groups, and numerous other combat and supporting units, totaling
    over 76,000 sailors. Most of these units are preparing for possible
    combat operations in Iraq.
        The high quality of training we provide to these sailors is largely
    unseen and often taken for granted, yet it is an essential element of
    their impressive level of combat readiness. Clearly, before this Nation
    sends its most precious asset--its young men and women--into harm's
    way, we must be uncompromising in our obligation to prepare them to
    fight, survive, and win. This, in turn, demands the most realistic and
    comprehensive training we can provide.
        Realistic, demanding training has proven key to survival in combat
    time and again. For example, data from World Wars I and II indicates
    that aviators who survive their first five combat engagements are
    likely to survive the war. Similarly, realistic training greatly
    increases our combat effectiveness. The ratio of enemy aircraft shot
    down by U.S. aircraft in Vietnam improved to 13-to-1 from less than 1-
    to-1 after the Navy established its Fighter Weapons School, popularly
    known as TOPGUN. More recent data shows aircrews who receive realistic
    training in the delivery of precision-guided munitions have twice the
    hit-to-miss ratio as those who do not receive such training.
        Similar training demands also exist at sea. New ultra-quiet diesel-
    electric submarines armed with deadly torpedoes and cruise missiles are
    proliferating widely. New technologies such as these could
    significantly threaten our fleet as we deploy around the world to
    assure access for joint forces, project power from the sea, and
    maintain open sea-lanes for trade. To successfully defend against such
    threats, our sailors must train realistically with the latest
    technology, including next-generation passive and active sonars.
        We rely on full use of our ranges, facilities, and advanced
    technology to ensure our forces have a decisive advantage in conflict.
    As we prepare for possible conflict today and look to the future, I am
    increasingly concerned about the growing challenges in our ability to
    ensure our forces receive the necessary training with the weapon and
    sensor systems they will employ in combat. Training and testing on our
    ranges is increasingly constrained by encroachment that reduces the
    number of training days, detracts from training realism, causes
    temporary or permanent loss of range access, decreases scheduling
    flexibility, and drives up costs.
        Encroachment issues have increased significantly over the past
    three decades. Training areas that were originally located in isolated
    areas are today surrounded by recreational facilities, urban and
    suburban sprawl, and constrained by state and Federal environmental
    laws and regulations and cumbersome permitting processes which
    negatively impact our ability to train.

                        NAVY'S ENVIRONMENTAL STEWARDSHIP

        Meanwhile, the Navy continues its commitment to good stewardship of
    the environment. Indeed, our culture reflects this, as the men and
    women manning our fleet grew up in a generation with a keen awareness
    of environmental issues. The Navy environmental budget request for
    fiscal year 2004 totals $1.0 billion. This funding supports
    environmental compliance and conservation, pollution prevention,
    environmental research, the development of new technologies, and
    environmental cleanup at Active and Reserve bases. It is precisely as a
    result of that stewardship, as opposed to commercial exploitation of
    private land--particularly along the Nation's coasts--that military
    lands present favorable habitats for plants and wildlife, including
    many protected species. Ironically, our own successful stewardship
    programs have helped increase the number of protected species on our
    ranges, which has resulted in less training flexibility.

             San Clemente Island, CA: Navy spends $2.5 million per
            year on habitat preservation and a captive breeding program
            that increased the number of endangered Loggerhead Shrike 12
            fold.
             Navy spent $400 million to develop, install, and
            maintain plastic waste processors on all surface ships to avoid
            discharging plastics overboard.
             American Bird Conservancy recently hailed DOD and
            Navy's participation in the Partners in Flight initiative,
            praising its efforts to ``defend the stepping stones of bird
            migration.''
             Navy is spending $7 million annually pursuing various
            multi-year marine mammal research projects that include efforts
            to detect, classify, and monitor behaviors, habitat, and
            migration routes of marine mammal populations using underwater
            sound propagation.

                BALANCING MILITARY READINESS AND THE ENVIRONMENT

        Sustaining military readiness today has become increasingly
    difficult because, over time, a number of factors, including urban
    sprawl, regulations, litigation, and our own accommodations to demands
    from courts, regulatory agencies and special interest groups have
    cumulatively diminished the Navy's ability to effectively train and
    test systems. Among the greatest threats to proper military training
    are laws that include ambiguous provisions and cumbersome process
    requirements that result in unintended negative consequences, which
    inhibit realistic, timely and comprehensive training. These laws, and
    the court decisions which have interpreted and expanded them, have
    resulted in Federal courts and regulatory agencies curtailing essential
    training and weapons systems testing, notwithstanding the ``best
    available science'' supportive of the Navy's ability to train without
    harm to the environment. As a result, military readiness requirements
    and environmental protection are out of balance.
        The Department of Defense's RRPI proposes modest amendments to
    several environmental laws which will help restore the balance, meeting
    our national security needs and maintaining good stewardship of the
    environment. I ask for your help to address the challenges of most
    concern to the Navy in the Marine Mammal Protection Act (MMPA) and the
    Endangered Species Act (ESA).

                          MARINE MAMMAL PROTECTION ACT

        Last year before the Senate Environment and Public Works Committee
    I testified that the definition of the term ``harassment'' of marine
    mammals in the MMPA was a source of confusion because the definition is
    tied to vague and ambiguous terms such as ``annoyance'' and ``potential
    to disturb.'' These terms arguably apply to even the slightest changes
    in marine mammal behavior and subject Navy training and testing at sea
    to the scrutiny and control of courts, regulatory agencies and special
    interests groups, even in the absence of evidence of adverse impacts on
    the marine mammals. The severity of the impact on Navy training and
    testing is strikingly more apparent now.
        In November 2002, a Federal district judge in San Francisco
    presiding over a case brought by environmental groups alleging
    violation of the MMPA, National Environmental Policy Act (NEPA), and
    the ESA issued a court order that strictly limits employment of the
    Surveillance Towed Array Sensor System Low Frequency Active (SURTASS
    LFA) sonar system. This advanced system is designed to detect and track
    the growing number of quiet diesel submarines possessed by nations
    which could threaten our vital national security. After highlighting
    what the court viewed as flaws in regulatory agency implementation of
    the MMPA and ESA, and despite the Navy's unprecedented efforts to
    comply with NEPA, the court issued a preliminary injunction restricting
    Navy's deployment of SURTASS LFA to a small area in the western
    Pacific. As a result of the inherent structural flaws in the laws
    themselves as applied to world-wide military readiness activities, the
    Navy now finds the deployment and operation of one of our most
    important national security assets constrained by a Federal court as a
    result of litigation brought by environmental groups that is
    specifically designed to deny the Navy use of the system. Future
    testing and employment of SURTASS LFA (and potentially other Navy
    training and testing programs) are in jeopardy because the MMPA was
    originally enacted to protect whales from commercial exploitation and
    to prevent dolphins and other marine mammals from accidental death or
    injury during commercial fishing operations and did not address
    military readiness concerns.
        The Navy has immediate need for SURTASS LFA. The Chief of Naval
    Operations has stated that Anti-Submarine Warfare (ASW) is essential to
    sea control and maritime dominance. Many nations are capable of
    employing submarines to deny access or significantly delay execution of
    joint and coalition operations in support of our vital interests. The
    submarine threat today is real and in some ways has become more
    challenging than during the Cold War. Of the approximately 500 non-U.S.
    submarines in the world, almost half that number are operated by non-
    allied nations. Of greatest concern are the new ultra-quiet diesel-
    electric submarines armed with deadly torpedoes and cruise missiles
    being produced or acquired by the People's Republic of China, Iran, and
    North Korea.
    SURTASS LFA Scientific Research Effort
            - Evaluated affects of low frequency sound on marine species
            - Marine mammal research involved world-renowned experts and
            representatives from Cornell University, University of
            Washington, University of California Santa Cruz, Hubbs Sea
            World Research Institute, Marine Acoustics, Inc., National
            Marine Fisheries Service, Marine Mammal Commission, Harvard
            Medical School, Bodega Marine Laboratory, Woods Hole
            Oceanographic Institution, Scripps Institution of Oceanography,
            Raytheon, Office of Naval Research, Naval Facilities
            Engineering Service Center
            - Scientific Research Project alone, which involved 3 phases
            over 2 years, cost $10 million
            - Scientific effort concluded that LFA could be operated safely

        These diesel submarines are very difficult to detect outside the
    range at which they can launch attacks against U.S. and allied ships
    using passive sonar systems. Active systems like SURTASS LFA, when used
    in conjunction with other anti-submarine sensor and weapons systems,
    are necessary to detect, locate and destroy or avoid hostile submarines
    before they close within range of our forces. To ensure our sailors are
    properly prepared to counter this growing submarine threat, we must
    make certain they train with the best systems available.
        In meeting its obligations under current environmental laws for
    deploying SURTASS LFA, the Navy undertook the most comprehensive and
    exhaustive environmental planning and associated scientific research
    effort ever conducted to support a major seagoing combat system.
    Working cooperatively with the National Marine Fisheries Service
    (NMFS)--the Federal regulatory agency tasked with protection and
    preservation of marine mammals--the Navy completed an Environmental
    Impact Statement (EIS), developed mitigation measures for protecting
    the environment, and obtained all required permits pursuant to the MMPA
    and ESA. The scientific research and EIS involved extensive
    participation by independent scientists from a large number of
    laboratories and academic organizations. The Navy also undertook a
    wide-ranging effort to involve the public in the EIS process through an
    unprecedented program of public meetings and outreach for the Navy.
    Based on this monumental effort, NMFS concluded that the planned
    SURTASS LFA operations would have negligible impacts on marine mammals.
        Despite this extraordinary effort in terms of time, money, and
    resources to comply with existing environmental laws, Navy now finds
    itself with a Federal court order defining the limits of operation of a
    key system needed to address a clear, present and growing national
    security threat. Notably, there is no evidence of any negative impact
    on marine mammals in the one area in which we are currently operating.
    EIS Outreach
            - Notice of Intent published in 1996
            - 3 public scoping meetings
            - 8 public outreach meetings
            - 3 public hearings on the Draft EIS (DEIS)
            - DEIS distributed to Federal, State, and local government
            agencies, citizen groups, and organizations, and 17 public
            libraries
            - Over 1,000 public comments received on DEIS
            - Record of Decision signed in June 2002

        While recognizing the national security need for SURTASS LFA, the
    court nevertheless felt constrained by the broad language of a law
    which was not drafted with application to military readiness activities
    in mind. Notwithstanding the plaintiffs' failure to produce scientific
    evidence contradicting the independent scientific research sponsored by
    the Navy in coordination with numerous outside experts that the system
    could be operated with negligible harm to marine mammals, the court
    opined that Navy training must be restricted. In reaching this
    conclusion, the court noted that under the definition of harassment,
    the phrase ``potential to disturb'' hinged on the word ``potential''
    and extended to individual animals. Quoting from the opinion, the judge
    said, ``In fact, by focusing on potential harassment, the statute
    appears to consider all the animals in a population to be harassed if
    there is the potential for the act to disturb the behavior patterns of
    the most sensitive individual in the group.'' (Emphasis added.)
    Interpreting the law this broadly would require authorization (permits)
    for harassment of potentially hundreds, if not thousands, of marine
    mammals based on the benign behavioral responses of one or two of the
    most sensitive animals.
        Highlighting how difficult it would be to apply the MMPA to world-
    wide military readiness activities under such a broad interpretation of
    harassment, the court pointed out that a separate structural flaw in
    the MMPA limits permits for harassment to no more than a ``small
    number'' of marine mammals. Overturning the regulatory agency's
    decades-old interpretation of the MMPA, the court also said that the
    ``small number'' of animals affected cannot be defined in terms of
    whether there would be negligible impact on the species, but rather is
    an absolute number that must be determined to be ``small.'' The court's
    far-reaching opinion underscores shortcomings in the MMPA which apply
    to any world-wide military readiness activity, or any grouping of
    military training activities that might be submitted for an overall
    review of impact on the environment.
        In addition to the decision to restrict deployment of the SURTASS
    LFA system, two other recent decisions by different Federal district
    courts have stopped scientific research due to concerns about acoustic
    impacts to marine mammals. In one case, the court enjoined seismic air
    gun research on geological fault lines conducted by the National
    Science Foundation off the coast of Mexico based on the court's concern
    that the research may be harming marine mammals in violation of the
    MMPA and NEPA. In another case, a court enjoined a Navy funded research
    project proposed by the Woods Hole Oceanographic Institute designed to
    study the effectiveness of a high frequency detection sonar (similar to
    a commercial fish finder) in detecting migrating Grey Whales off the
    coast of California. The court's order stopped research on the
    development of a promising mitigation measure to avoid harming marine
    mammals from acoustic sources.
        To address these issues, I ask for your consideration of the
    narrowly focused amendments to the MMPA proposed in the National
    Defense Authorization Act for Fiscal Year 2004, which has now been
    transmitted by the President to Congress. Our proposal to clarify the
    definition of ``harassment'' and allow authorization of activities
    under the MMPA which would have a negligible impact on a stock or
    species follows recommendations of the National Research Council of the
    National Academy of Sciences, and would reinstate regulatory policies
    adopted prior to or during the Clinton administration. Our proposal to
    include a national security exception, similar to that in the
    Endangered Species Act, is directly responsive to numerous comments we
    received from environmental organizations commenting on national
    security exemptions in environmental laws.

                          ENDANGERED SPECIES ACT (ESA)

        Negative impacts on military readiness activities have also
    resulted from the ESA. For example, the designation of land used for
    military training as critical habitat under the ESA can undermine the
    primary purpose for which these lands were set aside. Federal courts
    have held that critical habitat is intended not only as a safe haven
    for species survival, but as a cradle for species recovery--even if the
    species is not currently present on the land. Under the ESA, Federal
    agencies are required to ensure that their activities do not adversely
    modify designated habitats. Hence designation as critical habitat can
    drastically limit land uses by placing inflexible restrictions on land
    that has been dedicated by our Nation to maintain military readiness.
        For example, in 1996, when 40 percent of the Chocolate Mountain
    Aerial Gunnery Range was designated as critical habitat, Navy SEAL
    training was negatively impacted. Before designation, Navy SEALs
    conducted realistic live-fire defense and attack training with multiple
    avenues of approach. Today, Navy SEALs training at this important range
    must restrict firing weapons to a narrow sector away from the critical
    habitat, undermining training realism. The ability to react to hostile
    forces coming from any direction is essential to a combat-effective
    SEAL and the range cannot provide that training under the critical
    habitat restrictions.
        Due to environmental restrictions and encroachment from other
    sources (e.g., urban sprawl, State and Federal-designated recreation
    areas and access limitations) at Camp Pendleton, California where the
    Navy and Marine Corps jointly train, only 1,500 meters of the 17 miles
    of beach is available to practice amphibious landings and movement from
    the beach using the full range of Marine Corps combat vehicles.
    Rehearsal of standard line abreast (side-by-side) formations of landing
    craft--to prevent the enemy from being able to concentrate fire on a
    specific beach location--has been dropped to mitigate potential
    disruption to birds and their nests on the beach. Even within this
    1,500-meter beach, all military vehicles are restricted to designated
    roads, and digging and earth moving is constrained to very limited
    areas.
        Similar ESA-based restrictions have led to significant curtailment
    of Navy training at other important locations, such as the Naval
    Amphibious Base at Coronado, California, which has been home to Navy
    frogmen and SEALs since their inception in World War II. All of their
    basic training and many necessary skills (from diving to hydrographic
    reconnaissance) are taught on its beaches and in the bays surrounding
    the base. A substantial amount of the SEAL training conducted at this
    base has had to be relocated as a result of requirements to mark and
    avoid ESA-protected bird nests on the beach that have flourished under
    dedicated Navy stewardship. At Tinian in the Marianas Islands in the
    Pacific, ESA-based restrictions to protect sea turtles and bird nesting
    areas resulted in a decision this year to cancel use of air cushion
    landing craft during a major fleet exercise, although this is the best
    heavy lift capability the Navy has to support Marine landings.
        In some cases, the challenge of critical habitat designation has
    become an issue even when the relevant endangered species are not
    currently present. Under litigation pressure brought by environmental
    groups in Federal court, the U.S. Fish and Wildlife Service (USFWS) has
    proposed part of Guam as critical habitat for the Marianas Crow,
    Marianas Kingfisher, and Marianas Fruit Bat. The areas under
    consideration for designation are currently used as magazines for
    forward deployed ordnance storage, jungle training areas (special
    operations forces), and low-level aviation training areas by all
    military services. None of the animals for which the habitat would be
    designated currently live on the land. Just last month USFWS designated
    critical habitat for a species of grass at the Pacific Missile Range
    Facility (PMRF) in Hawaii. PMRF is a long, narrow strip of land on
    Kauai, critical to the testing and evaluation of weapons, and capable
    of supporting a broad range of training and testing, including
    amphibious landings and Missile Defense Agency efforts to rapidly
    achieve an operational ballistic missile defense capability. This
    designation, like those proposed on Guam, establishes critical habit
    for species which do not even exist there. While the Guam and Hawaii
    critical habitat designations are noteworthy current examples, the real
    challenge is that special interest groups will use litigation to force
    designation of more and more military land as critical habitat even as
    other training alternatives become more scarce due to commercial
    development and urban growth.
        The administration has proposed a legislative solution to this
    challenge which would specify that INRMPs be used in lieu of
    designating critical habitat. DOD is already obligated under the Sikes
    Act to develop INRMPs for lands under military control. INRMPs address
    management of natural resources in the context of the missions for
    which the lands were placed under control of the military services.
    INRMPs are prepared in cooperation with the USFWS and State agencies,
    and these agencies recommend ways for DOD installations to better
    provide for species conservation and recovery.
        INRMPs are an effective tool for protecting the environment. For
    example, at Naval Amphibious Base Coronado, the Navy is spending about
    $720,000 per year on conservation and management programs for the
    Western Snowy Plover and Least Tern, endangered birds that nest in that
    area. That effort has successfully increased the number of Least Tern
    nests from 187 to 825 (over 4 times as many in 9 years) and the number
    of Western Snowy Plover nests from 7 to 99 (nearly 14 times as many in
    9 years). Similar good environmental stewardship by the Navy has been
    demonstrated at Vieques Island, Puerto Rico, where over 17,000 sea
    turtle eggs have been incubated and returned to the environment during
    a 10-year program. Vieques is only one part of a Navy-wide sea-turtle
    conservation effort in which we invest about $1 million a year.
        Adopting the RRPI would better balance training needs with the
    protection of threatened or endangered species. Changing the law to
    clearly establish that an approved INRMP provides sufficient species
    protection--rather than designating more and more military land as
    critical habitats--would retain flexibility for the Services in places
    where training needs and endangered species protection must coexist.

                             LEGISLATIVE PROPOSALS

        I would like to call your attention to several other important
    legislative proposals which would, if enacted, enable the Navy to meet
    both its legal obligations to provide ready forces under Title 10 and
    to conserve environmental resources.
        The Readiness and Range Preservation Initiative is a top Department
    of Defense and Navy priority. It would provide legislative relief for
    military readiness activities under various environmental statutes
    without compromising environmental protection. Each of these provisions
    would provide a significant benefit to readiness at a negligible cost
    to the environment.

             Modifications to MMPA which would clarify the MMPA's
            definition of ``harassment'' as a biologically significant
            response and authorize permits under the MMPA when there is a
            negligible impact on the stock of marine mammals.
             Modifications to ESA so that an approved INRMP for
            management of all natural resources now required under the
            Sikes Act precludes designation of critical habitat on military
            lands.
             Clarifying and confirming the longstanding regulatory
            policy of EPA and the States that firing of munitions on an
            operational range does not constitute a ``release'' under the
            Superfund statute or the creation of solid waste under the
            RCRA--a commonsense policy now being challenged in court. If
            the challenges are successful, such an interpretation could
            inhibit or even preclude live-fire training on our existing
            operational ranges.
             Provide modest additional flexibility under the Clean
            Air Act to the activities and the States in accommodating new
            military readiness activities like beddown of new weapons
            systems.

                                    SUMMARY

        We face an enemy today which threatens our way of life. The
    President has directed us to ``be ready'' to face this challenge. To
    fulfill this directive, we must conduct comprehensive and realistic
    combat training--arming our sailors and other servicemen and women with
    experience necessary to safeguard their lives and our national
    interests. This requires full use of our ranges, operating areas, and
    weapon systems. The Navy has demonstrated its able stewardship of our
    natural resources, and we will continue to promote the health of lands
    entrusted to our care. We recognize our responsibility to the Nation in
    both of these areas and seek your assistance in balancing these two
    requirements.
        I thank the subcommittee for your continued strong support of our
    Navy and I ask for your consideration of the RRPI legislation. Passage
    of RRPI will help the Services sustain military readiness today in this
    time of war and in the future. It will also support our on-going
    efforts at environmental conservation. Achieving the best balance of
    these national imperatives is in the interests of all Americans, and
    your Navy is committed to achieving these goals.

        Senator Ensign. We will be back in a few minutes. [Recess.]
        Next we will hear from General Nyland.

    STATEMENT OF GEN. WILLIAM L. NYLAND, USMC, ASSISTANT COMMANDANT
                          OF THE MARINE CORPS

        General Nyland. Thank you, Mr. Chairman. Chairman Ensign,
    members of the subcommittee, it is certainly my honor to appear
    before you today to provide the Marine Corps' position on
    encroachment and encourage Congress to pass the Department's
    Readiness and Range Preservation Initiative.
        Environmental encroachment directly impacts the ability of
    our bases, stations, and ranges to support the readiness
    training of our servicemen and women. I greatly appreciate this
    subcommittee's willingness and commitment to address this truly
    national issue with the holistic view that only the Congress of
    our great Nation can provide. I thank you for your continuous
    support of our Nation's services, and most particularly for
    your Corps of Marines.
        I look forward to answering any questions you may have.
        [The prepared statement of General Nyland follows:]

               Prepared Statement by Gen. William L. Nyland, USMC

        Chairman Ensign, Senator Akaka, and members of the subcommittee;
    thank you for the opportunity to speak with you concerning the impacts
    of encroachment on Marine Corps training ranges, and the Department's
    legislation known as the Readiness and Range Preservation Initiative.
    Your efforts on behalf of our men and women in uniform will ensure that
    the Nation's military remains ready and that our service members and
    their families enjoy the quality of life that they deserve. As General
    Mike Williams, the Assistant Commandant of the Marine Corps before me,
    accurately noted: good quality of life begins with realistic training
    because realistic training results in success on the battlefield and
    success on the battlefield is the only way your marines can return home
    safely to their families.
        I welcome the opportunity to offer testimony as the subcommittee
    considers the implications of encroachment. The Readiness and Range
    Preservation Initiative is fundamentally important to the Nation
    because encroachment is on the rise. If left unchecked, encroachment
    will detrimentally impact the mission of our bases, stations, and
    ranges in the near term and threaten our future military readiness in
    the long term. At stake for your Marine Corps is the cost of success in
    combat. We must do all in our power to ensure that marines, members of
    our sister services, and service member families do not pay an
    unnecessarily high price for that success. Marines must train, as they
    will fight; to do that requires unencumbered access to sea, land, and
    airspace to properly conduct this essential training.
        During the last 24 months, service witnesses have appeared before
    Congress to speak to encroachment issues at six different hearings:
    this subcommittee held a hearing on March 20, 2001; the House Committee
    on Government Reform held hearings on May 9, 2001 and May 16, 2002; the
    Subcommittee on Military Readiness of the House Armed Services
    Committee held hearings on May 22, 2001 and March 8, 2002; and the
    Senate Environment and Public Works Committee held a hearing on July 9,
    2002. The Readiness and Range Preservation Initiative was introduced
    and debated during the course of these hearings. Marine Corps'
    witnesses, among others, were afforded the opportunity to articulate in
    detail their position on the issue of encroachment.
        As a result of these efforts, the 107th Congress enacted a
    provision to clarify Department of Defense responsibilities under the
    Migratory Bird Treaty Act. Litigation had called into question our
    responsibilities under this act, and threatened to halt military
    training necessary to be combat ready. Congress took action to remove
    this litigation threat, and I thank Congress for this effort. In
    accordance with last year's legislation, we will continue with our
    efforts to identify measures to monitor, minimize and mitigate--to the
    extent practicable, any adverse impacts to migratory birds that may be
    attributable to military readiness activities. Further, we will work
    with the Interior Department as they develop and prescribe the
    regulations Congress directed.
        The 107th Congress also granted authority to the military
    departments to partner with non-governmental organizations, and State
    and local governments to acquire land adjacent/proximate to military
    installations to prevent incompatible development, and to convey
    surplus real property for natural resource conservation. I would like
    to take this opportunity to advise you as to what we have already done
    with this new authority. I believe our efforts demonstrate that we take
    the encroachment threat seriously.
        The Marine Corps is actively pursuing use of the new authority
    provided by the 107th Congress; and in fact, Camp Lejeune has already
    utilized the authority. The installation is a member of the Onslow
    Bight Forum, a group dedicated to protecting the natural heritage of
    coastal North Carolina. Participants in the Onslow Bight include The
    Nature Conservancy and other non-governmental organizations, several
    North Carolina state agencies, the U.S. Fish and Wildlife Service and
    the U.S. Forest Service. Recently, 2,500 acres adjacent to the Camp
    Lejeune tank and rifle ranges became available for purchase, and was
    the subject of interest by a developer hoping to construct 3,000
    housing units. The land was purchased by The Nature Conservancy (with
    partial funding provided by the Marine Corps) and will be transferred
    to the North Carolina Wildlife Resources Commission for inclusion into
    the State hunting lands system. The Marine Corps, in exchange for its
    funding contribution, received a restrictive use easement that will
    prohibit any land use or development of the parcel that is incompatible
    with Marine Corps training requirements. The Onslow Bight Forum is
    continuing to search for other parcels that further the mutual goals of
    its members.
        Camp Pendleton, California is also actively engaged in a similar
    partnership effort. Camp Pendleton is participating in the South Coast
    Conservation Forum, a group whose goal is to acquire lands that will be
    set aside to protect as many of the 50 listed species in the area as
    possible. Members of this group include Orange, Riverside and San Diego
    counties, and non-governmental conservation organizations such as The
    Nature Conservancy, Trust for Public Land, Sierra Club and Wildlife
    Habitat League. There may be opportunities to purchase buffer areas
    adjacent to the north, east and south sides of Camp Pendleton in order
    to preserve watersheds, protect natural habitat and avoid urbanization.
        The efforts of the 107th Congress, and our subsequent initiatives
    within the Marine Corps, have been very beneficial. Much more, however,
    must still be done. We continue to face threats to our training
    capabilities focused on environmental media the 107th Congress did not
    address. This year, therefore, the administration is reintroducing
    legislative clarifications for five provisions not approved in last
    year's Readiness and Range Preservation Initiative. These
    clarifications will:

             provide for our integrated natural resource management
            plans to obviate the need for critical habitat designation
            under the Endangered Species Act;
             clarify the definition of ``harassment'' under the
            Marine Mammal Protection Act;
             provide needed flexibility in working with States
            regarding the conformity requirement of the Clean Air Act; and
             clarify the role of the Resource Conservation and
            Recovery Act and the Comprehensive Environmental Response,
            Compensation, and Liability Act to apply when a range closes to
            provide a clear demarcation for the application of these laws.

        The challenge of encroachment is clear, as is the importance of
    this hearing and the proposed initiative. The Readiness and Range
    Preservation Initiative is narrowly tailored to protect military
    readiness activities, and does not purport to address the entire scope
    of Department of Defense activities. The thrust of the Initiative is to
    clarify rather than to roll back existing regulation, and each of the
    Initiative's proposals would benefit each of the military services to
    varying degrees. For the Marine Corps, endangered species issues are at
    the forefront of our encroachment concerns. The Readiness and Range
    Preservation Initiative proposal that addresses critical habitat,
    therefore, is the provision that would provide the Marine Corps with
    the greatest training value. (I will address our endangered species
    issues in more detail shortly.) The absolute necessity of maintaining
    military readiness is beyond debate, and readiness depends upon quality
    training that realistically simulates combat conditions. The issue,
    then, is how to balance the demands of national security with
    environmental stewardship, which at times are competing but are often
    complementary.
        Most of the Marine Corps' bases and stations were established in
    remote areas prior to or during World War II. Since then significant
    urban development has occurred around many of these installations. At
    the same time, our warfighting doctrine, weapons platforms, and tactics
    have evolved to counter new threats. The Marine Corps now requires
    greater standoff distances and larger maneuver areas. Simultaneously,
    our access to training resources is becoming more constrained,
    primarily as a result of growing populations around our bases and
    stations. The dramatic urban development near many of our installations
    has had numerous unintended consequences. For example, wildlife (often
    threatened or endangered species) seek out our installations, as they
    are often the last remaining open spaces in areas otherwise overtaken
    by human habitation and use.

        Previous testimony at the hearings referenced above provided
    compelling statements regarding encroachment. The Marine Corps
    recognized, however, that evidence of negative encroachment impacts,
    though persuasive, were largely anecdotal. Consequently, the Marine
    Corps set out to establish quantitative data regarding this issue.
    Selecting Marine Corps Base Camp Pendleton, California as the subject
    of the study, we examined encroachment impacts on a Marine Air Ground
    Task Force during the conduct of an amphibious landing. We relied upon
    established standards to measure the proficiency of marines based upon
    the Individual Training Standards of their military occupational
    specialties. The performance of Marine units was assessed against long
    established standards based upon Mission Essential Task Lists. We used
    these standards as the building blocks upon which we were able to
    quantify encroachment impacts.
        There are literally hundreds of elements to a Marine Air Ground
    Task Force. The study, therefore, selected three separate combat arms
    elements of the Marine Air Ground Task Force to examine: the artillery
    battery; the light armored reconnaissance platoon; and the mortar man.
    The tasks for each combat arms element were identified, and completion
    rates for each task were evaluated. Given that safety during training
    is paramount, and therefore certain types of training can be limited
    for safety purposes, the study concentrated on non-firing tasks
    (defined as all tasks that did not involve the use of live ammunition
    or explosives). In doing so, we avoided any concern that the study
    would confuse safety with encroachment issues.
        The initial results of the Camp Pendleton Quantification Study were
    surprising. The three combat arms elements were able to accomplish only
    69 percent of established standards for non-firing field training. The
    combat engineer Military Occupational Specialty was also examined in
    the context of the scenario, as the engineers have important tasks in
    support of the three combat arms elements. They were able to accomplish
    77 percent of established standards for non-firing field training. In
    the study, endangered species was the largest contributing encroachment
    factor. Endangered species and their habitat, for example,
    significantly constrain individual marines and Marine units from
    digging fighting positions, gun emplacements, vehicle defilade, and for
    combat engineers earthmoving and vehicle recovery activities. These
    findings reinforce my comment above that for the Marine Corps,
    endangered species issues are at the forefront of our encroachment
    debate.

        A second phase of this study is on the verge of completion. A final
    report of some 650 tasks is due to the Commanding General, Marine Corps
    Base, Camp Pendleton later this month. The second phase examined
    additional elements of the Marine Air Ground Task Force, including a
    Battalion Landing Team, an Infantry Company, the Cobra Attack
    Helicopter, and an Assault Amphibian Vehicle Crewman. I can report that
    the second phase's initial findings are consistent with the first
    phase. On average, a 70 percent completion rate applies to these
    additional elements of a Marine Air Ground Task Force conducting an
    amphibious operation at Camp Pendleton.
        One of the hundreds of tasks examined in the Pendleton
    Quantification Study was simple digging. Digging fighting holes is a
    core competency for Marine infantrymen, and one that is severely
    constrained at Camp Pendleton due to the presence of endangered species
    and habitat, cultural resources, or wetlands. To the layman, it may
    sound strange to suggest that digging is a technique that must be
    practiced; however, digging must be second nature in combat.
        An historical example will prove my point. During the Chosin
    Reservoir campaign of the Korean War, a Marine infantry company
    occupied a mountain pass for what was to have been a brief rest before
    advancing. Beginning that night, and for several days, they came under
    constant attack. Eventually, the entire 1st Marine Division fought back
    through that pass. Years later, the company commander recalled:

            I'll never forget how close we came to not digging in that
            first night. It seemed almost foolish at the time, because we
            expected to move off the position early the next morning. But
            something made me order them to break out those entrenching
            tools, even though it was growing dark and we were dead tired.
            If we hadn't, we would have been wiped out. We would not have
            survived that first night. [Martin Russ, Breakout: The Chosin
            Reservoir Campaign, page 316]

        The ``something'' to which the company commander refers is
    realistic training, which was then--unlike now, unconstrained at Camp
    Pendleton. His marines had been trained to dig their fighting holes as
    an automatic response in combat conditions. That response came as a
    result of repetition and reinforcement in a training environment;
    repetition and reinforcement that is not fully available today.
        Returning to the Pendleton Quantification Study for 1 minute, I
    would like to note that the study is not meant to identify the combat
    readiness of any particular Marine unit. Instead, the study is a report
    card on Camp Pendleton's ability to provide the training environment
    necessary for marines to complete their missions to task or standard.
    Marines who cannot get their training at Camp Pendleton must go
    elsewhere to train. Naturally, there are associated costs here, not
    only in terms of money but also in quality of life.
        Evidence of negative encroachment impacts is not limited to the
    Camp Pendleton Quantification Study. Perhaps the most sweeping example
    within the Marine Corps is a proposal--made in calendar year 2000, to
    designate critical habitat on 57 percent of the 125,000-acre Camp
    Pendleton and 65 percent of the 23,000-acre Marine Corps Air Station
    Miramar. The Marine Corps worked with the USFWS to develop a
    scientifically and legally based policy that precluded the need to
    designate critical habitat on Miramar, and precluded the designation of
    critical habitat on the vast majority of Camp Pendleton. This policy
    recognized that Marine Corps Integrated Natural Resource Management
    Plans, developed in coordination with the USFWS, can provide the
    special management necessary for endangered species, and can preclude
    the need to designate critical habitat. Special interest groups have
    now challenged the USFWS's final rule in court. With the consent of the
    court, the USFWS withdrew their final rule. The USFWS is currently
    reconsidering critical habitat designation, and is required to issue a
    new draft rule in April 2003.
        Meanwhile, the USFWS has been applying their policy to other
    Federal agencies with acceptable natural resource management plans. The
    USFWS applied the policy, for example, to a Forest Service management
    plan on lands that are habitat for the Mexican Spotted Owl. In January
    2003, a Federal district court in Arizona held that the USFWS's policy,
    as it was applied to the Forest Service management plan, was
    ``knowingly unlawful.'' The Readiness and Range Preservation Initiative
    has within it a provision that would codify current USFWS practice.
    Given recent judicial opinions, codification is necessary to confirm
    for the courts that the USFWS's policy is lawful. Absent the passage of
    this specific provision, environmental litigation may still cause over
    65 percent of Marine Corps Air Station Miramar and 57 percent of Camp
    Pendleton to be designated critical habitat.
        As the legislative response to the Pendleton/Miramar critical
    habitat proposals demonstrate, clarification of existing law in
    accordance with administration policy is the purpose of the Readiness
    and Range Preservation Initiative. The intent of the Initiative is not
    to roll back the environmental stewardship responsibilities of the
    Armed Forces. Rather, by clarifying relevant environmental statutes,
    the Initiative will enhance the ability of the Armed Forces to train
    properly for combat.
        There are those who note that the military services already have
    limited legislative exemptions available in some of the environmental
    statutes; they note that these exemptions are seldom used, and suggest
    that they are the appropriate venue under which the military should
    address encroachment impacts. We disagree. A national security
    exemption, such as the one available under the Endangered Species Act,
    is like the tool-box in your car. Exemptions, like the automobile tool-
    box, are necessary for emergency situations; they should not, however,
    be necessary every day for the daily commute to work. We seek
    legislative clarification for the day-to-day functioning of our
    military installations. National security exemptions are not the
    appropriate method to deal with daily operations.
        While we seek legislative clarification for the day-to-day
    functioning of our military installations, our effort does not address
    every function of our military installations. A military installation
    can be viewed as a ``tale of two cities.'' On the one hand, our
    installations are comparable to many medium-sized cities, complete with
    populations of 50,000 residents, schools, wastewater treatment
    facilities, power plants, and a hospital. There are environmental
    responsibilities associated with each of these amenities, and we seek
    no relief from any of these responsibilities. A military installation,
    however, is also a military combat test and training center. The
    primary purpose of the military installation is to promote military
    readiness. No civilian city has a similar purpose. It is within the
    venue of military readiness that we seek to address the impact of
    encroachment on combat readiness activities. Our goal is to establish
    the appropriate balance between our Title X responsibility to be combat
    ready at all times, and our additional environmental compliance and
    stewardship responsibilities. The Initiative's provisions are focused
    solely on readiness activities. Marine Corps activities unrelated to
    combat remain unchanged.
        Encroachment has grown over time, and while each issue taken
    individually may not seem detrimental to our training mission, it is
    their cumulative effect, and the predictable increase in these
    encroachment pressures that has lead the Department of Defense to seek
    the clarifications of existing statutes.
        The provisions contained in the Readiness and Range Preservation
    Initiative are primarily designed to maintain the status quo so that
    our training can continue at its current pace. For example, the
    critical habitat provision codifies current USFWS practice. This
    practice holds that Integrated Natural Resource Management Plans
    prepared pursuant to the Sikes Act provide the special management
    considerations necessary under the Endangered Species Act. Critical
    habitat designation on military installations is, therefore,
    unnecessary. Similarly, the Readiness and Range Preservation Initiative
    provision addressing marine mammals provides a definition of harassment
    that is consistent with guidance of the National Research Council to
    maintain adequate protection of marine mammals. The Clean Air Act
    compliance provision provides limited flexibility--a 3-year period,
    within which the military services would be required to demonstrate
    conformity with applicable State Implementation Plans. Finally, the
    military munitions provisions are designed to codify current
    administration policy regarding when military munitions are solid and
    hazardous wastes.
        The Marine Corps is a good steward of the resources entrusted to
    it. Even those who question our need for legislative relief acknowledge
    that fact. Our responsibility to the American people is to maintain a
    high state of readiness while preserving and protecting the environment
    of the Nation. Unlike commercial developers, the military needs a
    natural environment for realistic field training. As a result, our
    environmental management efforts have produced increasing populations
    of endangered species on our lands.
        The Readiness and Range Preservation Initiative is essential to
    ensure a proper balance between two national imperatives: military
    readiness and environmental conservation. The Initiative is key to
    future readiness. It is an appropriate response to the encroachment
    threat, and I encourage your full support for this balanced approach
    toward both the requirement to maintain military readiness and the
    requirement to protect the environmental resources of the Nation. Thank
    you for your interest in this national issue.

        Senator Ensign. General Foglesong.

    STATEMENT OF GEN. ROBERT H. FOGLESONG, USAF, VICE CHIEF OF THE
                               AIR FORCE

        General Foglesong. Thank you, Mr. Chairman, Senators.
    Thanks very much for the opportunity to come over. I am honored
    to be here with you today. This is a critical and important
    topic for all of our Services. Let me start off by saying I
    think we have been good stewards of our environment. We are
    primarily interested in the land around our bases and the air
    space around our bases. I will comment on that a little later,
    but we also have this balancing act, as you all know better
    than anybody, of trying to be good stewards of readiness for
    our sons and daughters. I think we have also done a pretty good
    job of that lately, and I am proud of that.
        I do not see those two things as incompatible, by the way,
    being a good steward of our environment and being a good
    steward of our sons' and daughters' readiness.
        I will say that our ranges are absolutely fundamental, in
    fact, even critical to our successes. I will also give an
    anecdotal story, if I can. I was recently visiting over in the
    Persian Gulf and had the opportunity to talk to one of our
    fighter pilots who had just returned from a mission and had
    just dropped a 500-pound bomb on a gun emplacement that had
    been shooting at him. As it turns out, this is not an uncommon
    event, and of course they are pretty pumped up when they come
    back.
        So my question was, ``well, how did this go?'' and the
    answer I got back was, ``General, this is not my first rodeo,''
    that he had had the opportunity to drop 500-pound bombs before
    and had trained up to do this. While the adrenaline was flowing
    a little more when somebody is shooting back at you, the
    procedures that he used and the techniques, the training that
    he had achieved on our ranges, were incredibly useful for him.
    So it helped me focus once again on why our range spaces are
    absolutely critical to us.
        Let me finish by saying that while, as I said earlier, our
    focus is primarily on the land around our bases and the air
    space around our bases, I am here also in full support of the
    Army, the Navy, and the Marine Corps. Because when their
    ability to train is impacted, it critically impacts our ability
    to train with them, so for the Army and the Marines, when they
    are impacted, the air power that is provided by the sea
    services and the Air Force also is critically impacted.
        I, too, have a statement I would like to turn in for the
    record if I could, and I would be happy to take your questions,
    sir.
        [The prepared statement of General Foglesong follows:]

              Prepared Statement by Gen. Robert H. Foglesong, USAF

                                  INTRODUCTION

        Mr. Chairman, members of the subcommittee, I am delighted to have
    this opportunity to address you today on the growing challenges that
    encroachment poses to force readiness. As the Air Force's Vice Chief of
    Staff, I want to thank you for your continued focus on the resource
    challenges facing our airmen today. The Air Force is dedicated to
    maintaining a ready force while protecting our natural resources. We
    are committed environmental stewards and do not believe that military
    readiness and environmental stewardship are mutually exclusive--in
    fact, they can go hand in hand.
        Our installations, ranges, and training airspace are critical
    national assets that allow the Air Force to test equipment, develop new
    tactics, and train our forces to be combat-ready. Access to these
    resources is increasingly threatened by urban and commercial growth and
    is often restricted or limited by regulations or local laws designed to
    conserve resources and manage economic development. At a time when
    increased OPTEMPO, aging equipment, and personnel challenges are
    threatening our readiness, it is critical that we protect these
    valuable resources we need to train our airmen and to develop new
    weapon systems.
        The loss or restricted use of combat training ranges and operating
    areas forces us to find workarounds or to delay and reschedule needed
    training. These constraints inhibit our ability to ``train as we
    fight,'' degrade our combat readiness, and will eventually limit combat
    forces to fight only as they have trained. In the past, the Air Force
    dealt with encroachment issues by modifying operations, financing
    mitigation, or both. As pressures continue to grow, managing the
    operational and financial risks without compromising our mission
    becomes increasingly difficult and costly. Without action, we expect to
    see a continuing erosion of the training environment.
        The Air Force, with all the Services, is committed to addressing
    these challenges. We are confident in our ability to provide the
    necessary balance between operational needs and environmental
    protection. We have a strong record of doing so. Our leadership in
    environmental management has ensured resources entrusted to the Air
    Force are sustained and restored to the condition needed for future
    generations. Our lands offer excellent wildlife habitat; our environs
    attract development and competition for clean water and clear air.
        The Air Force has made it a priority to identify and quantify the
    resources needed to support mission requirements, and to measure and
    communicate the impacts of encroachment on mission readiness. The RRPI
    will provide needed clarification to specific environmental statutes
    and protect access to our training resources while continuing to
    protect the environmental resources so valuable to us and the Nation.
    Last year, Congress adopted three of the original eight RRPI provisions
    providing us with additional options to address land development near
    our installations, new opportunities to transfer surplus land, and
    relief from Migratory Bird Treaty Act liability for take of birds
    incidental to readiness activities for 1 year while we work with the
    Department of the Interior on a longer lasting regulatory fix. We need
    the remaining provisions to ensure our continued preparedness.

                                  ENCROACHMENT

        Encroachment is the result of any and all outside influences that
    inhibit necessary training and testing. There are myriad causes.
    Competition for airspace in and around military installations from
    commercial and general aviation can limit test and training activities.
    Conservation of natural resources such as cultural resources,
    restrictions on noise levels, caps on air emissions, and efforts to
    protect endangered or threatened species can be restrictive. Potential
    new critical habitat designations could restrict installation or range
    use and development. For example, without clarification, we are facing
    acreage restrictions on portions of Beale AFB, F.E. Warren AFB, and
    Andersen AFB. A critical habitat designation would restrict all of
    Travis AFB. We are also experiencing increasing competition with
    commercial users for radio frequency spectrum, interfering with our
    command, control, communications, computer, intelligence, surveillance,
    and reconnaissance (C\4\ISR) and possibly impacting the next generation
    of weapon systems that depend on that data.
        We remain concerned about the future impacts of encroachment on our
    ability to test and train. New systems, like our standoff weapons and
    next generation aircraft, require more airspace and greater range
    access. Unfortunately, we cannot simply train somewhere else. Our
    existing ranges support a significant infrastructure of testing and
    training areas, targets, instrumentation, and other investments--the
    costs involved in relocating would be enormous. Maintaining existing
    ranges with adequate room to maneuver and the ability to drop live-fire
    ordnance is essential to maintaining our combat edge.
        The Air Force has a comprehensive strategy to address these
    encroachment issues. We identify and quantify the resource base
    required to perform the Air Force mission and then quantify the
    readiness impairments resulting from any limitations on the resource
    base. We work with other Federal resource management agencies to
    develop regulatory or administrative improvements, and we dialogue with
    State, tribal, and local governments and other interested
    organizations. If necessary, we seek statutory modifications to prevent
    these unintended impacts to military readiness.
        RRPI seeks to do just that. For the most part, we are seeking
    definitional clarifications, application of environmental requirements
    in more appropriate balance with readiness requirements, and, in some
    cases, time extensions to fulfill our requirements. Narrowly defined,
    RRPI seeks to address only those regulations that specifically impact
    readiness training.
        For example, the Air Force's access to and management of our
    valuable resources is often controlled or limited by courts and other
    governmental agencies that apply existing laws, statutes, and
    regulations in ways that limit military readiness. In some cases, there
    are laws that, depending on the manner in which they are interpreted,
    may contradict one another. Case in point, the Sikes Act states that
    military needs are the primary land use consideration, while the
    Endangered Species Act (ESA) requires agencies to utilize their
    authorities to conserve listed species and their habitat. As a result,
    there are currently several legal challenges that threaten to overturn
    the Department of the Interior (DOI) policy of using the Sikes Act
    planning process to substitute for critical habitat on some military
    lands. The Air Force would like to use Integrated Natural Resource
    Management Plans in place of critical habitat designation under the
    ESA.
        Cases like this demonstrate the needed clarification the RRPI
    provides. There are more. We need time extensions to comply with State
    Implementation Plans in the Clean Air Act. Further clarification of the
    circumstances in which explosives, unexploded ordnance, munitions and
    their fragments, are included in the definition of ``solid waste'' when
    used on operational ranges is needed. Similarly, additional
    clarification is needed with respect to those items and the definition
    of ``release'' under the Comprehensive Environmental Response,
    Compensation, and Liability Act. These and other reasonable steps will
    ensure that military training and readiness are not compromised as we
    carry out our environmental protection responsibilities. The relief
    will allow us to direct our budget and priorities towards sustaining
    environmental resources and to spend less of our limited environmental
    funding on litigation, administration, support, studies, and
    investigations.
        The following is illustrative of our environmental commitment and
    the associated operational challenges in the areas of species and habit
    protection, unexploded ordnance removal, air quality, and spectrum
    allocation.

                         SPECIES AND HABITAT PROTECTION

        Currently, 78 Federally listed threatened and endangered species
    live on approximately 9 million acres of Air Force property for which
    the Air Force provides measures of habitat and species protection. As
    an example, we track the movement of Sonoran Pronghorn on the Barry M.
    Goldwater Range (BMGR) in Arizona. The DOD flies about 70,000 sorties
    yearly on the BMGR, and our biologists monitor the BMGR target areas
    for Pronghorn movements. If any are spotted within a 2-hour period
    prior to bombing, the live missions projected for that area are
    diverted or canceled. Working hand-in-hand with the USFWS and the
    Arizona Department of Game and Fish, we strive to ensure the survival
    of this endangered subspecies of Pronghorn.
        At the Nevada Test and Training Range (NTTR), operated by Nellis
    Air Force Base, the Air Force supports the Bureau of Land Management's
    wild horse program on over 390,000 acres of the NTTR. In the southern
    portion of the range we have fenced target areas to ensure the
    endangered Desert Tortoise population is not affected by our
    operations. Additionally, in Nevada and Arizona we work with local
    communities and Tribal Governments to ensure the protection of cultural
    resources. We can do all of this and still meet our training
    requirements.
        At Tyndall Air Force Base in Florida, we monitor the nests of about
    100 threatened Loggerhead and endangered Green Sea Turtles daily,
    physically protecting their homes with wire mesh. We do this to ensure
    compliance with the ESA.
        At Eglin Air Force Base in Florida, we electronically tag and track
    endangered Gulf Sturgeon to ensure they are not impacted by our
    operations. The water impact/detonation area is monitored for sturgeon
    prior to training. If sturgeon are detected in the area, detonation is
    moved or delayed. Eglin also serves as a home to the endangered Red-
    Cockaded Woodpecker. By working closely with the FWS, we have been able
    to nearly double their population. Additionally, our biologists are
    doing everything possible to aid the threatened Flatwoods Salamander
    and the threatened Eastern Indigo Snake.
        We do these initiatives to support the ESA and serve as good
    stewards of our Nation's resources while at the same time, maintain our
    commitment to combat readiness. However, good stewardship incurs
    significant costs. For example, the Air Force spends $300,000 annually
    to track Pronghorn movements at BMGR and is preparing a 10-year, $35
    million study of endangered bird species in New Mexico, Texas and
    Arizona.
        In some cases, our installations and ranges are the only large,
    undeveloped, and relatively undisturbed areas remaining in growing
    urban areas. This can result in Air Force lands becoming the sole area
    in the region that can support endangered species. Biological Opinions
    resulting from our obligations under the ESA have imposed range and
    airspace restrictions mainly associated with aircraft noise and
    munitions use. We operate with altitude restrictions because of the
    noise and its possible effects on endangered species in states such as
    Arizona, Idaho, New Mexico, and Texas.
        The potential designation of installation or range areas as a
    critical habitat or marine sanctuary may seriously limit our ability to
    perform training and test missions. For example, a critical habitat
    designation for six species, including three species of shrimp and two
    grasses, on Travis AFB could restrict 100 percent of the installation
    and impede/stop plans to beddown C-17 aircraft. At Andersen AFB on Guam
    a critical habitat designation for the Guam Rail, Micronesian
    Kingfisher, Guam Fruit Bat, and Mariana Fruit Bat could restrict 67
    percent of the installation.

                           UNEXPLODED ORDNANCE (UXO)

        We have extensively examined our practices and policies for the
    disposal of UXO and associated residue material (primarily scrap metal)
    on operational ranges. UXO and range residue (used targets, inert
    ordnance, etc.) physically occupy only a small part of any air-to-
    ground range, but their presence is an increasingly expensive problem.
    The costs associated with cleaning up closed ranges have led us to the
    conclusion that we need to plan and manage for the entire life-cycle of
    a range.
        The Air Force first started clearing ordnance from active ranges in
    the late 1940s. Today, active range clearance provides for safe target
    area operations, while clearing live-drop operational ranges provides
    airfield-recovery training for our Explosive Ordnance Disposal
    technicians. Air Force policy requires that active air-to-ground ranges
    be cleared on a quarterly, annual, and 5-year basis at varying
    distances from each target. Our currently scheduled UXO and residue
    removal program, along with modifications to our range-clearing
    practices, will ensure long-term range sustainability and the safety of
    personnel on the range. Our ultimate goal is to manage our ranges
    effectively and efficiently throughout the life-cycle process providing
    for sustainable operations, safe and effective UXO management and long-
    term environmental stewardship.
        The Air Force understands its responsibility to manage material
    from our ordinance if it travels off-range, and supports the RRPI
    legislation that helps to clarify our obligation to respond to
    potential off-site impacts from our munitions training.

                                  AIR QUALITY

        Many of our largest and most important installations are located in
    areas that are experiencing rapid growth and the attendant pressures
    resulting from air quality standards. A number of our installations are
    currently located in ``non-attainment'' areas, which are places that
    failed to meet EPA standards for air pollution, and more bases are in
    areas that are trending toward non-attainment. Air quality pressures
    generally affect operations at our installations more than on our
    ranges, but they potentially limit our basing options for force
    realignments and weapon system beddowns. If any beddown action is found
    not to conform to the state implementation plan for Clean Air Act
    compliance, the Air Force must either obtain air quality credits or
    reduce other emissions at the base to counterbalance the impact.
        The Air Force supports the RRPI legislative provision that allows
    for conformity with each State's air quality implementation plan,
    including emissions limits, over a 3-year period so that mission
    critical readiness activities can still take place while the steps
    necessary to achieve conformity are completed. We continue to work with
    State regulators and local communities to ensure we have the
    flexibility to base aircraft at our installations which have huge
    investments in infrastructure not only on the installation itself, but
    also in the ranges used by its aircraft.

                             SPECTRUM REALLOCATION

        The RF frequencies below about 5000 MHz are the most valuable part
    of the spectrum for the kinds of highly mobile functions carried out at
    our test ranges. Over the past decade, the Federal Government has lost
    access to over 235 MHz of bandwidth in this part of the spectrum--due
    primarily to international and congressionally-mandated reallocations.
    For example, until 1992, the DOD and private sector aerospace industry
    were authorized to use 80 MHz of designated spectrum in ``Upper-S
    Band'' to transmit real-time telemetry data from flight tests of manned
    aircraft. This spectrum bandwidth was needed to support increasing
    telemetry bandwidths requirements for future fighters and bombers. In
    1992, the World Radio Conference (WRC) reallocated the lower 50 MHz of
    this frequency band to provide spectrum for broadcasting high quality
    audio from geostationary satellites. In 1997, under the requirements of
    the Balanced Budget Act of 1997, we were forced to transfer an
    additional portion of this frequency band, leaving us with only a 25
    MHz increment for flight test telemetry in this spectrum. Although the
    recent National Telecommunications and Information Administration
    (NTIA) Advanced Mobile Wireless Viability Study agreement between the
    NTIA and Federal Communications Commission will restore a limited
    portion of this bandwidth, further loss of this spectrum could impact
    our flight-test programs, increase test costs, and threaten our future
    telemetry needs.

                                   CONCLUSION

        I thank the subcommittee for this opportunity to address our
    concerns and to outline workable solutions that will guarantee
    continued readiness while preserving our natural resources. The Air
    Force understands its obligation to identify competing defense and
    environmental needs and to establish a compatible use of resources. At
    the same time, we are committed to giving our airmen both the resources
    and the training they need to succeed in combat. We owe them no less.
    This requires a realistic training environment that approximates the
    combat environment. It requires cutting-edge weaponry that will
    overwhelm our enemy's capabilities. Let me be clear, when opportunities
    to test and train are reduced, our readiness and effectiveness are
    reduced. Without appropriate relief from encroachment, the Air Force
    will be unduly constrained over time, and we will not be the ready
    fighting force this country needs and demands.
        We are confident the multi-billion dollar effort in Defense
    programs to conserve, protect, and restore the environment will
    continue to achieve lasting successes in all areas of protecting human
    health and the environment. The Air Force appreciates the
    subcommittee's continued support so that we can maintain our
    stewardship of the environment and still prepare our men and women for
    the daunting challenges of combat.

        Senator Ensign. I thank all of you, and I want to start,
    first of all, General Keane, when we visited a few weeks ago in
    my office I was greatly impacted that day. I really appreciated
    the fact that you brought out how many of our soldiers are
    there still on the ground, still fighting, still engaging.
    Afghanistan does not make a lot of news these days, unless we
    are on the trail of enemy number 1. But people are in harm's
    way and they are getting wounded.
        The acts of heroism that you talked about there I thought
    were incredible. The whole battle, and you mentioned it today,
    where our troops were so outnumbered, and I think it really
    pointed out in a real life situation the importance of training
    and readiness. They talk about balance. To me, there is no
    balance when it comes to readiness. I mean, we want to be
    superior, far superior to our enemies, and balance between
    training and taking care of the environment. But not where we
    are ever putting our troops at a disadvantage when they are
    coming up against the enemy.
        Senator Akaka in his opening statement today referenced the
    current state of readiness, and I have heard from all of you
    that you feel very good about our state of readiness,
    especially as we prepare for a possible war against Iraq. The
    question, I think is more important, because a lot of these
    lawsuits are pending, or they have, as with the Navy and your
    LFA, we are talking about future things that are in the
    development stages.
        What would the answer be, and I would like each one of you
    to respond as best you can, I realize some of this is
    hypothetical, but as best you can--if these lawsuits are going
    to shut down, for instance, what is happening in Alaska, which
    could have a ripple effect, as we know, at many other training
    ranges? What happens if we ask this question 5 years from now
    of the Vice Chiefs? What will be the answer on readiness 5
    years from now if the environmental groups are able to use the
    current laws and the courts to block what you are doing today?
    In other words, if you do not get legislative relief, what will
    be the answer to that question 5 years from now?
        General Keane. Thank you, sir. For example, the tragedy of
    the Arizona lawsuit, which is overruling essentially a U.S.
    Fish and Wildlife Service policy, that uses a management policy
    to deal with critical habitat, and avoids the critical habitat
    designation. The tragedy of the Arizona lawsuit is, on the six
    installations we have applied the wildlife management policy in
    the United States Army, we have made enormous progress. We are
    still protecting the critical habitat. Although not designated
    as such, it is growing and flourishing.
        In all of the surrounding areas to those military
    installations, that critical habitat has been destroyed by
    commercial development and urbanization, in complete violation
    of the environmental laws. So what we have proven is that we
    can work with the U.S. Fish and Wildlife Service to adjudicate
    the problem and protect the endangered species. Now comes a
    lawsuit, and that effectively will shut us back to where we
    were, essentially 7, 8 years ago and the situation I described
    to you at Fort Bragg in that chart will get progressively
    worse. That is point 1.
        A much greater threat to the Army is the CERCLA and RCRA
    application of the lawsuit that is pending in Alaska. If we
    lose that lawsuit, it will effectively shut that range down,
    but it jeopardizes the other 400 that we have, and so 5 years
    from now, we are not able to train and to conduct live-fire
    operations on any of our impact areas, which is the essence of
    what we do in our training.
        So I think it is a legitimate question to ask us--we are
    the best military in the world, and we are highly trained, and
    we are highly skilled, and you seem to be doing all of this
    despite some of the environmental challenges that are out
    there--what is the problem? Well, the problem is, it is getting
    progressively more difficult to do that training, and our
    people are working around it. It is frustrating them
    considerably to get this thing done, and we are asking,
    frankly, just too much of them to do that kind of training in
    such an unrealistic environment, and each year it gets worse.
        Then with the pending lawsuits, I think what I am trying to
    tell you, as well as my colleagues are, is a train wreck is
    coming. We see it coming. Let us get out in front of it. Let us
    not have the train wreck and then all have to rush in here and
    on an emergency basis change these laws. Let us be reasonable
    about this thing.
        We are good stewards of the environment. We were polluters
    20 years ago and as the consciousness of America was raised in
    the environmental area, so was ours. We changed rather
    dramatically. We had to change. We changed behavior and
    attitude of our leaders to be supporters of the environment,
    and as my colleagues have said, you can come to any of our
    military installations and find verification of that.
        So in my judgment, it is a train wreck that is coming. We
    see it, and we should stop it from happening.
        Senator Ensign. Admiral.
        Admiral Fallon. Senator, it is tough to predict the future,
    but if I could just recap, the U.S. Navy around the world in
    just the last year alone, you are all intimately familiar with
    the recent couple of years' activities in and around Vieques.
    The end result there is that we are finished training in that
    location.
        In the far Pacific, last year we had a court that enjoined
    us from doing training at a small rock islet, Farallon de
    Medinilla (FDM) we call it for short. It is out in the
    Marianas. It is really the only place for live fire for the
    Seventh Fleet that are forward-based in Japan, and we were shut
    down, totally, because of a ruling having to do with the
    Migratory Bird Treaty Act.
        The act of Congress last year in response to the Office of
    the Secretary of Defense (OSD) initiative, the one area in
    which we got relief, was dramatically effective for us. We were
    able to send, just in the last 6 months, two of our carrier
    battle groups down there to train en route to their stationing
    in the Middle East. We have another ship, Nimitz, that is on
    the way across the Pacific now that we hope to use there too.
    Without this relief from Congress in the nick of time, we would
    have been shut out of there.
        I mentioned earlier the problem out at PMRF, and this is
    the future. This facility is going to be critical to our
    ability to conduct testing for missile defense and for our
    other activities, including submarines, the low frequency
    active sonar challenges, we just see an ever-increasing number
    of these things.
        As General Keane indicated, the amount of time that people
    spend doing this instead of preparing our troops, our sailors,
    airmen, and marines for their readiness mission is growing day
    by day, and this is not what we believe they ought to be
    engaged in, but the realities of life are, it is just an
    increasing burden that we desperately need some relief from.
        Thank you, sir.
        Senator Ensign. General Nyland.
        General Nyland. Yes, sir. I would certainly echo the
    comments of my two colleagues, since we maneuver on the ground
    and fire, as does the Army, and operate from the sea, as we do
    with the Navy. I would say that clearly it would be a train
    wreck for the Marine Corps. Each of our major installations
    today has critical species, and also has an integrated resource
    management plan that we have worked together with the U.S. Fish
    and Wildlife Service to create.
        We have shown that we are good stewards, and personally, as
    a zoology major, I understand the great value of the animals of
    the Nation, but I have worn this uniform for 35 years, and I
    also understand the great value of trying to ensure that our
    soldiers, sailors, airmen, and marines, when they go forward,
    can do so successfully.
        I think what we really seek here is a balance. We can do
    both, but what we cannot do is continue to watch the
    litigation, as General Keane articulated, keep mounting that
    continues to threaten it, and should one be upheld, then set
    the precedent that would create the downfall for all the rest.
        Senator Ensign. General Foglesong.
        General Foglesong. Two points, sir, that come to mind to me
    about the future here, and I do not want to sound trite about
    this, but I have a son and a daughter-in-law both in the
    military right now, and it occurs to me that in the future we
    never want them to go into a fair fight. We always want the
    odds stacked in their favor.
        The second point is, we are in this delightful dilemma now
    in the Air Force of trying to ensure they are in an unfair
    fight. We do this by developing new weapons and new weapons
    systems that have more precision, more stand-off capability,
    more force protection, if you will. However, this requires that
    we have the right range space and the right training and test
    space available to go out and ensure that when and if they are
    called to war, that they are able to employ in a way that will
    be as effective and efficient as can be, yet bring them back
    home.
        So it is hard to predict 5 years. I agree with what was
    said earlier, but what I know is that our range, our air space
    in particular is under scrutiny every day. It is death by a
    thousand cuts to a degree, unless we have some clarification in
    the current status of the laws right now. Our concern is that
    we will shrink and shrink and shrink when we actually need what
    we have now, possibly even more because of the ranges that are
    involved with some of our newer weapons systems.
        Senator Ensign. I thank each of you for that answer. Just a
    yes or no, if possible: will it seriously hurt readiness if
    these things go forward in 5 years?
        General Keane. Very much, so.
        Admiral Fallon. Yes, sir.
        General Nyland. Yes, sir.
        General Foglesong. Yes, sir.
        Senator Ensign. All of them were affirmative.
        Senator Akaka.
        Senator Akaka. Thank you very much, Mr. Chairman.
        Admiral Fallon, I was a bit surprised to hear your
    testimony that just last week the U.S. Fish and Wildlife
    Service designated critical habitat for a species of grass at
    the missile range. So this is news for me.
        Admiral Fallon. I did not know it until last evening when I
    was back in the office and I was going over my notes, and one
    of my aides said, here is a little thing you probably need to
    know about.
        Senator Akaka. It spurs my interest to the point that I
    want to see what the grass looks like.
        Admiral Fallon. I cannot pronounce it, by the way. It is a
    Latin name. I am kind of rusty.
        Senator Akaka. My understanding was that for at least the
    last 4 years of the Clinton administration, the military
    services were able to avoid new designations of critical
    habitat on military lands by gaining approval of the INRMP on a
    case-by-case basis as an alternative to critical habitat
    designations, and my question then would be, why did it not
    work in this case? Is there an INRMP in place for this facility
    and, if so, do you know yet why the U.S. Fish and Wildlife
    Service did not follow its own rules on the consideration of
    the INRMPs?
        Admiral Fallon. Senator, I will tell you what I know. When
    I found out about this last night I was given a copy of the
    Federal Register that had a couple of facts in there, and the
    issue was, first of all, there is an INRMP in place for this
    facility, an approved INRMP. Evidently, there have been some
    negotiations for sometime.
        There are apparently several species of grass, or some kind
    of vegetation that were in discussion. Evidently there had been
    an exchange of documents between the naval service and
    Department of Interior or their agents in this thing, and at
    our last knowledge of this, there was a discussion in which the
    last document that we received, I have not seen it myself, but
    apparently it states that the Department of Interior was okay
    with several of these particular types of vegetation, but that
    this particular one had not been addressed in the interim.
        I will go out on a limb and say it probably was because it
    was not known, because it did not exist on our lands at the
    time. At any rate, there was a reply sent, and this is the next
    iteration, that we find out that this has actually been
    enacted.
        I do not know exactly what went on. I know there was, in
    fact, a dialogue in progress, but what is really significant
    about this, and I did not get to it in my opening statement,
    and it is very difficult--I know you cannot see from up there,
    but on this chart, this particular area, the critical habitat
    stretches from virtually one end of this facility to the other,
    and it occupies the vast majority of the coastal front, and so
    it will obviously have a significant impact.
        Now, just how this managed to occur, I do not know. We will
    go to find out, but this is unfortunately the way things are
    done today.
        Senator Akaka. Thank you for that explanation.
        Admiral Fallon and General Nyland, in my State of Hawaii, I
    have worked with the military to try to address issues raised
    in the community about the impact of training on cultural and
    historical sites and endangered species, fire damage, and other
    issues. I have always felt that the best way to avoid
    situations, as I said in my statement, like the ones on
    Vieques, and to assure continued military training, is to work
    within a community on this kind of case-by-case basis.
        Late last year, the Secretary of the Navy sent a memorandum
    to the Chief of Naval Operations and the Commandant of the
    Marine Corps directing that all Endangered Species Act (ESA)
    issues be addressed in the Pentagon, rather than at a local
    level. The memorandum states, ``. . . the purpose of the
    attached policy guideline is to bring back into the building
    final decision regarding any deviations from ESA. While I am a
    strong proponent of decentralization, it is important that our
    well-intentioned personnel in the field not make local
    accommodations to introduce new species, habitats, and so on,
    on our bases outside or beyond the requirements of ESA. My
    concern is that while individual concessions appear
    insignificant, over time we die from a thousand cuts.
    Additionally, some concessions could run counter to the
    legislative relief that we are continuing to pursue with
    Congress.''
        I am concerned that this statement makes it appear that the
    Department of the Navy does not trust its installation
    commanders to know what is in the best interests of their
    installations, and you want to avoid entering local agreements
    that would protect both Navy training and endangered species in
    the hopes that Congress will give you a better deal. How do you
    explain this memorandum?
        Admiral Fallon. I will take the first start. I would not
    presume to speak for the former Secretary of the Navy on the
    issue. Just an observation that quite frankly, as we get deeper
    and deeper into these issues, and occupying a greater
    percentage of the time of many of us in the chain of command,
    what we are finding is that there are significant disconnects
    among our installation commanders in our facilities around the
    world. I believe in trying to deal with things at the lowest
    possible level, which is exactly what we want them to do.
        In fact, we found in some cases opposing activities. I
    believe that this was intended to try at least to bring to some
    collective central level some idea of what is going on before
    people pursue their individual activities. I have not had any
    discourse with the Secretary on that particular issue, but I
    suspect it is really just trying to get us aligned so that we
    are consistent in what we do. It has been my experience that,
    in fact, we were all over the place on these issues, and I
    believe that is really what it was intended to do.
        General Nyland. Sir, I would echo Admiral Fallon's
    comments. I am not familiar with the Secretary's stance on
    that, but I, like you, believe that these begin only at the
    local level where we start to organize them.
        My take on that would have been simply that to ensure
    consistency across the Department, that they would like them to
    be reviewed here at the headquarters to ensure that they were
    in line with our position on other INRMPs on other endangered
    species.
        Senator Ensign. Senator Inhofe.
        Senator Inhofe. Thank you, Mr. Chairman.
        Admiral Fallon, quite often I have heard people take
    statements maybe a little out of context. I want to make sure
    that that does not happen in this case. You had made a
    statement that--I think it might have been a response to--I
    think it was in your prepared statement. You said, we have the
    best-trained and most ready forces right now that we have ever
    had. People, if they took that alone, might think, well, wait a
    minute, there must not be a problem here if that is the case.
        Would you take a moment and outline the different elements
    of readiness, and show how that statement could be an accurate
    statement?
        Admiral Fallon. Sure, Senator. The readiness equation,
    which we use for shorthand, many components today, as I look at
    our forces and I know what condition we were in 3 or 4 years
    ago, it is pretty clear to me that the single most significant
    factor is the personnel piece. The fact that we have the
    appropriate numbers of people, and that they are distributed
    and trained at their individual skill sets throughout the Navy,
    has made a huge difference.
        I believe the next most important thing is the fact that
    through the resourcing of Congress and the dedicated efforts of
    the CNO, the people have been given the resources to actually
    get proficient in their endeavors, for example, the appropriate
    number of flying hours and steaming hours and the research
    allocations, particularly to spare parts, which have made
    available the components that we need to be able to do the work
    that we do.
        If you were to look at our readiness statistics pretty much
    across the Navy, you will see there is a direct response from
    the investments in these accounts to the status they enjoy
    today, notwithstanding the fact that none of this comes
    together without training in the field. That is a critical
    element, but I believe that the biggest factors today--or in
    the last year or so that have gone into this have been those
    other things, but without realistic training none of this is--
    --
        Senator Inhofe. Well, I chaired this subcommittee for a
    number of years, and I knew those elements were there. I knew
    there was a serious problem then, and I am glad that we are
    correcting that now, but this one is still here.
        Now, let me ask you the question, what happens if you lose
    this capability in the Barking Sands Range? Where will you
    provide the training that you are doing now if you are not able
    to use that?
        Admiral Fallon. This facility, I believe, is one that is
    earmarked for much greater future use than today in response to
    some other activities, realities. We are basically shut down on
    the east coast, in Vieques, to do long range testing for
    missile systems, and our ship-based radars.
        On the west coast of the United States, Point Magoo and the
    immediate adjacent water and land areas, or water and air space
    on the west coast, is under increasing encroachment pressures
    from population growth, as is the east coast. The west coast is
    about the only United States territory that enjoys a large
    water and air space adjacent to it, and I see increasingly the
    type of future training and testing that we require migrating
    there.
        The fact of life is our systems are much longer range today
    than they were just a few years ago. We are going to need this
    extra air and water space beyond the Hawaiian Islands out to
    the northwest of this territory. There is real growth in this
    area. Just this year alone, I believe there were four tests by
    the Missile Defense Agency conducted at the Pacific Missile
    Range Facility, Kanai, Hawaii, but this is a very small
    facility, a very limited number of facilities.
        I am probably leading the rabbit here, but I think there
    will be growth in this area, a desire to do more testing and
    training. We had been able to do some of this training closer
    to the west coast. As the pressures increase over there, I
    believe we will see our battle groups coming out here and doing
    more of certain kinds of trainings, so this is really a future
    issue, but we are now being severely impacted before we get out
    of the blocks.
        Senator Inhofe. In your statement, do you make any
    reference to Guam in your prepared statement?
        Admiral Fallon. I just made reference--in the prepared
    statement, there is. I think in the oral statement, just that
    the FDM range north of Guam was the site of a shutdown last
    year. That has just been temporarily reopened.
        Senator Inhofe. Okay, but I understand now in looking at a
    number of endangered species, or listed species, there are
    three that could create another problem after it is already
    opened up that could cause it to--I have always asked the same
    question, what you would do without it?
        Then third, I am probably the only one up here who has read
    the entire Pace-Fallon report on what you do if you lose the
    unified training, which we lost at Vieques, and General Nyland,
    I could ask you, or Admiral Fallon, either one. If you wanted
    to continue to do unified training, live-fire, is there any
    place else now that you could go to do that type of training?
        I understand they are trying to respond to the problem by
    changing and doing more other types of training, but if you
    wanted to do that, which I believe we still need to do, is
    there any place else where you could get that type of unified
    training?
        Admiral Fallon. Senator, on the west coast we are doing it
    as we were before, off the west coast, in several areas. On the
    east coast, I believe you are aware the Commander of the
    Atlantic Fleet has a training resource strategy (TRS) which he
    is attempting to implement our work-around solution to the
    closure of Vieques.
        Senator Inhofe. Work-around. Work-around is a very
    interesting term. Do you want to define that for us?
        Admiral Fallon. If we have a course of action that we
    desire to pursue, but for whatever reason we are inhibited,
    then we have to come up with another solution to it to get to
    where we are going.
        Senator Inhofe. Now, quite often, people in talking about
    the Endangered Species Act, and I could ask you and General
    Keane or any of you, they say there is really no problem
    because there is a national security exemption, for any agency
    action if the Secretary of Defense finds that such an exemption
    is necessary for reasons of national security. Tell us if there
    is a problem with that. Why does that not solve all your
    problems?
        General Keane. Yes, sir. The national security exemptions
    were never intended as permanent solutions to recurring
    requirements. Generally, they are reserved for approval at the
    presidential area. They apply to only specific activities at
    individual sites, and they remain in effect for only 1 year.
        It is in our judgment--and I do not want to speak for all
    my colleagues, but I think we agree on this. It is unrealistic
    to expect the military to request exemptions for training that
    must occur on a regular basis. It is just too much to ask of us
    to use that procedure to solve such a significant problem that
    we are facing here.
        Senator Inhofe. In other words, you think maybe the
    President and the Secretary of Defense have something better to
    do.
        General Keane. I do not want to speak for them, sir.
    [Laughter.]
        Senator Inhofe. As a normal procedure, though, you are
    saying this is something that would require going back and
    getting this exemption with regularity. This is the point I
    want to get into the record.
        Thank you, Mr. Chairman.
        Admiral Fallon. Senator, there is another factor here.
    Under the existing regulation--I believe it is 10 U.S.C. 2014--
    there is a 5-day period in which to effect this relief. This is
    pretty impractical for the kinds of things for which we would
    seek help. We are talking about recurring, regular, routine
    training evolutions, and I believe that to merit the kind of
    instantaneous reaction up the chain of command to the President
    for these kinds of things is not at all what was intended here,
    and not particularly appropriate to the remedy we seek.
        Senator Inhofe. Thank you, Admiral. On the next round I
    want to pursue this, the problem you talked about in your
    opening statement on the sonar.
        Senator Ensign. Senator Clinton.
        Senator Clinton. Thank you, Mr. Chairman, and I thank you
    for holding this important hearing, and I thank all of the Vice
    Chiefs for being here.
        I think we can all agree, or maybe we can even stipulate
    that we intend to do everything possible to ensure the best
    available and successful training for our men and women in
    uniform, regardless of the mission that they are assigned. I
    think what we are searching for is a way to provide that
    without interfering with, or unnecessarily burdening, the
    military to become enforcers of the environmental laws that
    mean a great deal to our Nation. Just as we owe the very best
    possible training to our men and women in uniform, we also owe
    them and their dependents and the communities around our bases
    the security of knowing that we are protecting the environment
    and their health.
        That is why many of us are concerned about the Department's
    desire to make significant changes to many of the very laws
    that are designed to protect human health and the environment,
    particularly the Clean Air Act, the Superfund law, the Nation's
    solid waste law, known as RCRA, and others that are there not
    simply to protect endangered species or critters, but to
    protect the rest of us. Part of my assessment of this is to
    determine the health impact on our men and women in uniform and
    the surrounding communities for wholesale changes in the
    environmental laws of our Nation.
        I was very impressed by the comments recently made by the
    chairman of this full committee, Senator Warner, who serves
    with me on the Environment and Public Works Committee, a few
    weeks ago, when he said we need to figure out how to keep our
    military ranges operational 24 hours a day, 365 days a year
    without having to sacrifice our Nation's environmental laws. I
    could not agree more, and I think that has to be our objective.
    I also believe that Senator Levin is correct in saying that
    these proposals belong in the committee of jurisdiction, namely
    the Environment and Public Works Committee.
        But putting aside procedural issues, I think it is
    imperative that we look at where we want to end up. If, indeed,
    it is necessary, and I am certainly convinced from the expert
    testimony of the vice chiefs and others that some added
    flexibility is required in order not just to ensure military
    readiness today, but for all the tomorrows ahead, and to avoid
    the train wreck that General Keane referred to. Then of course
    we have to take that into account and figure out ways to adjust
    laws and their implementation in order to protect against any
    eventuality and to assure that readiness is the primary
    obligation of the military. But, I do believe that we have to
    hear many different perspectives, because the adjustments have
    to be made taking into account the potential impact on
    environment and health.
        For example, earlier today there was testimony before the
    Environment and Public Works Committee from the Environmental
    Protection Agency (EPA) about the impact on the clean air laws
    of certain necessary training exercises, the impact on both
    those who are in the immediate vicinity and those further away.
    I have looked closely at the 30 States Attorneys General who
    have expressed opposition to the Department's proposals. These
    are people throughout our country who are required to not only
    implement existing environmental statutes in their own States,
    but often have obligations to enforce national statutes such as
    Clean Air, RCRA, and CERCLA. If there is a way we can work
    together on this and take into account the overriding necessity
    for readiness and the legitimate concerns raised by Attorneys
    General and others about existing environmental statutes, then
    I think it is certainly an important exercise for us to
    undertake in the committee of jurisdiction.
        But let me ask, have any of the Services responded to the
    concerns of the Attorneys General about the DOD proposal that
    you are aware of?
        General Keane. I am not aware of it, Senator.
        Admiral Fallon. I have not seen it presented, Senator.
        Senator Clinton. Mr. Chairman, I think that as I said in
    the beginning the stipulation that we want to be as ready as we
    possibly can is one that cuts across every committee and every
    concern in the Senate. But, I do believe it would be more
    productive to have some kind of ongoing task force, or maybe
    even joint committee effort to begin to really dig into this so
    that we know exactly what we are undertaking.
        I am reminded, because of Admiral Fallon's presence here,
    of when I went to Fallon, Nevada with my friend Senator Ensign.
    We were there because of these unexplained childhood leukemias,
    this cluster of cancers. We have no idea what has caused them,
    but I think that there is a long list of reasons, and on that
    list has to be the presence of the naval base there. We do not
    know if it is a contributing factor. Also on the list is the
    use of a lot of pesticides for the agricultural produce that is
    farmed there. There are a lot of issues.
        Until we know more about what the relationship between the
    environment and the health of people happens to be, then some
    of these acts, which are aimed not at animals or plant life,
    but at human life and health, have to be factored into anything
    that we do. Certainly those of us who are concerned about the
    health of our troops in the Gulf remember what happened the
    last time, when healthy young people went over there, and many
    came back and we had no idea what caused the problems that they
    were encountering. Many of us concluded something that we are
    just not quite aware of in combination impacted their health.
        So this is an area that has broad ramifications for the
    health and readiness of our men and women in uniform and the
    dependents, the civilian employees, and the surrounding
    communities. I think we should go at it with that sense of
    complexity and concern moving forward.
        Senator Ensign. Senator Clinton, if I may, is Ben Cohen,
    Deputy General Counsel for Environment and Installations at the
    Department of Defense in the room? Would you like to address or
    just respond to the Attorneys General letter of opposition? Is
    there anything you would like to say? That is what the staff
    had advised me up here.
        Mr. Cohen. Sure thing, Mr. Chairman.
        Senator Ensign. Maybe come to the microphone so they can
    get it down on the record. I just thought it might be
    appropriate.
        By the way, Senator Clinton, we are going to have a second
    hearing on this issue in this subcommittee as well. Senator
    Akaka had some issues, some various other witnesses that he
    wanted to call forward.
        Mr. Cohen. Thank you, Mr. Chairman. I am Ben Cohen. I am
    the Deputy General Counsel for Environment and Installations at
    DOD. I would just say we have been engaged since last year on a
    fairly vigorous interaction and dialogue with a variety of
    State regulators, the Attorneys General, the solid waste
    regulators, and others, and we think that has been very
    productive. We think it has helped us improve the legislation
    that we introduced this year, which actually includes some
    changes designed to respond to their concerns. We intend to
    continue that dialogue and have high hopes that we will be able
    to reach a broad measure of agreement with them on all the
    statutes that they are concerned about.
        Senator Clinton. Thank you, and Mr. Chairman, perhaps we
    could add a representative of the Attorneys General to a future
    panel as well.
        Senator Ensign. That is one of the things we are looking
    at.
        Senator Pryor.
        Senator Pryor. Thank you, Mr. Chairman. One thing I need to
    disclose on the front end is, I am new to this committee, and I
    am trying to get a handle on just how widespread the problem
    is. Certainly I have talked to some of you individually and
    privately about this issue, and I have talked to a few Senators
    individually and privately about this issue, and you have
    brought in the example of Fort Bragg. The question I have for
    you with regard to Fort Bragg is, are you telling the
    subcommittee that Fort Bragg is representative of the problem?
    In other words, do all of your forts like that and all of your
    installations like that have these environmental problems or
    these concerns?
        General Keane. Fort Bragg is an interesting illustration
    and that is why I brought it forward, because it is
    representative of how much management has to take place on
    130,000 acres of land to manage an endangered species which is
    there, in the case of the animal, which is the Red-Cockaded
    Woodpecker, and the five endangered plants that they have.
        But the flip side of that is, it is also an area where for
    the last 6 or 7 years, using the U.S. Fish and Wildlife Service
    management policy, or INRMP, which is what Senator Akaka
    referred to, that we have been able to mitigate a lot of those
    challenges as well. So what Fort Bragg represents is the scale
    and magnitude of the problem and also an attempt on the part of
    the U.S. Fish and Wildlife Service to work with us to mitigate
    those challenges.
        Now, what has thrown a wedge into that is this lawsuit in
    Arizona, which would put us back to ground zero in a sense. It
    would force Fort Bragg to be declared a critical habitat, and
    no longer managed using INRMP, which would mean a less
    restrictive policy. That is the concern that we have, because
    the current law does not protect us from that assault that was
    just made and the judicial finding that occurred, so that is
    our challenge.
        There are other places where we have a critical habitat
    designated and there is no management policy for the U.S. Fish
    and Wildlife Service that we are able to use as an effective
    tool, and when we have something like that we have huge
    restrictions. For example, the Pohakuloa training area in
    Hawaii, we have a critical habitat that was declared there for
    a plant. We built a $25 million range that we have yet to use
    because it was set aside for a critical habitat for the plant
    that is there. Given the prevalence of the plant, we are not
    able to use the range and also maintain the plant, and so there
    is a $25 million range going unused.
        The U.S. Fish and Wildlife Service is proposing in Hawaii
    147 different plant life that they want to designate as
    critical habitats. If that is designated as a critical habitat,
    and we are not able to manage it under the INRMP, which Senator
    Akaka referred to, that is going to shut us down. It will shut
    us down.
        So those are the challenges that we are facing as it
    relates to endangered species. The lawsuit that just took place
    jeopardizes the flexible approach the U.S. Fish and Wildlife
    Service used in working with us for the last 6 or 7 years.
        Senator Pryor. I apologize that I am unfamiliar with the
    details of the lawsuit, but I will definitely educate myself on
    that, but it sounds like that is at the Federal district court
    level. Do you know, Mr. Chairman, is that right? Has that been
    appealed to the circuit court level yet?
        Senator Ensign. We do not believe so.
        Senator Pryor. Okay. All right. I can find out about that
    and educate myself on that.
        I will say this, that I have heard some Senators discuss
    privately, without revealing their names, a concern that your
    request for exemption may be just a little too broad. That it
    may have the unintended consequences of just being too broad
    and causing some long-term damage to the environment. I think
    Senator Clinton really alluded to that without saying it
    exactly that way, that we are trying to find that balance here.
        We certainly understand the needs of the military. We also
    want to take into consideration the desire to have the best
    possible environment here in the United States, and we just
    need to try to continue to work on that. I know that is what
    you are here doing, presenting your case to the subcommittee
    today.
        Let me ask just one last question with all that in mind.
    Would you all object to, say, a pilot project at Fort Bragg, or
    you can pick whatever location you want, allow you to have the
    exemption that you are requesting just for the one facility.
    Let that run for a couple of years and then come back in, we
    can evaluate it, and we can determine lessons learned from that
    and possibly extend that to other locations, or would you like
    the more global exemptions?
        General Keane. My reaction to that as it pertains to the
    Endangered Species, the fact that the U.S. Fish and Wildlife
    Service entered into an agreement with us that permitted
    flexibility and relaxation of some of the critical habitat
    designation rules, that has already been in effect for 6 or 7
    years. What our concern is, is that because of this lawsuit, we
    will lose that flexibility. So that already exists at least at
    the six Army installations, and I think we would be more than
    happy to show the subcommittee the details of what that
    flexibility allowed us to do.
        The other threat that we feel is with this lawsuit at Eagle
    River Flats up in Alaska. Right now, obviously, we are shooting
    our live ammunition on 400 impact areas around the United
    States and overseas. If this lawsuit is won, obviously, that
    ammunition would be declared a solid waste or hazardous waste
    and would have to be managed as such, which would effectively
    shut us down.
        So yes, in a sense we want to codify that that ammunition
    that we are going to shoot in a designated impact area that the
    Congress of the United States has provided to us, we want an
    exemption that that is not, in fact, solid waste or hazardous
    waste. But, that does not mean for a minute that we would not
    be liable to be examined in terms of munitions that would harm
    an aquifer below it or any water supply of the American people.
        There is nobody here, or any representative of the
    Department of Defense that would stand for the water supply of
    Americans being endangered. We are not going to put up with
    that, and we would make dramatic changes to make certain that
    does not happen. The exemption that we are seeking would not
    preclude us from that oversight, or if the munitions were a
    runoff of the reservation itself, which could possibly happen,
    and may be part of the concern at Eagle River Flats. We would
    still have oversight of that function as well, and if we shut
    down a range of our own accord, it would not be in the
    exemption status any more.
        So I think what I am saying to you is that, yes, there is a
    lot to work with here in terms of the Department of Defense and
    our attitude toward this, and our desire to work with the
    subcommittee to find a way here to keep both of these entities
    going the way they should, the national defense and protecting
    the environment. We think we can make it work.
        Senator Pryor. Mr. Chairman, that is all I have and I look
    forward to working with you as we try to resolve this.
        Senator Ensign. Thank you, Senator Pryor. We appreciate
    having you on the committee, and your participation on this
    subcommittee.
        We have a vote at 3:45. If we keep it to about 5 minutes
    each, we could probably each get another round of questioning,
    so I will start.
        Admiral Fallon, I want to explore in a little more detail
    about the LFA and this term, harassment. Can you give me the
    Navy's take on just the whole issue, just describe the issue,
    how it is affecting the LFA, but also anything else as far as
    the Navy is dealing with?
        Admiral Fallon. Yes, sir, Senator. This legislation has
    been on the books for quite a few years, not initially
    intended, to the best of my knowledge, to have anything to do
    with the Navy. But, over the years it has become the stuckee
    for this with environmental groups around the world. The issue
    we have with this thing is pretty simple, and that is that
    there is one word in that legislation, the term ``harassment,''
    that appears, that comes up time and time again as the focal
    point for all the attraction of regulators, environmental
    groups, and the courts, and what we are seeking, quite simply,
    is a better definition of this term.
        Now, we have sat down and met with scientists and the
    regulators and we have informally agreed to a number of
    solution sets to this issue.
        Senator Ensign. Also, just in your discussion, could you--
    because we are going to hear from other sides of this--is there
    argument that some of these sonars are hurting breeding? Are
    they hurting development? How exactly are they harming the
    animals?
        Admiral Fallon. The issue is, first of all it is much more
    than sonars. It is all kinds of activity, every kind of
    activity. Examples--what is harassment? What constitutes
    harassment? Is it a change to the places where the animals
    live, or migrate, or breed? Is it an acknowledgement of some
    activity?
        Senator Ensign. No, that is what I am trying to get to.
        Admiral Fallon. That is the question.
        Senator Ensign. Right, I know you want this defined as
    well, and so what I am saying is, what are their arguments?
    What are the environmental groups' arguments? Is this,
    ``harassment''--you know, there is probably some that is
    significant, and that is what you want, significant harm or
    whatever put in language. But, are some of these other things,
    are they pointing to significant biological effects to some of
    these marine species?
        Admiral Fallon. Well, that term, significant biological
    effect, is one that the scientists, I understand, like to use.
    That would be one that if we could agree on what constitutes
    those effects, we think we would be pretty happy campers, but
    left as it is, subject to anyone's interpretation, the most,
    least significant--it is tough to put this in appropriate
    language, but anything that would cause some kind of
    recognition or acknowledgement by the creature of some event
    could constitute harassment under the interpretation of some
    courts, and it is that very wide range of options that we would
    seek to limit so that we could come up with some reasonable
    approach.
        Again, we have reached agreement in the past with the
    regulatory agencies and with many prominent scientists in this
    area to come up with an alternative. But, absent some forcing
    function, and in this case, we believe legislative relief here,
    it is just left to individual people to interpret, and that is
    the key issue.
        There are some other things that have come out of this LFA
    lawsuit, and by the way, this is not just typically somebody
    against the Navy. This usually is a triangle, because the
    regulatory agencies with which we have to work, and are happy
    to work in accordance with the law, are often the people that
    bear the heat here. So without specifically identifying one,
    they are viewed, I believe, by the public as representing the
    protection, for example, of wildlife, or the protection of sea
    creatures, and so the attacks will usually come against them
    and say, ``hey, you, agency, are not representing the American
    people because you are not going after these guys, because the
    Navy is obviously doing something to harass these things.''
        This is one of the ways this is played, but they end up
    bringing the regulatory agencies into court and it ends up in a
    three-way battle. At the end of the day, it is pretty simple.
    We just need a little bit of relief. We are not looking for a
    broad-based solution, just a little specificity, and we think
    most of these problems will go away.
        This one issue, which is worldwide, that is why Senator
    Pryor wanted to know if we could do a trial somewhere. I do not
    know how you do a trial. The oceans are worldwide, and we
    really need some help on this one.
        Senator Ensign. Just something maybe each of you could
    address as briefly as possible. I know it is a complex
    question, but the administration has proposed a provision that
    would make the application of the Clean Air Act conformity
    requirements more cooperative and less prohibitory when a
    Department of Defense activity is proposed that would exceed
    air quality thresholds under a State implementation plan. Can
    each of you describe why there is a need for this proposal, and
    what would be the impact if this proposal were not enacted?
        General Foglesong. I will take that, sir, if I could,
    because we are in the clean air business here in the Air Force.
    What we are really asking for is just a little relief on the
    requirement to conform fully with the Clean Air Act before any
    movement can be made. So if we want to move force structure,
    for instance, from one base to another base, we have to have
    studies done that take months, sometimes years before we can,
    in fact, move that force structure there for training reasons,
    for actual employment reasons or whatever.
        What we are asking for there is just a period of time of 3
    years so that we can comply with the State requirements and buy
    ourselves a little flexibility and we do not have to wait this
    extended period of time, which all the Services face right now.
        Senator Ensign. How would you answer to the people who say
    you are just trying to get around the clean air laws?
        General Foglesong. Sir, my answer to that would be, we
    intend to comply with the clean air laws. All we are asking for
    is the flexibility to take a little longer to get to the
    solution that is going to be legislated to us.
        Senator Ensign. Great. Let me go to Senator Inhofe, because
    we are trying to keep this under the time, or excuse me,
    Senator Akaka.
        Senator Akaka. Thank you very much, Mr. Chairman.
        General Keane, 2 years ago General Van Antwerp, the Army's
    Assistant Chief of Staff for Installation Management, testified
    before this subcommittee that, and I am quoting, ``installation
    management, the environmental compliance programs on the ranges
    and training land at Fort Hood, Texas are an example of how
    such programs have restricted training capabilities.''
        General Van Antwerp referenced erosion control practices
    designed for compliance with the Clean Water Act, the
    designation of core and non-core habitat for the Golden-cheeked
    Warbler and the Black-capped Vireo, as well as restrictions
    imposed to comply with the Clean Air Act and to protect
    archaeologically and culturally significant sites. He concluded
    that, ``while some of these restrictions overlap on the same
    training areas, only about 17 percent of Fort Hood training
    lands are available for training without restrictions.''
        Last December, on a bipartisan visit to Fort Hood, the
    committee staff was presented with the same map of Fort Hood we
    had seen a year and a half earlier, showing encumbrances on 83
    percent of the base, only this time the Army restamped the map
    in big red capital letters, ``misleading.'' The briefers
    explained that the Army had procedures in place that allow it
    to do the training it needs, ``virtually everywhere on the base
    with a high level of realism.''
        My conclusion, General, is that the Army has had to work
    hard to get the training that it needs at Fort Hood, but it has
    been able to do so, to get that training. Would you agree or
    disagree with that?
        General Keane. I would agree, and it is an example of what
    we are talking about in terms of the flexibility we have been
    able to establish with the U.S. Fish and Wildlife Service, and
    we are not seeking an exemption from any endangered species
    law. What we are seeking is to use the management practices
    that the U.S. Fish and Wildlife Service has permitted us to do
    over the last 5 or 6 years which gets the result that you are
    speaking of.
        Going back to belabor the point a little bit, is that the
    Arizona lawsuit is jeopardizing the very acts that those
    leaders were able to do with the U.S. Fish and Wildlife Service
    to mitigate some of those restrictions, and it will put us back
    to where we were 6 or 7 years ago, that is the problem we have,
    so I would agree with your statement, sir.
        Senator Akaka. Admiral Fallon, you have just discussed the
    definition of harassment, but there are a number of other
    elements of the administration's legislative proposal on marine
    mammals. I believe that the cumulative impact of the prepared
    changes has raised some real concerns. How would you prioritize
    these three legislative initiatives and, in particular, if, at
    the end of the day we were able to enact just the first change,
    the modified definition of harassment, do you think this would
    give the Navy the flexibility to do what it needs to do?
        Admiral Fallon. Senator, based on our experience in the
    last several years, there is little doubt that the single issue
    and the single term that has had the most negative impact on us
    is this term, harassment. The fact is that as a result of this
    recent lawsuit with the LFA, some other issues have come to the
    fore, particularly the issue of small numbers, the definition
    of small numbers.
        We had not had, to the best of my knowledge, any kind of an
    issue with this, or go-around prior to this event in the
    courts, but now we have one. I believe that the intent of the
    DOD legislation was to do something to address that particular
    issue, because if it has come up once, it is probably going to
    come up again. But, specifically, for the Navy the harassment
    definition fix would be most welcome.
        We certainly need some help in other areas, but that is
    clearly our top priority, sir.
        Senator Akaka. Thank you, Mr. Chairman.
        Senator Ensign. Senator Inhofe.
        Senator Inhofe. I will not take the full 5 minutes, because
    I think we will have our vote coming up. You made the comment
    on a couple of occasions now, and so did someone at a previous
    hearing, that if the decision is made the way it could turn out
    at Richardson it would affect 400 ranges, is that correct?
        General Keane. If the judicial decision went against the
    Government and were applied to other areas and live-fire
    munitions were, in fact, declared solid or hazardous waste, it
    would shut down our ranges.
        Senator Inhofe. Okay, now, would it not also shut down the
    other Services? Would you like to each one comment?
        General Foglesong. Yes, sir. We are equally concerned about
    that. We have 41 major ranges, and the precedent that is being
    set that General Keane talks about has us equally concerned.
        General Nyland. Also for us, sir. Certainly we share all
    the ranges with my fellow members as well as our own ranges.
    The interesting thing to me is that under the EPA the military
    munition rule, which is an accommodation similar to the INRMP,
    we are all in agreement. We have worked that with that agency,
    yet now we have the case if the Eagle River Flats legislation
    is approved, we would have a precedent that would potentially
    overturn all that, and then lose the ability to use our ranges.
        Senator Inhofe. Yes, that is what I wanted to get into the
    record, that it is not just the Army ranges.
        Let us get back to the LFA again. Now, it is my
    understanding that as far as the national security exemption,
    that does not apply to the Marine Mammal Protection Act, is
    that correct?
        Admiral Fallon. Senator, I believe that the Department of
    Defense initiative this year, in fact, does request an
    exemption.
        Senator Inhofe. No, I am talking about as it is today.
        Admiral Fallon. No, sir.
        Senator Inhofe. Even in times of war, because we have been
    talking about training.
        Admiral Fallon. To the best of my knowledge there has never
    been an exemption clause as part of this, because again, when
    this legislation was initially enacted, it was not concerning
    our activities. It had to do with others.
        Senator Inhofe. All right, would you real quickly run over
    what you started out with when you told us about the
    circumstances under which you would have to shut down and not
    use this particular type of sonar?
        Admiral Fallon. This is a new system, a prototype system.
    It operates in an area in which we had not used previous
    systems to detect submarines. We believe it is of great
    importance to our future because of the, as I said earlier,
    challenge worldwide of these quiet new submarines.
        Senator Inhofe. New, quiet, some diesels, otherwise there
    is no way of making that detection?
        Admiral Fallon. Yes, sir. The reality today is that after
    the end of the Cold War and the demise of the Soviet Union, we
    have a different threat than we faced then. In those days, they
    were nuclear submarines, large numbers in a blue water
    environment, and typically they would be moving somewhere. We
    would expect them to move somewhere, and we would be going to
    counter them.
        In today's reality, we are working in the littorals. We are
    not in the blue water, primarily, and we are working against a
    threat that is designed to prevent our accessing the near shore
    area so that we can project power ashore and do whatever we
    have to do to carry out the mission.
        Senator Inhofe. But there are some circumstances under
    which this sonar is the only way of detecting?
        Admiral Fallon. The likelihood of detecting submarines
    without this in many circumstances we think is pretty low.
        Senator Inhofe. In an actual situation, then, not training,
    if you had to shut down, what is the exposure?
        Admiral Fallon. We are not going to be able to get it
    online, and we will be forced to use what we have, which we do
    not think is adequate to meet this emerging threat.
        Senator Inhofe. So this is a life and death situation, it
    could be, for your sailors.
        Admiral Fallon. If we end up in a position where we are
    asked to execute a mission with that kind of a threat, and we
    cannot detect that threat, then our forces are at risk.
        Senator Inhofe. Thank you very much.
        Thank you, Mr. Chairman.
        Senator Ensign. Senator Pryor.
        Senator Pryor. Thank you, Mr. Chairman. Really, I only have
    one question, and that is for General Nyland. I know that some
    of your written comments related to the Endangered Species Act,
    and I know that is a real challenge for your branch to try to
    work around and work through all those issues, and it sounds
    like you and the DOD have just gone above and beyond in many
    cases to try to accommodate and work with that.
        As I understand it, and again I am new to this committee,
    but as I understand it, there has been a three-factor test that
    you have used with regard to endangered species. It may be
    slightly or somewhat cumbersome, but it has seemed to work
    fairly well, I am sure with a few bumps in the road. There
    always seem to be, but would codifying that three-factor test--
    it seems like that would give you certainty. It would give you
    some familiarity with the process, and it would allow you all
    to function and accomplish your mission. Is that something that
    you could support?
        General Nyland. Yes, sir. In fact, the second phase of that
    quantification study at Camp Pendleton, which is designed to
    show the ability of the installation to support training, will
    end within the next 30 days, or 6 weeks.
        We have every intent over the next 2 years to take what we
    have learned from that and add it to a new range management
    system that we have instituted down at Quantico to be able to
    not only identify how our training goes against our individual
    skills and our metals, but also to quantify the impact due to
    any kind of encroachment. So we certainly hope we will be able
    to have that data collected by the end of April and then start
    towards probably a 2-year period to implement this, and then
    have that available to us at all times.
        Senator Pryor. Thank you.
        Senator Ensign. Thank all of you for your wonderful
    testimony. Obviously, we have some difficult challenges ahead.
    This subcommittee looks forward to working with you and the
    other committees of jurisdiction on these very important
    issues, and you are excused. This hearing is concluded.
        [Questions for the record with answers supplied follow:]

                   Questions Submitted by Senator John Ensign

                               RANGE PRESERVATION

        1. Senator Ensign. General Keane, Admiral Fallon, General Nyland,
    and General Foglesong, the Readiness and Range Preservation Initiative
    submitted to Congress this year reflects changes when compared to the
    proposal submitted last year. What are the differences between the two
    versions?
        General Keane. The Army believes that the Office of the Secretary
    of Defense (OSD) is best equipped to address the detail regarding
    specific changes in the Readiness and Range Preservation Initiative
    legislative language requested by this question.
        However, the Army does feel it important to highlight the following
    key general points. Last year, Congress enacted three of eight
    Readiness and Range Preservation Initiative proposals submitted by OSD:
    Reform of the Migratory Bird Treaty Act and two provisions
    strengthening OSD's ability to encourage buffer zones around military
    installations. This fiscal year's Readiness and Range Preservation
    Initiative proposals include the five remaining elements from last
    year, with clarifications and modifications of these five elements to
    more sharply define their scope. The Army believes that these
    clarifications highlight the modest and necessary nature of the
    proposals. We strongly encourage the subcommittee to fully review and
    then adopt all five of these Readiness and Range Preservation
    Initiatives as part of the National Defense Authorization Act for
    Fiscal Year 2004.
        Admiral Fallon. Last year, DOD submitted an eight-provision
    legislative package, three of which Congress enacted in some form. Two
    of the provisions allow DOD to cooperate more effectively with third
    parties on land transfers for conservation purposes, and a third
    provides a temporary exemption from the Migratory Bird Treaty Act for
    the unintentional taking of migratory birds during military readiness
    activities.
        The five remaining provisions resubmitted this year reaffirm the
    principle that military lands, marine areas, and airspace exist to
    ensure military preparedness, while also ensuring DOD remains fully
    committed to environmental stewardship of the lands under its care.
        As the result of discussions with State and Federal agencies,
    natural resource trustees, and non-Government organizations over the
    past year, the RCRA and CERCLA provisions of this year's legislative
    package have been revised to narrow their focus to military readiness
    activities on operational ranges. These provisions state that they do
    not apply to closed ranges or ranges that close in the future. None of
    the provisions apply to the routine operation of installation support
    functions or the operation of industrial activities, for which DOD is,
    and will remain, subject to the same regulatory requirements as the
    private sector.
        The Marine Mammal Protection Act (MMPA) provision differs
    substantively from last year's provision, which sought only to clarify
    the ``harassment'' definition. This year's provision seeks the same
    clarification to the ``harassment'' definition for military readiness
    activities only, corrects structural deficiencies in application of the
    MMPA's permitting provisions to military readiness activities, and
    includes a national defense exemption. The structural deficiencies
    include elimination of the ``small numbers,'' ``specified geographic
    region,'' and ``specific activity'' requirements of the MMPA permitting
    process for military readiness activities. The corrections of the
    permitting process resulted from the ruling of the Federal court in the
    SURTASS FLA litigation, which occurred subsequent to last year's
    Readiness and Range Preservation Initiative submission.
        There are no changes to the Clean Air Act provision.
        General Nyland. Both Readiness and Range Preservation Initiative
    submissions retain the goal to prevent further encroachment
    restrictions and mitigate others, which restrict access to, and
    sustainment of, training and test ranges. The legislative proposal
    submitted to the 107th Congress in April 2002 contained eight
    provisions. The following three provisions were reflected in the
    National Defense Authorization Act for Fiscal Year 2003 of 13 November
    2002: (1) Land Conservation Partnerships, (2) Surplus Property
    Conveyance, and (3) Migratory Bird Treaty Act (accepted in revised
    form). The following five provisions not accepted last year, were
    resubmitted before the 108th Congress on 3 March 2003 and are as
    follows:
        1. Endangered Species Act: We propose that Integrated Natural
    Resources Management Plans under the Sikes Act provide the special
    management considerations or protection required under the Endangered
    Species Act and would obviate the requirement for designation of
    critical habitat on military lands for which such plans have been
    completed.
        2. Marine Mammal Protection Act (MMPA): This proposal clarifies the
    definition of ``harassment'' for purposes of military readiness
    activities under the MMPA (i.e. any military readiness activity must
    injure or have the significant potential to injure a marine mammal;
    disturb or likely disturb a marine mammal, causing a disruption of
    behavioral patterns to the point of abandonment or significant
    alternation; or be directed toward a specific individual, group, or
    stock of marine mammals, causing a disruption of natural behavioral
    patterns).
        3. Clean Air Act (CAA): Our proposal will maintain DOD's commitment
    to CAA standards while providing flexibility to meet State air quality
    policies by providing DOD and State regulators up to 3 years to ensure
    compliance with State Implementation Plans. Under the requirements of
    current law, it is becoming increasingly difficult to base military
    aircraft near developed areas.
        4 and 5. RCRA and CERCLA: Our proposed amendments to RCRA and
    CERCLA have been slightly revised to make it absolutely unambiguous
    that they do not affect our cleanup obligations on closed ranges. We
    included new language in both the legislation and the accompanying
    sectional analysis to clarify that our proposals have no affect
    whatsoever on our legal obligations with respect to cleanup of closed
    bases, or of bases that close in the future.
        In addition, we made a technical revision in a provision in last
    year's bill designed to ensure that our proposal did not alter EPA's
    existing protective authority in section 106 of the Superfund law. As a
    result, this year's version is even clearer that notwithstanding
    anything in our proposal, EPA retains the authority to take any action
    necessary to prevent endangerment of public health or the environment
    in the event such risk arose as a result of use of munitions on an
    operational range.
        General Foglesong. Last year Congress enacted three of the eight
    proposals submitted by the Defense Department--reform of the Migratory
    Bird Treaty Act and two provisions strengthening DOD's ability to
    encourage buffer zones around military installations. This year's
    proposal includes the remaining five elements, with some clarifications
    and modifications based on events in the previous year.
        RCRA and CERCLA. Our proposed amendments to RCRA and CERCLA have
    been slightly revised to make it absolutely unambiguous that they do
    not affect our cleanup obligations on closed ranges. We included new
    language in both the legislation and the accompanying sectional
    analysis to clarify that our proposals have no effect whatsoever on our
    legal obligations with respect to cleanup of closed bases, or of bases
    that close in the future.
        In addition, we made a technical revision in a provision in last
    year's bill designed to ensure that our proposal did not alter
    Environmental Protection Agency's (EPA) existing protective authority
    in section 106 of the Superfund law. As a result, this year's version
    is even clearer that notwithstanding anything in our proposal, EPA
    retains the authority to take any action necessary to prevent
    endangerment of public health or the environment in the event such risk
    arose as a result of use of munitions on an operational range.
        Marine Mammal Protection Act. This year's proposal adds three new
    elements to our Marine Mammal Protection Act (MMPA) proposal, all as a
    result of events in the last year. As you may know, the Navy and
    National Oceanic and Atmospheric Administration (NOAA) lost an
    important case last year regarding a vital anti-submarine warfare
    sensor--Surveillance Towed Array Sensor System (SURTASS) Low Frequency
    Active (LFA), a towed array of sensors emitting low-frequency sonar
    that is critical in detecting ultra-quiet diesel-electric submarines
    while they are still at a safe distance from our vessels.
        The Court's ruling highlighted a number of structural deficiencies
    in application of the MMPA to military readiness activities that
    require legislative change. First, the Court found fault with NOAA's
    regulatory interpretation of the definition of ``harassment,'' clearly
    substantiating the need to change the statutory definition of
    harassment that we identified in our legislative package last year.
    Second, the Court struck down NOAA's longstanding application of the
    MMPA's ``small numbers'' requirement. The National Research Council has
    recommended that this provision be deleted as not scientifically based.
    Elimination of this requirement, which Congress has previously
    acknowledged is ``incapable of quantification,'' would instead
    appropriately focus impact determinations on the scientifically based
    ``negligible impacts'' standard. Third, the litigation highlighted the
    difficulty in identifying a ``specific geographical region'' for
    permits applied to military readiness activities. Given the migratory
    nature of marine mammals, varying biological and bathymetric features
    in the environment they occupy, and the worldwide nature of naval
    operations, this requirement is extremely difficult to define as a
    legal matter. Our proposal would have no effect on NOAA's
    responsibility to satisfy itself that our activities would have
    ``negligible impacts''--a finding that necessarily entails full
    consideration of the location and timing of our readiness activities.
    It would, however, prevent critical readiness activities that have been
    validated by such scientific review from being impeded by technical
    legal issues of defining ``regions.''
        The last change we are proposing, a national security exemption
    process, also derives from feedback the Defense Department received
    from environmental advocates last year after we submitted our proposal.
    With virtual unanimity, these groups argued that DOD should use
    emergency exemptions rather than the alternative forms of regulation
    that we proposed to Congress. The comments we received last year
    highlighted the fact that the MMPA does not currently contain such
    emergency authority, so this year's submission does include a waiver
    mechanism. Like the Endangered Species Act, our proposal would allow
    the Secretary of Defense, after conferring with the Secretary of
    Commerce or Secretary of Interior, as appropriate, to waive MMPA
    provisions for actions or categories of actions when required by
    national security.

        2. Senator Ensign. General Keane, Admiral Fallon, General Nyland,
    and General Foglesong, the Marine Corps has gone above and beyond to
    work with the regulators on the Endangered Species Act and has
    developed a three-factor test to address endangered species on Marine
    Corps installations. Should the three-factor test be codified to
    provide predictability?
        General Keane. The Army believes that the Marine Corps and OSD are
    best equipped to answer this specific question. The Marine Corps has
    specific experience with the benefits and limitations of the three-
    factor test, and OSD has a broad view of the potential limitations and
    liabilities from generalizing this three-factor test. The Army has not
    done the detailed analysis necessary to provide a formal opinion in
    these areas.
        Having noted the above, the Army believes that the proposed fiscal
    year 2004 OSD Readiness and Range Preservation Initiative legislation
    with respect to the Endangered Species Act does provide the necessary
    legislative codification of procedures that will protect endangered
    wildlife without resorting to the designation of a ``critical
    habitat''--a designation that can severely curtail vital military
    training. The Readiness and Range Preservation Initiative would provide
    a basis in law for procedures that are now working well between the
    U.S. Fish and Wildlife Service and the military services to protect
    endangered wildlife by generation of an Integrated Natural Resources
    Management Plan, ``pursuant to the Sikes Act.'' This legislative
    initiative--the Sikes Improvement Act--would provide that Integrated
    Natural Resource Management Plans must be prepared by the military
    services in cooperation with and reflect the ``mutual agreement'' of
    the U.S. Fish and Wildlife Service (and the head of each appropriate
    State fish and wildlife agency where the installation is located). Once
    completed, these management plans would obviate any need for
    designation of a ``critical habitat'' [16 U.S.C. Sec. 670a(a)(2)]. The
    Army believes that this comprehensive approach to clarifying the
    Endangered Species Act is necessary as the first step toward a
    sustainable balance between military readiness and protection of
    endangered species. We strongly encourage the subcommittee to adopt
    this OSD legislative initiative as part of the National Defense
    Authorization Act for Fiscal Year 2004.
        Admiral Fallon. No. The three-factor test would require that INRMPs
    used in lieu of designating critical habitat provide (a) a conservation
    benefit to the species; (b) certainty that the management plan will be
    implemented; and (c) certainty that the conservation benefit will be
    effective. The RRPI provision anticipates these factors and provides
    greater flexibility for the protection of military readiness activities
    and the stewardship of species by requiring ``mutual agreement''
    between the Navy and the U.S. Fish and Wildlife Service regarding the
    contents of an INRMP. This flexibility is necessary to ensure that
    there is a balance achieved to protect species and to ensure that the
    military can execute necessary national security missions. Finally, and
    most importantly, inclusion of the three factors would generate
    considerable litigation risk as environmental groups attacked the
    findings and conclusions of the U.S. Fish and Wildlife Service
    regarding the INRMP's compliance with the three factors.
        General Nyland. It is not necessary and may not be appropriate to
    codify the three-factor test currently employed by the U.S. Fish and
    Wildlife Service when reviewing military service Integrated Natural
    Resource Management Plans. While the three-factor test currently
    employed by the U.S. Fish and Wildlife Service may be sufficient for
    purposes of many listed species, situations could arise where different
    or additional conditions may be warranted. In other words, species-
    specific issues may dictate a change to the three-factor test. The
    Readiness and Range Preservation Initiative provision anticipates the
    potential need for such changes by requiring approval of Integrated
    Natural Resource Management Plans in accordance with the mutual
    agreement provision of the Sikes Act Improvement Act. Consequently,
    compliance with the three-factor test, or other appropriate species-
    specific considerations believed to be necessary by the Secretary of
    the Interior, is required under the current language of the Readiness
    and Range Preservation Initiative.
        All of the military services have worked closely with the U.S. Fish
    and Wildlife Service to address the management of threatened and
    endangered species habitat extant on military installations. Recent
    efforts were energized, however, by U.S. Fish and Wildlife Service
    proposals to designate 57 percent of Marine Corps Base Camp Pendleton
    and 65 percent of Marine Corps Air Station Miramar as critical habitat.
    The Marine Corps offered that Integrated Natural Resource Management
    Plans, prepared pursuant to the Sikes Act Improvement Act, 16 U.S.C.
    Sec. 670a, provide comprehensive, multi-species management strategies
    sufficient to address the conservation needs of listed species so that
    the designation of critical habitat is neither necessary nor required.
    The U.S. Fish and Wildlife Service accepted this analysis, and
    developed a policy wherein critical habitat designation is not required
    on military lands subject to a completed Integrated Natural Resource
    Management Plan. This policy requires the Integrated Natural Resource
    Management Plans provide: (a) a conservation benefit to the species;
    (b) certainty that the management plan will be implemented; and (c)
    certainty that the conservation benefit will be effective. (The policy
    includes more extensive definitions for each of these three
    conditions.) Since October 2000, the U.S. Fish and Wildlife Service has
    employed this policy to obviate the need to designate critical habitat
    at several military installations.
        The Readiness and Range Preservation Initiative requires the
    completion of Integrated Natural Resources Management Plans pursuant to
    the Sikes Act. The Sikes Act Improvement Act provides that Integrated
    Natural Resource Management Plans must be prepared in cooperation with
    and reflect the ``mutual agreement'' of the U.S. Fish and Wildlife
    Service (and the head of each appropriate State fish and wildlife
    agency where the installation is located). 16 U.S.C. Sec. 670a(a)(2).
    This mutual agreement provision ensures that conditions required by the
    U.S. Fish and Wildlife Service (and State fish and wildlife agencies)
    for the benefit of listed species will be embedded in the completed
    Integrated Natural Resource Management Plan. It is appropriate to
    ensure that regulatory agencies can require conditions necessary to
    benefit the listed species (via the mutual agreement requirement), but
    it is not necessary to codify the exact conditions.
        General Foglesong. It is not necessary--and may not be appropriate
    to codify the ``three-factor test'' currently employed by the U.S. Fish
    and Wildlife Service when reviewing military service Integrated Natural
    Resource Management Plans. While the ``three-factor test'' currently
    employed by the U.S. Fish and Wildlife Service may be sufficient for
    purposes of many listed species, situations could arise where different
    or additional conditions may be warranted. In other words, species-
    specific issues may dictate a change to the ``three-factor test.'' The
    Readiness and Range Preservation Initiative provision anticipates the
    potential need for such changes by requiring approval of Integrated
    Natural Resource Management Plans in accordance with the ``mutual
    agreement'' provision of the Sikes Act Improvement Act. Consequently,
    compliance with the ``three-factor test,'' or other appropriate
    species-specific considerations believed to be necessary by the
    Secretary of the Interior, is required under the current language of
    the Readiness and Range Preservation Initiative.
        All of the military services have worked closely with the U.S. Fish
    and Wildlife Service to address the management of threatened and
    endangered species habitat on military installations. Recent efforts
    were energized, however, by U.S. Fish and Wildlife Service proposals to
    designate 57 percent of Marine Corps Base Camp Pendleton and 65 percent
    of Marine Corps Air Station Miramar as critical habitat. The Marine
    Corps offered that Integrated Natural Resource Management Plans,
    prepared pursuant to the Sikes Act Improvement Act, 16 U.S.C.
    Sec. 670a, provide comprehensive, multi-species management strategies
    sufficient to address the conservation needs of listed species so the
    designation of critical habitat is neither necessary nor required. The
    U.S. Fish and Wildlife Service accepted this analysis, and developed a
    policy wherein critical habitat designation is not required on military
    lands subject to a completed Integrated Natural Resource Management
    Plan. This policy requires the Integrated Natural Resource Management
    Plans provide: (a) a conservation benefit to the species; (b) certainty
    that the management plan will be implemented; and (c) certainty that
    the conservation benefit will be effective. (The policy includes more
    extensive definitions for each of these three conditions.) Since
    October 2000, the U.S. Fish and Wildlife Service has employed this
    policy to obviate the need to designate critical habitat at several
    military installations.
        The Readiness and Range Preservation Initiative requires the
    completion of Integrated Natural Resources Management Plans ``pursuant
    to the Sikes Act.'' The Sikes Act Improvement Act provides that
    Integrated Natural Resource Management Plans must be prepared in
    cooperation with and reflect the ``mutual agreement'' of the U.S. Fish
    and Wildlife Service (and the head of each appropriate State fish and
    wildlife agency where the installation is located). 16 U.S.C.
    Sec. 670a(a)(2). This ``mutual agreement'' provision ensures conditions
    required by the U.S. Fish and Wildlife Service (and State fish and
    wildlife agencies) for the benefit of listed species will be embedded
    in the completed Integrated Natural Resource Management Plan. It is
    appropriate to ensure that regulatory agencies can require conditions
    necessary to benefit the listed species (via the ``mutual agreement''
    requirement), but it is not necessary to codify the exact conditions.

        3. Senator Ensign. General Keane, Fort Hood, Texas, has been
    confronted with challenges related to the Endangered Species Act. There
    are indications that there may have been ``misleading'' information
    provided on the training restrictions at Fort Hood. Can you explain
    this?
        General Keane. There are many constraints on the use of the
    training areas at Fort Hood. Some are based on external legal or
    regulatory requirements. Others are self-imposed policies implemented
    to respond to concerns from neighboring communities or based on a
    variety of internal land management objectives. The information the
    Army has used to articulate the training constraints at Fort Hood,
    primarily maps developed by Fort Hood staff from the installation's
    geographic information system (GIS), was accurate. In total,
    approximately 154,000 acres (77 percent) of the training area at Fort
    Hood are subject to some type of training restriction. About 66,000
    acres (33 percent) of the training area are restricted due to
    management of endangered species and their habitat. These facts could
    be misleading without further explanation. The command group at Fort
    Hood has done a tremendous job of getting every bit of training value
    they can from the land. They find creative ways of working around the
    environmental constraints and training their soldiers to standard. The
    readiness of the Army's III Corps reflects that. However, training on
    Fort Hood is constrained and the realism of the training at Fort Hood
    is negatively affected by these constraints.
        Even relatively minor constraints on the use of training land, such
    as restricting the use of camouflage netting or digging foxholes,
    incrementally diminishes the realism of training events. When several
    minor restrictions apply to a training event, the cumulative impact can
    and has significantly degraded training realism. At a minimum, these
    restrictions tend to concentrate training in less constrained areas of
    the installation. Repeated use of a relatively small number of training
    areas concentrates training damage on those areas, driving up land
    maintenance costs and creating additional issues (e.g., erosion). More
    importantly, repetitive use of training areas by units reduces
    realistic assessment and consideration of terrain when making tactical
    decisions and encourages habitual occupation of the same terrain and
    defensive positions. It causes unrealistic scenarios, and soldier
    unfamiliarity with the most likely military courses of action, the most
    challenging forms of enemy positioning, and the most dangerous types of
    enemy ambush points. Each of these shortfalls places at risk the type
    of high-quality training necessary to sustain force readiness and our
    warfighting edge.

        4. Senator Ensign. General Keane, what is the Army's position on
    the training restrictions at Fort Hood?
        General Keane. Training on Fort Hood is constrained and the realism
    of the training at Fort Hood is negatively affected by these
    constraints. The command group at Fort Hood has done a tremendous job
    getting every bit of training value they can from the land. They find
    creative ways of working around the constraints and training their
    soldiers to standard. The readiness of the Army's III Corps reflects
    that. However, these ``work-arounds'' do not come without cost. For
    example, concentrating maneuver training to only certain parts of Fort
    Hood in order to preserve ``core habitat'' has contributed to
    significant erosion problems in the maneuver area that are not only
    expensive to manage, but detrimental to the environment. The quality
    and quantity of our unit training--and associated force readiness--at
    Fort Hood will continue to decline if steps are not taken now to
    reverse these trends.
                                     ______

                 Questions Submitted by Senator Daniel K. Akaka

                               RANGE PRESERVATION

        5. Senator Akaka. General Keane, Admiral Fallon, General Nyland,
    and General Foglesong, earlier this year, EPA Administrator Christine
    Todd Whitman testified before the Senate Environment and Public Works
    Committee, ``I don't believe there is a training mission anywhere in
    the country that is being held up or not taking place because of
    environmental protection regulation.'' I am aware of a number of cases
    in which training and readiness activities have been impeded by the
    Endangered Species Act and the Marine Mammal Protection Act (neither of
    which is implemented by EPA), so I would like to focus on the other
    aspects of the administration's legislative proposal. Are any of you
    aware of any case in which a military training mission anywhere in the
    country is being held up or not taking place as a result of hazardous
    waste statutes?
        General Keane. I am aware of no Army range or training area where
    the application of the Federal hazardous waste statute, the RCRA,
    prohibits training. However, RCRA is one of the laws cited by
    plaintiffs in a lawsuit against the Army at Fort Richardson, Alaska.
    Also cited in the case are the Comprehensive Environmental Response
    Compensation and Liability Act (CERCLA or Superfund) and the Clean
    Water Act. Plaintiffs claim that firing munitions during training
    violates all of these laws. Plaintiffs are seeking to halt live-fire
    training and require remediation of the Eagle River Flats impact area.
    This would dramatically impact the training of the 172nd Infantry
    Brigade, the largest infantry brigade in the U.S. Army. If the suit is
    successful, it would set a precedent that could subject live-fire
    training and testing at every Army operational range (400+) to
    permitting and remediation actions under these laws.
        It is interesting to note that the expanded application of
    environmental laws to military ranges is not coming from regulatory
    agencies, but from citizens' suits seeking novel interpretations of
    these laws. In fact, DOD's legislative proposals in the areas of RCRA
    and CERCLA seek to codify the longstanding EPA policy, established by
    former President Clinton's administration, that firing ammunition on an
    operational range is not a trigger for cleanup requirements. DOD has
    developed these legislative proposals in close coordination with EPA.
        Admiral Fallon. Navy is not aware of any instances in which
    training has been lost due to the administration of the hazardous waste
    statutes. However, administration of hazardous waste statutes is
    usually under the authority of State regulatory officials, who vary in
    their interpretation of Federal hazardous waste laws and who have the
    ability to enforce stricter standards than existing Federal hazardous
    waste laws. Thus, there is the potential for negative impacts to
    military readiness activities. More importantly, hazardous waste laws
    have been used in litigation by environmental groups seeking to halt
    military training. The Readiness and Range Preservation Initiative
    proposed legislative clarification for the Resource Conservation and
    Recovery Act. It comports with the existing EPA Military Munitions Rule
    while providing a statutory definition for ``solid waste'' that
    standardized application of hazardous waste laws and ensures continued
    access to our operational ranges now and into the future.
        General Nyland. Administrator Whitman's oversight role does not
    include natural resources. The Marine Corps needs solutions as outlined
    in the RRPI, embedded in law, that requires consideration,
    accommodation, and protection of lands used for military training and
    operations. RRPI passage, including the provision that addresses
    critical habitat designation, has direct national security
    implications, and is a Marine Corps priority.
        Regarding your question on hazardous waste, I am aware of the U.S.
    Army's involvement in a citizen's suit involving Fort Richardson,
    Alaska. The coalition of plaintiffs is challenging the Army's live-fire
    operations at Eagle River Flats. The suit alleges that munitions are:

              Solid/hazardous waste subject to the RCRA;
              Release of a hazardous substance subject to the CERCLA; and
              Pollutant discharge subject to the Clean Water Act (CWA).

        If successful, plaintiffs could force remediation of the Eagle
    River Flats impact area, precluding live-fire training at the only
    mortar and artillery impact area at Fort Richardson and dramatically
    degrading readiness of the 172nd Infantry Brigade, the largest infantry
    brigade in the Army. The Fort Richardson litigation could set a
    precedent fundamentally affecting military training and testing at
    virtually every test and training range.
        RCRA and CERCLA are Federal laws designed to regulate the cleanup
    of solid hazardous wastes on land. RRPI intends to clarify the
    application of RCRA and CERCLA to operational ranges. This
    clarification is in accordance with the EPA's Military Munitions Rule.
    Explosives, munitions, munitions fragments, or constituents thereof
    would be excluded from the definition of ``solid waste'' under RCRA
    when military services ``deposit'' the items on an operational military
    range incident to normal use, and the items remain thereon. If the
    operational range ceases to be operational (is closed), CERCLA would
    then apply to the cleanup. Similarly, under CERCLA, explosives and
    munitions deposited on operational ranges during normal use would not
    qualify as a ``release''--otherwise, under CERCLA, a ``release'' would
    require a cleanup. The provision explicitly preserves the President's
    and DOD's authority to address an imminent and substantial endangerment
    to the public health, welfare, or the environment.
        Fort Richardson is a prime example of Federal agencies (DOD and
    EPA) working together to arrive at an environmentally acceptable
    solution, only to be sued by private party plaintiffs who interpret the
    law differently. This legislative clarification/codification of EPA's
    Military Munitions Rule is intended to forestall litigation such as
    what the Army is currently facing at Fort Richardson, Alaska.
        General Foglesong. Although I am not aware of any case in which a
    military mission is currently being held up or not taking place as a
    result of restoration statutes, environmental plaintiffs have filed
    suit at Fort Richardson, Alaska, alleging violations of the CERCLA and
    Alaska anti-pollution law applicable under the RCRA. If successful,
    they could potentially force remediation of the Eagle River Flats
    impact area and prevent all future live-fire training at the only
    mortar and artillery impact area at Fort Richardson, thereby
    dramatically degrading readiness of the 172nd Infantry Brigade, the
    largest infantry brigade in the Army. It could also set a precedent
    fundamentally affecting military training and testing at virtually
    every test and training range.
        In only one instance has the U.S. Environmental Protection Agency
    (EPA) taken an enforcement action resulting in the cessation of live-
    fire training at a military base, the Massachusetts Military
    Reservation (MMR) on Cape Cod, Massachusetts. As John Peter Suarez,
    Assistant Administrator, Office of Enforcement and Compliance
    Assurance, U.S. Environmental Protection Agency, testified before the
    Subcommittee on Readiness and Management Support of the Senate Armed
    Services Committee on April 1, 2003:

            ``We note, for the record, that in its history, EPA has in only
            one instance taken an enforcement action that resulted in the
            cessation of live-fire training at a military base--namely, at
            the MMR on Cape Cod, Massachusetts. There, EPA took action
            under the Safe Drinking Water Act only after determining that
            the groundwater aquifer underlying MMR, the sole source of
            drinking water for hundreds of thousands of Cape Cod residents,
            was threatened with contamination--and only after efforts to
            support voluntary action failed to stop the spread of
            contamination. Today at MMR, EPA is overseeing cleanup work to
            ensure that Cape Cod residents have an adequate supply of
            drinking water now and in the future. The Defense Department
            shifted some of this training to another facility and has
            continued to conduct training at MMR using small arms, as well
            as other training without using explosives, propellants, and
            pyrotechnics.''

        6. Senator Akaka. General Keane, Admiral Fallon, General Nyland,
    and General Foglesong, setting aside smoke and dust restrictions, which
    I understand are not addressed in the administration's legislative
    proposal, are any of you aware of any case in which a military training
    mission anywhere in the country is being held up or not taking place as
    a result of the Clean Air Act?
        General Keane. Restrictions on training with smoke or other
    obscurants and restrictions on mechanized maneuver that generates
    airborne dust are addressed by the administration's legislative
    package. Like any other air emission, new or modified training
    activities would have 3 years to demonstrate conformity with State
    Implementation Plans Under the Clean Air Act. The legislation would
    provide more flexibility for the Defense Department in ensuring that
    emissions from its military training and testing are consistent with
    State Implementation Plans under the Clean Air Act by allowing DOD and
    the State a slightly longer period to accommodate or offset emissions
    from military readiness activities.
        At Fort Leonard Wood, Missouri, the home of the Army's Chemical
    School, Military Police School, and Engineer School, there are four
    training areas designed for training soldiers in the generation of
    obscurants (fog oil). Due to constraints contained in the
    installation's air permit, the Army is restricted to using only one of
    these training areas. Meteorological conditions are seldom favorable
    enough to allow use of the other three. These restrictions severely
    limit the areas where soldiers can conduct smoke field training
    exercises. Because only one training area is available on a regular
    basis, students tend to see the same targets and terrain over and over
    again in training. The realism of the training is diminished, and the
    capability of our soldiers in this critical area of military operations
    is reduced.
        Admiral Fallon. No. The Navy has not suffered any training losses
    associated with the conformity provisions of the Clean Air Act.
    However, there have been several near misses that threatened delay in
    introduction of new weapons systems or the movement of aircraft and
    ships. The Readiness and Range Preservation Initiative to extend the
    deadline for conformity is meant to alleviate the future impacts
    associated conformity requirements for the basing of ships and
    aircraft, and the introduction of new weapons systems. Navy homeports a
    large number of our ships and aircraft in areas of the country
    designated as non-attainment or maintenance areas under the Clean Air
    Act.
        General Nyland. It is likely that the fielding of future weapons
    systems and the conduct of contingency operations will be negatively
    impacted by Clean Air Act requirements. Our proposal will maintain
    DOD's commitment to CAA standards while providing flexibility to meet
    State air quality policies by providing DOD and State regulators up to
    3 years to ensure full compliance with State implementation plans. If
    RRPI were passed, the CAA provision would allow limited flexibility
    when complying with the conformity requirement. The CAA's ``general
    conformity'' requirement, applicable only to Federal agencies,
    threatens deployment of new weapons systems and base closure/
    realignment despite the fact that relatively minor levels of emissions
    are involved. For example, the realignment of F/A-18 C/Ds from Cecil
    Field, Florida to Naval Air Station (NAS) Oceana in Virginia was made
    possible only by the fortuity that Virginia was in the midst of
    revising its implementation plan and was able to accommodate the new
    emissions. Under the existing requirement, there is limited flexibility
    to accommodate readiness needs, and DOD is barred from even beginning
    to take readiness actions until the requirement is satisfied. The
    legislation would provide more flexibility for the DOD in ensuring that
    emissions from its military training and testing are consistent with
    State implementation plans under the Clean Air Act by allowing DOD and
    the State a 3-year period to accommodate or offset emissions from
    military readiness activities.
        Federal facilities located in non-attainment areas must comply with
    the Clean Air Act General Conformity regulations, which prohibit
    Federal agencies from supporting or taking any action that does not
    conform with the State's plan to bring air quality into compliance.
    This can have significant impacts on the military's ability to change
    operations or field new weapon systems. We believe DOD actions should
    conform with State Implementation Plans; in recognition of the national
    security implications, however, military readiness activities should be
    given a 3-year window to demonstrate conformity.
        Future Weapons Systems: Across the board all new weapons systems
    (JSF, F-22, F/A-18E/F, V-22, and AAAV) will emit more nitrogen oxides
    (NOx) than the legacy systems they are replacing. Basic combustion
    processes mean that the more efficient higher power engines burn
    hotter, emitting more NOx. For areas designated nonattainment for ozone
    (including most of Southern California--the location of multiple
    military installations) NOx is a pollutant of concern. Historically,
    the military services have been able to work with States to demonstrate
    conformity--these good relations will continue. The immediate nature of
    the conformity requirement, however, is burdensome. A 3-year window to
    demonstrate conformity would maintain the conformity requirement, and
    allow for smoother transitions to new weapons systems.
        Contingency Operations: Conformity is triggered whenever there is a
    major Federal action. Major increases or a change in the type of
    operations in a non-attainment area can trigger conformity
    requirements. For example, homeland security activities, especially the
    round-the-clock air surveillance of the major cities, can--depending
    upon flight tempo level, constitute a new mission for some airfields
    and thereby raise conformity issues. A 3-year window to demonstrate
    conformity would maintain the requirement, and allow for immediate
    ramp-up of military operations in support of unanticipated
    contingencies.
        General Foglesong. There are currently no places where Air Force
    training missions are being held up or are not taking place as a result
    of the Clean Air Act. The Air Force does regularly relocate forces
    among installations throughout the U.S. and the world, in order to best
    position them for potential use and to optimize training opportunities.
    However, the Clean Air Act's ``general conformity'' requirement
    applicable to Federal agencies restricts the Air Force's ability to
    immediately deploy personnel or relocate weapons systems, despite the
    fact that only minor levels of emissions may be involved. The proposed
    Readiness and Range Preservation Initiative would provide more
    flexibility for the Air Force in ensuring emissions from its military
    training are consistent with State Implementation Plans under the Clean
    Air Act by allowing the Air Force and the States a 3-year period to
    accommodate or offset emissions from military readiness activities.
    This would greatly facilitate the movement of military units among
    installations in order to best position them for potential use.

                              encroachment issues
        7. Senator Akaka. General Foglesong, earlier this week, the Under
    Secretary of Defense for Personnel and Readiness testified before
    another subcommittee that military faces a number of encroachment
    issues. He specifically listed ``Urban sprawl, loss of frequency
    spectrum, restrictions on air space, and endangered species-related
    restrictions on training lands.'' Yet the administration's legislative
    proposal focuses exclusively on encroachment issues arising out of
    environmental law and regulation. In the case of the Air Force, how
    would you rank the impact of the encroachment issues we have been
    discussing in this hearing against the impact of encroachment issues we
    have not focused on, such as airspace management, the availability of
    spectrum, and noise restrictions?
        General Foglesong. Frequency spectrum, urban sprawl, noise
    concerns, and the utilization of the national airspace system pose just
    as significant concerns to the Air Force as the encroachment issues
    based on environmental provisions. Each of these types of encroachment
    is being addressed but do not require changes to specific statutes at
    this time.
        The authority to guide civilian growth and development of land
    rests exclusively with State and local governments. The Air Force has
    been proactive in this arena for over 25 years by participating in the
    local land use planning process. Provisions in last year's passage of
    some elements of the RRPI provide another tool for use by the Air Force
    to address urban sprawl around our ranges and installations, and we
    thank Congress for this needed relief.
        Noise concerns are primarily local issues and our military
    professionals are actively interacting with their local communities to
    address noise concerns, educate populations, and provide public record
    documents giving future property owners disclosure on the military
    noise in their region. Additionally, the Services are working to
    develop better noise modeling programs to ensure the best possible data
    is available to military planners and the public.
        Likewise, the shared use of our National Airspace System is very
    important to the Air Force and we are actively working, through the DOD
    Executive Director of the Policy Board on Federal Aviation, to ensure
    all civil and military needs for airspace are accommodated in the
    future.
        Frequency spectrum encroachment occur when the Air Force loses
    spectrum as greater demands are placed on spectrum for commercial and
    international uses. The Air Force is actively developing methods to
    more efficiently use the spectrum we currently have, and to work within
    the National Telecommunications and Information Administration, Federal
    Communications Commission, and the International Telecommunications
    Union processes to protect or provide for Air Force frequency spectrum
    needs.

        8. Senator Akaka. General Foglesong, can you explain why the
    administration has chosen to offer legislation that focuses exclusively
    on the environmental laws, and neglects to address other encroachment
    issues identified by the military services?
        General Foglesong. The Department of Defense's efforts to address
    encroachment are broadly focused, encompassing a wide range of issues
    and actions. As your question recognizes, not all encroachment issues
    are ``environmental'' issues per se. Urban growth and development at
    the fence line, commercial competition for vital radio spectrum,
    airspace restrictions, increasing pressure for recreation or commercial
    uses on military land, and other such factors come into play. DOD is
    actively addressing these problems on many fronts. Legislation is only
    one possible solution, and has been sparingly employed. We are working
    to resolve many of these concerns by working with the regulatory
    agencies and other parties to mitigate existing or potential
    encroachments. If and when appropriate, we will consider legislative
    clarification on non-environmental encroachment concerns, but we do not
    believe that is necessary at this time.
        However, while encroachment is broad-based, a large number of our
    most pressing encroachment issues are associated with the readiness
    impacts of environmental legislation or regulation. Each of the five
    legislative proposals offered this year is the result of lengthy
    deliberation within the Department and the administration, to include
    Office of Management and Budget and the Federal agencies. DOD has taken
    a very conservative approach in deciding which specific encroachment
    concerns justify a request for legislative clarification. No
    legislation is proposed that has not met three basic tests:

            -  Is the proposed legislation the only realistic option to
            address the readiness issue? In other words, can the problem be
            solved through regulatory or administrative means, or by
            internal DOD action short of legislative clarification? In
            these five cases, we have concluded that other options are not
            available, for the most part due to lawsuits and court
            decisions that have removed other recourse. Legislative action
            is the only reasonable alternative.
            -  Will the legislation produce significant readiness benefits?
            Of the many potential encroachment issues we face, the five we
            are seeking to address in our RRPI provision are truly
            potential showstoppers. Our range commanders have told us, and
            have repeatedly testified before Congress, that their
            management flexibility and the realism of their testing and
            training are being severely constrained due to these precise
            issues. DOD believes these are the most important issues to
            address, and that the resolutions we have proposed are the best
            way to resolve the concern.
            -  Will the legislation have neutral or positive environment
            effects? DOD is fully committed to superior natural resource
            stewardship. None of our five legislative proposals would
            significantly affect the quality of the environment on or
            around our ranges, except perhaps in a positive manner. For
            example, the use of INRMP holistically protects not just
            individual endangered species, but their ecosystems, in ways
            critical habitat designations cannot.

        In summary, the Department hopes to resolve many of our
    encroachment issues through broad-based, long-term range sustainment
    efforts, without resorting to legislative action. We are pursuing a
    number of policy, organizational, programmatic, regulatory/
    administrative, and stakeholder involvement solutions to the broad
    range of encroachment issues we face. It is only where other solutions
    are unavailable that legislation is being pursued, and even then, only
    when such clarifications will truly improve our ability to fulfill both
    our readiness and stewardship missions.
                                     ______

                   Questions Submitted by Senator Bill Nelson

                  TRAINING IMPACT OF ENVIRONMENTAL REGULATIONS

        9. Senator Bill Nelson. General Keane, Admiral Fallon, General
    Nyland, and General Foglesong, in a report released in June 2002, the
    General Accounting Office (GAO) reported that the military services
    have demonstrated no significant reduction in readiness as a result of
    encroachment (the term encroachment refers to the impairment of
    training capabilities due to the growth of civilian populations near
    military installations and involve regulatory compliance with
    environmental regulations). Data for this report was gathered by
    surveying military installations and conduction interviews with base
    commanders. What are your reactions to the GAO's conclusions?
        General Keane. The Army believes that this reading of the GAO
    report misses the key finding of the report: as a result of
    encroachment, the Services have incrementally lost training
    capabilities at each of the installations the GAO reviewed. In this
    finding, the GAO reinforced our position that encroachment diminishes
    training realism and restricts the types, locations, and times of
    training events.
        We acknowledge that the GAO study also found that DOD has not
    documented the overall impact of encroachment on training. The Army
    recognizes that our readiness reports have not reflected encroachment
    impacts. We are taking steps to address the issue. However, the
    readiness reporting steps we are taking in no way offset the fact that
    a negative and growing impact from environmental encroachment exists,
    and that the GAO was able to document this impact upon Army training in
    its June 2002 report.
        The impacts of training strategy deviations resulting from
    environmental requirements at Army installations are difficult to
    identify and measure. These environmental training constraints result
    in incremental reductions in training capabilities that have long-term
    cumulative impacts on unit readiness. Individual commanders may not
    recognize these cumulative adverse effects during their command tours.
    The current Army Unit Status Report system has not been sensitive
    enough to identify these cumulative effects as significant contributors
    to training status. One aspect of the Army culture is to find a way to
    make things work while avoiding complaint. Therefore, training
    constraints are often charitably characterized as necessary ``control
    measures'' to avoid environmental violations. As a result, commanders
    routinely implement training work-arounds. Over time, these work-
    arounds are accepted as ``business as usual.''
        The Army is improving the tools with which garrison and mission
    commanders evaluate the cumulative impacts on live training resulting
    from incrementally more stringent environmental management
    requirements. The Army has modified its Installation Status Report
    (ISR) to better quantify encroachment and training restrictions. These
    measures will be directly incorporated into the Strategic Readiness
    System and should more accurately reflect the impacts of encroachment.
    We anticipate compiling a first year of encroachment data from the ISR
    by the summer of 2003.
        Admiral Fallon. The GAO report expressly concluded that DOD and the
    military services have lost training range capabilities and can be
    expected to experience increased losses in the future absent efforts to
    mitigate encroachment. The GAO report further concluded that
    encroachment had limited the extent to which training ranges are
    available or the types of training that can be conducted. Additionally,
    the GAO report indicated that constraints on the availability and type
    of training affected the ability of units to train as they would expect
    to fight or required workarounds--or adjustments in training events--
    that can create bad habits and affect performance in combat or, in some
    instances prevent training from being accomplished.
        The impacts of encroachment on training and testing are sometimes
    readily apparent, such as the loss of training areas due to the impacts
    of training and testing on endangered species that are present in the
    area. More often than not, the impacts are incremental. A slow but
    steady increase in encroachment problems has constrained the use of
    training and testing facilities and forced the Services to work around
    the constraints by modifying the timing, tempo, and location of
    training and testing, as well as the equipment used. These workarounds
    are becoming increasingly difficult and costly and compromise the
    realism of training and testing. Constraints on training and testing,
    as well as the compromise of realism, threaten military readiness and
    the development of new weapon systems. These in turn increasingly put
    U.S. forces at risk when called upon to conduct combat operations.
        The GAO report noted that there are limitations in the DOD
    readiness reporting system. These limitations include the fact that the
    readiness reporting system does not differentiate between minimum
    skills necessary to perform military operations and the higher-level
    skills necessary to conduct those military operations in combat
    conditions. Thus, although military readiness reporting has generally
    not noted impacts from encroachment, this failure to note impacts from
    encroachment does not mean that the impacts of encroachment are not
    affecting combat capability, the ultimate form of readiness. Likewise,
    this failure to note deficiencies does not imply that workarounds are
    not affecting combat capability. More importantly, the GAO report
    acknowledged that a mechanism for determining the impacts of
    encroachment on training capabilities and readiness is only being
    developed. Since the methodology does not exist, it would be difficult
    to report deficiencies on readiness reports. However, anecdotal
    evidence of the impacts of encroachment on readiness does exist and can
    be documented.
        Since the impacts of encroachment are slowly eroding the combat
    capability of the military services, steps must be taken now to arrest
    the erosion and to ensure that U.S. military forces are fully prepared
    for combat. Failure to do so will result in an increased probability of
    casualties in combat situations as inadequately trained military forces
    struggle to learn lessons for the first time under hostile fire.
        General Nyland. GAO-02-614, ``Military Training: DOD Lacks a
    Comprehensive Plan to Manage Encroachment on Training Ranges'' (GAO
    review code 350075), had three findings:

              That encroachment has diminished military service training
            range capabilities;
              That the impact of encroachment on readiness and training
            costs is not well-reflected in DOD's reported data; and
              That a comprehensive plan for addressing encroachment has not
            been finalized.

        The first finding is significant: encroachment has diminished our
    military service training range capabilities. Second, the Pendleton
    Quantification Study is a direct response to the criticism that we
    cannot quantify the impacts of encroachment. Moreover, we are working
    to quantify encroachment impacts nationwide. At Headquarters Marine
    Corps, a Range Management System (RMS) has been funded including monies
    programmed through fiscal year 2004, to build an institutional-wide
    ability to relate training standards to ranges using the Pendleton
    study as a proof of principle, if not an exact model. Intent is to have
    the RMS in place within the next 18 months.
        We are taking a multi-layered approach towards the problem; the
    legislative package is one very important step in this approach that
    will include administrative and regulatory proposals in the near
    future. Where we can take action that reduces the known impact of
    encroachment at no (or at least very little) cost, we would be remiss
    in not taking that action immediately.
        General Foglesong. The GAO report confirmed encroachment is a
    recognized problem for military readiness activities. However, the
    report did note quantification of this problem must be better. The Air
    Force substantially concurs with the report's conclusions. The Air
    Force has recognized the need for better supporting data to
    substantiate our request for encroachment relief. To accomplish this,
    the Air Force is developing and testing the Resource Capability Model.
    It will capture the qualitative and quantitative information on the
    availability of air, land, water, and spectrum resources required to
    support operations at our installations and ranges. It is designed to
    define what resource requirements are associated with a defined unit of
    operation, whether these resources are adequate to support the
    requirements (quantify), what kinds of encroachment are denying or
    degrading resource availability or capability, and what are those
    impacts to operations. Overall, this model will provide information on
    what operations are curtailed or modified due to resource denial or
    restraint.

        10. Senator Bill Nelson. General Keane, Admiral Fallon, General
    Nyland, and General Foglesong, does the military agree with the data
    gathered for the study?
        General Keane. We strongly agree with the GAO finding that the
    military services have lost training range capabilities and can expect
    to experience increased losses in the future. We also agree with the
    GAO finding that there is not adequate data to quantify the impacts of
    encroachment on our ability to train and the readiness of our units.
    However, the lack of quantification does not make the impacts on
    training any less real. To rectify the situation the Army has modified
    the ISR to better quantify encroachment and training restrictions.
    These measures will be directly incorporated into our Strategic
    Readiness System and should more accurately reflect the impacts of
    encroachment.
        Admiral Fallon. Yes. The data was accurate, but the report did not
    take into account the impact of workarounds on tests and training, nor
    their overall impacts on readiness.
        General Nyland. Although the report credits the Marine Corps
    process of quantifying the impacts of encroachment on the capability of
    Marine Corps Base, Camp Pendleton to support unit operational readiness
    requirements for assigned marines and units, the study fails to
    reinforce the notion that prior to deployment, unit training readiness
    should be 100 percent. Attaining those levels requires alternative
    training venues at additional expense and operational time; for
    example, marines at Camp Pendleton, CA, are forced to train at
    Twentynine Palms, CA, to achieve their full readiness levels.
    Restrictions at Camp Pendleton caused by the presence of endangered
    species, recreational areas, and topographic and access limitations,
    prevent training to doctrinal standards (e.g., digging of fighting
    positions and vehicle off-road travel).
        General Foglesong. Yes, with the understanding the General
    Accounting Office was only able to examine a small portion of military
    installations which face potential adverse impacts from encroachment.
    The Air Force substantially concurs with the contents of the report.

        11. Senator Bill Nelson. General Keane, Admiral Fallon, General
    Nyland, and General Foglesong, has the military conducted its own study
    and how does it differ?
        General Keane. Recognizing the need to fully quantify readiness
    impacts from environmental encroachment (as stated in the June 2002 GAO
    report), and acknowledging the fact that contemporary Army readiness
    reports do not reflect encroachment impacts, the Army has modified its
    ISR to better quantify encroachment and training restrictions. These
    measures will be directly incorporated into the Strategic Readiness
    System and should more accurately reflect the impacts of encroachment.
    We anticipate compiling the first year of encroachment data from the
    ISR by the summer of 2003. In the 2003 National Defense Authorization
    Act, Congress directed DOD to develop a comprehensive plan to address
    training constraints caused by limitations on the use of ranges and
    training land. The Office of the Secretary of Defense (OSD) has, in
    turn, requested that the military services conduct extensive
    assessments of range requirements, range capabilities, and constraints
    on the use of ranges and training areas and provide a report by
    November 2003. The Army is compiling the necessary data and will
    provide the required report to OSD in November 2003.
        Admiral Fallon. Navy's Federally Funded Research and Development
    Center, the Center for Naval Analyses (CNA) performed three studies to
    help us quantify encroachment impacts.
        In the first study, CNA looked at encroachment impacts at the unit
    level. They found that on the Navy-wide level, SORTS scores (Status of
    Readiness and Training--the standard readiness measuring system used
    throughout the Department of Defense) do not have the fidelity to
    capture the effects of the occasional degradation in training due to
    encroachments. Simply put, in light of the myriad parameters and
    training events that go into Fleet SORTS scores, the occasional
    encroachment on a training event simply doesn't show up. However, when
    they looked at individual units performing training on installations
    faced with environmental restrictions, CNA found training readiness
    scores of these units were indeed significantly degraded in particular
    mission areas.
        Following this look at unit-level impacts, CNA looked at effects of
    encroachments on Battle Group level exercises; specifically, the
    impacts of encroachment on the major Fleet exercises known as Fleetex
    and JTFEX. They found that encroachments on these exercises are
    somewhat insidious; that is, encroachment is not immediately apparent
    upon observing an exercise because the workaround for a specific
    restriction is built into the exercise during the planning process. By
    following a Fleet exercise from its early development stages through
    actual execution, they found several events altered or eliminated
    during the planning cycle as a result of environmental restrictions.
    CNA also found examples due to airspace restrictions along the U.S.
    east coast of weapons employment during the exercise not being
    consistent with how they have been employed in wartime.
        In the third study, CNA, in conjunction with the Office of the
    Deputy Under Secretary of Defense (Readiness), approached the
    encroachment issue from the installation (range) perspective. That is,
    they focused on a particular training range and developed a methodology
    to characterize the physical assets. For example, they focused on the
    airspace and groundspace the range needs in order to fulfill its
    training mission; how we can objectively assess the degree to which
    these assets are restricted; the reasons for these restrictions; and
    their ultimate impact on the training of combat forces. We feel this is
    an important step in addressing the overall issue of range management,
    of which encroachment is one component. That is, there are many
    reasons, in addition to encroachment, for shortcomings in the training
    resources that our ranges are able to provide. The methodology
    developed helps us characterize encroachment in a general perspective,
    and shows how we can look at it in the context of other types of
    restrictions and focus our efforts accordingly.
        General Nyland. The Commanding General, Marine Corps Base, Camp
    Pendleton, California sponsored a study to establish quantitative data
    that examined encroachment impacts on the capability of the
    installation to support Marine Air Ground Task Force operational
    readiness requirements.
        The first phase of study results revealed that an artillery
    battery, light armored reconnaissance platoon, and mortar man Military
    Occupational Specialty (MOS) were able to accomplish specified tasks to
    only 69 percent of established standards for non-firing field training
    while conducting an amphibious operation at Camp Pendleton. The Combat
    Engineer MOS was able to accomplish only 77 percent of established
    standards for non-firing field training.
        The second phase of study examined a Battalion Landing Team,
    Infantry Company, Cobra Attack Helicopter Crewman MOS, and an Assault
    Amphibian Vehicle Crewman MOS.
        The study examined 760 total tasks for both phases of the study.
    The final report's findings are consistent with those of the
    preliminary assessment. On average, the units assessed were able to
    complete their required tasks to just below 70 percent of the
    established standard while conducting an amphibious operation at Camp
    Pendleton.
        In comparison to the GAO report, our study reflected the impacts of
    encroachment within a notional, realistic exercise scenario. The
    scenario included an amphibious landing at Red Beach; tactical
    displacement of the force 6 miles through a maneuver corridor from Red
    Beach to an objective in the vicinity of the live-fire impact areas; a
    deliberate assault of an objective; and sustainment of the force. One
    of the hundreds of tasks examined in the Pendleton Quantification Study
    was simple digging. Digging fighting holes is a core competency for
    Marine infantrymen, and one that is severely constrained at Camp
    Pendleton due to the presence of endangered species and habitat,
    cultural resources, or wetlands. To the layman, it may sound strange to
    suggest that digging is a technique that must be practiced; however,
    digging must be second nature in combat. The conduct of battle
    currently underway in Operation Iraqi Freedom is a testament to this
    necessity.
        General Foglesong. The Air Force has extensive efforts underway to
    better characterize encroachment and its effect on our ability to meet
    current and future training requirements. We are currently developing
    the Air Force Resource Capability Model that captures qualitative and
    quantitative information on the availability of air, land, water, and
    spectrum resources required to support operations at an Air Force
    installation and associated training areas (e.g., range and airspace).
    Additionally, in satisfying the requirement of Section 366 of the
    National Defense Authorization Act for Fiscal Year 2003, the Air Force
    is preparing a comprehensive report that will address encroachment on
    our installations and ranges.

        [Whereupon, at 3:54 p.m., the subcommittee adjourned.]

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2004

                                  ----------

                           WEDNESDAY, MARCH 19, 2003

                               U.S. Senate,
                      Subcommittee on Readiness
                                and Management Support,
                                   Committee on Armed Services,
                                                        Washington, DC.

                   ACQUISITION POLICY AND OUTSOURCING ISSUES

        The subcommittee met, pursuant to notice, at 9:33 a.m., in
    room SR-222, Russell Senate Office Building, Senator John
    Ensign (chairman of the subcommittee) presiding.
        Committee members present: Senators McCain, Allard, Ensign,
    Chambliss, Levin, Akaka, E. Benjamin Nelson, Clinton, and
    Pryor.
        Committee staff member present: Cindy Pearson, assistant
    chief clerk and security manager.
        Majority staff members present: William C. Greenwalt,
    professional staff member; Gregory T. Kiley, professional staff
    member; and Ann M. Mittermeyer, counsel.
        Minority staff members present: Richard D. DeBobes,
    Democratic staff director; Maren R. Leed, professional staff
    member; and Peter K. Levine, minority counsel.
        Staff assistants present: Andrew W. Florell and Nicholas W.
    West.
        Committee members' assistants present: Christopher J. Paul,
    assistant to Senator McCain; John A. Bonsell, assistant to
    Senator Inhofe; Arch Galloway II, assistant to Senator
    Sessions; D'Arcy Grisier, assistant to Senator Ensign; Clyde A.
    Taylor IV, assistant to Senator Chambliss; Davelyn Noelani
    Kalipi, assistant to Senator Akaka; William K. Sutey, assistant
    to Senator Bill Nelson; Eric Pierce, assistant to Senator Ben
    Nelson; Andrew Shapiro, assistant to Senator Clinton; and Terri
    Glaze, assistant to Senator Pryor.

           OPENING STATEMENT OF SENATOR JOHN ENSIGN, CHAIRMAN

        Senator Ensign. This morning, the Subcommittee on Readiness
    and Management Support meets to receive testimony on
    acquisition policy and outsourcing issues in review of the
    National Defense Authorization Request for Fiscal Year 2004.
        I am pleased to welcome today's witnesses on the first
    panel, Under Secretary of Defense for Acquisition, Technology,
    and Logistics, Pete Aldridge; the Comptroller General of the
    United States General Accounting Office, David Walker; and the
    Director of the Office of Federal Procurement Policy, Angela
    Styles.
        This hearing will address a full range of acquisition
    related issues. I look forward to hearing from Secretary
    Aldridge on how the Department is transforming its acquisition
    process through the use of spiral development and other
    reforms.
        The acquisition challenges facing the Department of Defense
    as it seeks to acquire weapons and other systems critical to
    its mission are potentially overwhelming. I am most interested
    in any observations on how the Department might improve its
    acquisition practices and how Congress can help in that
    endeavor.
        The General Accounting Office has played a critical role in
    identifying for the committee various best practices in
    purchasing weapons systems, information technology and
    services. Many of these findings and recommendations are being
    implemented by the Department of Defense (DOD).
        Mr. Walker, as Chairman of the Commercial Activities Panel
    (CAP), you took on another critical acquisition challenge,
    improving the process for public/private competitions. This
    subcommittee is particularly interested in your perspective on
    that panel's report findings and recommendations, as well as
    subsequent developments.
        Ms. Styles, as the administration's senior procurement
    official, you have been tasked with the job of implementing
    many of the CAP's recommendations. I hope you will be able to
    share with the subcommittee where you are in the process of
    reforming the Office of Management and Budget's (OMB) Circular
    A-76 that governs public/private competitions.
        A critical component of successful acquisition reform is
    DOD's acquisition workforce. This workforce, however, has been
    significantly downsized. Many in the workforce are eligible to
    retire in the next few years.
        DOD's budget has risen significantly, and contracting
    actions have increased. While workload has increased, there are
    fewer acquisition personnel around to do the work. What is the
    impact of this situation? How can we strengthen this workforce?
        Improving how the Department of Defense buys goods and
    services is critical to our national security. We need to
    ensure that the money spent on defense acquisition is spent
    wisely.
        I look forward to hearing from our witnesses on DOD's
    efforts to address these challenges.
        Senator Akaka.

                  STATEMENT OF SENATOR DANIEL K. AKAKA

        Senator Akaka. Thank you very much, Mr. Chairman. I thank
    you for calling this hearing today. This committee has a long
    tradition of holding an annual oversight hearing on acquisition
    policy. This morning we will focus on the significant changes
    in outsourcing policy currently under consideration in the
    Department of Defense and elsewhere in the executive branch.
        Late last year, the administration proposed a revised
    version of OMB Circular A-76, to authorize a streamlined ``best
    value'' type of competition. The administration's legislative
    package contains a provision that would amend Title 10 to
    enable the Department of Defense to fully implement this
    change. I believe that decisions to contract out government
    functions should be based on fair and objective competition. In
    my view, true competition must be cost-effective, fair, and
    must promote trust through transparency and public
    accountability.
        I do not automatically rule out the use of best value
    competitions, which appear to have worked well in the
    acquisition of products and services from the private sector.
    However, the subjective quality of best value decisionmaking
    requires a great deal of trust in the impartiality of the
    decisionmaker. As the General Accounting Office (GAO) CAP noted
    in its final report, ``Because the sourcing decision under
    Circular A-76 is based on a cost comparison, some view it as
    objective and therefore less open to an abuse of discretion by
    management. In the context of the distrust that often permeates
    the sourcing process, participants, particularly Federal
    employees, often prefer a cost-only basis for a decision,
    rather than one that permits the exercise of discretion based
    on subjective factors.''
        The GAO Commercial Activities Panel concluded that Federal
    employees' trust in a streamlined best value process would be
    measured, in part, on the extent to which the process provides
    the Federal workforce appropriate rights and protections.
        I am concerned that the proposed revision to the A-76
    public/private competition process falls short of providing
    those rights and protections in several important areas. For
    example, the proposal would not eliminate arbitrary numerical
    goals for conducting public/private competitions, as
    recommended by the GAO panel. The proposal would not give
    unions the same right to file bid protests to the private
    sector, which the private sector already has, as proposed by
    the GAO panel.
        The proposal contains unrealistic timelines for conducting
    public/private competitions that appear designed to push work
    out the door to the private sector as fast as possible. The
    Comptroller General has stated that these timelines are
    ``unrealistic.''
        The proposal would provide expanded authority to conduct
    direct conversions to private sector performance without any
    competition at all. The Comptroller General has noted that this
    approach ``sends an unfortunate signal'' to Federal employees.
    The proposal would unduly burden Federal managers, and we must
    ensure that they have the resources, training, and people
    needed to meet competition requirements.
        Mr. Chairman, I believe that we can design outsourcing
    policies that achieve the best deal for the taxpayer without
    being unfair to our Federal workforce. The proposed revisions
    call for a pilot project that would allow for the use of a best
    value standard for information technology (IT) projects. I am
    open to a genuine pilot project to test the feasibility of best
    value competitions in the Department of Defense, but I hope
    that we will also be able to address some of the concerns that
    I have raised.
        I look forward to working with you on these important
    issues, Mr. Chairman. Thank you very much.
        Senator Ensign. Thank you, Senator Akaka.
        Secretary Aldridge.

       STATEMENT OF HON. EDWARD C. ``PETE'' ALDRIDGE, JR., UNDER
    SECRETARY OF DEFENSE FOR ACQUISITION, TECHNOLOGY, AND LOGISTICS

        Secretary Aldridge. Thank you, Mr. Chairman, for inviting
    me here----
        Senator Ensign. All of your statements, by the way, will be
    made part of the record.
        Secretary Aldridge. Yes, sir. Mr. Chairman, Senator Akaka,
    members of the subcommittee, again I thank you for inviting me
    here today to talk about our acquisition policy and competitive
    sourcing as part of your review of the National Defense
    Authorization Request for Fiscal Year 2004.
        We have made great progress in addressing barriers to
    efficient acquisition, and we thank the subcommittee for its
    assistance in the creation of a professional acquisition corps,
    as well as for its support for pilot programs and other
    transaction authorities to speed the fielding of the state-of-
    the-art technology and better equipment to our warfighters.
        Our current national security situation once again reveals
    a truth often forgotten during these times of peace; that the
    most important duty of the government is the protection of its
    citizens. The support this subcommittee has demonstrated for
    our men and women in uniform honors that covenant.
        The successes of my office in our ongoing quest for
    excellence in the defense acquisition are a measure of our
    attempts to honor the same covenant. For example, in the past
    year, we have been quite successful in pursuing the five goals
    I established at the beginning of this administration. These
    goals were directly derived from those established by Secretary
    Rumsfeld for the Department as a whole.
        These goals are to improve the credibility and
    effectiveness of the acquisition and logistics support process;
    to revitalize the quality and morale of the Acquisition,
    Technology, and Logistics workforce; to improve the health of
    the defense industrial base; to rationalize the weapon systems
    and infrastructure with our defense strategy; and initiate high
    leverage technologies to create the warfighting capabilities
    and strategies of the future.
        Toward these goals, I have restructured the Defense
    Acquisition Board, and designated evolutionary acquisition and
    spiral development as the preferred approach. The opposite side
    of that coin must be the proper pricing of programs, which I
    have insisted upon.
        I have also approved a new process for the acquisition of
    services by the Department of Defense; mandated
    interoperability at program initiation; institutionalized the
    use of Technology Readiness Assessments; consolidated and
    improved our acquisition education; developed a comprehensive
    Future Logistics Enterprise; made changes to improve the health
    of the defense industrial base; instituted a new profit policy;
    increased progress payment schedules; developed a process for
    sharing of cost savings from excess facilities; eliminated
    inappropriate research and development (R&D) cost sharing;
    encouraged non-traditional commercial companies to do business
    with the Department of Defense; accelerated the close-out of
    over-aged contracts; and exploited the enormous potential of
    Advanced Concept Technology Demonstrations.
        Of course, we have many things still to accomplish: we need
    to further eliminate inappropriate management functions and
    marginal activities; continue to devolve functions that can be
    better accomplished elsewhere; further reduce acquisition cycle
    times; continue to minimize program risks; enhance program
    stability; continue to stress keeping costs under control; and
    further establish a clear vision by which our logistics will
    better support our operational requirements. We must accelerate
    the flow of technology to the warfighter with a vibrant and
    robust research program.
        I would now like to discuss the issues you identified as
    being of particular interest to the subcommittee. I believe
    that increased use of evolutionary acquisition and spiral
    development is the key to reducing the acquisition cycle time.
        I have designated evolutionary acquisition and spiral
    development as our preferred strategy for fielding
    operationally useful and supportable military capabilities.
    They deliver advanced technology to the warfighter as rapidly
    as possible, with the explicit intent of delivering improved or
    updated capability in the future.
        Evolutionary acquisition success depends on the consistent
    and continuous definition of requirements; the maturation of
    technologies that lead to disciplined development; and
    production of systems that provide increasing capability to the
    right materiel solution. Achieving the optimum benefit from
    evolutionary acquisition and spiral development requires early
    and frequent collaboration between the user, the tester, and
    the developer.
        We have been implementing evolutionary acquisition and
    spiral development over the past years and have instituted it
    in some of our major programs. Several examples of our
    evolutionary programs that will transform the battlefield are
    the Joint Strike Fighter; the Navy's DD(X); unmanned aerial
    vehicles, such as Global Hawk; the new aircraft carrier, CVN-
    21; and the Army's Future Combat System.
        Proper pricing of programs is the predicate required for
    successful evolutionary acquisition and spiral development.
    Without it, program managers tend to exhaust their funding,
    scavenge funding from other sources, and slip their schedules.
    Without the proper pricing of programs, the advantages
    conferred by evolutionary acquisition and spiral development
    are eliminated before they can be brought to bear.
        The acquisition policy improvement initiatives we are
    pursuing internally will make a tremendous difference in the
    future. The first of these is the complete rewrite of the DOD
    5000 series of documents. Over the last year, we have been
    taking a hard look at our acquisition policies, and we
    determined last fall that the old policies were much too
    prescriptive.
        We concluded that they required revision to create an
    acquisition policy environment that fosters efficiency,
    flexibility, creativity, and innovation. Consequently, we
    cancelled those policies and issued interim guidance while we
    completed the final policies. I have also worked with the Joint
    Staff as they revised the policies concerning the requirements
    definition process.
        The flexibility that we have built into these streamlined
    policies reflect the confidence that I have in our highly
    talented workforce and in the dramatic improvements we have
    made to our acquisition education system.
        I do not want to leave you with the impression that we are
    done. I will continue to aggressively pursue the development
    and implementation of new policies that will ease the burdens
    on our managers while producing stable, affordable, and well-
    managed programs that serve the needs of our warfighters.
        The acquisition workforce initiatives must be focused, as
    President Bush stated in a speech to Government employees on
    July 10, 2002, ``We must be able to get the right people in the
    right place at the right time with the right pay. We need to be
    able to reward excellence and ensure accountability for
    individual performance.''
        The Acquisition Workforce Demonstration also helps us get
    the right people at the right place at the right time, through
    its flexible personnel practices, but it also adds the element
    of ``right pay'' by linking pay to contribution to mission. In
    the National Defense Authorization Act for Fiscal Year 2003,
    you provided us an extension of the Acquisition Workforce
    Demonstration project until 2012. We appreciate that support.
        I would emphasize one more element of the President's
    direction. We need to have the workforce with the right skills.
    The Defense Acquisition University (DAU) has been in the
    forefront of providing certification training for our
    acquisition, technology, and logistics (AT&L) workforce. But we
    have also recognized the need to move beyond certification
    training.
        DAU has embraced a new performance learning model for
    training; upgrading their certification courses to include
    critical thinking and case studies; adding web-based continuous
    learning; providing onsite support to our workforce from
    regional campuses; and offering web-based practitioner sharing
    of best practices and lessons learned.
        No discussion of the workforce would be complete without
    addressing workforce size. Since the mid-1990s, DOD has defined
    our AT&L workforce to include all people who are doing AT&L
    work, regardless of their organization. That workforce now
    numbers a little over 132,000 people, down from almost 146,000
    people we counted in 1998.
        Today, the workforce is managing over $1,700,000 per person
    in total acquisition dollars. That is up over 40 percent since
    1998. That means the productivity of the workforce has
    increased by 40 percent in 4 years.
        As we discussed, we are using human capital strategic
    planning and the acquisition workforce demonstration to get the
    right people at the right place at the right time with the
    right skills and the right pay. We are in direct competition
    with the private sector, seeking talent for many of the same
    skills in a shrinking demographic pool.
        While we are continuing to use these to examine our
    workforce needs of the future, we believe that our workforce is
    where it should be today to manage our workload. We will
    continue to make adjustments as they become necessary, but
    adjustments should be left to the Department, not enshrined in
    statute.
        This leads us to the last area you asked me to focus on:
    competitive sourcing. The Department must continue to do
    business better, faster, and at a reduced cost to maintain our
    focus on readiness. In order to focus on what we do best, our
    core mission activities, we must become more efficient in our
    support, or non-core services. When subjected to competition,
    our workforce, as dedicated as they are, as well as other
    service providers, can and do provide support services not only
    at a lower cost, but with greater speed and efficiency.
        The public/private competition process is not easy. In
    fact, it is often lengthy, complex, and frustrating for all
    involved. That very frustration is, in part, an outgrowth of
    the A-76 process, which has evolved over time to address the
    legitimate concerns for establishing a level playing field to
    protect the interests of all participants; Government
    employees, private sector competitors, Federal managers, and
    taxpayers.
        But the old A-76 process has become too lengthy,
    adversarial, and distrusted by all participants. The Office of
    Management and Budget has now issued a revised, or a proposed
    revision to the OMB Circular 76 to address recommendations made
    by the Commercial Activities Panel. We believe the proposed
    mission--or proposed revision offers promising and overdue
    improvements to the A-76 process, especially with respect to
    aligning it more closely with procedures already used under the
    Federal Acquisition Regulations.
        The proposed revisions were published in November for
    review, and we have supplied comments, as have all interested
    parties. We have continued our dialogue with OMB as they work
    to finalize the circular.
        I have talked about some of the things we could do on our
    own to transform this department, to eliminate waste and
    duplication, and to demonstrate greater respect for the
    taxpayers' dollars. In the past several years, we have made
    significant progress. However, in some cases we need your help
    to make needed changes.
        As the Secretary of Defense has said in his town hall
    meeting on March 6, ``To truly bring the Department of Defense
    into the 21st century, we need legislative help. We are now
    working with Congress to fashion proposals that will help
    transform the Department, how we move money, how we manage
    people, how we buy weapons. Final decisions on this package of
    legislative authorities have not been made. We are currently in
    discussions with the Office of Management and Budget about them
    and we are still in a consultation process trying to make sure
    that we get it right.''
        Thank you, Mr. Chairman, for the opportunity to testify
    before the subcommittee. I would be happy to answer any
    questions from you or any members. Thank you.
        Senator Ensign. Thank you, Secretary.
        [The prepared statement of Secretary Aldridge follows:]

          Prepared Statement by Hon. Edward C. ``Pete'' Aldridge, Jr.

        Chairman Ensign, Senator Akaka, and members of the subcommittee:
    thank you for inviting me here today to talk with you about acquisition
    policy and competitive sourcing as part of your review of the National
    Defense Authorization Request for Fiscal Year 2004. We have made great
    progress in addressing barriers to efficient acquisition, and we thank
    the subcommittee for its assistance in the creation of a professional
    acquisition corps, as well as for its support for pilot programs and
    other transaction authorities to speed the fielding of state-of-the-art
    technology and better equipment to our warfighters.
        Our current national security situation once again reveals a truth
    often forgotten during times of peace--that the most important duty of
    Government is the protection of its citizens. The support this
    subcommittee has demonstrated for our men and women in uniform honors
    that covenant. The successes of my office in our ongoing quest for
    excellence in defense acquisition are a measure of our attempts to
    honor the same covenant.
        For example, in the past year, we have been quite successful in
    pursuing the five goals I established at the beginning of this
    administration. These goals were directly derived from those
    established by Secretary Rumsfeld for the Department as a whole. These
    goals are: improve the credibility and effectiveness of the acquisition
    and logistics support process; revitalize the quality and morale of the
    AT&L workforce, improve the health of the defense industrial base;
    rationalize the weapon systems and infrastructure with our defense
    strategy; and initiate high leverage technologies to create warfighting
    capabilities and strategies of the future.
        Toward these goals, I've restructured the Defense Acquisition
    Board, and designated evolutionary acquisition and spiral development
    as the preferred approach. The opposite side of that coin must be the
    proper pricing of programs, which I have insisted upon. I have also
    approved a new process for the acquisition of services by DOD, mandated
    interoperability at program initiation, institutionalized the use of
    ``Technology Readiness Assessments'', consolidated and improved our
    acquisition education (``Electronic Distance Learning''), developed a
    comprehensive Future Logistics Enterprise, made changes to improve the
    health of the defense industrial base, instituted a new profit policy,
    increased progress payment schedules, developed a process for sharing
    of cost savings from excess facilities, eliminated inappropriate R&D
    cost sharing, encouraged non-traditional commercial companies to do
    business with DOD, accelerated the close-out of overaged contracts, and
    exploited the enormous potential of Advanced Concept Technology
    Demonstrations (ACTDs).
        Of course, we still have many things to accomplish. We need to
    further eliminate inappropriate ``management'' functions and marginal
    activities, continue to devolve functions that can be better
    accomplished elsewhere, further reduce acquisition cycle times,
    continue to minimize program risks, enhance program stability, continue
    to stress keeping costs under control, further establish a clear vision
    by which our logistics will better support our operational
    requirements, and accelerate the flow of technology to the warfighter
    with a vibrant and robust research program.
        I would now like to discuss in some detail the issues you
    identified as being of particular interest to you at this time.
        I believe that increased use of evolutionary acquisition and spiral
    development is the key to reducing the acquisition cycle time. I have
    designated Evolutionary Acquisition and spiral development as our
    preferred strategy for fielding operationally useful and supportable
    military capabilities. They deliver advanced technology to the
    warfighter as rapidly as possible--with the explicit intent of
    delivering improved or updated capability in the future. Evolutionary
    Acquisition success depends on the consistent and continuous definition
    of requirements, and the maturation of technologies that lead to
    disciplined development and production of systems that provide
    increasing capability to the right materiel solution. Achieving the
    optimum benefit from Evolutionary Acquisition and spiral development
    requires early and frequent collaboration between the user, tester, and
    developer. We have been implementing evolutionary acquisition and
    spiral development over the past year and have instituted it in some of
    our major programs. Several examples of our evolutionary programs that
    will transform the battlefield are:

             The Joint Strike Fighter (JSF) program will develop a
            family of strike aircraft, capitalizing on commonality and
            modularity to maximize affordability while addressing the needs
            of the Air Force, Navy, Marine Corps, and United Kingdom Royal
            Navy and Royal Air Force, in addition to those of numerous
            other international partners.
             The DD(X) program will continue development of a suite
            of technologies to be applied to the whole family of 21st
            century surface combatants, including: littoral combat ship,
            DD(X) destroyer, CGX cruiser, and maritime pre-positioning
            ship;
             Unmanned Aerial Vehicles, such as Global Hawk, where
            we continue to add new and upgraded capabilities;
             The new aircraft carrier, CVN-21, whose evolutionary
            strategy and innovations include an enhanced flight deck, a new
            nuclear power plant, allowance for future technologies, and
            reduced manning; and
             The Future Combat System (a system-of-systems of
            aerial and ground, manned and unmanned combat vehicles linked
            via a command and control network).

        Proper pricing of programs is the predicate required for successful
    evolutionary acquisition and spiral development. Without it, program
    managers tend to exhaust their funding, scavenge funding from other
    sources, and slip their schedules. Without the proper pricing of
    programs, the advantages conferred by evolutionary acquisition and
    spiral development are eliminated before they can be brought to bear.
        On a similar note, more realistic funding and costing are important
    to establishing and maintaining the credibility of our acquisition
    process. The fiscal year 2004 budget request continues the process we
    began in fiscal year 2003 of funding many of our major programs to more
    realistic cost estimates. I generally require the Services to meet the
    Department's full-funding guidelines, and to budget to what I believe
    are realistic and executable cost estimates, based on a variety of
    inputs including the OSD Cost Analysis Improvement Group (CAIG)
    independent cost estimate. For example, on the F/A-22 program we have
    essentially capped the total program cost. Recent cost increases in the
    Engineering and Manufacturing Development (EMD) phase have been funded
    from within the total program budget through tradeoffs between the pace
    of modernization efforts, the procurement rate, and total quantity. We
    reduced production in fiscal year 2004 by five aircraft while
    increasing the budget by $89 million and adjusted the overall
    production profile consistent with a ``buy to budget philosophy.''
    These were hard decisions made necessary by escalating costs within the
    program.
        The Acquisition Policy improvement initiatives we are pursuing
    internally will make a tremendous difference. The first of these is the
    complete rewrite of the DOD 5000 series of documents. Over the last
    year, we have been taking a hard look at our acquisition policies and
    we determined last fall that the old policies were much too
    prescriptive. We concluded that they required revision to create an
    acquisition policy environment that fosters efficiency, flexibility,
    creativity, and innovation. Consequently, we cancelled those policies
    and issued interim guidance while we completed the final policies. I
    have also worked with the Joint Staff as they revise the policies
    concerning the requirements definition process. Our goal is to
    harmonize these processes and reduce the friction associated with
    unrealistic requirements or processes previously geared to produce the
    ``100 percent solution'', when an 85 percent solution could be achieved
    much faster without significant risk to the customer--the warfighter.
        The final policies will shortly be published. They will take a long
    step toward achieving my objective by giving our senior acquisition
    decisionmakers much greater authority to tailor program strategies to
    fit the needs of their program; by placing greater emphasis on
    evolutionary acquisition as the preferred strategy for rapidly
    acquiring advanced warfighting capability; and by giving program
    managers the flexibility to be creative and efficient in the way they
    apply policy to their programs.
        The flexibility that we have built in to these streamlined policies
    reflects the confidence I have in our highly talented workforce and in
    the dramatic improvements we have made to our acquisition education
    system.
        I don't want to leave you with the impression that we are done. For
    as long as I hold this office, I will continue to aggressively pursue
    the development and implementation of new policies that will ease the
    burdens on our managers while producing stabile, affordable, and well
    managed programs that serve the needs of our warfighters.
        The Department recently started another major transformation
    initiative to improve the acquisition process by dramatically changing
    the Defense Federal Acquisition Regulation Supplement (DFARS) and the
    processes we use to create and maintain it. The DFARS is nearly 20
    years old and is about 1,400 pages long. The last major review of this
    regulation was done in the late 1980s. We've already determined that
    about 60 percent of the DFARS is driven by internal policies and
    procedures and not by statute or Federal policies. Our regulatory
    processes have been in place since the early 1950s and take far too
    long to implement needed changes to policy and guidance. As part of the
    Department's overall transformation goals, we are taking a hard, new
    look at the purpose and content of the DFARS.
        We chartered a task force under the direction of the Director of
    Defense Procurement and Acquisition Policy to identify changes to
    procurement policies, procedures, processes, and authorities and submit
    proposals to me by early May. The task force will also identify
    opportunities for legislative change for possible consideration by
    Congress in the fiscal year 2005 legislative cycle. We will remove or
    dramatically change parts of the regulation if we determined that doing
    so would improve and strengthen the efficiency and effectiveness of
    acquisition processes, reduce unnecessary costs and administrative
    burdens for Government and industry, and create an environment that
    fosters creative solutions to the unique challenges that face our
    acquisition workforce. Similarly we will retain those policies and
    processes that today, ensure adequate internal controls, implement our
    stewardship responsibilities to the taxpayer or maintain fundamental
    principles of integrity and fairness in our business relationships with
    industry.
        We are aggressively challenging the acquisition community,
    including industry and the general public, to participate by proposing
    opportunities for change. We have contacted a broad range of industry
    associations that are already considering how they can provide input to
    the task force efforts. There is significant potential benefit to
    reducing regulatory burdens. While many policies and procedures in the
    DFARS are sound, they may not always be the most effective approach for
    every situation and certainly do not require restrictive regulations in
    every case. Our main focus is to improve our processes and add value.
    However, we are on a clear path to reduce regulatory burdens under this
    initiative.
        The Acquisition Workforce initiatives must be focused, as President
    Bush stated in a speech to Government employees on July 10, 2002:

            ``We must be able to get the right people, in the right place,
            at the right time, with the right pay. We need to be able to
            reward excellence and ensure accountability for individual
            performance.''

        In order to get the right people in the right place at the right
    time, we have been conducting human capital strategic planning and are
    using the authorities in the Acquisition Workforce Demonstration.
        We began the human capital strategic planning effort 2 years ago,
    concentrating on developing a process and methodology. We are beginning
    to see the Services embrace that process and use it. So, this year we
    are concentrating on two key functional components of our workforce--
    systems engineers and logisticians. We are working with the functional
    leads for those two career fields to describe a desired future end
    state. We are also working with the workforce managers in each Service
    and the key defense agencies to look at current manpower, projected
    into the future, and how to move from where we are today to where we
    need to be. We are also identifying the actions we need to close those
    gaps. Human capital strategic planning is hard work, and we won't be
    where we want to be for another few years, but we've begun that process
    and it will pay dividends for us.
        The Acquisition Workforce Demonstration also helps us get the right
    people at the right place at the right time, through its flexible
    personnel practices, but it also adds the element of right pay by
    linking pay to contribution to mission. In the National Defense
    Authorization Act for Fiscal Year 2003, you provided us an extension of
    the Acquisition Workforce Demonstration project until 2012. We
    appreciate that support.
        I would emphasize one more element of the President's direction. We
    need to have a workforce with the right skills. The Defense Acquisition
    University (DAU) has been in the forefront of providing certification
    training to our AT&L workforce. But, we have also recognized the need
    to move beyond certification training. DAU has embraced a new
    performance learning model for training, upgrading their certification
    courses to include critical thinking and case studies, adding web-based
    continuous learning, providing on site support to our workforce from
    regional campuses, and offering web-based practitioner sharing of best
    practices and lessons learned. DAU has done so well implementing their
    performance learning model that they have been accredited by the
    Council on Occupational Education and recognized by their peers by
    winning a Corporate University Best in Class (CUBIC) award for the Best
    Over All Corporate University in 2002. DAU is now turning their
    attention to developing rapid training for emerging policies as a
    result of requests from the front-line. You have been supporters of
    DAU, and we thank you for that.
        No discussion of the workforce would be complete without addressing
    workforce size. Since the mid-1990s, DOD has defined our AT&L workforce
    to include all people who are doing AT&L work, regardless of their
    organization. That workforce now numbers a little over 132,000 people
    (as of September 30, 2002), down from the almost 146,000 people we
    counted in 1998. That workforce today is managing over $1,700,000 per
    person in total acquisition dollars, up over 40 percent from 1998. As
    we discussed, we are using human capital strategic planning and the
    acquisition workforce demonstration to get the right people at the
    right place at the right time with the right skills and the right pay.
    We are in direct competition with the private sector seeking talent for
    many of the same skills in a shrinking demographic pool. While we are
    continuing to use these to examine our workforce needs of the future,
    we believe that our workforce is where it should be today to manage our
    workload. We will continue to make adjustments as they become
    necessary, but adjustments should be left to the Department, not
    enshrined in statute. We can reduce the size of the support structure
    surrounding our AT&L workforce. We will do that by using the tools you
    have given us--BRAC and competitive sourcing. Providing relief from our
    statutory reporting burden and flexibility in our personnel process
    will help with that effort.
        This leads us to the last area you asked me to focus on:
    competitive sourcing. The Department must continue to do business
    better, faster, and at reduced cost to maintain our focus on readiness.
    In order to focus on what we do best--our core mission activities--we
    must become more efficient in our support, or non core, services. When
    subjected to competition, our workforce, as dedicated as they are, as
    well as other service providers, can and do provide support services at
    not only a lower cost, but with greater speed and efficiency.
        The Department of Defense has, by far, the most experience in the
    Federal Government in competing its support services using the public-
    private competition process defined by OMB Circular A-76. During the
    fiscal years 2001 through 2002, we completed over 330 A-76 competitions
    with about 42,000 positions, and we are scheduled to complete A-76
    competitions on an additional 15,000 positions by the end of fiscal
    year 2003. The 330 completed A-76 competitions have resulted in either
    a contract or in-house decision that will generate about $3.6 billion
    in savings (cost avoidance) over the life of the contracts, normally
    about 5 years. This demonstrates the power of competition. Our studies
    verify these savings are real and persist over the entire performance
    period.
        The public-private competitive process is not easy. In fact, it is
    often lengthy, complex, and frustrating for all involved. That very
    frustration is, in part, an outgrowth of the A-76 process, which has
    evolved over time to address legitimate concerns for establishing a
    level playing field to protect the interests of all participants:
    Government employees, private sector competitors, Federal managers, and
    taxpayers. But the old A-76 process has become too lengthy,
    adversarial, and distrusted by all participants.
        The OMB has now issued a proposed revision to OMB Circular A-76 to
    address recommendations made by the Commercial Activities Panel. We
    believe the proposed revision offers promising and overdue improvements
    to the A-76 process, especially with respect to aligning it more
    closely with procedures already used under the Federal Acquisition
    Regulations. The proposed revisions were published in November for
    review, and we have supplied comments as have all interested parties.
    We have continued our dialog with OMB as they work to finalize the
    circular.
        The Department has long been the leader in the Federal Government
    in competing commercial functions with the private sector under OMB
    Circular A-76 and fully supports the President's management agenda for
    competitive sourcing. OMB identified for DOD a long-term competition
    goal for 226,000 positions (50 percent of the fiscal year 2000 Federal
    Activities Inventory Reform (FAIR) inventory of 452,000 positions). DOD
    is on track to meet our interim 15 percent goal of completing A-76
    competitions on 67,800 positions by the end of fiscal year 2003. The
    remaining 35 percent will be met using both A-76 competitions and
    ``Alternatives to A-76''. While the Department continues to conduct A-
    76 competitions, we believe the Department and taxpayers are best
    served by employing a wide range of business tools designed to make our
    operations more efficient. The respective Military Departments are
    developing plans for submission with the fiscal year 2005 program to
    meet the President's long term management agenda targets.
        I've talked about some of the things we could do on our own to
    transform this department--to eliminate waste and duplication and to
    demonstrate greater respect for the taxpayer's dollars. In the past
    several years, we have made significant progress. We've reduced
    management headquarters staffs in the department by about 11 percent.
    We have streamlined the acquisition process by getting rid of hundreds
    of pages of prescriptive rules and regulations, and allowing program
    managers--we hope--to be more innovative, flexible, and creative. We
    have eliminated onerous regulations that make it impossible or
    unattractive to do business with the Department of Defense, and to
    expand authority for competitive outsourcing so we can get military
    personnel out of non-military tasks and back into the field. There is
    really no reason, for example, that the Department of Defense should be
    in the business, as we are, of making eyeglasses. The private sector, I
    suspect, makes them better and faster and possibly even cheaper. These
    types of things need to change.
        However, in some cases we need your help to make needed changes.
    This year we are proposing a series of changes to the acquisition
    statutes, some bolder than others. These proposals address several
    kinds of problems. Some address burdensome requirements, such as relief
    on contracting out expansion and contracting of support services for
    security and firefighting beyond that allowed in prior years. They also
    attempt to better clarify the Buy American definitions such that we
    don't cause excessive record keeping to gain diminimus compliance, or
    inadvertently benefit foreign suppliers. Finally, we're proposing
    several flexibility changes, starting with seeking management relief
    from moving funds within a program to provide management margin where
    it is needed. We recognize the significance of some of the changes
    requested, but again seek a dialog to make the business of defense more
    efficient.
        As the Secretary of Defense has said in his Town Hall meeting on
    March 6, ``To truly bring DOD into the 21st century we need legislative
    help. We are now working with Congress to fashion proposals that will
    help transform the department: how we move money, how we manage people,
    how we buy weapons. Final decisions on this package of legislative
    authorities have not been made. We are currently in discussions with
    the Office of Management and Budget about them and we are still in a
    consultation process trying to make sure that we get it right.''
        Thank you, Mr. Chairman for the opportunity to testify before the
    subcommittee. I would be happy to answer any questions you and the
    members of the subcommittee may have.

        Senator Ensign. Mr. Walker.

     STATEMENT OF HON. DAVID M. WALKER, COMPTROLLER GENERAL OF THE
         UNITED STATES, UNITED STATES GENERAL ACCOUNTING OFFICE

        Mr. Walker. Thank you, Mr. Chairman, Senators. It is a
    pleasure to be here. Since my entire statement has been entered
    into the record, I will summarize the key points for you.
        I would like to focus on two key aspects. The first is
    implementation of sound policies for making decisions, with
    emphasis on the Commercial Activities Panel, which I had the
    privilege to chair; and second, DOD's efforts to adopt best
    practices.
        I would like to acknowledge at the outset, Mr. Chairman,
    that this subcommittee has been instrumental in sponsoring
    GAO's work dealing with commercial best practices and other
    best practices. They are making a difference at DOD and
    elsewhere throughout the government.
        With regard to the Commercial Activities Panel, the
    National Defense Authorization Act for Fiscal Year 2001
    mandated that the Comptroller General create a panel of experts
    where certain specific parties had to be represented and others
    at the discretion of the Comptroller General, in order to
    address the issue of competitive sourcing. Given the complexity
    and controversy associated with this topic, I decided to
    personally chair the panel, and to comprise it with a group of
    highly qualified and empowered representatives from various
    groups in order to maximize the chance for success.
        The Commercial Activities Panel conducted a year-long
    study. We had 11 meetings and 3 public hearings, 2 of which
    were outside of Washington, DC, and therefore in the real
    world.
        The panel's staff conducted an extensive amount of
    additional research, review, and analysis in order to
    supplement these public hearings and considered other
    information that each panel member brought to our combined
    deliberations.
        It was clearly a very challenging, complex, and
    controversial assignment. As a result, we decided to adopt a
    super majority vote requirement in order for any findings or
    recommendations to be adopted by the panel. I am pleased to say
    that despite the significant differences in perspective and
    historical position with regard to competitive sourcing, the
    panel was able to unanimously agree on a set of 10 principles
    that should guide all sourcing decisions. These principles are
    outlined on page three of my testimony, and I will not repeat
    them at the present time.
        Furthermore, a super majority of the panel agreed on a
    number of other supplemental recommendations, the chief among
    them being a movement to a supplemental alternative for
    conducting these public/private competitions that would be
    based on the Federal Acquisition Regulation (FAR). That is, at
    least initially, a supplement to, not a substitute for, the
    historical A-76 process.
        While a minority of the panel did not support these
    supplemental recommendations, it is important to note, as our
    panel report makes clear, that they did support certain
    elements of the supplemental recommendations, but we voted on
    them as a package. Yet as I said, a super majority did support
    these supplemental recommendations. We made a good faith effort
    until the very end to try to seek consensus and to achieve as
    many votes as we could on the panel's report.
        I would say, from my standpoint, since I was heavily
    involved in both face-to-face as well as telephonic
    conversations to the very end with the panel members, that in
    the final analysis, I think it is a minor miracle that we
    achieved unanimous agreement on the 10 principles. I think it
    is a big plus that we achieved a super majority recommendation
    for these additional recommendations, but I think it is
    important to note that the differences of opinion in the final
    analysis on these supplemental recommendations were really few
    in number and philosophical in nature. Namely, the two primary
    differences were whether and to what extent to allow the new
    FAR type process; and second, how many times that Congress
    should be required to act in connection therewith.
        The minority felt Congress should authorize a specific
    pilot program before providing broad-based authority and,
    therefore, Congress would be required to act twice; whereas a
    super majority felt that it was important to design a program
    that could be implemented that would not require Congress to
    act twice. Obviously Congress reserves the right to act at any
    time if for some reason things are not going the way that it
    feels is appropriate.
        With regard to the administration's proposed changes,
    Angela Styles has taken charge of trying to adopt these
    recommendations administratively. Some of the panel's
    recommendations would, however, require legislative action. She
    has, I think, done an excellent job over a very short period of
    time of trying to come up with a good faith effort to adopt the
    panel's recommendations administratively to the extent that
    that can be done.
        In many ways, the administration's proposal is consistent
    with the panel's recommendations, but not in all ways. A couple
    of examples--I expressed concern as to the timeframes that are
    outlined in the proposed recommendations. They are very
    aggressive.
        While clearly I totally agree with Secretary Aldridge that
    we need to do things a lot quicker than we have in the past, I
    think we have to be realistic as to what is attainable. In my
    opinion, the timeframes that were outlined in the initial
    proposal are not realistic. I believe that if we are going to
    expedite this, it is critically important that there be an
    adequate amount of financial and technical resources available
    to hit these expedited timeframes in order to maximize the
    chance for success.
        Furthermore, we expressed concern that there was not
    sufficient guidance on calculating savings, and we also noted
    the fact that, under the recommendation, one could make a
    business case to outsource up to 50 full-time equivalents (FTE)
    without going through a public/private competition, whereas the
    recommendation of the panel was to limit direct conversions to
    10 FTEs.
        But, again, I think it is a positive, good faith step. They
    are considering the comments that we and others made, and I am
    looking forward to seeing what their final recommendations are.
        Last, just a few comments on the adoption of commercial
    best practices. As I mentioned, this subcommittee has been
    instrumental in requesting and sponsoring GAO's work dealing
    with commercial best practices. It is making a difference, not
    only within DOD, but also elsewhere throughout the Government.
        Our work historically shows that DOD's implementation of
    these have been uneven. I will commend Secretary Aldridge for
    his personal commitment at the top, along with Secretary
    Rumsfeld, to changing how the Department of Defense does
    business. They are clearly committed. They are clearly
    providing persistent attention and leadership in this area.
        I would also like to note for the record that there is no
    question that the Department has made great progress in
    adopting, in its policies, a vast majority of GAO's best
    practices recommendations. So in form, they have generally
    adopted commercial best practices.
        However, as we all know, whether it be in the Government,
    the private sector, or the not-for-profit sector, sometimes
    there can be a difference between form and substance. In other
    words, the policy could say ``X,'' but in practice, ``Y'' is
    done.
        We believe that more needs to be done in order to assure
    that, in fact, people are conducting their activities in
    accordance with policy. I know that Secretary Aldridge is
    committed to this concept as well. We met as recently as last
    week for over an hour to discuss a variety of issues, including
    some of these issues.
        The absence of following commercial best practices,
    especially with regard to the development of new technologies,
    results in extensive delays, higher costs, compromised
    performance, and a ripple effect, in that it affects our
    ability to improve readiness and to be able to fund other
    critical needs within the Department, whether they be
    acquisitions or otherwise.
        I think it is important to note that one key aspect has to
    do with the people element, which Secretary Aldridge mentioned.
    I would like to turn over now, if I can, and refresh the
    Senators' memory of something that I covered last year; that
    is, the typical number of persons who are responsible for a
    weapons system during an 11-year cycle.
        During 11 years, you typically will have four program
    managers, three presidents, seven secretaries of defense, five
    program executive officers, eight service acquisition
    executives--defense acquisition executives--and five chairmen
    of the Joint Chiefs of Staff. My point is: How can you assure
    effective responsibility and accountability for results with
    that type of turnover?

        Now, we know we are going to have turnover at the
    presidential level. We know we are going to have turnover at
    the secretarial level. That is part of our constitutional
    framework. But below that, where we are dealing with either
    uniformed or career officials, we need to provide more
    stability in order to assure that these individuals have both
    the responsibility and accountability for results over a
    reasonable period of time. This type of turnover is not going
    to be conducive towards trying to get the type of outcomes that
    we all desire. Obviously, additional training is going to be
    necessary as well.
        So in summary, I was pleased to chair the Commercial
    Activities Panel. I was pleased to serve along with Secretary
    Aldridge and Director Styles on the panel. I think we made a
    meaningful contribution. But the panel is a beginning, not an
    end. OMB has to implement it administratively. In the different
    departments and agencies, including DOD, implementation is key.
    Congress will have to act in order for certain of our
    recommendations to become the law of the land.
        Finally, I think that much progress has been made on
    adopting commercial best practices. I think more needs to be
    done, but I know that leadership at the Department is committed
    to doing everything that they can to try to make that happen.
        Thank you.
        Senator Ensign. Thank you.
        [The prepared statement of Mr. Walker follows:]

                     Prepared Statement by David M. Walker

        Chairman Ensign, Ranking Member Akaka, and members of the
    subcommittee: I am pleased to be here today to participate in the
    subcommittee's hearing on the acquisition and sourcing practices of the
    Department of Defense (DOD). Today's hearing occurs at a critical
    time--with DOD on the brink of operations in Iraq while seeking to
    respond to changes in security threats and still meeting the challenge
    of transforming the military.
        DOD spends an average of $150 billion annually on acquisitions that
    support these and other missions. Moreover, this investment is expected
    to grow considerably in the future as DOD works to keep legacy systems
    while investing in future capabilities such as unmanned aircraft,
    satellite networks, and information and communications systems.
        Such demands clearly require DOD to be as efficient and effective
    as possible in obtaining the systems, services, and equipment it needs
    to carry out its mission. But our reviews continue to show that DOD is
    not carrying out acquisitions cost-effectively and that the
    acquisitions themselves are not always achieving DOD's objectives.
    Pervasive problems persist regarding high-risk acquisition strategies
    and unrealistic cost, schedule, and performance estimates.
        My testimony today will focus on two aspects fundamental to
    successful acquisitions in DOD.

             The first is the implementation of sound policies for
            making sourcing decisions. Last April, the congressionally
            chartered Commercial Activities Panel, which I chaired, and on
            which I was privileged to serve along with my fellow panelists
            here today, Angela Styles and Pete Aldridge, made a number of
            recommendations for improving the policies and procedures
            governing the competitive sourcing of commercial activities. I
            welcome this opportunity to discuss the work of the panel and
            the progress to date in implementing its recommendations. These
            recommendations should lay a good foundation for improving
            sourcing decisions within DOD.
             The second is the adoption of best practices. DOD
            itself recognizes the need to ensure that it can match its
            needs to its resources and to follow a knowledge-based
            acquisition process. It is seeking to adopt practices that have
            proven successful in the commercial sector in the procurement
            of both systems and services. It also recognizes the need to
            reshape its acquisition workforce to meet growing demands. Yet
            it still faces a considerable challenge in putting these
            practices to work and instituting the cultural changes needed
            for their success. I would like to recognize the subcommittee's
            leadership in sponsoring the work on the best practices used by
            leading commercial firms in acquiring services, information
            technology, and major systems, and in working to get them
            accepted within DOD.

        Before I begin my testimony, I would like to note that the
    environment in which these changes must be made is a challenging one--
    not just for DOD, but for other agencies as well. It consists of new
    and changing security threats, the public's growing expectations for
    demonstrable results, demographic changes, rapidly evolving science and
    technology, and serious and growing fiscal constraints. All of these
    challenges demand that the Federal Government engage in a fundamental
    review of its mission and priorities and to consider the long-term
    impact of the decisions it makes today. The recommendations and
    practices I will be discussing today, however, should position DOD to
    meet these broader challenges since they focus on taking a more
    knowledge-based, and longer-term approach to acquisitions. They have
    proved successful in reducing costs.

                          IMPROVING SOURCING DECISIONS

        Government agencies increasingly are relying on services to
    accomplish their missions. The DOD now spends more than half its
    contracting dollars acquiring services, about $77 billion in fiscal
    year 2001, the latest year for which complete data are available. In
    addition, the Department reports that it has over 400,000 employees
    performing commercial-type services. Determining whether to obtain
    required services using Federal employees or through contracts with the
    private sector is an important economic and strategic decision. In
    fact, competitive sourcing is a key component of the President's
    management agenda. But historically, the process for determining
    whether the public or the private sector should perform services needed
    by Federal agencies--set forth in Office of Management and Budget (OMB)
    Circular A-76--has been difficult to implement. The impact such
    decisions have on the Federal workforce has been profound, and there
    have been concerns in both the public and private sectors concerning
    the fairness of the process and the extent to which there is a ``level
    playing field'' for conducting public-private competitions.
    Recommendations of the Commercial Activities Panel
        It was against this backdrop that Congress enacted Section 832 of
    the National Defense Authorization Act for Fiscal Year 2001, which
    mandated that I establish a panel of experts to study the process used
    by the Government to make sourcing decisions. Given the importance of
    this issue, I elected to chair this panel myself and ensured that it
    was comprised of highly qualified and empowered representatives from
    the groups specified in the act and other knowledgeable individuals.
        The Commercial Activities Panel conducted a year long study, and
    heard repeatedly about the importance of competition and its central
    role in fostering economy, efficiency, and continuous performance
    improvement. The panel held 11 meetings, including 3 public hearings in
    Washington, DC; Indianapolis, Indiana; and San Antonio, Texas. In these
    hearings, panelists heard first-hand both about the current process,
    primarily the cost comparison process conducted under Circular A-76, as
    well as alternatives to that process. Panel staff conducted an
    extensive amount of additional research, review, and analysis in order
    to supplement and evaluate the public testimony. Recognizing that our
    mission was a challenging, complex, and controversial one, the panel
    agreed that a superiority of two-thirds of the panel members would have
    to vote for any finding or proposal in order for it to be adopted by
    the panel. Importantly, the panel unanimously agreed upon a set of
    principles to guide all sourcing decisions:

        In addition, a super majority of the panel agreed on a package of
    additional recommendations. Chief among these was a recommendation that
    public-private competitions be conducted using the framework of the
    Federal Acquisition Regulation (FAR). Although a minority of the panel
    did not support the package of additional recommendations, some of
    these panelists indicated that they supported one or more elements of
    the package, such as the recommendation to encourage high-performing
    organizations throughout the Government. Importantly, there was a good
    faith effort to maximize agreement and minimize differences among
    panelists. In fact, changes were made even when it was clear that some
    panelists seeking changes were highly unlikely to vote for the
    supplemental package of recommendations. As a result, on the basis of
    panel meetings and my personal discussions with panel members at the
    end of our deliberative process, the major differences among panelists
    were few in number and philosophical in nature. Specifically,
    disagreement centered primarily on: (1) the recommendation related to
    the role of cost in the new FAR-type process; and (2) the number of
    times Congress should be required to act on the new integrated process,
    including whether Congress should specifically authorize a pilot
    program that tests that process for a specific time period.
    The Administration's Proposed Changes
        As part of the administration's efforts to implement the
    recommendations of the Commercial Activities Panel, OMB published
    proposed changes to Circular A-76 for public comment in November 2002.
    The administration is now considering the comments received as it
    finalizes the revisions to the circular.
        I provided comments on the proposal to the Director of OMB this
    past January. My assessment of the proposed revision concluded that in
    many ways it is consistent with the sourcing principles and
    recommendations adopted by the Commercial Activities Panel. In
    particular, the proposal stresses the use of competition in making
    sourcing decisions and, through reliance on procedures contained in the
    FAR, should result in a more transparent, expeditious, and consistently
    applied competitive process. The proposal should promote sourcing
    decisions that reflect the best overall value to the agencies, rather
    than just the lowest cost. Importantly, the proposed revision also
    should result in greater accountability for performance, regardless of
    the service provider selected. Of course, successful implementation
    will require that adequate resources and technical support be made
    available to Federal employees.
        There are several areas, however, where the proposed revisions to
    the circular are not consistent with the principles or recommendations
    of the Commercial Activities Panel. Specifically, these include the
    absence of a link between sourcing policy and agency missions,
    unnecessarily complicated source selection procedures, certain
    unrealistic timeframes, and insufficient guidance on calculating
    savings. I am confident that the administration is carefully
    considering these and other comments on the proposal, and look forward
    to reviewing the final product.
        One area of particular importance for all affected parties is how
    the Government's sourcing policies are implemented. In this regard, one
    of the panel's sourcing principles was that the Government should avoid
    arbitrary numerical or full-time equivalent (FTE) goals. This principle
    is based on the concept that the success of government programs should
    be measured by the results achieved in terms of providing value to the
    taxpayer, not the size of the in-house or contractor workforce.
    Although the proposed revision of the circular contains no numerical
    targets or goals for competitive sourcing, this has been a
    controversial area in the past. It has been our view that the
    administration needs to avoid arbitrary targets or quotas, or any goal
    that is not based on considered research and analysis. Congress
    recently put this principle into legislation; a provision in the recent
    consolidated appropriations legislation requires sourcing goals and
    targets to be based on considered research and sound analysis of past
    activities''.\1\
    ---------------------------------------------------------------------------
        \1\ Consolidated Appropriations Resolution, 2003, P.L. 108-7.
    ---------------------------------------------------------------------------
    DOD's Competitive Sourcing Agenda
        DOD has been at the forefront of Federal agencies in using the A-76
    process in recent years. After several years of limited use of Circular
    A-76, the Deputy Secretary of Defense gave renewed emphasis to the A-76
    program in August 1995 when he directed the services to make
    outsourcing of support activities a priority in an effort to reduce
    operating costs and free up funds to meet other priority needs. This
    effort was subsequently incorporated as a major component of the
    Defense Reform Initiative, and the program became known as competitive
    sourcing--in recognition of the fact that either the public or the
    private sector could win the competitions.
        Recently, DOD's A-76 study goals have increased because of the
    President's management agenda, which includes competitive sourcing as
    one of its five key government-wide initiatives.\2\ Under that program,
    OMB directed agencies to directly convert or complete A-76 competitions
    on 15 percent of their 2000 Federal Activities Inventory Reform (FAIR)
    Act inventories by the end of fiscal year 2003, with the ultimate goal
    of competing 50 percent of the FAIR Act positions. However, we
    understand that this broader goal may be subject to negotiations
    between DOD and OMB. DOD's ongoing A-76 efforts should permit it to
    meet OMB's goal for 2003. However, a greater challenge remains for DOD
    to complete studies on an additional 158,000 positions in the outyears
    (fiscal year 2004 through fiscal year 2009). This is double what DOD
    has been able to accomplish in the past over a similar timeframe. For
    example, DOD completed studies on 71,000 positions between fiscal years
    1997 and 2002, and found it increasingly difficult to identify study
    candidates over time. DOD hopes to be able to meet this larger goal
    through a combination of A-76 competitions and other alternatives.
    ---------------------------------------------------------------------------
        \2\ In addition to competitive sourcing, the other initiatives are
    strategic management of human capital, improved financial performance,
    expanded electronic government, and budget and performance integration.
    ---------------------------------------------------------------------------
        DOD's experience with competitive sourcing since 1996 contains
    important lessons for civilian agencies as they implement their own
    sourcing initiatives. As we have tracked DOD's progress in implementing
    its A-76 program since the mid- to late-1990s, we have identified a
    number of challenges and concerns with the program. They include: (1)
    the time required to complete the studies, (2) the resources required
    to conduct and implement the studies, (3) selecting and grouping
    positions to compete, and (4) developing and maintaining reliable
    estimates of projected savings expected from the competitions.

            THE DEPARTMENT CAN BENEFIT FROM ADOPTING BEST PRACTICES

        At the request of this subcommittee, GAO has conducted a number of
    engagements to identify best practices in the commercial sector for
    addressing the sourcing and acquisition challenges facing the
    Department. We believe the Department could significantly improve its
    performance in a number of areas by adopting some of the best practices
    we have identified.
    Information Technology Outsourcing
        For example, we reviewed the practices used by leading companies
    involved in outsourcing certain information technology (IT) functions.
    In November 2001, we issued a guide on outsourcing IT services that
    provides a generic framework of practices from leading commercial
    organizations that can improve purchasing decisions and manage the
    resulting government/provider relationship.\3\
    ---------------------------------------------------------------------------
        \3\ U.S. General Accounting Office, Information Technology; Leading
    Commercial Practices for Outsourcing of Services, GA0-02-214
    (Washington, DC: Nov. 30, 2001).
    ---------------------------------------------------------------------------
        At the further request of this subcommittee, we have been reviewing
    the extent to which selected DOD projects are using leading commercial
    practices laid out in our November 2001 guide. We have shared our draft
    report with this subcommittee, which is currently with DOD for comment.
    In brief, we found that the five projects in our review were generally
    implementing these practices. This is a positive sign because although
    implementing these practices does not guarantee the success of an
    outsourcing project, our November 2001 study reflected a consensus view
    that these practices were the most critical to success.\4\ Accordingly,
    application of these practices increases the probability of a
    successful outsourcing project.
    ---------------------------------------------------------------------------
        \4\ This consensus view was based on interviews with managers in
    leading commercial organizations, discussions with academic and
    professional authorities, and extensive research on IT acquisition
    practices.
    ---------------------------------------------------------------------------
    Acquiring Information Technology Systems
        Since the 1990s, DOD has spent billions of dollars each year
    attempting to leverage the vast power of modern technology to replace
    outdated ways of doing business. However, the Department has had
    limited success in modernizing its information technology environment,
    and we have designated DOD's systems modernization as high risk since
    1995.\5\ A major reason for this designation is DOD's inconsistent use
    of best practices for acquiring IT systems.
    ---------------------------------------------------------------------------
        \5\ See U.S. General Accounting Office, High-Risk Series: An Update
    GAO-03-119 (Washington, DC: January 2003) for our most recent high-risk
    report.
    ---------------------------------------------------------------------------
        We have categorized IT system acquisition practices into three
    groups and apply leading practices, as appropriate, in our evaluations
    of systems acquisitions within DOD. A brief description of the three
    categories and what we have found at DOD follows:
        Aquisition of systems in accordance with mature processes. Our work
    shows that DOD's implementation of mature acquisition management
    processes is uneven, as are its proactive efforts to improve these
    processes. For example, our review of the Defense Logistics Agency's
    system acquisition processes showed that one major system was following
    mature processes, while another was not.\6\ We made recommendations to
    correct these weaknesses, and DOD has generally concurred.
    ---------------------------------------------------------------------------
        \6\ U.S. General Accounting Office, Information Technology:
    Inconsistent Software Acquisition Processes at the Defense Logistics
    Agency Increase Project Risks (GAO-O2-9, Jan. 10, 2002).
    ---------------------------------------------------------------------------
        There are also published best practices for acquiring systems that
    are built from commercial components. Generally, these practices
    advocate an acquisition approach that is not driven primarily by system
    requirements, but rather an approach that proactively manages the
    tradeoff among various acquisition issues, such as the organization's
    system requirements and the commercially available system components.
    Accordingly, we have ongoing and planned work at a number of Federal
    agencies, including DOD, which includes determining whether these
    practices are being employed.
        Use of an enterprise architecture to guide and constrain system
    acquisitions. Effectively managing a large and complex endeavor
    requires, among other things, a well-defined and enforced blueprint for
    operational and other technological change, commonly referred to as an
    enterprise architecture. In May 2001, we reported that DOD had neither
    an enterprise architecture for its financial and financial-related
    business operations, nor the management structure, processes, and
    controls in place to effectively develop and implement one.\7\ In
    addition, the National Defense Authorization Act for Fiscal Year 2003
    required DOD to develop such an architecture by May 1, 2003, along with
    a transition plan for its implementation. At the request of this
    subcommittee, we reported last month that DOD had taken a number of
    steps to address this issue, such as establishing a program office
    responsible for managing the enterprise architecture effort.\8\
    However, the Department had yet to implement some of the
    recommendations from our May 2001 report and commercial leading
    practices for developing and implementing architectures. Accordingly,
    we made additional recommendations related to DOD's architecture
    effort, with which DOD concurred.
    ---------------------------------------------------------------------------
        \7\ U.S. General Accounting Office, Information Technology:
    Architecture Needed to Guide Modernization of DOD's Financial
    Operations, GAO-01-525 (Washington, DC: May 17, 2001).
        \8\ U.S. General Accounting Office, DOD Business Systems
    Modernization: Improvements to Enterprise Architecture Development and
    Implementation Efforts Needed, GAO-03-458 (Washington, DC: Feb. 28,
    2003).
    ---------------------------------------------------------------------------
        Acquiring systems in a series of economically justified incremental
    builds. Both Federal law and guidance advocate the use of incremental
    investment management \9\ when acquiring or developing large
    systems.\10\ Using these system investment practices helps to prevent
    discovering too late that a given acquisition/development effort is not
    cost beneficial. We have previously reported that certain DOD system
    acquisitions were not utilizing incremental management best practices
    or were just beginning to do so. For example, in July 2001 we reported
    that although DOD had divided its multi-year, billion-dollar Standard
    Procurement System into a series of incremental releases, it had not
    treated each of these increments as a separate investment decision.\11\
    ---------------------------------------------------------------------------
        \9\ Incremental management involves three fundamental components:
    (1) acquiring a large system in a series of smaller increments; (2)
    individually justifying investment in each separate increment on the
    basis of cost, benefits, and risks; and (3) monitoring actual benefits
    achieved and costs incurred on ongoing increments and applying lessons
    learned to future increments.
        \10\ Clinger-Cohen Act of 1996, P.L. 104-106, and Office of
    Management and Budget Circular A-130 (Nov. 30, 2000).
        \11\ U.S. General Accounting Office, DOD Systems Modernization:
    Continued Investment in Standard Procurement System Has Not Been
    Justified; GAO-01-682 (Washington, DC: July 31, 2001).
    ---------------------------------------------------------------------------
    Acquiring Services
        With respect to services acquisitions generally, we found that the
    experiences of leading private-sector companies to reengineer their
    approach to acquiring services offer DOD both valuable insights and a
    general framework that could serve to guide DOD's efforts. In January
    2002, we reported that our work at six leading companies found that
    each had reengineered its approach to acquiring services to stay
    competitive, reduce costs, and improve service levels. These changes
    generally began with a corporate decision to pursue a strategic
    approach to acquiring services. Taking a strategic approach involves a
    range of activities from developing a better picture of what a company
    was spending on services to taking an enterprise-wide approach to
    procuring services and developing new ways of doing business. Pursuing
    such an approach clearly paid off, as the companies found that they
    could save millions of dollars and improve the quality of services
    received.
        DOD already has in place certain elements critical to taking a
    strategic approach, such as the commitment by senior DOD leadership to
    improve practices for acquiring services and to adopt best commercial
    practices. Moreover, the fiscal year 2002 national defense
    authorization legislation directs DOD to improve its management and
    oversight of services acquisitions. To implement these requirements,
    DOD issued new policy in May 2002 that was intended to elevate major
    purchases of services to the same level of importance as purchases of
    major defense systems. The Department still faces a long journey,
    however, as it begins to take on the more difficult tasks of developing
    a reliable and accurate picture of service spending across DOD.
    Major Weapon Systems Acquisitions
        DOD relies heavily on its major weapons acquisitions to modernize
    its forces and expects to spend on average about $150 billion annually
    over the next 5 years for the research, development, and procurement of
    weapon systems. However, its history of acquiring major weapon systems
    all too frequently has been characterized by poor cost, schedule, and
    performance outcomes that have delayed delivery of new capabilities to
    the warfighter and created significant opportunity costs that have
    slowed the Department's overall modernization efforts.
        Because of the pressures in DOD's acquisition environment to get
    new acquisition programs approved and funded, many programs are
    initiated with requirements that make a proposed weapon system stand
    out from others. The systems engineering necessary to identify gaps
    between requirements and resources is often not accomplished until
    after the program is started. In these cases, performance requirements
    can outstrip the resources--technologies, funding, time, and
    expertise--available to meet them. This creates a need for immature,
    fledgling technologies that are difficult to develop and usually
    results in unstable and incomplete a product design for which there is
    insufficient time to mature before starting production. Sufficient time
    or effort may not be available during product development to understand
    the product's critical characteristics or to bring key manufacturing
    processes in control to meet cost, schedule, and quality targets. In
    addition, there is not enough emphasis on building in reliability and
    reducing total ownership cost.
        Typically, the results of this process are weapons that have
    superior performance, but that create longer-term collateral
    consequences such as:

             Higher acquisition costs that reduce buying power and
            force tradeoffs in other acquisitions;
             Increased costs to operate and support weapon systems
            at required readiness rates;
             Significant delays in getting weapon systems to
            warfighters;
             Reduced quantities;
             Early obsolescence; and
             A diminishing supply base for critical parts and
            components.

        DOD understands that it must get better outcomes from its
    acquisition process if it is to modernize its forces quickly within
    projected resources. To that end, it is currently revising acquisition
    policies to emphasize an evolutionary, knowledge-based process that
    incorporates best practices proven by successful companies in
    developing complex new products. We believe the policy changes, while
    not yet finalized, promise to be a good first step in changing DOD's
    acquisition outcomes. If implemented properly, programs would face less
    pressure to deliver all of the ultimate capabilities of a weapon system
    in one ``big bang.'' The new policy has many positive features. For
    example, it:

             Separates technology development, which is
            unpredictable by nature, from product development, which
            requires major investments and is delivery-oriented;
             Articulates the concept of a knowledge-based approach,
            providing guidelines for achieving knowledge of technologies
            prior to beginning product development, stability of the
            system's design by about midway through product development,
            and control over critical manufacturing processes for building
            a weapon system prior to a production decision;
             Places a greater emphasis on evolutionary product
            development, which provides a more manageable environment for
            achieving knowledge; and
             Recognizes the benefits of best practices for product
            development from leading companies in capturing knowledge at
            critical junctures during product development.

        While these policy changes represent tangible leadership action for
    getting better weapon system acquisition outcomes, unless the policies
    are implemented through decisions on individual programs, outcomes are
    not likely to change. Both form and substance are essential to getting
    desired outcomes. At a tactical level, we believe the policies could be
    made more explicit in several areas to facilitate such decisions.
    First, the regulations provide little or no controls at key decision
    points of an acquisition program that force a program manager to report
    progress against knowledge-based metrics. Second, the new regulations,
    once approved, may be too general and may no longer provide mandatory
    procedures. Third, the new regulations may not provide adequate
    accountability because they may not require knowledge-based
    deliverables containing evidence of knowledge at key decision points.
        At a strategic level, some cultural changes will be necessary to
    translate policy into action. At the very top level, this means DOD
    leadership will have to take control of the investment dollars and to
    say ``no'' in some circumstances, if programs are inappropriately
    deviating from sound acquisition policy. In my opinion, programs should
    follow a knowledge-based acquisition policy--one that embraces best
    practices--unless there is a clear and compelling national security
    reason not to. Other cultural changes instrumental to implementing
    change include:

             Keeping key people in place long enough that they can
            affect decisions and be held accountable;
             Providing program offices with the skilled people
            needed to craft acquisition approaches that implement policy
            and to effectively oversee the execution of programs by
            contractors;
             Realigning responsibilities and funding between
            science and technology organizations and acquisition
            organizations to enable the separation of technology
            development from product development;
             Bringing discipline to the requirements-setting
            process by demanding a match between requirements and
            resources;
             Requiring readiness and operating cost as key
            performance parameters prior to beginning an acquisition; and
             Demanding reliability testing early in design.

        Ultimately, the success of the new acquisition policy will be seen
    in individual program and resource decisions. Programs that are
    implementing knowledge-based policies in their acquisition approaches
    should be supported and resourced, assuming they are still critical to
    national needs. Conversely, if programs that repeat the approaches of
    the past are approved and funded, past policies--and their outcomes--
    will be reinforced.
    Acquisition Workforce Challenges
        To effectively implement best practices and properly manage the
    goods and services it purchases each year requires that DOD have the
    right skills and capabilities in its acquisition workforce. This is a
    challenge given decreased staffing levels, increased workloads, and the
    need for new skill sets. Procurement reforms and the ongoing
    technological revolution have placed unprecedented demands on the
    workforce, and contracting personnel are now expected to have a much
    greater knowledge of market conditions, industry trends, and technical
    details of the commodities and services they procure.
        In response to these challenges, DOD has made progress in laying a
    foundation for reshaping its acquisition workforce. The agency has
    initiated a substantial long-term strategic planning effort to identify
    the competencies needed for the future and to address what reshaping of
    the workforce will be needed to achieve the desired mix. DOD is
    continuing with an effort to test various human capital innovations and
    has begun making significant changes to its acquisition workforce-
    training program. Part of this long-term effort will involve making a
    cultural shift as well as developing better data to manage risk by
    spotlighting areas for attention before crises develop and to identify
    opportunities for improving results.

                                   CONCLUSION

        The continuing war on terrorism, regional instability, demographic
    and technological changes, as well as the Federal Government's short-
    and long-term budget pressures have created a challenging environment
    for the Department of Defense. It faces a number of difficult missions
    that will put its strategies, personnel, and resources under enormous
    strains. Consequently, it is important for the Department to adopt
    business practices that will enable it to acquire the systems and
    services to allow it to operate effectively in this environment. Doing
    so will help ensure that its resources are used in the most efficient
    manner possible. I am confident that the leadership of the Department
    is committed to that objective. Success over the long term will depend
    on the leadership sustaining its commitment to improving business
    practices through a strategic, integrated, and DOD-wide approach to
    ensure that these efforts achieve their intended results.
        Mr. Chairman, this concludes my statement. I will be pleased to
    respond to questions from the subcommittee.

        Senator Ensign. Ms. Styles.

       STATEMENT OF HON. ANGELA STYLES, ADMINISTRATOR, OFFICE OF
                       FEDERAL PROCUREMENT POLICY

        Ms. Styles. Mr. Chairman, Senator Akaka, and members of the
    subcommittee, I am pleased to have this opportunity to update
    you on efforts of this administration to address many
    procurement challenges.
        While our efforts are government-wide in nature, the
    decisions are often shaped by the critical mission needs of the
    Department of Defense. You will find our activities guided by
    two principles: Making the Federal marketplace more
    competitive, and preserving acquisition flexibilities through
    more accountable and strategic management.
        With these principles in mind, there are several important
    initiatives we are pursuing: Creating a viable infrastructure
    for public/private competition; strengthening the use of
    competition in our everyday acquisitions, particularly for
    services; expanding our small business supplier base; reducing
    transaction costs and increasing transparency through
    technology advances; and improving purchase card practices.
        I will briefly discuss a few of these efforts, but the
    focus will be on competitive sourcing. Competitive sourcing--
    the use of competition for selecting sources to perform
    government activities that are commercial in nature--is a key
    component of the President's management agenda and this
    administration's vision for a market-based government.
        After nearly 2 years of hard work, agencies are, for the
    first time, institutionalizing public/private competition. DOD
    has the largest and most experienced infrastructure in the
    Federal Government for conducting competitive sourcing. The
    Center for Naval Analysis, the GAO, and other evaluators have
    reviewed the results of DOD's competitions and found two
    important things. The net long-term savings are significant and
    permanent; and few Federal employees are worse off after
    competition.
        DOD has committed to reviewing half of its 452,000
    commercial positions. DOD estimates that announcements of new
    A-76 competitions will be around 10,000 positions in fiscal
    year 2003 and at least 10,000 in fiscal year 2004.
        In spite of DOD's many successes, the process has faced
    significant and valid criticisms. As a result, last November,
    we proposed major revisions to OMB Circular A-76.
        I want to highlight a few of the points in the revisions.
    We want to help agencies easily distinguish inherently
    governmental from commercial activities. We have made a more
    concise definition of what is an inherently governmental
    activity.
        We want to integrate the processes for private/private
    competition on the one hand with public/private competition on
    the other hand, so we have one force, one workforce that
    understands competition, and competition whether it is private/
    private or public/private.
        We want to fully accommodate a program's need for best
    value and innovation, while still requiring cost to remain a
    factor in every competition. This is a misunderstood point. In
    every single competition, cost will continue to be a factor.
    But very importantly, cost will be a deciding factor in most
    public/private competitions.
        We also want to ensure that sourcing deadlines are made in
    real time; and, yes, we are going to impose some very
    aggressive deadlines. It is unacceptable from our perspective
    for the private sector or public sector employees to be
    committed to a public/private competition for an average of 3
    years. Sometimes, these exceed 3 years, going into 4 years for
    a public/private competition.
        We have been working aggressively to consider the more than
    700 comments we have received. In analyzing these public
    comments, we have been keeping an especially watchful eye out
    for areas where processes may cause results that fall short of
    expectations, instances where the processes unnecessarily
    constrains management's ability to fully consider and compare
    the options.
        In this regard, a number of commenters have pointed out
    that administrative convenience may drive agencies to pursue
    direct conversions even where in-house providers may be the
    better and the cheaper alternative.
        Senator Akaka pointed out that these changes must promote
    trust. As we look at these comments that we have received, we
    are being very careful to take into consideration how we can
    create a fair process that is easy to understand, and we
    realize that we must promote trust in what we write in the
    circular as well as how we implement this.
        I would also like to add that we are adding several points
    on the appropriate allocation of resources for the public
    sector entity to be able to compete and to be able to provide a
    competitive bid in this area.
        Public/private competition will not work and we will not
    achieve the best value for the taxpayer unless we have a
    competitive process that allows the public sector to provide
    the best bid that they possibly can.
        The theme of competition continues through a host of other
    acquisition-related initiatives including one to strengthen the
    use of competition on multiple award contracts, such as the
    Multiple Award Schedules; and also initiatives to create a
    level playing field between Federal Prison Industries and the
    private sector, thereby increasing opportunities for small
    businesses and giving agencies greater flexibility to obtain
    best value when spending the taxpayers' money.
        In conclusion, this administration remains committed to
    promoting access to the Federal marketplace and ensuring
    competition is effectively used at every level of purchasing
    throughout the Federal Government. This will enhance
    opportunities for all businesses, small and large, spur
    creativity in the marketplace, and provide the framework for
    the delivery of better value for our agencies, but ultimately
    for our taxpayers. There is more to be done, but I am confident
    that these steps are laying the foundation for an acquisition
    process that is considerably more market-driven and results-
    oriented than the one we inherited.
        This concludes my prepared comments, but I am happy to
    answer any questions.
        [The prepared statement of Ms. Styles follows:]

                     Prepared Statement by Angela B. Styles

        Chairman Ensign, Senator Akaka, and members of the subcommittee, I
    am pleased to have this opportunity to update you on efforts the Office
    of Federal Procurement Policy (OFPP) is taking to address the
    challenges facing our procurement community. My comments, reflective of
    OFPP's activities, are Government-wide in scope, but are shaped in many
    important ways by the critical mission needs of the DOD.
        Broadly speaking, the majority of OFPP's current activities are
    intended to: (1) make the Federal marketplace more competitive in order
    to lower costs for taxpayers and improve program performance to
    citizens, and (2) preserve acquisition flexibilities through more
    accountable and strategic management. As you know from prior
    statements, my primary mission since assuming the responsibilities of
    Administrator of OFPP in May 2001 has been to renew our acquisition
    workforce's focus on the fundamental building blocks of procurement:
    sound planning, consistent use of competition--applied in a fair,
    transparent, and ethical manner--well structured contracts, and solid
    contract administration. While these principles are hardly strangers to
    our workforce, we often find ourselves struggling to apply them
    consistently in a world of rapidly changing needs and ever-evolving
    technologies. My hope is that clearer emphasis on acquisition basics
    will better position us as a community to ensure that taxpayer
    resources are managed well and used more effectively.
        There are several important initiatives OFPP is pursuing, in close
    coordination with other offices within OMB, to pave the way to a
    performance-based environment--in terms of both fostering effective use
    of competition and instilling greater accountability for our actions.
    These initiatives include:

             creating a viable infrastructure for public-private
            competition;
             strengthening the use of competition in our everyday
            acquisitions for services;
             expanding the small business supplier base;
             reducing transaction costs and increasing transparency
            through technological advances; and
             improving purchase card practices.

        Let me now briefly discuss each of these efforts with you.
        creating a viable infrastructure for public-private competition
        As you know well, competitive sourcing--i.e., using competition for
    selecting sources to perform Government activities that are commercial
    in nature--is a key component of the President's management agenda and
    the administration's vision for a market-based government. After nearly
    2 years of hard work with the agencies, I am pleased to see a large
    number of our Federal managers accepting the difficult challenge of
    building an infrastructure to identify commercial activities, planning
    for their performance, and, for the first time, institutionalizing
    public-private competition to address those needs.
        While creation of an infrastructure is just one step, it is a
    critical step. Many of the processes relied upon until now are rooted
    in long-outdated management ideals that have permitted vast numbers of
    our commercial activities to remain insulated from competition. As our
    mindset transforms from one that resists competition to one that
    embraces the value competition generates, agencies should find
    themselves well-positioned to achieve a mix of Government and contract
    support that is optimal for mission success.
        Progress is proceeding according to plans at many of the agencies
    we are tracking in the budget (i.e., the ``scorecard agencies''). We
    are starting to see real management advances in a few instances. DOD
    has the largest and most experienced infrastructure in the Federal
    Government for conducting competitive sourcing, which is governed by
    OMB Circular A-76. The Center for Naval Analysis and other evaluators
    have reviewed the results of DOD's competitions and found that: (1) the
    net long-term savings are significant and permanent; and (2) few
    Federal employees are worse off after competition, and many are hired
    by contractors who win competitions.
        DOD is increasing the ``tooth-to-tail'' ratio through competition
    of military members and civilians in commercial activities to less
    support-oriented activities, particularly warfighting. DOD is committed
    to reviewing half of the 452,000 positions in commercially available
    activities. DOD estimates that announcement of new A-76 competitions
    will be around 10,000 positions in fiscal year 2003 and at least 10,000
    in fiscal year 2004. A major DOD review of A-76 and other competitions
    by each Military Service and Defense Agency is scheduled this year so
    that the President's fiscal year 2005 budget can present how DOD will
    achieve this Presidential Management Initiative.
        Action is occurring at other agencies as well. For example, the
    Department of Veterans Affairs is opening up the activities of 52,000
    employees (primarily ancillary support functions) to competition over
    the next 5 years--initiating studies of 25,000 of them in 2003 alone.
    At the Federal Aviation Administration, 2,700 Federal flight services
    personnel are participating in a public-private competition. These
    Federal personnel currently provide weather reports to private pilots,
    a function that is currently outsourced by every major airline.
    Similarly, the Department of Energy has started public-private
    competition for a variety of functions (such as computer personnel,
    graphic designers, and financial services personnel) and locations
    nationwide.
        Despite progress, overall use of competitive sourcing remains weak.
    This is not surprising when considering that the current processes
    governing sourcing decisions are time consuming and unnecessarily
    complicated. Therefore, OMB is committed to significantly improving how
    agencies determine whether commercial activities will be performed by
    public or private sources.
        Last November, OMB proposed major revisions to OMB Circular A-76.
    The proposed changes would provide for processes that are more
    manageable, more competitive, more even-handed, and more results-
    driven. These objectives would be accomplished by:

             helping agencies more easily distinguish between
            commercial and inherently governmental activities by offering a
            more concise definition of ``inherently governmental'' and
            rescinding the more complex description currently relied on;
             making processes simpler and easier to understand,
            including appropriate use of certain well-tested practices in
            the Federal Acquisition Regulation (FAR);
             more fully accommodating a program's need for best
            value and innovation, while still requiring cost to remain a
            factor in all competitions and the deciding factor in many
            competitions;
             incorporating appropriate mechanisms of transparency,
            fairness, and integrity (e.g., by separating the team that is
            formed to write the solicitation from the one established to
            develop the agency tender) so that competitions occur on a
            level playing field that results in performance by the best
            source;
             ensuring that sourcing decisions are made in real time
            by imposing deadlines that would reduce the cycle time from the
            current delay-plagued 3 years (on average) to 1 year; and
             improving post-competition oversight so that selected
            sources, whether from the public or private sectors, make good
            on their promises to the taxpayer.

        With regard to the first element, in particular, which involves
    distinguishing the universe of activities that may be eligible for
    competition from those that would not, I would emphasize that
    competitive sourcing is not, and has never been, about outsourcing
    inherently governmental activities. We are focused strictly on
    commercial functions, whether they be specialized functions or more
    routine functions such as hanging dry wall or mowing the lawn. I am
    puzzled to hear statements that the administration is planning to
    contract functions intimately related to the public interest, such as
    determinations on the content and application of regulations. These
    types of functions must be performed by public employees and we will
    continue to depend on our able workforce to execute these important
    responsibilities on behalf of our citizenry. This notwithstanding, we
    will still require agencies to identify their inherently governmental
    functions to ensure activities are properly characterized. By doing so,
    commercial functions that should be considered for competition will not
    remain insulated from the savings that a fair competition can yield. At
    the same time, we will not force agencies to pursue competitive
    sourcing for competition's sake. We appreciate that each agency has a
    unique mission and workforce mix and will continue to work with
    agencies in tailoring competition plans accordingly.
        We have been working aggressively to consider the more than 700
    comments that were submitted on the proposed rule. These comments are
    posted on the Internet at http://www.omb.gov and a discussion of their
    general disposition will be provided in the preamble to the final
    circular.
        In analyzing the public comments, we have been keeping an
    especially watchful eye out for areas where processes may cause results
    that fall short of expectations--e.g., instances where the process
    unnecessarily constrains management's ability to fully consider and
    compare options. In this regard, a number of commenters pointed out
    that administrative convenience may drive agencies to pursue direct
    conversions even where in-house providers may be the better
    alternative. We are examining the viability and fairness of a process
    that would allow for a highly simplified and streamlined consideration
    of public and private sector sources.
        We are aiming to complete our review of public comments shortly so
    that agencies may soon take advantage of our transformed processes.
    While final decisions have not yet been made, you should anticipate
    that the major elements I described a moment ago will be incorporated,
    in appropriate fashion, in the final revisions to the circular.
        Of course, our commitment doesn't end with publication of the
    circular. This is just a beginning. We will continue to work with
    agencies in crafting appropriate competition plans. Equally important,
    we will track results through our scorecard so that successes are
    promoted and shortfalls corrected.

      STRENGTHENING AND IMPROVING THE USE OF COMPETITION IN OUR EVERYDAY
                           ACQUISITIONS FOR SERVICES

        As agencies look to the marketplace for ``managed solutions,'' we
    must continually strive to make sure that the vehicles and strategies
    we use for these purposes are shaped to achieve good results. For this
    reason, we have been paying increasing attention to the popular
    Multiple Award Schedules (MAS) program and looking for ways to
    encourage greater use of performance-based services acquisitions.
        MAS Purchases. OFPP recognizes that agencies have been inconsistent
    in adhering to certain basic acquisition requirements in their MAS
    purchases, such as in their use of statements of work, pricing of
    orders, application of competition, and documentation of award
    decisions. The issuance last fall of a final rule in the DOD FAR
    Supplement (DFARS) implementing section 803 of the National Defense
    Authorization Act for Fiscal Year 2002 will significantly assist in
    strengthening the Department's use of competition in its schedule
    purchases for services over $100,000. But additional steps must be
    taken. I, and the other members of the FAR Council, seek to
    significantly improve the application of acquisition basics on MAS
    purchases for services and reinforce sound MAS practices generally at
    all agencies.
        Within the next several weeks, I anticipate issuance of a proposed
    FAR that will:

             add new coverage on use of statements of work when
            acquiring services from the MAS;
             reinforce documentation requirements generally and
            address the documentation of sole-source orders and price-
            reasonableness determinations in particular; and
             clarify and strengthen the procedures for establishing
            blanket purchase agreements against the MAS.

        In developing these changes, we gave careful consideration to the
    findings and recommendations made by the General Accounting Office as
    part of its study of DOD's large MAS buys for services.
        Performance-based services acquisitions (PBSA). OFPP is taking
    steps to reinvigorate the use of PBSA and capitalize on the
    competitiveness and innovativeness that is generated when contractors
    are given the freedom to figure out the best solution to meet the
    Government's needs. Specifically, an OFPP-sponsored inter-agency
    working group has developed a set of recommendations for making PBSA
    policies and procedures more flexible and easier to apply. The working
    group's recommendations will form the basis for proposed amendments to
    the FAR's coverage on service contracting. The recommendations also
    will be used to develop new practical guidance, such as sample
    performance-based statements of work that OFPP plans to post on the
    Internet for easy access and application to appropriate agency services
    acquisitions. This new guidance may replace OFPP's current best
    practices guide, which was last updated in 1998.
        OFPP intends to review data collected by the Federal Procurement
    Data System (FPDS) to measure PBSA usage. FPDS began collecting data in
    fiscal year 2001 on whether service contracts are performance-based.
    This measure will not, by itself, indicate the effectiveness of PBSA.
    However, the measure will serve as a useful gauge of whether agencies
    are making PBSA a priority.

                   EXPANDING THE SMALL BUSINESS SUPPLIER BASE

        The administration seeks to create a dynamic atmosphere where
    competitive and innovative small businesses can flourish and apply
    their talents to the many pressing needs facing our Government. Over
    the past 10 years, we have seen a significant increase in contract
    bundling--i.e., where agency procurement requirements are consolidated
    into contracts that are unlikely to be suitable for performance by a
    small business because of the size or performance requirements of the
    contract. As we have broadened the scope of contract requirements and
    awarded fewer contract vehicles over the past decade, the pool of small
    business contractors receiving new contract awards declined from 26,000
    in 1991 to about 11,600 in 2000.
        We cannot afford to revert back to the paperwork and labor-
    intensive acquisition system of the past; nor can we pursue operational
    efficiencies at the expense of reducing small business opportunities.
    We must find an appropriate balance between operational efficiency,
    opportunity, and fairness. We must also recognize that bundling
    decisions should not be an ``either or'' decision, i.e., a decision to
    either bundle or not bundle acquisitions. Like any acquisition
    strategy, analysis of bundling should account for how it would help or
    hinder the operation of programs within and across agencies. For
    example, the administration's e-Government initiatives often require
    integration that may be facilitated by bundling if the agency
    demonstrates substantial benefits. However, even in instances where
    bundling is found to be necessary and justified, agencies should seek
    alternative acquisition strategies that have less negative impact on
    small businesses.
        Today, there are certain conditions under which an agency may be
    able to bundle contracts without analyzing the benefits or considering
    alternatives that may produce similar positive results with fewer
    negative effects on small businesses. Without this analysis, we put
    ourselves at risk of a shrinking contractor base and fewer products and
    services from which to choose.
        Last October, OFPP submitted a nine-point strategy to the President
    for eliminating unnecessary contract bundling and mitigating the
    effects of bundling that agencies find to be necessary and justified.
    The strategy is designed to: (1) promote leadership and accountability;
    (2) close regulatory loopholes; and (3) mitigate the effects of
    necessary and justified contract bundling. With successful
    implementation of this strategy, we believe that we will have reduced a
    significant barrier to entry and, in doing so, allowed small businesses
    to bring their innovation, creativity, and lower costs to the Federal
    marketplace.
        With this result in mind, OFPP established and heads an interagency
    task force to bring the bundling strategy to fruition. The task force's
    primary task has been to develop regulations that implement the new
    bundling strategy in the FAR and SBA's regulations. Proposed
    regulations, which were published in the Federal Register at the end of
    January, would:

             provide more effective agency small business
            contracting review procedures;
             require agencies to identify alternative strategies
            that reduce bundling and justify decisions not to use those
            alternatives; and
             make clear that multiple award contracts and orders
            under those contracts are not exempt from regulatory
            requirements and procedures designed to eliminate unnecessary
            contract bundling and mitigate the effects of bundling.

        Comments on the proposed rules are due by April 1, 2003.
        We have also asked agencies to report quarterly to OMB on the
    status of their efforts to address contract bundling issues. OFPP will
    be monitoring agency actions and will develop additional guidance as
    necessary.

        REDUCING TRANSACTION COSTS AND INCREASING TRANSPARENCY THROUGH
                             TECHNOLOGICAL ADVANCES

        The President's management agenda calls on Federal agencies to
    champion a citizen-centered electronic government that consistently
    delivers high quality service at lower cost. The appeal of ``e-
    Government'' for procurement is easy to see. The efficiency,
    transparency, and administrative simplification that technology enables
    can stimulate the type of robust participation that makes for a
    successful virtual marketplace. Consider ``e-Buy''--i.e., a new
    electronic quote system for MAS purchases. As a convenient and easy
    medium for transmitting notices, e-Buy can be a catalyst to further
    increase MAS competition without hampering the efficiencies that draw
    buyers to the MAS program.
        The introduction of e-Buy is particularly timely in light of the
    recent and pending regulatory changes that seek to strengthen MAS
    purchasing. I commend both the Federal Supply Service (which operates
    the MAS) for making this infrastructure available to MAS customers and
    DOD for highlighting the availability of e-Buy in the DFARS as part of
    its coverage on schedule purchases.
        The ``inter-agency contract directory'' (ICD) offers another good
    example of how we are using the powers of the Internet to improve our
    buying practices. While agencies have become increasingly interested in
    inter-agency contracting, there are few, if any, places, they can turn
    to see the range of contracts across Government that may be suitable
    for their use. The ICD is designed to overcome this shortcoming and
    facilitate more informed decisionmaking. Later this year, the ICD will
    provide general information about contracts available for inter-agency
    use, including information about: the scope of the contract, socio-
    economic considerations, ordering procedures, and fees. Agencies will
    be able to use this information as one data point in deciding whether
    they are better served by placing an order under an existing contract
    or pursuing a new open market contract action. The ICD will also help
    senior managers to get a better picture of the number of inter-agency
    contracts that their agencies are operating.
        GSA, which manages this project in consultation with my office, has
    been working for a number of months to address configuration issues. In
    addition, the FAR regulatory councils have evaluated public comments on
    proposed FAR changes that will provide the regulatory underpinning for
    the ICD. Population of the directory is expected to begin after
    validation testing is completed this spring. FAR changes will be
    finalized at that time to encourage consideration of the ICD during
    acquisition planning and market research as well as to ensure agencies
    regularly input information on new inter-agency vehicles in a timely
    fashion.
        Of course, ``e-Buy'' and the ICD are just two components of our
    efforts to reshape information technology (IT) investments in ways that
    mirror the integrated nature of acquisition. Our ``integrated
    acquisition environment'' (IAE) initiative seeks to facilitate the
    migration and leveraging of IT investments to modernized, technology-
    based infrastructures that harmonize the varying functions that support
    the acquisition process. GSA serves as managing partner of the IAE
    initiative, working closely with OMB's Office of Information Technology
    and Electronic Government, and OFPP.
        IAE projects have been placed into one of three broad functional
    areas that collectively encompass the acquisition process, namely,
    functions that: (1) promote access to business opportunities, (2)
    manage information about the Government's business partners, or (3)
    capture information on acquisition activities. For instance, ``e-Buy''
    and the ICD are part of a larger ``business opportunities network''
    that also includes:

             ``FedBizOpps,'' our Government-wide point of entry for
            information on actions over $25,000, and
             ``SUBNet,'' a one-stop resource for information on
            subcontracting opportunities.

        The functional groupings are helping managers across agencies to
    more easily identify and avoid redundant IT investments. This saves
    money for the Government and can reduce burdens on contractors as well.
    An integrated ``business partners network,'' for example, means that
    contractors may register once and avoid the effort of submitting
    redundant data each time they seek to do business with the Government.
    Accurate and up-to-date registration information also facilitates
    timely payment to contractors.
        In short, the IAE is laying the foundation for lasting change. As
    we work our way closer to a technology-based infrastructure, we greatly
    increase the odds of achieving major improvements in how agencies carry
    out their missions.

                       IMPROVING PURCHASE CARD PRACTICES

        It is no secret that purchase cards have evolved quickly into a
    major institution in our procurement system, with expenditures
    increasing more than eight-fold since the mid-1990s. The reason for the
    purchase card's popularity is not difficult to understand: purchase
    cards eliminate many of the impediments of traditional procurement.
    Unfortunately, the efficiency of the card program has increasingly
    become overshadowed by waste, abuse, and even fraud, with little or no
    corrective action taken by the agency. While some members of our
    procurement community appear concerned that corrective action will
    unnecessarily erode flexibility, I believe that failure to act is much
    more likely to put this flexibility at risk.
        To help preserve public confidence in our workforce's ability to be
    effective stewards with purchase cards, we have taken several important
    actions. In January, OMB began requiring agencies to report quarterly
    on certain aspects of their purchase card programs to ensure that
    agencies are implementing strong internal controls. Agencies will
    provide information regarding the number of cards, span of control,
    spending limits, rebates, delinquency rates, fraud and misuse
    investigations, disciplinary actions taken, and other agency
    information related to the management of these programs.
        In addition, the President's budget for fiscal year 2004 proposes a
    statutory amendment that would require departments and agencies to
    evaluate the creditworthiness of individual employees before issuing a
    Government purchase charge card (or Government travel charge card).
    Agencies would not be allowed to issue charge cards to those without a
    credit history or with an unsatisfactory credit history. Agencies would
    be required to develop guidelines and procedures for disciplinary
    actions to be taken against agency personnel for improper or fraudulent
    use, or abuse of charge cards. Better management over card activities,
    as reinforced by this provision, will help agencies capture cost-saving
    efficiencies in acquisition and finance operations without wasting
    hard-earned taxpayer dollars.
        I would emphasize that our efforts are focused not just on
    protecting against waste. We are also seeking to capitalize on the
    value that cards offer in furthering strategic decisionmaking. Cards
    give agencies the ability to gain much better insight into buying
    behaviors of their employees. Agencies must actively use this
    information to identify opportunities for smarter purchasing and we
    plan to work with agencies to find appropriate ways to make this
    happen.

          IMPLEMENTING A BALANCED REFORM OF FEDERAL PRISON INDUSTRIES

        Before concluding, I would like to draw your attention to promising
    developments regarding the reform of Federal Prison Industries (FPI).
    The administration strongly supports a balanced reform of FPI that
    would level the playing field between the private sector and FPI,
    increase opportunities for small businesses, give agencies greater
    flexibility to obtain best value when spending taxpayer money, and
    ensure continued work opportunities for Federal inmates. As the Armed
    Services Committee has recognized, the products that agencies have been
    required to buy from FPI may be ones that many of our Nation's private
    sector contractors are able and willing to provide at better prices and
    at a level of quality that FPI, as a Federal correctional program, is
    not always in a position to match.
        Over the last several months, FPI's Board of Directors has taken
    several administrative steps that will benefit all agencies. I
    suggested many of these actions to the Board and strongly commend them
    for recognizing the need for reform and taking timely action. Let me
    briefly describe these actions for you.
        In January, the FPI Board of Directors raised the waiver threshold
    for application of the mandatory source requirement from $250 to
    $2,500. This change, which will apply to all Federal agencies and
    become effective when implemented in the FAR, will give buyers across
    the Government the opportunity to carefully consider the wide array of
    products offered in the marketplace, as well as by FPI, and make buying
    decisions free from the management restraints associated with mandatory
    sourcing.
        Agencies will further benefit from additional business reforms the
    Board announced earlier this month. The Board resolved that:

             FPI will immediately begin granting waivers in all
            cases where the private sector provides a lower price for a
            comparable product that FPI does not meet.
             The FPI Chief Operating Officer will prepare and
            present to the Board by March 31 a plan to end the application
            of mandatory source for products for which FPI's share of the
            Federal market exceeds 20 percent.
             Inmates will be denied access to personal information
            of any kind, including credit card numbers, medical records,
            social security numbers, credit records, and other personal
            information.

        In addition, the Board agreed to consider ending the practice of
    selling products for which prison labor does not have a substantial
    portion of the value (at least 20 percent) of the product. OFPP's
    intent in offering this proposal to the Board is to help ensure that
    all of FPI's activities further the goal of providing work
    opportunities for Federal inmates. We think such an action would be
    consistent with the Board's announcement made at the end of last year
    to eliminate the practice of ``pass through'' sales, in which FPI
    purchases products directly from commercial manufacturers and resells
    them to a Federal agency to meet delivery deadlines. The Board has
    tabled action until it can obtain more information. We look forward to
    a continued collaborative effort with the Board as it pursues reform
    efforts.

                                   CONCLUSION

        As this year's budget again illustrates, the administration remains
    firm in its resolve to improve the performance of Government and the
    culture that drives our investment decisions. For the acquisition
    community, this means that we must continue our efforts to promote
    access to the Federal marketplace, and ensure competition is used
    effectively at every level of purchasing throughout the Government.
    This will enhance opportunities for all businesses--small and large--
    spur creativity in the marketplace, and provide the framework for the
    delivery of better value for agencies and the taxpayer.
        There is more to be done. But I am confident that the steps we are
    taking are laying the foundation for an acquisition process that is
    considerably more market-driven and results-oriented than that which
    this administration inherited.
        This concludes my prepared remarks. I am happy to answer any
    questions you might have.

        Senator Ensign. I thank each of you for your excellent
    testimony. I think this is a very important hearing, bringing
    out some of the things that have been done and some of the huge
    challenges that are ahead of us. There is no question that all
    of us recognize that we cannot have 20 years to bring a new
    weapons system on board. Some of the practices of the past
    cannot continue, especially with how quickly technology is
    changing. Those kinds of practices will leave the United States
    behind in the future.
        Secretary Aldridge, I am not sure if you will be able to
    address this because I do not know exactly when the
    evolutionary spiral-type development was applied to the Joint
    Strike Fighter, but if it was, first of all, when was it? But
    also, if it was applied from the beginning, do we have any idea
    how much time, how much cost, theoretically, at least, could
    have been saved in development of the Joint Strike Fighter?
        Secretary Aldridge. Well, let us see. The Joint Strike
    Fighter from its evolution when we entered into this phase had
    a spiral development plan in place. We made the decision back
    in October to enter into the system development in
    demonstration phase. We knew we were going to have blocks, and
    what is different is that we have planned blocks, and we have a
    technology plan that goes with it. When the technology is
    developed, it can be phased into those specific blocks; and
    that is the plan. That was the way it was set up from the
    beginning.
        I think what you are getting to is that we did not do that
    for the F-22. The F-22 was designed to go to the ultimate
    configuration from the beginning. I was involved in the source
    selection process of that airplane back in the early 1980s, so
    it has been around for 20 years and it has not yet entered its
    operational test phase. But it is because we wanted to get the
    ultimate configuration.
        We know there will be upgrades to it, but they are not
    planned upgrades that the Joint Strike Fighter has in place, so
    we know the first block of the Joint Strike Fighter will not be
    the full-up configuration. It will be about 80 percent. We will
    have a block B that will have an improved capability for air-
    to-air, and some additional air-to-ground. We know we have
    those planned.
        How much we could have saved on the F-22 is kind of
    speculation if we went to a block design there. But I think it
    would have been significant, because we would have had fielded
    the airplane sooner. We would have gotten rid of some of the
    older F-15s that are really costing a lot of money to maintain.
    We would have gotten rid of them earlier. We would have done so
    with a lot less risk, and I think with a lot less cost. How
    much that would have been saved is speculation, but
    significant.
        Senator Ensign. Have we done a lot in the private sector? I
    know that there are models out there that hopefully we are
    looking at in the private sector. There are inherent
    differences between the private sector, obviously, and the
    public sector. But, I think that there are a lot of principles
    that can be applied from the private sector to the public
    sector. One of those principles, the whole idea of quality
    management.
        Now, depending on whose definition of quality management,
    there are many different practices that lead us to that. But,
    certainly the private sector in the United States has had to
    learn some from the Japanese, some from the Germans, and now
    the Americans are being very innovative in their management
    practices.
        One of the things that they do is they benchmark each
    other. They look for what is working out there. How much of
    your workforce is benchmarking the private sector and trying to
    figure out how they are doing it, and how can those private
    sector practices be brought into the public sector?
        Secretary Aldridge. I do not think we are doing enough of
    it. I will start off by saying----
        Senator Ensign. By the way, when you were mentioning
    training earlier--and I think, Mr. Walker, you mentioned that a
    lot as well--that bringing part of the training needs to be
    that benchmarking. I mean, that is a big part of showing people
    how to even benchmark.
        Secretary Aldridge. One of the areas that I find we have to
    get into, this gets into the benchmarking idea, is that the
    Government has to be the smart buyer. We cannot pass off that
    responsibility to the commercial sector or the contracting
    sector.
        So we, as Government officials in trying to determine what
    we are buying for the taxpayer, and the best thing we can get
    for quality and cost, we have to be smart. So inside the
    Government, we need to have smart program managers that stay
    for a period of time to apply their skills overall, rather than
    every 2 years. Also, program managers that understand what is
    benchmarked in the commercial sector, so they can measure the
    performance of the contractor against some quality standard. I
    do not believe we do enough of that, quite honestly.
        I am worried about making sure that the workforce that we
    have in the Government, the AT&L workforce, is qualified with
    the right skills as I have mentioned. We are putting a lot of
    emphasis at the Defense Acquisition University on training
    these people, bringing in case studies, which is also part of
    benchmarking, to see how we did things right and wrong, and
    applying that to our people.
        I am very worried about that, and you mentioned it in your
    opening statement that we have 50 percent of our acquisition
    workforce eligible to retire in the next 5 years. Unless we do
    something to encourage them to stay, I think we are going to
    end up with the workforce not having the skills to be the smart
    buyer. That, I worry about.
        Senator Ensign. Mr. Walker.
        Mr. Walker. Can I comment on the two points real quickly?
    First, you mentioned spiral development, and clearly that is
    something that is being used for JSF, and has been contemplated
    from the very beginning.
        I would assert that the F-22 and certain other platforms
    may be an example of the old ``I have a dream'' mentality. ``I
    have a dream. Why can we not have X that is perfect and has all
    these different capabilities.'' Whereas now with spiral
    development we have an idea of what we are looking for, but we
    recognize that we need to try to go for an 80-percent solution
    and that it needs to evolve over time.
        Where I think there is a direct correlation with the
    private sector based upon GAO's work that was commissioned by
    this subcommittee, is ``What is the level of maturity of any
    new technology before you move into the next level of the
    acquisition process?'' That is where there has been the biggest
    problem in the past. There has been a drive to try to hit the
    dates, no matter what the maturity of the technology is, and to
    move into the next stage.
        The later that you solve your technology problem, the more
    it is going to cost, the more it is going to be delayed, the
    more you are going to have to compromise. They, I think, are
    realizing that. Spiral development is an effort to try to
    address that, and I think it is something that clearly has to
    be promoted and expanded within the Department.
        Senator Ensign. Well, I have many other questions, but my
    time is up. If we have a second round, I may get into some
    others further; otherwise, I have some questions that I will
    submit for the record.
        Senator Akaka.
        Senator Akaka. Thank you very much, Mr. Chairman.
        Mr. Walker, you and I have discussed the human capital
    problems facing the Federal Government on a number of
    occasions. I am concerned that we lack a coherent focus on
    these issues.
        The different parts of the executive branch propose
    policies on outsourcing civil service reform and civilian pay.
    Different committees of Congress considered these proposals,
    even in our own committee. Different subcommittees are
    responsible for outsourcing and for civilian personnel policy.
    Yet, these policies all impact the same civilian workforce.
        We are telling this workforce that we want to reform the
    civil service system to make it more flexible by eliminating
    some of the protections now available to Federal employees.
    But, at the same time, we are telling these same employees that
    we want to outsource their jobs and that they do not deserve
    the same pay increase as we provide to the military.
        Mr. Walker, would you agree that even if the right hand
    does not know what the left hand is doing, this combination of
    policies is likely to have an adverse effect on employee
    morale? Should we not make a greater effort to take a
    coordinated approach to these human capital issues?
        Mr. Walker. I think it is critical that we continue to
    devote more time and attention to modernizing our human capital
    strategies, policies, and practices. The fact of the matter is
    that the Federal Government needs a number of different types
    of capabilities in order to deliver on its promises and to
    achieve its many missions. It needs dedicated and capable
    Federal workers. It needs contractors. It needs effective
    partnerships involving both.
        I think that we have made a tremendous amount of progress
    in the last 2 years in the human capital area, in part due to
    your efforts and others. GAO put the lack of a strategic
    approach to human capital strategy on its high-risk list about
    2 years ago. There has been more activity in that area in the
    last 2 years than the last 25, both on the administrative side
    as well as legislative. I am hopeful that we are going to have
    more progress in the next 2 years than the last 2.
        I do think it is critically important that we have a well-
    conceived and executed process for competitive sourcing, not
    outsourcing. I do not use the word ``outsourcing.'' I think it
    is a loaded term. I think what we are talking about is
    strategic sourcing strategies. It could be insourcing,
    outsourcing, or co-sourcing. In most cases, co-sourcing is what
    it is going to be, because you may want to have an internal
    capability as a Reserve, and even if you outsource something,
    you have to have an adequate number of qualified, dedicated
    Federal employees to manage cost, quality, and performance,
    because if you do not, you are going to get in trouble.
        By the way, if you look at our high-risk list, we have a
    lot of areas on our high-risk list, NASA, IRS, DOD, DOE, that
    are on high risk for contract management because they do not
    have an adequate number of skilled, knowledgeable people to
    manage cost, quality, and performance from contractors.
        So I think it is important that the principles of the
    Commercial Activities Panel be adopted by the administration. I
    am hopeful that Congress will consider any related legislation
    that will help make them a reality. It is important that we
    continue to make progress on the broader human capital
    challenge to meet the needs and address our challenges going
    forward.
        Ms. Styles. Senator Akaka, can I add a point about morale
    and competitive sourcing?
        Senator Akaka. Of course.
        Ms. Styles. I think it is a very important issue as we move
    forward with these changes. Competitive sourcing can really
    increase morale when it is done right. The President just gave
    an award to Offutt Air Force Base, where the in-house
    organization actually won. It increased morale. They learned
    how to do things more efficiently and cheaper, and they beat
    the private sector.
        The problem we face is morale issues when the public sector
    does not have the resources or the commitment from management
    to really be able to prepare a competitive bid. We are working
    to make sure that in implementation and in our circular that we
    give the public sector entities the resources, the training,
    and the ability to be competitive and bid against the private
    sector when it is appropriate.
        Senator Akaka. Mr. Secretary, 647 of the Treasury
    Appropriations bill, as enacted through the Omnibus
    Appropriations Act earlier this year, contains a provision
    which prohibits the use of any goal, target, or quota for
    outsourcing, ``Unless the goal, target, or quota is based on
    considered research and sound analysis of past activities and
    is consistent with the stated mission of the executive
    agency.''
        The administration has established a goal of considering
    425,000 jobs or 50 percent of the eligible workforce for
    conversion to private sector performance. Although no timetable
    has been set for the achievement of this long-term goal, OMB
    has established a 2-year goal of considering 127,500 jobs,
    fully 15 percent of the eligible workforce for conversion to
    private sector performance by the end of fiscal year 2003. To
    reach this goal, each Federal agency has been asked to submit a
    plan to compete 5 percent in fiscal year 2002 and 10 percent in
    fiscal year 2003.
        Ms. Styles, is it your view that the 50-percent goal and
    15-percent goal are based on, ``considered research and sound
    analysis of past activities of each Federal agency''? If not,
    what action does the administration plan to take to comply with
    this new statutory requirement?
        Ms. Styles. Well, I think I would like to clarify that
    these are and have been Government-wide goals. In application,
    we have worked over 2 years with each department and agency to
    develop a plan that was appropriate for that agency.
        We have agencies that are competing as few as 7 percent of
    their workforce because they have had historic contract
    management problems. We were concerned that competition as high
    as 15 percent would simply be inappropriate under the current
    circumstances. We have agencies that are up around 20 percent.
        My boss, Mitch Daniels, has asked me to make sure that we
    clarify that none of these goals will be going forward, agency
    specific or arbitrary. Our management scorecard will reflect
    that as well.
        We have worked so hard to make sure that the plans are
    appropriate for the mission of each agency, that they are
    carefully considered, that they are based on sound analysis and
    research, that we have that available for almost every
    department in the agency of the 26 major departments in the
    agency right now. I think we are concerned that the original
    goals that were put in place are distracting from the
    significant efforts that have gone into the plans of the
    different departments and agencies.
        Senator Akaka. My time has expired. Mr. Chairman, I
    understand that the standard in the legislation was drawn from
    the report of the GAO's Commercial Activities Panel. I wonder
    if we could take advantage of the presence of Comptroller
    General Walker to jointly request that GAO review the
    implementation of this new statutory requirement.
        Senator Ensign. Senator McCain.
        Senator McCain. Thank you, Senator.
        Secretary Aldridge, I would like to discuss with you the
    issue of providing sufficient assets to the United States Air
    Force and military for refueling capability. I am told that the
    Institute for Defense Analyses (IDA) just completed a study
    regarding this issue. Is that true?
        Secretary Aldridge. Yes, sir.
        Senator McCain. Will you share that?
        Secretary Aldridge. Well, I would say--let me clarify. They
    did phase one of a study. We have asked them to go back with
    some more data from the Air Force, to take another look at
    their results to try to resolve some differences that have been
    identified between the Air Force estimate of cost and the IDA
    estimate of cost.
        Senator McCain. Will you share that analysis with the
    committee?
        Secretary Aldridge. Sir, that was done for internal
    purposes. It was done using certain proprietary data from
    Boeing, and I think the judgment of the general counsel is that
    it was for internal decisionmaking.
        Senator McCain. So the answer is no?
        Secretary Aldridge. Yes, sir.
        Senator McCain. Have you or the Air Force done an analysis
    of alternatives on tanker replacements?
        Secretary Aldridge. The Air Force did an analysis looking
    at two different configurations that would be a suitable tanker
    using commercial aircraft assets. They did not want to go into
    a development program for a new airplane, for tankers, so they
    looked at two different versions.
        The Air Force did the analysis, looking at a 767 and a
    European version. They concluded that the U.S. version was
    preferable for that purpose and would satisfy their needs.
        Senator McCain. I will repeat my question. Have you or the
    Air Force done an analysis of alternatives?
        Secretary Aldridge. The Air Force did the analysis of the
    two alternatives. I have not.
        Senator McCain. Has there been a complete analysis of
    alternatives done, which is a standard procedure, which is
    bringing into play all options, or was there just one done as
    you have said about two alternatives?
        Secretary Aldridge. There were two alternatives, one of
    which was rejected.
        Senator McCain. In other words, the answer then is no.
        Mr. Walker, can you give us some of your preliminary
    findings about this issue?
        Mr. Walker. Senator, we did some work on this at your
    request, and we are also doing some additional work at the
    request of the Senate Armed Services Committee (SASC) on this
    issue. We have reported on your work, and we expect to report
    on this SASC work within the next 2 to 3 months.
        My understanding is, as Secretary Aldridge said, that they
    looked at two alternatives for leasing. I am not aware that
    there has been any analysis of looking at a purchase versus
    lease. And it----
        Senator McCain. That is--thank you.
        Mr. Walker. Right.
        Senator McCain. Because that was the question I was trying
    to get from Mr. Aldridge, who did not choose to answer. Go
    ahead, please.
        Mr. Walker. One of the concerns that we have is: There is a
    tradeoff here. On one hand, there is absolutely no question
    that the Defense Department has certain requirements that need
    to be met. The question is how best to meet those requirements.
    Should you buy? Should you lease? Should it be a combination
    thereof?
        Senator, one of the concerns that I have is: The way the
    budget rules work, if you end up leasing, you get more
    favorable treatment for budgetary purposes than you do if you
    purchase. Therefore, that can drive certain decisions whereby
    people might do something using one method which may or may not
    make economic sense in the broader scheme.
        I personally believe that it is important to consider buy
    versus lease in any related decisions, because I would hope
    that our final desire is to do what is in the best long-term,
    not only based on our national security interest, but also the
    economic interest of the country and the taxpayers. But part of
    this problem, quite frankly, Senator, is the budget rules.
        Senator McCain. Secretary Aldridge, according to a story by
    Tony Capaccio that Air Force Colonel Frantz DeWillis, Deputy
    Director for--with programs, says that the Boeing company wants
    to sell bonds to a special purpose entity to finance
    construction of 100 Boeing 767 aircraft that would be leased to
    the Air Force as refueling tankers.
        Colonel DeWillis said, ``There will be a three-way
    contract.'' It says, ``Boeing will build the planes. They will
    be sold to a special purpose entity that leases them to us
    after it gets financing to pay Boeing for the airplanes.'' Are
    Colonel DeWillis' comments accurate?
        Secretary Aldridge. Yes, sir. From what I understand of the
    lease arrangement, which there are a lot of details, is that
    that is--the special purpose entity would be the financier of
    the lease.
        Senator McCain. Do you have anybody in the Air Force that
    has any training, experience, or knowledge of special purpose
    entities?
        Secretary Aldridge. You would have to ask the Air Force
    that. I am not aware of any.
        Senator McCain. Nor am I. It was the special purpose
    entities that the Enron accounting practices were all about,
    Mr. Secretary. Some of us are a little skeptical that the Air
    Force would do such a thing.
        Perhaps you can explain to me, Mr. Secretary, the logic of
    leasing an aircraft for 10 years that has a life of 35, 45, 40,
    depending on which expert you talk about, and then giving those
    aircraft back to the manufacturer as opposed to an outright
    purchase of those aircraft. Perhaps you can explain to me the
    logic of that? Besides, as Mr. Walker said, getting around the
    budgetary constraints.
        Secretary Aldridge. It starts with the need to begin the
    recapitalization of the tanker fleet. There are some 500 KC-
    135s that are over 40 years old. There are about 130 of them,
    which are the older E models. With recent depot maintenance,
    they are beginning to see a significant increase in corrosion
    and some structural problems. The time it takes in the depot is
    getting longer, and the cost to maintain the aircraft is
    increasing year by year at a faster rate than was previously
    planned.
        So the Air Force has identified the need to begin the
    recapitalization of these, some 500 aircraft. It takes a long
    time to recapitalize that number of aircraft. They want to
    begin as fast as they can.
        In looking at their budget process, however, and in their
    program plan that they submitted to the Department of Defense,
    they began the replacement of the tankers starting in fiscal
    year 2006. Because of affordability, they could not start any
    sooner than that, given the other priorities that existed in
    the Air Force.
        The proposal came to the Air Force from Boeing as to
    starting that program earlier by leasing the aircraft and
    getting someone to finance that leasing arrangement. They could
    begin delivering aircraft much sooner in the future years
    defense plan than the Air Force proposal.
        The identification was that if they began leasing with
    someone financing the upfront costs, they could get 67 tankers
    delivered in the fiscal year 2006--versus one if they purchased
    this under the Air Force plan.
        Senator McCain. But the----
        Secretary Aldridge. The Air Force thought that that was a
    preferred solution to begin the recapitalization sooner and not
    requiring the upfront costs that would be in the Air Force
    budget. For example, if the Air Force bought the same number of
    aircraft on the same schedule as the lease, we would have to
    add over $10 billion to that, or take out some other $10
    billion worth of other programs. The Air Force recommended that
    we start the lease for the purpose of getting tankers sooner.
        Senator McCain. Well, my time has expired.
        I have been briefed that the Institute for Defense Analyses
    has given a very negative view of this cockamamie proposal. I
    am sure that is why you sent it back for further study.
        I will continue, Mr. Chairman, to do everything I can to
    see that the taxpayers of America are protected from this
    military industrial rip off, which has been contemplated.
        Secretary Aldridge. Can I respond to that----
        Senator McCain. Certainly.
        Secretary Aldridge. --the question or assertion?
        Senator McCain. However you would like, Mr. Secretary.
        Secretary Aldridge. The Air Force estimate of the cost, the
    unit cost of the tanker if they bought it was $146 million. The
    IDA estimate of the unit cost was $125 million.
        Senator McCain. Well, I guess I would have to respond by
    saying: On their website, they list the--Boeing themselves
    lists the cost between $95 and $125 million. So----
        Secretary Aldridge. Which does not include the tanker
    modifications.
        Senator McCain. It does not include the $1.7 billion which
    would be required to modify the hangers, Mr. Secretary.
        Thank you very much, Mr. Chairman.
        Senator Ensign. Senator Nelson.
        Senator Ben Nelson. Thank you very much, Mr. Chairman.
        In looking at the forming of the acquisition process,
    clearly as a former governor I know how--and I have experience
    with wanting to streamline the process to make things work
    faster, work better, and better serve taxpayers. Ultimately,
    you also want to make sure that those who are the users of the
    product, the services, are going to benefit from any
    streamlining of the process as well. So I commend the effort to
    try to do that.
        I am also encouraged by the discussion that cost will
    always be part of it. As I say this, I am not going to use any
    eraser words, but--in connection with that suggestion that it
    is important. In the process also, though, you have to think
    not simply of cost, but you have to think of whether or not
    there truly is an increased quality, increased serviceability,
    increase in availability, a number of other considerations.
    ``Getting the best value,'' I think, was the word or words that
    I heard being expressed.
        I also spent time debating between privatization,
    challenging for public/private competition, or private/private
    competition. I hope that the effort toward improving quality,
    best quality, is not just simply a drive toward the road of
    total privatization.
        I hope that there is a retention of the goal of getting the
    best quality, whether it comes from the public or the private
    side. I also hope that in any effort to create competition
    between private and private, or private and public every effort
    is made to be sure that it is fair with respect to the rules
    and the opportunities. Because that is the only way that you
    can get, I think, the best deal for taxpayers, as well as the
    best available services or serviceability of products for the
    users, in this case, the military.
        No one wants to think about the possibility of lowest
    price, lowest cost, least value being achieved favoring either
    the public or the private side.
        I will ask this to the three of you. Are you convinced that
    the efforts that you have made thus far truly push for best
    value, not weighing the balance in favor of one group versus
    the other, private or public?
        Secretary Aldridge. Senator Nelson, let me begin by
    describing a little bit of the process by which the number of
    positions are available for the competition. The Department of
    Defense goes through a process in asking each of the military
    departments and the commanders of the various facilities what
    jobs here could be done by the private sector, and what jobs
    could not be done by the private sector. In other words, those
    core functions that he, as a military commander with a mission
    to perform, believes has to be inherently governmental jobs.
        Then he looks at those, and he then provides a list of
    those which could be privately competed for the purpose--and
    not part of the core function necessarily of his mission. Then
    those are identified. That is the number we have heard about,
    452,000 jobs have been identified within the Department of
    Defense for the private sector for competition, for sourcing
    competition.
        We then identified it through OMB, said, ``Look, let us
    make a plan to compete for 50 percent of those,'' which comes
    out to be the 226,000 that will be open for competition, and we
    will phase that over time, because it takes an enormous amount
    of time. Then those are competed in a plan.
        It so happens about 60 percent of the time, the Government
    wins the competition, but in every case, 25 to 30 percent
    savings for doing the function that was previously being
    performed by the Government. So competition, in fact, works
    by----
        Senator Ben Nelson. That is the cost factor. What about the
    best value?
        Secretary Aldridge. The process is that up until now it has
    been a cost process, and that is what the OMB's new circular is
    all about. It is, ``Let us change that from a cost only
    competition to a best value competition.'' We have not
    exercised that yet because the process will not permit us to do
    so.
        Senator Ben Nelson. Mr. Walker.
        Mr. Walker. My answer would be: It is too early to tell. I
    think that their intention is to do that. There are two aspects
    of it. One is design. What is the design of the new process?
    Director Styles has not yet finalized what that final process
    is going to be, so I think we have to see what the final design
    is going to be.
        As we all know, implementation is key. You can have a
    design that looks good on paper, but the real key is ``How does
    it actually get implemented in the real world?'' So I think it
    is too early to tell.
        Clearly, I think the intent is to do that. I expect that we
    will be involved in trying to look at the actual application
    over time.
        Ms. Styles. We have tried to be very clear from the
    beginning that this initiative is about bringing value to the
    taxpayer. We have said from day one that we do not care who
    wins. We care about competition. We are so committed to that
    fundamental principle that we have actually changed a policy--
    or we have proposed to change a policy for the Federal
    Government that has been in place for 50 years that says, ``If
    it is commercial, the private sector can do it better.''
        We have said, ``No. If it is commercial, let us determine
    which sector can do it better, which sector can do it for a
    better value, and oftentimes for a lower cost.''
        When I talk about best value and services, there are many
    services that you do not want to be based on a low-cost
    determination, which is why we are trying to make these changes
    to the circular. There are, however, a lot of things that you
    do want based on low cost.
        We want grass mowing to be determined based on low cost, so
    we do not want to preclude that by changing the circular in
    saying everything is going to be a tradeoff between cost and
    technical reasons.
        Senator Ben Nelson. My time has expired. Thank you very
    much.
        Thank you, Mr. Chairman.
        Senator Ensign. Senator Allard.
        Senator Allard. Thank you, Mr. Chairman.
        Secretary Aldridge, good to see you again.
        In your written statement, you discussed the acquisition
    cadre. We have been waiting on the space cadre strategy from
    the Air Force. I understand it is just about ready. Part of the
    space cadre focuses on the acquisition core of space programs.
    Did you confer with the Air Force space commander to ensure
    both sets of acquisition professionals meet consistent
    expectations?
        Secretary Aldridge. Yes, sir. I have been intimately
    involved with that, the whole Space Commission and the
    implementation of which this cadre is part of. In fact, I am
    getting a briefing on that early next week.
        Senator Allard. Okay. Thank you for your response.
        Also, Secretary Aldridge, you talk of the acquisition
    reform initiative or initiatives, and address numerous programs
    that will transform the battlefield, and I applaud you for
    looking at ways to improve the efficiencies and time to task
    these programs.
        What, if any, military space programs do you envision will
    be developed as transformational or spiral programs?
        Secretary Aldridge. Space-based radar. We--in fact, the new
    program that we call now the Space Tracking and Surveillance
    System (STSS) that used to be called Space Based Infrared Radar
    System (SBIRS)-Low is now called STSS. It has a spiral
    development. In fact, the first two satellites will be a
    scaled-down version of that capability, and we will improve it
    with time. The transformational communication system, which is
    the equivalent of putting fiber optics into space, we will be
    using a laser communications system, that will obviously be
    evolved with time. Some of its earlier satellites will need to
    have certain capabilities, and we will grow it. As I mentioned,
    space-based radar is certainly one of those. So those are three
    examples that we have underway.
        Senator Allard. Thank you. Are there any others that you
    did not mention?
        Secretary Aldridge. In transformational activities, the
    whole UAV/UCAV program will be spiraled. We mentioned the Joint
    Strike Fighter already. When we restructured the Comanche, the
    Army's Comanche helicopter program, we scaled it back, and now
    that is or has spirals in it, which would give us a little bit
    lower risk, and I think more of a credibility of bringing the
    program in on schedule.
        Senator Allard. Secretary Teets has testified recently
    about his priorities, the programs he viewed as
    transformational. Did Secretary Teets confer with you about--or
    before development, those priorities, and do you agree with his
    assessment?
        Secretary Aldridge. There was not a formal process by which
    we debated this process. He has shown those to me, and I agree
    with those.
        Senator Allard. I see. Now, to move on, we have been
    utilizing A-76 studies for more than 10 years now. Apparently,
    there are accomplishments--or there are indications that these
    studies have shown results favoring both privatization as well
    as, in some cases, Government participation in the program. Do
    you think that this is an effective and fair way of analyzing
    your acquisitions?
        Secretary Aldridge. It is a fair way. A-76 permits
    competition for functions that can be performed either by the
    public or private sector. There are some problems in the
    conduct of those competitions. It takes too long. They tend to
    be too burdensome.
        Because it takes so long, it tends to drive out small
    businesses from being able to compete, because they cannot
    stand around for the 3 years or so that it takes to conduct the
    competition waiting to get the business. So it discourages
    people.
        What the Commercial Activities Panel is trying to do in
    their recommendations is to clean up the process to make it
    easier to compete, hopefully quicker and encourage more
    competition. Because every time we compete, as I mentioned
    before, it seems like we always find a way to save 25 to 30
    percent of the cost from performing that function before.
        Competition does, in fact, save money and improves quality
    and performance. That is what we are trying to get from the
    revision of A-76 and get rid of most of the barriers and
    burdens that it has.
        Senator Allard. When we have Government agencies competing
    against private sector, for example--and maybe Ms. Styles, you
    would like to respond to this. For example, the Federal
    Government does not pay property taxes in Colorado. So how do
    you assess this as fair competition when the private sector has
    this tax burden that they pay but the Federal Government does
    not? Sometimes it is rather substantial.
        Ms. Styles. We actually adjust the Government cost and we
    take out the private sector taxes, so we make adjustments on
    both sides. The most difficult part of public/private
    competition in many respects is that a Federal manager only
    sees his budget costs. So if he makes a decision about a
    particular activity and whether he would like that to be
    performed by the private or public sector, without the A-76
    costing mechanism we have right now, he has no idea what
    performing that function with Federal employees actually costs
    the taxpayers.
        So what has been created in A-76 and is actually applicable
    right now, which we will be maintaining in the final circular,
    is a mechanism to pretty closely approximate what the
    Government cost to the taxpayer is as opposed to the
    appropriated or budgeted cost.
        Senator Allard. Thank you.
        Thank you, Mr. Chairman.
        Senator Ensign. Senator Pryor has yielded to Senator Levin.
        Senator Levin. Thank you, Mr. Chairman.
        Thank you very much, Senator Pryor. I appreciate your
    courtesy.
        The importance of competition is 1 of the 10 core sourcing
    principles adopted by the Commercial Activities Panel of the
    GAO in its report last year.
        A few years ago, Secretary Cohen said that competition is
    the driving force of the American economy. As a matter of fact,
    Secretary, and before that Senator Cohen and I authored the
    Competition in Contracting Act.
        Ms. Styles, I know that you share my commitment to
    competition for a number of reasons. You participated in the
    Commercial Activities Panel and endorsed its statements about
    competition. You have also taken strong actions to enhance
    competition throughout the Federal procurement system. I
    particularly appreciated the steps that you took to strengthen
    competition in the acquisition of services, and to implement
    the legislative changes that we have now made to permit private
    companies to compete with Federal Prison Industries.
        However, I am troubled by the administration's proposed
    revision to OMB's Circular A-76, which governs the outsourcing
    policy of the Department of Defense and other Federal agencies.
    The proposed revision does not appear to reflect that
    commitment to competition.
        The current version of Circular A-76 states right up front
    that it is the policy of the United States Government to
    achieve economy and enhance productivity, and the competition
    is the means that we use to achieve that objective. That
    statement of competition is our core policy. But that has been
    replaced now in the proposed revision of Circular A-76 with a
    statement that it is our policy ``to rely on the private sector
    for needed commercial services.''
        Far from endorsing competition, the proposed policy directs
    agencies to ``use Competition or Direct Conversion process to
    determine the providers of commercial activities.'' So we now
    have an equivalence between competition and direct conversion,
    whereas before we had the core policy of competition being
    emphasized.
        The Comptroller General stated in a January 16, 2003,
    letter to OMB Director Mitch Daniels, relative to the proposed
    revisions, the following, ``The Commercial Activities Panel
    strongly supported continued emphasis on competition in
    determining whether the public or the private sector should
    perform commercial services. . . [The proposed change] sends an
    unfortunate signal that the administration is attempting to
    increase the number of direct conversions. This is a
    particularly sensitive matter for Federal employees, whose
    trust in the objectivity and fairness of the system will be
    critical to the success of the administration's competitive
    sourcing initiative.''
        Competition is essential, not only to protect the taxpayer,
    which it clearly is, but also to provide fairness to our
    Federal employees. We need to recognize that these public
    servants are a valuable asset and that it is in the public
    interest for us to treat them as a valuable asset. Surely they
    should have a right to compete for their own jobs. It seems to
    me that should be a core principle too, which is an inherent
    part of competition, that you should be able to compete for
    your own job before it is outsourced.
        Let me start with the question to you, Ms. Styles. As I
    understand it, the administration proposes to authorize the use
    of direct conversions based on a ``business case analysis,''
    for outsourcing of functions currently performed by as many as
    50 Federal employees, without providing Federal employees an
    opportunity to compete for their own jobs.
        The cost of a function performed by 50 employees is
    probably somewhere in the order of $5 million a year, or $25
    million over 5 years. This is my first question: Would we
    encourage agencies to transfer work away from one private
    sector company to another private sector company with contracts
    of that size on the basis of a business analysis without
    competition?
        Ms. Styles. No, we would not. Let me address your first
    comment. While our decisions are not final at this point, we
    have taken into consideration many concerns that the direct
    conversion process and the streamlining process that are in the
    draft are not competitive. I believe based on recommendations
    that I am making that that will significantly change.
        I do not anticipate a reference to direct conversions in
    the circular itself. We are even in the process of discussing--
    and I will emphasize again that we have not made any final
    decisions about eliminating direct conversions altogether. Our
    concern certainly has been over the past 2 years that agencies
    have made decisions to directly convert that may not be in the
    best interest of the taxpayer. We do not want that to continue.
    We are trying to create a mechanism that is streamlined for
    under 50 or under 65 that would allow, in appropriate
    instances, the public sector to compete but would also require
    the agency to make a cost-effective determination, that any
    determination to go to the private sector would be cost
    effective.
        What we are looking at right now is a structure for full
    public/private competition and then a smaller cadre under
    either 65 or 50 that would be more streamlined and flexible for
    the agencies, but would have an element of competition and a
    strong element of competition for any decision to send work to
    the private sector and to allow, where appropriate, Federal
    employees to compete.
        I think we have understood the concerns expressed by many
    Members of Congress, by many employees and, I think, by the
    General Accounting Office. We are working hard to take those
    into consideration.
        Many people have said for a long time, even in the
    Commercial Activities Panel, that under 10 is a de minimis
    number. You should be able to send those directly out to the
    private sector and have flexibility.
        Our concern--and again I am going to emphasize, it is not a
    final decision--is that those decisions have been made without
    regard to cost, or without regard to the best value or
    effectiveness for the taxpayer.
        Senator Levin. Thank you.
        My time is up. Thank you, Mr. Chairman.
        Senator Ensign. The way we run this committee is just--some
    people run it alternately based on the early bird. I just like
    to run it based on who showed up first. So, Senator Pryor, you
    will be next, and then Senator Chambliss.
        Senator Pryor.
        Senator Pryor. Thank you. Mr. Chairman, I appreciate that.
        Let me just ask generally about sourcing and let me tell
    you my philosophy, the way I look at it. I want you to tell me
    if you agree or disagree, and educate me on why you might
    disagree.
        When it comes to the Department of Defense, it seems to me
    that you have three factors that you consider. One, and the
    first factor should always be: Does it make military sense?
    Does it make military sense on where we are getting--what our
    sources are? Second, does it make fiscal sense? Third, does it
    make philosophical sense?
        The reason I say that is because I think there is a
    temptation for people who want to see more privatization, and
    people who want to see no privatization almost, is that the
    philosophical sometimes overrides the fiscal considerations and
    also overrides the military considerations. But it seems to me
    that those should be our priorities in that order: Does it make
    military sense? Does it make fiscal sense? Third, should it
    make philosophical sense? Can I hear what you all think about
    that?
        Secretary Aldridge. Well, let me start off and maybe weigh
    in later. The process, as I described before, is for the
    military commander at a facility to look at his workforce. He
    or she understands the mission they have to perform, be it a
    depot or a maintenance facility, anywhere that has a
    significant number of in-house employees, ``What is my mission?
    What is--what am I here to do?''
        In some cases, it is warfighting. You look at the
    individual job and say, ``Does this job--is it essential for
    this job to be performed to contribute to my warfighting
    ability or to my maintenance ability, or so forth? Do I need
    this job inside the Government or can that job be performed
    outside the Government? Whether or not it is performed at the
    facility or not, can it be done?''
        Then they go look at it job by job and they identify what
    those functions are--and I believe, if I was a commander, I
    would take all these factors into account.
        Now, you do not know the fiscal answer until you compete,
    because normally what happens is the Government function that
    is being performed, they think of new and better ways to
    perform that function at less cost than they are performing it
    now. We find that to be, as I mentioned before, almost a truism
    for every competition. It gets performed at lesser cost, a
    significantly lesser amount.
        Senator Pryor. Within the Government?
        Secretary Aldridge. Within the Government, even when the
    Government wins. Or if the contractor wins, it also gets
    performed at lesser cost, so the--you will not know that answer
    until you have kind of gone through ``Is this job essential?
    Does it make sense to compete this job?'' Maybe a little
    philosophical factors go in. But you do not know the answer
    until later, until you compete it, but in most cases, it is
    pretty obvious to the commanders. Knowing they have done this
    before, they will get a better product out of this competition.
        Senator Pryor. Mr. Walker.
        Mr. Walker. First, let me acknowledge for the record that
    your father, the former senior Senator from Arkansas, was a
    member of the panel and very ably contributed to our efforts.
    Please pass on my regards to him.
        Senator Pryor. I will. Thank you. Yes. He worked on that.
    Thank you so much.
        Mr. Walker. There is a strong resemblance, I might add.
    [Laughter.]
        But I would say on all decisionmaking, I look at it from
    two primary factors: One, value and two, risk. What is the
    value that is added, and how do you manage the risk?
        Commenting on your specific criteria, mission is number
    one. In other words, what are we all about? What are we trying
    to achieve? How does this fit into that? I would say fiscal
    would come after that, but equal to that, I would say, would be
    the people dimension.
        I think you have to consider the people dimension. I think
    that is critically important. I would say that that is equal to
    the fiscal dimension.
        I would not say philosophical, because I would hope that
    this would not be philosophical.
        The last thing that I would say is feasibility. Because
    there are certain things that we might like to be able to
    perform certain functions or have certain capabilities in the
    Federal Government, but if our compensation policies are such
    that we cannot attract and retain an adequate number of people
    to do that, then the market may force us to look to a private
    sector alternative. Or if we are looking for certain types of
    technologies that, quite frankly, the Federal Government does
    not have or has not had the ability to develop and sustain over
    time, then we may have to look to the private sector.
        But I also believe that we need to keep in mind that this
    is sourcing strategy, where it is not just outsourcing. It
    could be insourcing when contractors fail to perform in
    appropriate circumstances. More likely than not, we are going
    to be co-sourcing of a lot of things. There has to be adequate
    oversight and management even if you do outsourcing. So that is
    what I would say.
        Senator Pryor. Thank you.
        Ms. Styles.
        Ms. Styles. I would like to emphasize that there is nothing
    that is critical to the mission of any agency that would ever
    even be contemplated for public/private competition. I mean, we
    are at a point where we are simply asking agencies to compete
    some pretty obvious things.
        I will give you a couple of examples, just so you know how
    far we are from mission critical requirements. The Department
    of Navy has 500 people that make eyeglasses. We have thousands
    of people at the Veterans Administration (VA) that do laundry,
    serve food, hang drywall. We have lifeguards at the Department
    of Interior. These are very basic commercial services that we
    are simply asking to be competed and to figure out if we can
    perform it cheaper with the private sector or with the public
    sector, or we can get better value from one sector or the
    other.
        Without the pressure of competition, we are going to
    continue not knowing. We are going to continue not managing
    these functions as well.
        Senator Pryor. Yes. Actually, I think that there are a
    whole range of things that are good candidates to be
    outsourced. Let me give you one example of that and--I am about
    out of time here, so we can talk through it very briefly.
        A friend of mine was in the Gulf War 12 years ago. When he
    gets to Kuwait, he finds the food service has been contracted
    with some locals there. The U.S. Army, the GIs did not feel
    that comfortable with a bunch of Kuwaitis, et cetera, serving
    the food. You get into that, is that mission critical?
    Certainly if the food supply is tainted and if we do not have
    the proper safeguards built in, then that certainly is mission
    critical.
        But they are in Kuwait. Apparently, the safeguards were
    there, and the contracts were done, and everything was fine.
    There was no problem at all whatsoever. So we have to balance
    that. Again, it has to make good military sense to do it.
        I will note this, Mr. Chairman, before I step aside here,
    is that Fortune Magazine, in this most recent issue, had a
    story about sourcing--I know we do not want to use the word
    ``outsourcing''--but about sourcing and contracting. It said
    that in the Gulf War, for every 100 soldiers, there was 1
    contractor. Today for every 100 soldiers, there are 10
    contractors.
        I would just ask you all to help us work through evaluating
    whether we are being most efficient with our dollars and
    evaluating the effectiveness of what we are trying to do here.
        Mr. Walker. Senator Pryor, I think part of that has to do--
    and I would ask Secretary Aldridge if he wanted to comment on
    it--with the sophistication of our weapons systems and our
    technologies. It goes back to what I said before, when you look
    at the people dimension, and when you look at the market
    dimension, being able to have the type of skills and knowledge
    in the requisite numbers to be able to deliver on mission and
    to achieve the objective. So I think there is an
    interrelationship.
        Senator Pryor. No, and I agree with that. I think things
    have become so high-tech, so advanced, so technically critical
    that obviously our needs on that will grow. Again, we are
    contracting out more laundry services, more grass cutting, more
    things like that. A lot of that makes sense.
        But at the end of the day, we need to look at it, in my
    view, of: Is the military purpose being served? Second,
    fiscally, does it make sense? Does it make sense to have all
    these contracts--all these contractors do this?
        Senator Ensign. Senator Chambliss.
        Senator Chambliss. Thank you, Mr. Chairman.
        Mr. Secretary, it is always good to see you. Very glad to
    have you back with us.
        Secretary Aldridge. Thank you.
        Senator Chambliss. I cannot help but put it in--as I am
    listening to this discussion, as we are sitting here on the
    brink of war, one of my projects over the last 8\1/2\ years now
    has been to get a definition of ``core.'' You all know what we
    went through last year with our National Defense Authorization
    Bill. I was finally willing to concede at the end of the day
    because of the right concessions being made.
        But I do not see any contractors jumping up and down today
    volunteering to go to the Middle East. I know that there are
    any number of civilians at Robins Air Force Base who are
    prepared to go, not because they want to go, but because that
    is part of their job. So I am always reminded of the fact that
    there is core work out there and that the public depot system
    is an absolute necessity, and I hope we never lose sight of
    that.
        I say that leading in, Mr. Secretary and Ms. Styles, to my
    comment and my question on A-76. I do not like A-76, and I do
    not like it because I do not think it is fair. There is nobody
    who believes in competition more than I do. I think competition
    does wind up giving you the best bang for the buck.
        But what has happened with A-76 is: It is a one-way street.
    Every A-76 contract that I am familiar with is a project that
    is being done within the depot that all of a sudden we decide
    we want to A-76 it and see whether or not we can do it cheaper
    on the outside.
        I am familiar with only one project that has ever been A-
    76'd from the outside to decide whether or not we can do it
    cheaper within the depot.
        Now, I beat up on the last administration every time I had
    the opportunity over this issue. I was willing to give you all
    some time to try to straighten that out, because I asked this
    question for the last 2 years on the House side. I do not see
    any movement in that direction now, so I would like the benefit
    of your thinking with respect to contracts that have been
    awarded or outsourced, because--I am marking it like you. I do
    not like that word, but it is a fact. We have outsourced
    contracts, both under A-76 and otherwise.
        What are we doing with respect to those contracts that have
    been outsourced regarding the possibility of being able to do
    that work more cheaply within the depots?
        Ms. Styles. If I can start by addressing what we are doing
    in the draft, the revisions that we have of the A-76: When I
    first confronted this question with the current A-76 that is
    now in force--that has been in force for quite a while, it
    appears to me that there are barriers in the circular and in
    the policy to bringing work back in.
        I have made changes to eliminate all barriers to bringing
    work back in-house, to holding a competition for bringing work
    back in-house. Those will remain in the final circular without
    any question in my mind. There is----
        Senator Chambliss. The changes are going to remain, not the
    barriers; am I understanding you?
        Ms. Styles. The barriers will be removed.
        There is no question that the barriers that I perceive to
    be in the current process to bringing work back in-house will
    be removed. There are specific instances in this administration
    where we have been encouraging agencies that are clearly having
    contract management issues, that have sent more than an
    appropriate amount of work out the door without having the
    capacity to manage that work from a contract perspective to
    look at bringing work back in-house through competition. That
    would be the Department of Housing and Urban Development (HUD)
    and that would be the Department of Energy, both.
        However, I will be frank with you: Our focus has been on
    work that is in-house that is performed by Government employees
    that is commercial in nature and has never been subject to the
    pressures of competition. I think we made that decision because
    we have 850,000 jobs that have never been subject to the
    pressure of competition. At least when work goes out to a
    contractor, it is subject to competition every 3 to 5 years.
        Secretary Aldridge. Senator, I have--just a comment on a
    couple of things. One, the concern I think we all have is that
    if a Government agency wants to re-enter and compete for
    something that has gone private, it implies there is excess
    capacity to do so, which may or may not be the true case, but--
    --
        Senator Chambliss. I never have been able to get a good
    definition of what ``excess capacity'' is.
        Secretary Aldridge. That is right. But I do remember
    visiting Robins, as a matter of fact, right shortly after I was
    confirmed and went through the depot, and clearly they showed
    me one case where we have some problems on some C-5s, the
    engines themselves. The work could not be defined well enough
    to go out for contract, because you have to write down the
    specifications. The only people who could have done that were
    Government employees who could react immediately to the
    demanding requirement to replace those themselves on C-5s as
    rapidly as possible.
        That is clearly one of those cases where we would not have
    been able to contract out that kind of work. The way we are
    heading is looking at making sure the functions are well-
    performed. For us to create partnerships, I believe, with the
    industry is probably the best long-term solution to these
    problems.
        Senator Chambliss. I agree with that. Partnering is the
    long-term answer. It has worked well.
        Secretary Aldridge. Yes.
        Senator Chambliss. But you all will be asked that question
    by me the next time you come as to what progress we have made
    on reviewing contracts that have been outsourced to see whether
    or not we ought to bring them back in.
        Thank you, Mr. Chairman.
        Senator Ensign. Senator Clinton.
        Senator Clinton. Thank you, Mr. Chairman.
        I want to just add a word to Senator Chambliss' questions
    because I share his concern about this. I think there is also a
    growing question about the impact and implication with respect
    to national security. You may not be able to put that in a
    circular, but I think it is something we have to take into
    account. I know that after the U.S.S. Cole was bombed by the
    terrorists, there was only one place left in our country where
    you could procure armored steel for the repair work. Frankly, I
    do not want to be dependent on a Chinese steel company to
    determine whether or not we get the armored steel that we need.
    I do not want to be dependent, whether it is a depot or an
    arsenal or any other manufacturing facility, on contractors in
    an uncertain economy under these very challenging
    circumstances. So I, too, am very concerned about some of these
    ongoing issues and what it means to subject national security
    concerns to competition.
        But I have a different set of questions that I would like
    to explore with Secretary Aldridge. They arise out of the
    recent news articles in this Monday's Wall Street Journal.
    Oops. Did we outsource this or what? [Laughter.]
        Senator Ensign. No. That was strictly a Government
    contract. [Laughter.]
        Senator Clinton. In those Wall Street Journal articles,
    sources have indicated that multi-million dollar contracts are
    being let for rebuilding Iraq and according to the Journal,
    ``The Bush plan as detailed in more than 100 pages of
    confidential contract documents would sideline United Nations
    development agencies and other multi-lateral organizations that
    have long directed reconstruction efforts in places such as
    Afghanistan and Kosovo. The plan also would leave big non-
    governmental organizations largely in the lurch, with more than
    $1.5 billion in Iraq work being offered to private U.S.
    companies under the plan. Just $50 million is so far earmarked
    for a small number of groups, such as CARE and Save the
    Children.''
        These articles raise a lot of questions. Let me just run
    through my concerns and then ask Secretary Aldridge to respond.
    The article also points out that U.S. Agency for International
    Development (USAID) is expected this week to pick the prime
    contractor for a $900 million job rebuilding Iraq's
    infrastructure, including highways, bridges, airports, and
    government buildings.
        Now, first, Secretary Aldridge, has this USAID contract for
    $900 million been awarded yet? If so, who received the
    contract?
        Secretary Aldridge. I am not aware that it has been
    awarded. I am not that familiar with the contract itself. I am
    familiar with the activity that has to be done in preparation
    because the people who go there also must be prepared to react
    because they have to get vaccinations and things of that
    nature. But I do not have the specifics. I will get back to you
    with an answer to that.
        [The information referred to follows:]

        These questions deal with contracting done by the USAID. I am not
    in a position to answer the questions since they do not involve
    Department of Defense contracting actions. General information about
    the contracting being done by USAID to support Iraq reconstruction is
    available at http://www.usaid.gov/iraq/about--reconstruction.html.

        Senator Clinton. Mr. Walker, do you know if the contract
    has been let, and who received it?
        Mr. Walker. I do not know, Senator, but I will tell you
    that I have already let the Defense Department know last week
    that they can expect that we are going to be involved in trying
    to understand where the money went and who the money went to
    with regard to both conflict and post-conflict operations.
        Senator Clinton. Ms. Styles, do you know anything about the
    awarding of the contract?
        Ms. Styles. No, I do not.
        Senator Clinton. With respect to this contracting process--
    and I appreciate Mr. Walker's comment--Secretary Aldridge, what
    steps are being taken to avoid conflicts of interest? We all
    have become aware of the article in the New Yorker magazine
    with respect to the role that a company that Mr. Perle
    apparently has a financial interest in, might be involved in
    both devising the criteria for the granting of contracts and
    then possibly being a recipient of such a contract. Are there
    conflict of interest rules in effect?
        Secretary Aldridge. Conflict of interest rules are
    definitely in effect. We follow them precisely. I am not aware
    of what Mr. Perle's relationship with this company is, but we
    have very strict conflict of interest rules and regulations
    that we must follow and we are very serious when we find that
    someone has violated those laws.
        Senator Clinton. Well, one of the things that concerns this
    member of the committee is sitting in those chairs a few weeks
    ago, we heard some rather vague testimony from Secretary Feith
    and others about post-Iraq, post-Saddam planning. Every
    question we asked about ``How long is it going to take? How
    much is it going to cost? How many people are going to be
    involved,'' the answer we got was, ``We cannot tell you. That
    is unknowable.''
        Now all of a sudden, we have private companies being given
    hundreds of pages of information about potential contracts,
    which I assume have details in them in order to be able to bid,
    information that has not been given to this committee.
        Now, I would also want to know, and we will give you, all
    three of you, follow-up questions and specifics about this,
    because I assume that these firms were given estimates as to
    how long their services might be necessary, how long they might
    be expected to have employees in the area. That is information
    that I think the public is entitled to as well as potential
    private bidders.
        Now, with respect to the non-governmental organizations,
    have any discussions gone on in DOD with respect to the role of
    non-governmental organizations that have a history and also a
    reputation of being non-political, uninvolved in the conflict,
    such as Save the Children or CARE, on the role they could play?
        Secretary Aldridge. I am not aware of any discussions in
    that regard.
        Senator Clinton. Thank you, Mr. Chairman.
        Senator Ensign. All of us have a lot more questions.
    Unfortunately, we do not have time for a second round.
        I want to thank the witnesses for your excellent testimony,
    and we will be submitting other questions for the record.
        One of the questions I had--would request a fairly prompt
    response on would be with regards to the level of the conflict,
    as you all are aware, between the House and the Senate and the
    mandatory cuts in personnel, and how that is affecting you. I
    am very curious to get that, especially before we do committee
    markups and I know sometimes the written questions take a lot
    longer. So I would like to get that from you all as----
        Secretary Aldridge. This is the size of the acquisition
    workforce?
        Senator Ensign. Yes. As soon as possible.
        [The information referred to follows:]

        Certainly, the conflict regarding the Defense Acquisition and
    Support Workforce between the United States House and the United States
    Senate is disconcerting to us in the DOD. The Department does not
    support the reductions being proposed by the House. Reductions in the
    acquisition workforce are not driven by our strategic planning and
    efficiency improvements have the potential for exposing the Department
    to significant risk. The DOD Inspector General (``DOD Acquisition
    Workforce Reduction Trends and Impacts'') and the General Accounting
    Office (``Acquisition Workforce: Department of Defense's Plans to
    Address Workforce Size and Structure Challenges'') have already
    suggested that DOD is experiencing risk in contracting and program
    management as a result of past workforce reductions. DOD needs
    sufficient people in the workforce to allow us to be smart buyers,
    provide enough people to both accomplish the Department's mission and
    train our workforce simultaneously, and continue to decrease
    acquisition cycle time. I appreciate your willingness in the past to
    support DOD's workforce management and request your continuing support.

        Senator Ensign. So I would excuse this panel.
        I welcome our second panel. This panel will focus on
    specifics of the outsourcing debate.
        Both of our witnesses were members of the Commercial
    Activities Panel and have very different views on this issue.
        Stan Soloway is President of the Professional Services
    Council, an association of services contractors. Prior to his
    current position, he was Deputy Under Secretary for Acquisition
    Reform in the previous administration.
        Bobby Harnage is President of the American Federation of
    Government Employees, a union that represents 600,000 Federal
    employees, of which almost 200,000 come from the Department of
    Defense.
        I would request this panel, just due to the shortness of
    time, if you could summarize your remarks in under 5 minutes,
    we would appreciate that.
        We will hear from Mr. Soloway first.

    STATEMENT OF STAN Z. SOLOWAY, PRESIDENT, PROFESSIONAL SERVICES
                                COUNCIL

        Mr. Soloway. Mr. Chairman, members of the subcommittee,
    thank you very much for this opportunity to share the
    perspectives of the Professional Services Council (PSC) on the
    critical issues associated with the Commercial Activities Panel
    report, and the administration's proposed revisions to A-76.
        As some of you have already noted, this is, of course, a
    time when all of our thoughts and prayers are with our men and
    women in uniform, a time that serves to remind us again of the
    unique responsibility that we have of providing them the best
    possible support.
        Moreover, at times like this, we are, again, reminded of
    the importance and value of a robust partnership between the
    public and private sectors. For it is only through such a
    partnership that we can truly meet our responsibilities to the
    troops, responsibilities that include large numbers of
    contractor employees that are today on board ships and at base
    camps and throughout the theater of operations helping to
    ensure mission success.
        Senator Clinton, your interesting questions regarding the
    AID contract, which I cannot comment on because none of the
    companies involved are companies I am involved with, it is not
    an assistance contract. It is actually a contract to do
    physical reconstruction, the kind of building, clearing, and so
    forth that is traditionally done through USAID, through
    companies.
        But Mr. Harnage and I were both privileged to serve on the
    Commercial Activities Panel, which was led so ably by the
    Comptroller General. Today, I will very quickly review the
    recommendations and some of our perspectives on it, and the
    administration's proposed revisions to A-76.
        I have also attached to my written statement PSC's detailed
    comments on those proposed revisions, as well as a companion
    statement from the industry-wide coalition on outsourcing and
    privatization. I would ask that they both be made a part of the
    permanent record.
        Senator Ensign. They will be.
        Mr. Soloway. The Commercial Activities Panel, as the
    Comptroller General said, unanimously agreed to a set of 10
    overarching principles to guide Federal sourcing. They call for
    a sourcing policy that treats all offers fairly; that is, based
    on a strategic assessment of agency mission needs and
    capabilities, and that is transparent and accountable.
        All told, the principles represent a common sense approach
    to sourcing. The current A-76 process, which applies to only
    about 1 percent of all Government procurement, fails to align
    with these principles. However, the Federal Acquisition
    Regulation, which is proven, well understood, and guides
    virtually all other Government procurements, aligns very well
    with the principles the panel unanimously adopted. Hence, our
    recommendation to conduct public/private competition under the
    auspices of the FAR was a purely logical extension of those
    principles.
        The principles also make clear that mandating public/
    private competitions across the board is inappropriate and
    helps neither the Government nor its workforce. Recognizing
    that competition is the key to driving performance and
    efficiency, and that competition is typically already robust,
    even when the Government is not a bidder. The principles state,
    ``The Government should not be required to conduct a
    competition open to both sectors merely because a service could
    be provided by either. Such decisions must involve a range of
    strategic and other considerations, including agency
    capabilities, human capital realities, technology, budgets and
    more.''
        Where the Government is not particularly competitive or
    need not continue to perform a given function, there are recent
    examples of strategies that both avail the Government of
    cutting edge solutions while also ensuring the protection of
    the interests of the affected employees, often greatly
    benefitting those employees. This kind of strategy serves
    everyone's best interest, but is not possible under A-76 or any
    other form of public/private competition.
        The panel also strongly recommended that sourcing include
    the assessment of both cost and non-cost factors, a so-called
    best value approach. Now, some have interpreted best value to
    be akin to a kind of unconstrained bazaar. In reality, it is a
    flexible but objective and reasonably constrained approach that
    enables the full assessment of appropriate cost and quality
    factors.
        In a recent letter to the Director of OMB, some of you
    stated your concern that public/private competitions must be
    based on cost and quality. In fact, it is under best value, not
    under the A-76 process, where cost and quality come together.
        Best value is also an objective process and an accountable
    one. If I could digress, under a best value process, all
    offerers are told the relevant weights of each of the factors
    to be considered, but the Government within its own acquisition
    plan must have absolute numerics assigned to each of those
    weights and follow those numerics in scoring the respective
    proposals. It is an accountable process, one that treats
    everybody the same and fairly, but also gives you the
    opportunity to consider the kinds of factors that Senator
    Nelson and others have spoken to this morning.
        The administration's proposed revisions to A-76 and its
    efforts to more closely align the process with the unanimously
    approved principles of the panel contain a number of key
    improvements. At the same time, there are a few critical and
    fundamental issues that need to be addressed.
        The proposed revisions include two primary methodologies
    for the conduct of these competitions, the so-called integrated
    process and the phased process. The integrated process comes
    very close to aligning with the principles contained in the CAP
    report, while the phased process remains highly problematic.
        The principal problem with the integrated process is that
    its use is limited to information technology only. It,
    therefore, excludes a wide range of other sophisticated
    Government requirements one would never want to buy on cost
    alone. As such, the integrated process must be made available
    to a much wider array of requirements and in a wider array of
    circumstances.
        As well, the very definition of ``information technology''
    contained in the revision is so narrow that it also excludes
    many other solutions for which IT is a driving force, but not
    the only element.
        On the positive side--and I speak here to the comment
    Senator Akaka made earlier this morning--two benefits of the
    integrated process that would accrue would be, number one, it
    is fully accountable; and number two, it is the process under
    which one could justify providing the public bidder the
    opportunity to protest source selection decisions.
        Throughout the last number of years, the General Accounting
    Office has routinely found that public employees do not have
    standing to protest, the principal reason being that they are
    not considered or treated as bidders in the process. In a
    process that provides both equal responsibilities to all
    offerers, equal rights then flow. It is our belief that under
    the integrated process, protest rights would be available to
    all participants.
        That is not true of the phased process that Ms. Styles
    referred to as dominating the majority of the A-76
    competitions. The phased process is more problematic than the
    integrated process. In the interest of time, let me just focus
    on one overarching concern.
        Under the phased process, all bidders compete in a
    technical evaluation, and only those deemed minimally
    technically acceptable move to the second round, a cost
    shootout. Cost shootouts by their very nature tend to
    perpetuate a kind of low-bid mentality that many, including the
    General Counsel of the America Federation of Government
    Employees and other members of this subcommittee, have
    appropriately lambasted.
        Moreover, under the phased process, the competition cannot
    move to the cost round unless and until the Government is
    deemed to be technically acceptable. Thus in those cases, where
    the Government's capabilities are simply not up to the par with
    that which is available in the marketplace, the performance
    requirements will be driven by the Government's existing
    capabilities, not by agency needs or the art of the possible.
    That violates the principles of sound management, is completely
    inconsistent with the unanimous recommendations of the CAP, and
    is a disservice to the agencies and the people they serve.
        As is true under the current A-76, such a strategy also
    lays waste to performance-based contracting, which this
    committee has long advocated become the norm and not the
    exception in Government procurement and, of course, inhibits
    the consideration of best value.
        Mr. Chairman, the current A-76 process is, as the CAP
    stated, fatally flawed. The CAP recognized that it makes no
    sense to have one small subset of Government procurement not
    governed by an ethic of equal rights and equal
    responsibilities.
        The CAP recognized that the Government disadvantages itself
    by limiting sourcing decisions to cost factors only, and not
    fully assessing all of the elements that make for a true
    quality decision.
        I urge this committee to support the full implementation of
    the CAP's recommendations, including revisions to current Title
    10 restrictions on the issue of best value, decisionmaking for
    public/private competitions at DOD.
        Finally, we fully support aggressive initiatives to provide
    more training and resources to the acquisition workforce. We
    proposed the creation of a Federal acquisition workforce
    training fund 2 years ago to help accomplish this vital goal,
    because training funds are amongst those that are first to be
    cut in constrained budget environments.
        We were also deeply concerned about the ongoing debate over
    the size of the acquisition workforce, an issue I had the
    privilege--or not so much ``privilege''--to deal with when I
    was at the Department of Defense, and suggestions that we
    should mandate arbitrary cuts to that workforce. This is a
    critical workforce for the Government. More resources and
    training for that workforce are absolutely critical.
        Thank you, again, for the opportunity to appear today. I
    certainly look forward to answering any questions you might
    have.
        Senator Ensign. Thank you.
        [The prepared statement of Mr. Soloway follows:]

                       Prepared Statement by Stan Soloway

        Mr. Chairman and members of the subcommittee: thank you for the
    opportunity to testify today on behalf of the PSC on the important
    issues associated with competitive sourcing. PSC is the principal
    national trade association of the Government professional and technical
    services industry. Our membership includes more than 140 companies of
    all sizes providing services of every type to virtually every agency of
    the Federal Government, prominently including the Department of
    Defense. We have long believed that a robust partnership between the
    public and private sectors is essential to ensuring the optimal
    performance and delivery of Government services and to ensuring the
    highest quality of support to our men and women in uniform. We
    appreciate the committee holding this hearing and advancing the
    dialogue on this very important issue.
        In the main, PSC does not believe it is appropriate, nor in the
    Nation's best interests, for the Government to compete with the private
    sector for work that is commercial in nature. We believe the
    Government's and the Nation's best interests are served when the
    Government focuses its energies on its core competencies. Core
    competencies are those things a company or Government agency does best.
    The term has a different meaning than ``core requirements'', which, of
    course, refers to those things that must be done to execute a mission
    effectively. They are very different terms but unfortunately are often
    used interchangeably. In simple terms, there are many core requirements
    that can, and probably should be competed or outsourced, unless they
    are also core competencies of the organization. This is certainly the
    norm in the private sector and is a key strategy to achieving optimal
    performance and efficiency.
        Clearly, the private sector is market driven, and interested in
    expanding opportunities to support the Government's mission. In other
    words, no one denies the private sector's market interests. The Federal
    employee unions have similar self-interests. The coming Federal
    employee retirement wave, the Government's continued problems
    attracting and retaining people, and the enormous budgetary pressures
    facing every agency of Government present the unions with business
    challenges of historic proportions.
        In the final analysis, however, Federal sourcing policies must be
    based solely on the best interests of the Government and the taxpayer
    and should not be driven by the market interests of either the private
    sector or the Federal unions.
        While there are many issues involved in competitive sourcing, and
    time does not allow us to examine all of them, I would like to address
    two principal questions. First, when and where should the Government
    compete its commercial functions, either through a competition among
    private sector providers only or through the process prescribed under
    OMB Circular A-76? Second, what rules should govern the sourcing
    process itself to ensure accountability, the best possible outcomes,
    and fairness?
        In order to answer those questions, I call the subcommittee's
    attention to the April 2002 report of the Commercial Activities Panel,
    which was created at the direction of Congress and was chaired by the
    Comptroller General. I was pleased to serve on that panel with Mr.
    Harnage, two other union representatives, administration officials, and
    outside experts.
        The Commercial Activities Panel agreed unanimously to a set of 10
    overarching principles to govern Federal sourcing policy and
    procedures. Those principles were specifically crafted to be taken as a
    whole and not broken into pieces; and taken as that whole, they provide
    the answers to the two aforementioned critical questions. Moreover, the
    panel clearly recognized that competition is a positive force and is
    the key to driving efficiency, innovation, and performance. At the same
    time, the panel clearly recognized as well that the mere existence of a
    Government bidder does not create, nor is it essential to, ensuring
    competition. Competition, after all, is the norm in Government
    procurement. Thus, it is wholly inappropriate to assume that public/
    private competitions are the only true competitions. As such, the real
    questions before us relate to how to determine when and where the
    Government should be a participant, and then, how to conduct the
    competitions in a fair, transparent, and accountable manner.
        The CAP report is clear in its endorsement of a Government sourcing
    policy based on a strategic process. It also identifies the
    inextricable link between a strategic approach to sourcing and key
    related factors such as human capital capabilities; obtaining
    contemporary and effective solutions for the Government; providing all
    offerors the same rights and same responsibilities; and more. This is
    both sound management practice and in the best interests of the
    taxpayer.
        The panel recognized that to mandate public-private competitions
    for all work, regardless of whether it is currently being performed by
    Federal employees, is inconsistent with smart, performance-based
    management, and with the sourcing principles the panel unanimously
    agreed upon. There are numerous circumstances involving work currently
    being performed by Federal employees in which the Government might
    appropriately opt not to compete, particularly when the activities
    involved require skill sets, resources, or technology that the
    Government simply does not have and would not reasonably be expected to
    acquire.
        Similarly, for new work or already-contracted work, the panel
    recognized that the Government should compete for such work only if
    there is a compelling strategic reason to do so, and if the Government
    has the existing capacity, resources, skills, and performance history
    to justify doing so. To do otherwise would be a waste of taxpayer
    dollars. That recognition is contained in the language regarding
    principle number seven of the panel's report, which states: ``. . . the
    Government should not be required to conduct a competition open to both
    sectors (public and private) merely because a service could be
    performed by either.'' The report then states that the circumstances
    under which a public-private competition is conducted should be
    ``consistent with these principles'', prominently including the
    strategic decisionmaking process.
        I might add that, in addition to being contrary to the unanimously
    adopted principles of the CAP, the unions' continued demand that
    public/private competitions be mandated across the board is also at
    odds with the best interests of its own members. After all, the
    membership's interest, like that of any employee group, lies in job
    satisfaction, opportunities to grow and develop professionally, rewards
    for performance, and more. In those cases where the Government is not
    particularly competitive and lags behind the capabilities available in
    the competitive private sector, it is often in the best interests of
    the Government, and the employees as well, to avoid a public/private
    competition and to instead compete the work solely among private
    offerors in a manner that treats the affected Federal employees as real
    assets in the transaction, and rewards them accordingly.
        We have seen this model work in several recent cases where the
    Government activity recognized that resource realities, human capital
    challenges, and other factors rendered them relatively non-competitive
    with the private sector, and where the agency determined it no longer
    needed to perform the functions in-house. The agencies also recognized,
    however, that their workforce was one of quality and commitment that
    deserved to be treated as such.
        Thus, in conducting the competitions, the agencies placed the best
    interests of their workforce near the top of the list of source
    selection evaluation criteria. As a result, in each of these cases, the
    affected workforces benefited more from the outsourcing than could have
    been the case through a complex, lengthy, and contentious public/
    private competition in which they would have been competing against
    these very same firms, or if the work had simply been retained in-
    house.
        The reality is that the Government is not, cannot, and need not be
    competitive with the private sector in many areas. Moreover, there is
    no inherent benefit to having the Government perform numerous
    commercial functions. Consistent with the CAP report's unanimously
    approved emphasis on approaching sourcing from a strategic perspective,
    agency managers ought to be given the flexibility to make these kinds
    of strategic decisions. When they conclude that a public/private
    competition is not consistent with their mission needs or resources,
    they should conduct private sector competitions in a manner that offers
    the affected workforce real benefits, such as we have seen in other
    similar cases.
        Unfortunately, however, the competitive sourcing debate is
    dominated by histrionics and mythology intended to create palpable fear
    among the Federal workforce and that makes it virtually impossible to
    explore, and pursue, such innovative approaches. The results of an
    agency outsourcing initiative, we are told, have been and will continue
    to be massive Federal unemployment, scandalously low wages, and
    horrendous private sector working conditions.
        Never mind that to buttress their campaign for higher civil service
    pay, Federal union leaders correctly point to the ``pay gap'' between
    the public and private sectors. Never mind that for wage-grade
    positions, wages on Government contracts are often determined by the
    Government, not the contractor. Never mind that the data show that
    outsourcing has had a negligible impact on employment for Federal
    workers. Never mind that many private sector unions have noted that
    private sector employers often offer much more to their employees than
    the Government can offer its own employees. These are inconvenient
    realities. But to paraphrase one former Senator, while everyone is
    entitled to his or her own opinion, they are not entitled to their own
    set of facts. Facts should underpin policy.
        The Commercial Activities Panel also unanimously provided important
    guidance on how to conduct public/private competitions when they are
    appropriate. Simply put, the panel's overarching principles state
    unequivocally that such competitions should treat all offerors the same
    and fairly, should be transparent, and should take into account both
    cost and non-cost factors. This common-sense approach is reflected in
    several of the principles as well as the panel's recommendation that
    such competitions be conducted under the tenets of the Federal
    Acquisition Regulation (FAR).
        On the other hand, the existing A-76 by design does not treat all
    offerors the same. The panel quite simply would not accept that a small
    subset of Federal procurement--less than 1 percent of all Federal
    procurement--should be handled in such a manner, while the FAR and its
    principles of fairness, equality, and transparency govern the remaining
    98 percent. This is why the panel was inexorably led to its second
    primary recommendation: that public/private competitions, like
    virtually all other Federal procurements, be governed by the FAR. In
    addition, because the FAR is the common language of Government
    procurement, the panel believed that the competitions would be better
    conducted and more consistently applied than is currently the case
    under A-76.
        The panel also could not accept that all competitions must be
    determined on a low-bid basis, the essence of A-76, when common sense
    dictates that many decisions must involve an array of factors in
    addition to price, including past performance, technical excellence,
    management experience, and more. We hear repeatedly that best value
    contracting is akin to some kind of unconstrained bazaar. In truth, it
    is nothing of the sort. Rather, it is a process that affords important
    flexibility to the agencies to meet their specific mission needs within
    the construct of clearly defined and accountable boundaries. It is a
    far more rational and appropriate means by which to procure goods and
    services than the low bid processes of old.
        Throughout the Government procurement environment, the low-bid,
    cost-only mentality of the past has been supplanted by a recognition
    that smart business and smart procurement requires that many factors be
    considered in any decision. That is what best value is all about, and
    nothing more. Under the rules of the FAR, best value enables a
    Government acquisition professional to match an acquisition strategy
    and the relative weights of all factors to the requirement at hand.
    Moreover, all offerors are told in advance of those relative weights
    and the contracting officer must have, and follow, specific numeric
    scores for each criteria involved. It is a process that offers
    important flexibility but is also carefully bound. It is time to bring
    this proven, common sense strategy to public/private competitions as
    well.
        Thus, I prefer to associate myself with the comments made by the
    General Counsel of the American Federation of Government Employees,
    who, in congressional testimony, decried the ``low bid'' mentality that
    led to the problems with the airlines' contracts for baggage screening.
    He is correct. I also agree with Senator Kennedy and others who signed
    a recent letter to the Director of OMB calling for a sourcing process
    based on ``cost and quality.'' Cost and quality is what best value is
    all about. A-76, on the other hand, minimizes, and in many ways
    prohibits, the Government's ability to appropriately and fully assess
    all of the elements that make up a proper definition of the word
    ``quality''.
        It is also time for Congress to replace the current provision in
    Title 10 that limits decisions on public/private competitions at DOD to
    a cost comparison with specific authority for DOD to utilize best value
    strategies in its public/private competitions just as DOD, and every
    other agency, does with the remainder of its procurements.
        Finally, the FAR embodies a full array of acquisition strategies
    and options that enable smart acquisition strategies tied to agency
    requirements. It is the antithesis of a ``one size fits all'' approach
    to sourcing. Unfortunately, A-76 is, again by design, a one size fits
    all process that limits smart acquisition planning and alternative
    implementation strategies. It also inhibits performance-based
    contracting, which this committee, and Congress have long urged become
    the norm in Government procurement.
        I have devoted much of my testimony today to the findings of the
    Commercial Activities Panel because it represents an important and
    largely successful effort to deal with the real issues associated with
    competitive sourcing and outsourcing.
        Since the CAP issued its report last year, much of the ensuing
    debate has focused on the President's management agenda's (PMA)
    emphasis on competitive sourcing, as well as the administration's
    recently proposed revisions to A-76.
        With regard to the President's Competitive Sourcing agenda, it is
    important to bear in mind that the President's agenda is specifically
    not an outsourcing agenda. It is, rather, a competition agenda.
    Moreover, it no longer includes specific numeric competitive sourcing
    targets that each agency must achieve, thus addressing one of the
    principal concerns expressed by some in both Houses of Congress. The
    PMA makes no assumptions as to the outcomes of the competitions and
    virtually ensures that incumbent Federal employees will participate in
    competitions that involve their work. For the reasons I mentioned
    earlier, PSC is concerned that the Competitive Sourcing agenda actually
    goes too far in guaranteeing that incumbent Federal activities will
    have a chance to compete, even when sound strategic analyses make clear
    that such competitions do not serve the Government's best interests.
        Attached to my statement are PSC's detailed comments on the
    November 2002 proposed changes to Circular A-76. We are all now waiting
    for the administration to release its final revisions to A-76.
        I would, however, like to highlight a couple of key issues
    associated with the proposed revisions.
        It is clear that the administration has made a serious effort to
    improve an A-76 process that is hopelessly broken. There are many
    elements of the revisions that represent real improvements. There are,
    however, a set of continuing problems that must be addressed if the
    process is to meet the challenge set forth by the Commercial Activities
    Panel and, in so doing, generate optimal outcomes for the Government.
        The revisions provide two principal methodologies for the conduct
    of public/private competitions. The so-called ``Integrated Process''
    comes closest to reflecting the principles unanimously supported by the
    CAP. Yet, within that process, there are two main areas that need
    further improvement.
        First, its use is limited to information technology requirements.
    But throughout Government, there are many requirements that are
    sophisticated and complex and which should never be procured in a cost
    only, low-bid process. In order to utilize the integrated process for
    those requirements, Government activities will have to go through a
    convoluted and time-consuming approval process all the way to OMB.
    Further, even the definition of information technology contained in the
    revisions is too limiting and ignores the fact that there are many
    solutions that are IT-driven but which would not be classified as
    information technology procurements under the proposed framework.
        Second, the integrated process does appropriately open the door to
    the use of best value contracting. However, one of the most important
    criteria in source selection is past performance and, under the
    integrated process, no past performance assessment of the Government is
    permitted. Thus the revisions create both a problem of bidder equity as
    well as an enormous evaluation headache for the Government.
        To address these issues, PSC has made several recommendations.
    Either the integrated process needs to be made more broadly available
    or the approval for its use should be devolved to the agency
    leadership. OMB is a policy organization and should not micromanage
    individual acquisitions. Nor does OMB have the manpower to do so in an
    efficient manner. Likewise, the definition of IT must be broadened to
    include the full array of complex solutions being sought by the
    Government. Until such time as the Government creates the kind of
    internal performance tracking system that it has for contractors, the
    source selection teams should be encouraged to substitute for past
    performance information a risk analysis that includes realistic
    assessments of a variety of performance risk factors. This can be done
    fairly and openly and would help ensure not only a more level playing
    field, but also a better outcome for the Government, whether the work
    goes to contract or stays in house.
        The phased-process presents a whole different set of problems.
    Although the revisions refer to it as a ``FAR-based'' process, in too
    many critical ways it is not, and it continues to reflect some of the
    real weaknesses of the current A-76 process that the Commercial
    Activities Panel decided was fatally flawed. One glaring problem with
    the phased process if not addressed, will perpetuate a wider range of
    problems.
        Under the phased process, there are two steps to a procurement. In
    the first phase, all bidders, including the Government, undergo a
    technical evaluation to determine their ability to meet the minimum
    performance standards called for in the request for proposals. All
    bidders respond to the same request for proposal, must submit their
    bids on the same timeline, and are evaluated at the same time. All of
    these represent significant improvements over the current A-76.
        The second phase of the competition involves only bidders that have
    been deemed to be technically acceptable in the first phase. These
    bidders then move into a cost shootout where the low bid wins. It is
    here that the process falls apart.
        The competition is prohibited from moving into the second phase
    until the Government is deemed to be technically acceptable. In other
    words, regardless of the Government's technical competency in any given
    area, it must be made technically acceptable and thus included in the
    cost shootout. In cases where the Government's capabilities are on par
    with or even greater than the private sector's, this is not a big
    problem. But in those cases where the Government's capabilities do not
    match up, it is an enormous problem. The end result will be a lowering
    of the performance requirements to whatever level the Government can
    achieve. Whether or not that level represents an optimal performance,
    the performance requirements will be determined by the Government's
    capabilities. Of course, since the second phase is a cost-only
    shootout, no other bidder can or will bid beyond the stated minimum
    performance requirement, since doing so guarantees one will lose.
        Further, the very use of cost shootouts inhibits innovation and
    creativity and limits the Government only to those solutions that meet
    minimum, rather than optimum, performance standards. Ironically and
    unfortunately the phased A-76, like the current A-76, will make
    performance based contracting impossible.
        Thus, our recommendation is to eliminate the phased approach
    altogether. The Integrated Process, with its true reliance on the
    principles and tenets of the FAR, offers the complete suite of
    acquisition strategy options, including a low price/technically
    acceptable approach for those activities for which a procurement might
    appropriately focus almost solely on cost. It is thus more than
    adequate to enable the Government to match its acquisition strategy to
    the requirement and to ensure a fair, balanced, and accountable
    process.
        Mr. Chairman, this is a difficult and highly contentious issue. I
    urge this committee to continue to assess the substance and not be
    swayed by the rhetoric. The imperative to greatly optimize the
    efficiency and performance of our Government has never been greater. It
    is our collective responsibility to the taxpayer, to our men and women
    in uniform, and to the millions of citizens who rely on the Government
    for a wide array of services, to ensure that the Government is taking
    full advantage of the many innovations available today in the
    competitive private sector.
        Moreover, sourcing decisions are not judgments on the quality of
    the people involved. Rather, they are strategic decisions designed to
    not just improve, but to optimize performance through real competition,
    and to thus better serve the customer. It is patently clear that the
    Government can do all of that, and, at the same time, not only protect,
    but also improve, the status of the affected Government workforce. I
    urge this committee to support such initiatives and to support
    conducting public/private competitions under the proven and well
    established procedures of the Federal Acquisition Regulation.
        I thank you again for the opportunity to appear here today and for
    the committee's continued interest in and leadership on this very
    important issue.

        Senator Ensign. Mr. Harnage.

        STATEMENT OF BOBBY L. HARNAGE, SR., NATIONAL PRESIDENT,
              AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES

        Mr. Harnage. On behalf of the American Federation of
    Government Employees, which represents more than 600,000
    Federal employees, including 200,000 in DOD, I thank you,
    Chairman Ensign, for this opportunity to testify this morning
    before this Subcommittee on Readiness and Management Support.
    As always, I appreciate the opportunity to testify before the
    ranking member, Senator Akaka, because of his expertise over
    all issues of concern for Federal employees.
        Mr. Chairman, my written statement is quite detailed, and I
    know it is being entered in the record, so this morning, I will
    limit my whole statement to a discussion of OMB's rewrite of A-
    76.
        In the past, when I mentioned OMB Circular A-76, people's
    eyes glazed over, but not any more. OMB's controversial rewrite
    of the A-76 process has subjected this obscure directive to a
    much-needed glare of publicity. In fact, 170 House and Senate
    lawmakers have already signed on to a joint letter of
    opposition to OMB about its rewrite; and others have sent their
    own individual letters. I am not surprised.
        The November draft is so one-sidedly pro-contractor, it
    defies belief. The Army's controversial ``Third Wave''
    privatization initiative, which was designed to review the
    privatization without any public/private competition of at
    least 210,000 Federal and military positions, is widely viewed
    as being beyond the public policy pale.
        But the A-76 rewrite, in some ways, is even more extreme,
    and could even be used by the Army or other services to
    implement the ``Third Wave.'' The A-76 rewrite might actually
    be called the ``Fourth Wave,'' and, if allowed to go forward,
    it would certainly constitute a ``Final Wave'' for Federal
    employees, effectively wiping out what is left of the in-house
    workforce.
        Triumphant contractors are delighted by the rewrite,
    salivating in fact, according to The Washington Post. In fact,
    some contractors insist that under the rewrite, they will win
    90 percent of all A-76 competitions, instead of the 40 to 50
    percent they are winning now.
        Like the ``Third Wave,'' the A-76 rewrite would emphasize
    privatization to the exclusion of all other methods of making
    the provision of Federal services less costly, more effective,
    more efficient, and more reliable. Also like the ``Third
    Wave,'' the A-76 rewrite would require agencies to treat 100
    percent of their so-called commercial jobs as fair game for
    contractors.
        Unlike even the ``Third Wave,'' the A-76 rewrite would
    include an explicit bias towards privatization. Unlike even the
    ``Third Wave,'' the A-76 rewrite would make it easier to
    privatize inherently governmental work.
        Unlike the ``Third Wave,'' which ostensibly calls for
    reviewing work performed by contractors, the A-76 rewrite will
    focus almost exclusively on the job of Federal employees. While
    DOD has scheduled to review for outsourcing hundreds of
    thousands of Federal employee jobs, not a single contractor job
    is scheduled to be reviewed for insourcing.
        The A-76 rewrite overtly encourages agencies to directly
    convert work performed by Federal employees to contractors
    without any public/private competition, a la the ``Third
    Wave.''
        However, the A-76 rewrite also covertly encourages agencies
    to directly convert work performed by Federal employees to
    contractor performance without any competition. For example, if
    competitions were not concluded within arbitrary deadlines or
    if managers do not submit the tenders on time, innocent rank-
    and-file Federal employees could pay the price with their jobs.
    Whether it is incompetence, negligence, or on purpose, the
    punishment is for innocent Federal employees to lose their job.
    It has nothing to do with saving money or efficiency. It is
    arbitrary. It is capricious, and it is dumb.
        Under the A-76 rewrite, Federal employees, but not
    contractors, must compete to perform new work. Under the A-76
    rewrite, Federal employees, but not contractors, must compete
    when they are doing exactly the same work as before, but the
    value of that work increases by as little as 30 percent.
        Under the A-76 rewrite, Federal employees, but not
    contractors, must compete to continue to perform work when
    their contracts expire; or agencies may simply give such work
    away to contractors through direct conversions.
        Federal employees are also held more accountable for
    failure than contractors. For example, when Federal employees
    are found in default, the work must automatically be converted
    or competed. For contractors, however, it could be business as
    usual. Agencies must provide many more justifications under the
    A-76 rewrite before canceling an award to a contractor than
    when the work has been won by Federal employees.
        Under the A-76 rewrite, contractors, but not rank-and-file
    Federal employees directly affected by privatization or their
    union representatives, can participate in all appellate
    processes to the Administrative Appeal Authority, the GAO, or
    the Court of Federal Claims.
        Under the A-76 rewrite, only the confidential nature of
    proprietary information of the contractors' bids is protected.
        The only conflicts of interest addressed by the A-76
    rewrite are those that might conceivably benefit Federal
    employees in the privatization process. The longstanding
    conflicts of interest which demonstrably benefit contractors
    will continue to undermine the integrity of the privatization
    process.
        Under the A-76 rewrite, tenders submitted by Federal
    employees must include all costs, even when they are irrelevant
    or have already been counted, while contractors would be
    allowed to exclude significant costs from their own proposals.
    Even worse, the new A-76 would allow agencies without the
    statutory safeguards possessed by DOD to use a best value
    process that would allow contractors to win contracts even when
    they submit more expensive and less responsive bids than
    Federal employees.
        Although today they cannot prove that privatization has
    saved one dime, they claim it does, but under the rewrite they
    do not have to save anything. Under the rewrite, privatization
    can even cost more every time. This is not about saving money.
    It is about moving money to the private sector contractors,
    taxpayers be damned.
        It is a sham, smoke and mirrors, and tap-dancing all rolled
    into one. It is legalizing gouging. The Enron-style shenanigan
    is an insult to this Congress. This Congress should stop it
    dead in its tracks.
        AFGE urges lawmakers on this subcommittee to take action to
    prevent this manifestly pro-contractor, anti-taxpayer, A-76
    rewrite from being implemented and enforced.
        Again, Chairman Ensign, I thank you for the opportunity to
    testify, and I look forward to answering your questions and
    your colleagues' questions.
        [The prepared statement of Mr. Harnage follows:]

                  Prepared Statement by Bobby L. Harnage, Sr.

                                  INTRODUCTION

        On behalf of the American Federation of Government Employees, AFL-
    CIO, which represents more than 600,000 Federal employees, including
    200,000 in the Department of Defense (DOD), who serve the American
    people across the Nation and around the world, I thank you, Chairman
    Ensign, for this opportunity to testify this morning before the Senate
    Armed Services Subcommittee on Readiness and Management Support. I
    always appreciate the opportunity to testify before Ranking Member
    Akaka, who takes such great interest in Federal employees issues as a
    member of the Armed Services Committee as well as of the Governmental
    Affairs Committee.
        Over the last several years, AFGE has striven to reform Federal
    privatization policy and thus promote the interests of warfighters and
    taxpayers as well as Federal employees. In fact, last year, an
    amendment offered on the floor to the defense authorization by Senator
    Edward Kennedy (D-MA), which came within one vote of passing and was
    strongly supported by AFGE, would have ensured real and equitable
    public-private competition under an objective, cost-based process for
    work performed by DOD civilian employees, DOD contractors, as well as
    at least small fractions of work not yet performed by either workforce.
    The Kennedy Amendment would have also ensured greater accountability
    through the establishment of an inventory to track the cost and size of
    DOD's contractor workforce.
        AFGE will continue to work with other unions and public interest
    organizations as well as our Republican and Democratic friends in both
    chambers of Congress to enact the significant changes in law necessary
    to improve the delivery of services for warfighters and reduce expenses
    for taxpayers, including those called for in the Truthfulness,
    Responsibility, and Accountability in Contracting (TRAC) Act, which
    claimed the cosponsorships of 215 House and Senate lawmakers in the
    107th Congress.
        Today, however, I will limit my written testimony to seven main
    topics:

            1. the Office of Management and Budget's (OMB) privatization
            quotas,
            2. the rewrite of the OMB Circular A-76 privatization process,
            3. the threat to use ``best value'' in DOD's public-private
            competitions,
            4. the threat of the Army's ``Third Wave'' privatization
            initiative,
            5. the threat to eliminate in-house depots and arsenals,
            6. the threatened introduction of the Service Acquisition
            Reform Act, and
            7. the report filed last May by the Commercial Activities
            Panel.

                          1. OMB PRIVATIZATION QUOTAS

        Although well over one-half of all congressional lawmakers have
    emphatically repudiated the essence of the administration's
    privatization policy--261 in the House of Representatives and another
    48 in the Senate--the infamous OMB privatization quotas are still with
    us. Regardless of their needs or missions, agencies are being forced by
    OMB to review for privatization, either with or without public-private
    competition, at least 15 percent of the positions listed on agencies'
    Federal Activities Inventory Reform (FAIR) Act inventories. According
    to the November 14, 2002, draft proposal to rewrite the A-76 process,
    it is ultimately the administration's goal to review every single
    position on every single agency's inventory, which works out to at
    least 850,000 positions.
        I would like to make these points about the OMB privatization
    quotas:

        A. The use of the term ``competitive sourcing'' to describe the OMB
    privatization quotas betrays either bias or ignorance. OMB explicitly
    encourages agencies, including DOD, to give work performed by Federal
    employees to contractors without public-private competition, either
    through direct conversions or privatizations. According to the
    administration's fiscal year 2004 budget proposal, some agencies,
    including the General Services Administration and the National
    Aeronautics and Space Administration, are using direct conversions
    exclusively to hit their OMB privatization quotas. Other agencies are
    using direct conversions extensively to hit their OMB privatization
    quotas. There is nothing ``competitive'' about this corporate welfare-
    style privatization.
        The ``competitive sourcing'' (sic) initiative is not about saving
    money for the taxpayers; it is about replacing Federal employees with
    contractors and shifting money to the private sector. The
    administration's refusal to help already overwhelmed agencies do a
    better job of conducting competitions fairly and administering their
    contracts satisfactorily is highly illustrative of this point. The
    threatened shift to a loosey-goosey ``best value'' competition process
    in which contractors can submit bids that are less responsive to the
    terms of the solicitation and more expensive than bids submitted by
    Federal employees and still win contracts is also illustrative.
        Office of Federal Procurement Policy (OFPP) Administrator Angela
    Styles, who is responsible for the implementation and enforcement of
    the OMB privatization quotas, now, according to Government Executive,
    must ``caution against judging the (privatization quotas) program on
    savings alone.'' (Emphasis added.) According to the March 2003 edition,
    Ms. Styles insists that threatening to privatize the jobs of 850,000
    Federal employees, either with competition under a privatization
    process that is being rewritten so that it becomes more pro-contractor,
    or without any competition whatsoever, ``can have a positive effect on
    morale, and could even help attract young people to Government
    service.'' Defending the indefensible can often require intelligent
    people to say the most preposterous things. However, as savings from
    the ``competitive sourcing'' (sic) initiative fail to materialize, we
    can expect other highly subjective, to say the least, and conveniently
    unquantifiable rationales to be served up for our consumption in the
    months ahead.
        Ms. Styles apparently considers public-private competitions to be
    intrinsically virtuous, whether or not money is actually saved--but
    only when the work in question is being performed by Federal employees.
    While OMB is forcing agencies to review for privatization 850,000
    Federal employee positions, only a tiny handful of contractor positions
    will be reviewed for possible insourcing, even though contractors
    acquire and retain almost all of their contracts without ever having to
    compete against Federal employees.
        The Department of Housing and Urban Development (HUD) is one of
    only two agencies that will be reviewing work performed by contractors
    for possible insourcing. In fact, HUD will get credit towards its
    privatization quotas by reviewing work performed by contractors in the
    area of home loan programs. DOD, however, is not reviewing a single
    contractor job for insourcing, despite a much larger and more
    unaccountable contractor workforce. This dereliction becomes even more
    difficult to comprehend when we remember that 10 U.S.C. 129a requires
    DOD ``to consider particularly the advantages of converting from one
    form of personnel (military, civilian, or private contract) to another
    for the performance of a specified job'' and DOD, in the person of
    Under Secretary of Defense for Acquisition, Technology, and Logistics
    E.G. ``Pete'' Aldrige, said in 2001, that ``we (may) have already
    contracted out capabilities to the private sector that are essential to
    our mission. . .''

        B. As implemented, the OMB privatization quotas have profoundly
    ugly class, race, and gender biases, and are systematically encouraging
    agencies to place target signs on the backs of employees who are lower-
    ranking, female, and members of minority groups.
        For example, in the Department of Veterans Affairs (DVA), it is the
    employees in building maintenance, food services, and laundries who
    will be reviewed for privatization, rather than health care
    professionals. In fact, OMB has directed that all agencies aggressively
    review for privatization the jobs of blue-collar, clerical, and
    maintenance workers. In the Department of Labor's Employment Standards
    Administration's Office of Federal Compliance Programs, all but 2 of
    the 72 employees categorized as candidates for privatization are GS-9
    or lower. All of the employees categorized as inherently governmental
    are GS-10 or above.
        DVA managers have publicly expressed concern about the impact of
    the OMB privatization quotas on the hard-won diversity of the agency's
    workforce. According to a DVA manager quoted in Federal Times, ``(A)ny
    significant effort to outsource jobs (in the functions listed above)
    will have huge diversity implications.'' Moreover, the Department of
    Transportation, in its comments on OMB's A-76 rewrite, reported the
    disproportionate impact of the privatization quotas' direct conversions
    on women and minorities. A consultant who has run Federal public-
    private competitions for more than 20 years told Government Executive
    that, ``(I)n looking at the affected workforce it is disproportionately
    minority and female.''
        Whether or not it is one of the intentions of those who designed
    the administration's policy, it cannot be denied that the consequences
    of the OMB privatization quotas will ultimately have the effect of
    turning back the clock to the days when Federal agencies were managed
    and staffed primarily by white males. This is a concern that has drawn
    too little attention. Thanks to the hearing you are conducting here
    today, Chairman Ensign, perhaps we can rectify this oversight.

        C. Although there was an attempt to portray the final result of the
    fiscal year 2003 effort to free agencies from the OMB numerical
    privatization quotas as a compromise, such is not the case. The
    administration agreed that numerical privatization quotas are bad
    public policy--except when they are based on the administration's own
    research and analysis. Report language requires OMB to submit a report
    that provides such research and analysis.
        The role of the General Accounting Office (GAO) in the defeat of
    what began as a bipartisan effort to end the use of numerical
    privatization quotas is disappointing. On the very day, July 24, 2002,
    that the House of Representatives passed an anti-numerical
    privatization quotas amendment, by a vote of 261-166, the Comptroller
    General went out of his way to criticize the effort in the media.
        Later, he elaborated on his criticism in an August 9, 2002, letter
    to a Senate lawmaker, in which he insisted that the amendment would be
    a ``blanket prohibition on the use of goals.'' As even the most cursory
    reading of the language would have revealed, the amendment was in no
    way a ``blanket prohibition.'' Rather, it would have prevented only the
    use of numerical privatization quotas. Agencies could have used
    research and analysis to establish non-numerical goals if the amendment
    had been enacted. In fact, by preventing political appointees from
    plucking numbers out of thin air and then imposing them on helpless
    agencies, the amendment would have promoted the use of research and
    analysis in the establishment of goals.
        Moreover, it is well understood by any observer of the Federal
    privatization scene that the OMB privatization quotas are not based on
    ``research and analysis.'' Representatives from GAO were in attendance,
    and one even testified, at the March 6, 2002, hearing of the Senate
    Governmental Affairs Committee hearing in which Ms. Styles said that
    the privatization quotas had been established by the President
    himself--who is unlikely to have had the time to perform any ``research
    and analysis.'' Indeed, the Comptroller General, in his August 9
    letter, correctly asserted that he had ``seen no evidence to indicate
    that its numerical FTE goals were based on considered research and
    sound analysis.'' Unfortunately, the inclusion of a vague ``research
    and analysis'' requirement gives the administration an obvious out and
    renders the amendment unenforceable.
        Finally, the GAO's recommendation that any prohibition on the use
    of numerical privatization quotas include an ``escape clause'' for
    those quotas that are based on ``research and analysis'' was strangely
    incomplete. The elaboration provided in the letter was vague
    management-speak: ``a review of historical data and sourcing activity
    in the public and private sector combined with an analysis of current
    and emerging market trends. . .'' However, the GAO's recommendation did
    imply that the OMB privatization quotas should take ``into account the
    capacity of agencies . . . to conduct public-private competitions.''
        Unfortunately, some Senators accepted the GAO's fundamentally
    flawed criticism as a rationale for voting against the anti-numerical
    privatization quotas amendment. Consequently, agencies are still being
    forced to review for privatization, regardless of their needs and
    missions, tens of thousands of Federal employee jobs, either with or
    without public-private competition.

        D. I will conclude this section of my testimony by providing you
    with my own thoughts on how to reform the OMB numerical privatization
    quotas so that agencies can, if appropriate, establish non-numerical,
    agency-specific, equitable sourcing goals:

              1. Don't use numbers. Numbers are a lazy person's short-cut,
            an unworthy alternative to conducting the ``research and
            analysis'' necessary to establish goals that promote good
            public policy, as opposed to narrow private interests. AFGE
            criticized the disastrous use of numbers to manage the DOD
            civilian workforce during the Clinton administration. We'll
            criticize the Bush administration when it perpetrates the same
            blunder in the context of DOD privatization.
              I would ask the Comptroller General to review a key passage
            in his own August 9 letter in which he implies that the desired
            ``result (of a goal-setting process) would be the
            identification of specific functions or activities that should
            be subject to public-private competition.'' In other words,
            sourcing goals, he believes, should be function- or activity-
            based; and, of course, I would add, no numbers are needed to
            establish such sourcing goals.
              2. Take politics out of the process. Any non-numerical
            sourcing goals should be designed by managers in the individual
            agencies, not the politicals over at OMB. Since they are closer
            to the action and have an institutional investment in seeing
            that their customers are well-served, agency managers, although
            far from perfect, are in a better position to establish
            appropriate goals that complement agencies' actual needs and
            missions. OMB politicals have no business in imposing
            privatization quotas on agencies, let alone telling managers
            exactly which jobs to review, as occurs regularly today. We
            would do well to remember that OMB's expertise is limited to
            the indelicate art of telling people what to do, not in
            actually doing something.
              3. Get rid of the corporate welfare. Direct conversions and
            privatizations have no place in any sourcing goals. With all
            respect to the Comptroller General, no amount of ``research and
            analysis'' can justify taking jobs away from Federal employees
            and giving them to contractors without public-private
            competition. That does a disservice to Federal employees,
            taxpayers, and customers.
              4. Look beyond the usual suspects so that agencies can
            establish non-numerical, equitable sourcing goals. DOD has
            three different workforces: civilian, military, and contractor.
            However, only the civilian and military workforces have been
            looked to for savings. As Army Secretary Thomas E. White, of
            all people, has acknowledged, ``In the past 11 years, the Army
            has significantly reduced its civilian and military workforces.
            These reductions were accompanied by an expanded reliance on
            contractor support without a comparable analysis of whether
            contractor support services should also be downsized.'' The
            same is true for the rest of DOD. If HUD and the Department of
            Energy can review contractor work for insourcing, there is no
            reason DOD cannot do the same.
              Just as it's important to track the work performed by Federal
            employees, it is also important to track the work performed by
            contractors. This means that agencies must have contractor
            inventories analogous to the FAIR Act, so that managers can
            determine, as Army managers are currently attempting to do so,
            what work has been privatized already, particularly with
            respect to whether it is actually inherently governmental work.
              5. Any non-numerical, agency-specific, equitable sourcing
            goals must take into account the need for a diverse Federal
            workforce. Federal agencies should be model employers, rather
            than reactionary employers who use, purposefully or not,
            privatization quotas to roll back all of the progress made in
            creating a Federal civil service as diverse and inclusive as
            the American people.
              6. Non-numerical, agency-specific, equitable sourcing goals
            should also peacefully coexist with other, more proven
            techniques--from labor-management partnerships to demonstration
            projects to reorganizations and consolidations--to make
            agencies' operations more efficient. The administration has
            broken with bipartisan precedent and emphasized the OMB
            Circular A-76 privatization process to the exclusion of all
            other techniques.
              7. Non-numerical, agency-specific sourcing goals that are
            truly equitable cannot possibly be created unless both
            contractors and Federal employees have the same rights to
            challenge agencies' sourcing decisions. Currently, only
            contractors have legal standing to take agencies to GAO and the
            Court of Federal Claims--and not Federal employees and their
            union representatives. It is manifestly unfair that the
            administration has unleashed a tidal wave of privatization on
            Federal employees without making sure that Federal employees as
            well as contractors can both have their day in court.
              8. Agencies should establish non-numerical, equitable
            sourcing goals for one reason only: so that customers can
            receive better services at the lowest possible costs.
            Competitions are a means to an end; they are not an end in
            themselves. As the costs and consequences of the privatization
            quotas become more clear, and the resulting savings fail to
            materialize, OMB officials are, as noted earlier, inventing
            rationales for their failed policy that have nothing to do with
            promoting the interests of customers or taxpayers. Well,
            conducting competitions for the sake of conducting competitions
            is not acceptable public policy. As OMB officials should know,
            the adverse impact on workforce morale of a privatization
            review, as well as the commensurate adverse impact on
            productivity, is significant.
              9. Agencies should also be required to conduct and make
            public ``research and analysis'' before establishing any non-
            numerical, agency-specific, equitable sourcing goals,
            including:

                      a. whether the agency has the in-house capability to
                    satisfactorily perform these inherently governmental
                    functions: conducting the competitions,\1\ crafting the
                    most efficient organization plans, and administering
                    any resulting contracts;
    ---------------------------------------------------------------------------
        \1\ According to the March edition of Government Executive, ``No
    agency is implementing competitive sourcing without contractor support.
    `There is no expertise left in government to do these competitions,' ''
    says one agency official. (Emphasis added.) ``For niche contractors
    that specialize in A-76, the initiative is big business,'' according to
    one consultant. `` `The demand for consultant support is so great that
    industry is strapped to meet it,' '' according to the consultant. ``
    `The biggest problem is finding qualified people to do the work. . .'
    '' Perhaps Ms. Styles meant that her privatization quotas would
    encourage young people to grow up and become the A-76 consultants
    necessary to implement her controversial initiative, rather than the
    Federal employees who are needlessly subjected to it.
    ---------------------------------------------------------------------------
                      b. what experiences the agency, other Federal
                    agencies, or State and local governments have had in
                    the past with public sector and I or contractor
                    performance of the work in question particularly with
                    respect to costs; \2\
    ---------------------------------------------------------------------------
        \2\ Obviously, the less experience with or information about an
    agency has in relation to the work in question, the more cautious an
    agency should be in shifting that work from one workforce to another.
    ---------------------------------------------------------------------------
                      c. to what extent the work has already been
                    privatized; \3\
    ---------------------------------------------------------------------------
        \3\ As the Department of the Army has concluded, it is necessary to
    determine whether commercial functions, ``when contracted out beyond a
    certain level of reliance, increase overall risk to mission
    capabilities and readiness.''
    ---------------------------------------------------------------------------
                      d. whether the agency can easily reconstitute an in-
                    house capability if the work is privatized;
                      e. whether the private sector market can provide
                    sufficient competition to avoid sole-source contracting
                    if the work is privatized;
                      f. what impact, if any, there would be on service if
                    the contractor were to provide its workforce with
                    inferior compensation; \4\ and
    ---------------------------------------------------------------------------
        \4\ It is commonly acknowledged that the historic and systematic
    failure of contractors to provide airport security screener workers
    with adequate compensation jeopardized passenger safety and played a
    significant role in the decision of Congress to contract in the
    screening function.
    ---------------------------------------------------------------------------
                      g. what alternatives to privatization exist to make
                    the delivery of services more efficient and what are
                    the costs of those alternatives in relation to the cost
                    of conducting a competition and perhaps privatizing the
                    work.\5\
    ---------------------------------------------------------------------------
        \5\ The consideration of alternatives to public-private competition
    is imperative when we remember that it can cost taxpayers as much as
    $8,000 to review just a single job for privatization.

        Not a single agency has conducted that basic ``research and
    analysis.'' Nor is there any indication that OMB or the agencies
    feverishly implementing the privatization quotas will rectify that
    dereliction, although the Army deserves some credit for thinking about
    these issues, albeit in the service of the indefensible ``Third Wave''
    initiative.
         2. the rewrite of the omb circular a-76 privatization process
        In the past, when I mentioned ``OMB Circular A-76,'' people's eyes
    glazed over. Not any more, though. OMB's controversial rewrite of the
    A-76 process has subjected this obscure directive to the much-needed
    glare of publicity. In fact, 170 House and Senate lawmakers have
    already signed on to a joint letter of objection to OMB about its
    November 14, 2002, A-76 rewrite proposal; and others have sent their
    own individual letters. I'm not surprised. The November draft is so
    one-sidedly pro-contractor, it defies belief.
        The Army's controversial ``Third Wave'' privatization initiative,
    which was designed to review for privatization without any public-
    private competition at least 210,000 Federal and military positions, is
    widely viewed as being beyond the public policy pale. In fact, at least
    publicly, it has even been implicitly repudiated by the Army.
        In summarizing the comments I submitted to OMB last December, I
    will argue that the A-76 rewrite has many similarities to the ``Third
    Wave,'' is in some ways even more extreme, and could be used by the
    Army or other services to implement the ``Third Wave.''
        In other words, the A-76 rewrite is in many ways a stealthy
    continuation of the discredited ``Third Wave'' by other means. It might
    actually be called the ``Fourth Wave''--and, if implemented, it could
    constitute the ``final wave'' for Federal employees, effectively wiping
    out what's left of the in-house workforce. Triumphant contractors are
    naturally exultant about the rewrite. In fact, as a result of the
    changes proposed by OMB, contractors insist that they will win 90
    percent of all A-76 competitions, instead of the 40-50 percent they are
    winning now.\6\
    ---------------------------------------------------------------------------
        \6\ For example, James C. Fonta, Senior Vice President, Geotonics
    Government Solutions, told contractors gathered at a Contract Services
    Association of America event that merely switching A-76 to a ``best
    value'' process and ``forc(ing) agencies to measure the true costs of
    their work'' (i.e., double charging in-house bids for indirect
    personnel costs, while not charging contractor bids for the same costs)
    would ``dramatically decrease number of Gov't `wins' perhaps to 10
    percent.''

        A. Like the ``Third Wave,'' the A-76 rewrite would emphasize
    privatization to the exclusion of all other methods of making the
    provision of Federal services more effective, more efficient, and
    reliable.\7\ Also like the ``Third Wave,'' the A-76 rewrite would
    require agencies to review 100 percent of their in-house inventories
    for privatization.
    ---------------------------------------------------------------------------
        \7\ Actual Text (Daniels Memorandum, 4., page 1): ``. . . (A)ll
    commercial activities performed by Government personnel should be
    subject to the force of competition, as provided by this circular.''
    ---------------------------------------------------------------------------
        This represents a radical shift in philosophy. The current circular
    places the privatization process in its proper context, as just one
    tool in a manager's toolbox. The process of improving service delivery,
    according to the current introduction, page 1, ``must consider a wide
    range of options, including: the consolidation, restructuring or
    reengineering of activities, privatization options, make or buy
    decisions, the adoption of better business practices. . .'' Even DOD
    employs a ``strategic sourcing'' approach that involves a range of
    options similar to those recommended in the introduction to the current
    circular.

        B. Unlike even the ``Third Wave,'' the A-76 rewrite would include
    an explicit bias towards privatization.\8\
    ---------------------------------------------------------------------------
        \8\ Actual Text (Daniels Memorandum, 4.b., page 1): ``Presume all
    activities are commercial in nature unless an activity is justified as
    inherently governmental.'' (Emphasis added.)
    ---------------------------------------------------------------------------
        Per the A-76 rewrite, all work performed by Federal employees would
    be considered appropriate for privatization.

        C. Unlike even the ``Third Wave,'' the A-76 rewrite would
    ``rewrite'' through a mere circular the law that defines ``inherently
    governmental'' in order to make it easier to contract out inherently
    governmental work.\9\
    ---------------------------------------------------------------------------
        \9\ Actual Text (Attachment A, E.I., page A-3): ``These activities
    require the exercise of substantial official discretion in the
    application of Government authority and/or in making decisions for the
    Government.'' (Emphasis added) The addition of the word ``substantial''
    rewrites the language in the FAIR Act that defines ``inherently
    governmental.''

        D. Unlike even the ``Third Wave,'' the A-76 rewrite does not
    include an inventory to track the work performed by contractors, making
    it impossible for agencies to determine which inherently governmental
    work has been wrongly privatized, even though key figures in the
    administration's privatization effort concede that this has already
    ---------------------------------------------------------------------------
    happened.

        E. Unlike even the ``Third Wave,'' which ostensibly calls for
    reviewing work performed by contractors, the A-76 rewrite would subject
    almost exclusively activities performed by Federal employees to
    review.\10\
    ---------------------------------------------------------------------------
        \10\ Actual Text (Daniels Memorandum, 4., page 1): ``. . . (A)ll
    commercial activities performed by Government personnel should be
    subject to the forces of competition.'' (Emphasis added.)
    ---------------------------------------------------------------------------
        Despite the fact that contractors acquire and retain almost all of
    their work without public-private competition and precious little
    private-private competition, OMB has never applied such quotas to the
    Federal Government's massive contractor workforce. For those keeping
    score, at least 850,000 Federal employee jobs would be subjected to
    privatization under the rewritten A-76. At the same time, only a tiny
    handful of contractor workers would be reviewed. In DOD, not a single
    contractor job is scheduled to be reviewed for insourcing.

        F. Unlike even the ``Third Wave,'' the A-76 rewrite would not
    establish a reliable and comprehensive inventory to track work
    performed by contractors, although the new process combined with the
    OMB privatization quotas will drastically increase the number of
    taxpayer dollars given to contractors.
        I will now discuss how the A-76 overtly encourages agencies to
    directly convert work performed by Federal employees to contractors
    without any public-private competition, a la the ``Third Wave.''

        G. The rewritten circular retains various direct conversion methods
    of giving work to contractors without public-private competition that
    are included in the current circular, including special authorities for
    smaller functions, whenever it can be claimed not to adversely impact
    Federal employees, waivers, and business case analyses.\11\ Because of
    the OMB privatization quotas, agencies would be encouraged to make use
    of all of these explicit direct conversion methods.
    ---------------------------------------------------------------------------
        \11\ For the actual text, please see Attachment C, A.1., 2., 8.,
    and 9, pages C-1, C-2.
    ---------------------------------------------------------------------------
        With respect to the authority for direct conversion of smaller
    functions, OMB has failed to require agencies to employ the Department
    of the Interior model that first performs a bare-bones cost comparison
    between the existing in-house workforce and private sector firms
    performing similar work before shifting any work to contractors.\12\
    ---------------------------------------------------------------------------
        \12\ According to an April 8, 2002, GovExec.com article, ``The
    Interior plan gives agencies a new option for holding public-private
    competitions on functions involving 10 or fewer employees. Currently,
    agencies may directly convert such small functions to the private
    sector without giving civil servants a chance to compete for their
    jobs. Interior's plan, by contrast, would allow Federal employees to
    keep their jobs if they could perform the work at a lower cost than
    private firms.'' While less than the ideal of allowing Federal
    employees to put their best bid forward as a real Most Efficient
    Organization, it's surely better than the wholly noncompetitive process
    mandated by the rewritten circular.

        The direct conversion authority where there is ostensibly no impact
    on Federal employees has been significantly expanded so that it applies
    without numerical limitation on the number of Federal employees
    involved and could now also be used when ``all directly affected
    Federal civilian employees within the agency . . . voluntarily
    retire.'' This is surely smart politics, encouraging agencies to give
    work to contractors when there might be no opposition from an in-house
    workforce, but is it good for Government? Of course not. Divesting an
    agency of a function through privatization without making a formal
    make-or-buy decision simply because of its political expediency is
    clearly bad for Government.\13\
    ---------------------------------------------------------------------------
        \13\ This is the sort of loophole that caused the ``human capital
    crisis,'' and the rewritten circular's expansion of that loophole would
    only exacerbate that crisis. For a precedent, we need look no further
    than the ruinous downsizing that has taken place in the Defense
    Department's acquisition workforce; as the Inspector General reported
    in 2000, DOD hired contractors to replace the civilian employees in the
    acquisition workforce who ``voluntarily retired''--at higher costs.
    Among the adverse consequences reported by multiple acquisition
    organizations from the downsizing: insufficient staff to manage
    requirements efficiently, reduced scrutiny and timeliness in reviewing
    acquisition actions, increased backlog in closing out completed
    contracts, and lost opportunities to develop cost savings initiatives.
    The IG also reported that seven different acquisition organizations
    experienced ``increased program costs resulting from contracting for
    technical support versus using in-house technical support.'' All such
    privatization occurred through direct conversions, the rationale being
    that the Federal workforce had (been) retired. The results: inherently
    governmental work was privatized and taxpayers paid more than before.
    ---------------------------------------------------------------------------
        I will now discuss how the A-76 covertly encourages agencies to
    directly convert work performed by Federal employees to contractors
    without any public-private competition, a la the ``Third Wave.''

        H. If managers responsible for conducting competitions for work
    performed by Federal employees are unable to complete those
    competitions within 12 months, the work can simply be given to
    contractors.
        ``If you can't complete the (competition within 12 months) then you
    are not prepared to do the work, so we will outsource it,'' thundered
    OMB's David Childs, according to the November 18, 2002, edition of
    Federal Times.
        In response to intense criticism, Ms. Styles, in a January 28,
    2003, article in The Washington Post, spun OMB's position, ``saying it
    was `absolutely not' true that agencies who exceed the 12-month
    timeframe would automatically lose the competitions to a private-sector
    bidder. `Could one of the alternatives be that this work goes to the
    private sector? Yes, it is,' she said. `But that's not the favored
    alternative. It's not the presumed alternative.' ''
        The ability of rank-and-file Federal employees to perform a service
    and the ability of management elsewhere in the agency to conduct a
    competition for that service are obviously apples and oranges. To say
    that Federal employees should be converted without competition because
    the agency didn't finish its competition on time is like saying that
    all OMB staff should be fired because the Director didn't submit his
    testimony on entitlement spending to the Senate Budget Committee on
    time. No arbitrary deadline for the completion of a competition,
    particularly one that involves a direct conversion of jobs to
    contractors as a penalty, is ever appropriate, period.

        I. Agencies should be able to convert work performed by Federal
    employees to contractor performance without competition when management
    does not punctually submit in-house tenders; \14\ however, instead of
    canceling solicitations when contractors submit bad proposals or don't
    submit their proposals on time, agencies are expected to rewrite their
    solicitations to address the complaints of contractors.\15\
    ---------------------------------------------------------------------------
        \14\ Actual Text [Attachment B, C.3.(9), page B-9]: ``When the in-
    house bid is not submitted; the agency's privatization czar ``may: (1)
    instruct the Contracting Officer to return received offers and tenders
    and amend the solicitation allowing additional time for resubmission of
    all offers and tenders, or (2) instruct the Contracting Officer to
    proceed with source selection without the Agency Tender. ``
        \15\ Actual Text: [Attachment B, C.3.(9)d, on page B-10]: ``When a
    Standard Competition is attempted but private sector offers or public
    reimbursable tenders are either not received; or those received are
    found to be non-responsive or not responsible . . . the contracting
    officer shall document, in writing, the following: (1) restrictive,
    vague, confusing, or misleading portions of the solicitation; (b)
    possible revisions to the solicitation to encourage participation; (2)
    the reasons provided by sources for not submitting responses; and (3)
    the reasons offers or tenders were either not responsive or not
    responsible. The contracting officer and the source selection authority
    shall evaluate the results of these discussions and propose a course of
    action in a written document to the (agency's privatization czar). The
    contracting officer shall provide a copy of this written document to
    the Performance Work Statement Team, Agency Tender Official, and to the
    public, upon request. . . (The agency's privatization czar) shall
    evaluate the contracting officer's written recommendation and make a
    written determination to either (a) revise solicitation or (2)
    implement the (in-house bid).''
    ---------------------------------------------------------------------------
        If the Agency Tender Official, a management official, fails to
    submit the in-house tender by the deadline, the jobs of innocent rank-
    and-file Federal employees, who are in no way responsible for the
    mechanics of the privatization process, could be given to contractors
    without any public-private competition. This is obviously unfair to the
    affected workforce and to the taxpayers.
        Because the OMB privatization quotas give agencies full credit for
    completing direct conversions pursuant to OMB Circular A-76, the same
    as if the jobs had been subjected to real public-private competitions,
    agencies will have little incentive to submit thoughtful in-house
    tenders in timely fashion. Why bother taking the time to craft the best
    possible in-house tender when the agency can do no work at all and get
    the same amount of credit, because OMB doesn't care whether the work is
    competed or converted, as long as any work performed by Federal
    employees is ultimately privatized?
        I will now discuss how the A-76 rewrite requires Federal
    employees--but not contractors--to undergo public-private competition
    in order to perform or retain new work, segregable work, and existing
    work.

        J. Federal employees--but not contractors--must compete to perform
    new work.\16\
    ---------------------------------------------------------------------------
        \16\ Actual Text [Attachment A, A.2.b.(3), page B-2]: ``Agencies
    shall use Standard Competitions to justify . . . (a)gency . . .
    performance of a new requirement. A Standard Competition is not
    required for private sector performance of a new requirement competed
    (sic) in accordance with the Federal Acquisition Regulation.''

        K. Federal employees--but not contractors--must compete when they
    are doing exactly the same work as before, but the value of that work
    increases by as little as 30 percent.\17\
    ---------------------------------------------------------------------------
        \17\ Actual Text: [Attachment A, A.2.b.(4), page B-2]: ``Agencies
    shall use Standard Competitions to justify . . . (a)gency . . .
    performance of an expansion of existing commercial activities. An
    expansion is the modernization, replacement, upgrade, or increased
    workload of an existing agency performed commercial activity that
    increases the operating cost of the activity by 30 percent or more . .
    . A Standard Competition is not required for private sector expansion
    competed (sic) in accordance with the FAR.''

        L. Federal employees--but not contractors--must compete to continue
    to perform work when their contracts expire; or agencies may simply
    give such work away to contractors through direct conversions.\18\
    ---------------------------------------------------------------------------
        \18\ Actual Text [Attachment B, C.5.b.(2), page B-16]: ``By the end
    of the last performance period stated on the Standard Competition Form,
    another public-private competition or Direct Conversion shall be
    completed in accordance with this Circular.''
    ---------------------------------------------------------------------------
        At the outset of this discussion, one point needs to be fully
    understood. The rewrite of the circular applies only to the circular,
    not the Federal Acquisition Regulation (FAR). However, the rewrite of
    the circular inserts the FAR into the circular. Consequently, to the
    extent the FAR itself has problems with respect to many issues
    involving competition between and among private contractors to perform
    the Federal Government's work--and it does--public-private competition
    will now be burdened with those problems.
        As Ms. Styles remarked at a House Armed Services Readiness
    Subcommittee hearing last year,

            ``There needs to be some recognition that there are problems in
            the private-private system for competition and FAR based
            competitions. It's not a perfect system and we may be
            exacerbating some of the problems when we try to apply the FAR
            based system private-private competitions to public-private
            competition.''

        Although ``full and open competition'' is technically still the law
    of the land, recent ``acquisition reform'' (sic) law (e.g., the Federal
    Acquisition Streamlining Act and the Clinger-Cohen Act) has virtually
    made ``full and open competition'' the exception rather than the rule
    in awarding contracts, particularly with respect to service contracts.
        There are so many exceptions to the rule that are technically
    deemed to involve competitive procedures [e.g., use of Government-Wide
    Acquisition Contracts (GWACs), multiple and single agency indefinite
    delivery/indefinite quantity (ID/IQ) contracts, General Service
    Administration (GSA) schedules, the higher dollar threshold and other
    requirements for ``commercial requirements,'' etc.] that the ``full and
    open competition'' standard is essentially dead. (Of course, it's
    getting worse. The streamlined acquisition authority under Section 833
    of the new Homeland Security Act allows any service to be deemed a
    commercial item for purposes of Federal procurement laws.) Moreover,
    many of these ``competitive alternatives'' are protest proof, meaning
    that they are not even subject to administrative or judicial review.
        Agency Inspectors General, the GAO, respected procurement judges,
    and even OMB officials have bemoaned the largely non-competitive state
    of Government contract awards.\19\ Here are some examples:
    ---------------------------------------------------------------------------
        \19\ Contractors still try to insist that there is competition
    between contractors, albeit unpersuasively. At a March 6, 2002, hearing
    of the Senate Governmental Affairs Committee, a contractor
    representative insisted that ``Contractors, for instance, are subject
    to a range of checks and balances, including continual competitive
    pressures. In fact, some 75 percent of all services contracting
    actions, and more than 90 percent of all information technology
    services contracting actions, are competitively awarded. . .'' As AFGE
    pointed out subsequently, this is a very misleading use of statistics
    from the Federal Procurement Data System. Although the contract vehicle
    (a.k.a., ``hunting license'') in a multiple award scenario may be
    considered to be competitively awarded, funding is provided through
    task orders. Such task orders through September 30, 2001, were
    automatically classified as competitively awarded, regardless of the
    circumstances. Although it is not possible to recreate the records to
    determine whether task orders to multiple award service contracts were
    competitively awarded, a DOD IG review indicated that an astounding 72
    percent of 423 multiple-award task orders awarded in fiscal years 2000
    and 2001 were awarded on a sole-source or directed-source basis.
    ---------------------------------------------------------------------------
        According to a 2000 report of the DOD Inspector General,
    ``(I)nadequate competition occurred for 63 of the 105 contract
    actions'' surveyed.
        Later that year, the GAO reported that most information technology
    orders were sole-sourced. In fact, ``only one proposal was received in
    16 of the 22 cases'' (or about $444 million of the total $553 million).
        The Associated Press reported last year that the Federal
    Government,

            ``bought more than half its products and services (in 2001)
            without bidding or through practices that auditors say do not
            fully take advantage of the marketplace. . . Concerns about the
            Government's new (i.e., post-acquisition reform) style of
            shopping are simply put: Buying without competition often means
            the public treasury gets overcharged.''

        Judge Stephen M. Daniels, Chairman of the General Services Board of
    Contract Appeals, has declared that,

            ``Although some parts of the (1984 Competition in Contracting
            Act) remain on the statute books, the guts have been ripped out
            of it. Openness, fairness, economy, and accountability have
            been replaced as guiding principles by speed and ease of
            contracting. Where the interests of the taxpayers were once
            supreme, now the convenience of agency program managers is most
            important. Full and open competition has become a slogan, not a
            standard; agencies have to implement it only in a manner that
            is consistent with the need to efficiently fulfill the
            Government's requirements.' It is now much easier to acquire
            goods and services without competition. Notice requirements
            have been reduced, particularly as the Government increasingly
            fulfills its needs without conducting formal procurements. The
            drive to have the Government present a single face to industry
            has been sent into retreat: agencies have been given greater
            discretion to procure in their own idiosyncratic ways,
            Government-wide regulations have been discarded or diminished
            in importance, and programs and whole agencies (the Federal
            Aviation Administration being just the first) are being allowed
            to procure under unique and sometimes vague rules and
            procedures.''

        Ms. Styles herself has also said that,

            ``Since the beginning of the (acquisition) reform movement,
            over a decade ago, I have not seen a serious examination of the
            effects of reform on competition, fairness, integrity, or
            transparency. As a result, I think we are seeing some serious
            competitive problems surface with the proliferation of
            Government-wide contracting vehicles and service contracting.
            ``

        Clearly, contractors are not always required under the FAR to
    compete against one another to win or retain service contracts.
    Consequently, while the rewritten circular will require Federal
    employees to compete to perform new work and segregable work as well as
    retain existing work, contractors will be able to acquire and keep such
    work without ever having to compete against Federal employees or even
    one another.
        Let's look in particular at segregable work. Under the rewritten
    circular, an automatic competition requirement kicks in for Federal
    employees when the value of work that they are already performing
    merely increases in value by 30 percent. What happens to contractors in
    such circumstances? The FAR does not use the concept of percentage
    increases in scope of work in order to determine whether a new
    competition is required. Rather, the FAR and Government contract case
    law use the concept of ``scope.''
        For example, if operating a telephone servicing center is expected
    to cost $10,000,000 but ultimately costs $15,000,000, this does not
    necessarily mean that new work has been added. It could just be that
    the original cost estimates were low, that the winning offeror low-
    balled his bid, or that more effort was required than originally
    anticipated. The general test of whether new work has been added is
    whether the added work is within the original ``scope'' of anticipated
    effort that the contractor was supposed to provide. Mere dollar value
    increases in the work under contract does not constitute expanded scope
    requiring a new competition. In practice, however, even if new scope is
    added to a contract, this is almost always performed by the original
    contractor. That's just a way of life in Government procurement. If the
    contract is a high visibility contract, typically a sole source
    justification will be written, with the justification stating that
    ``given the experience of the contractor in the work already performed,
    it is the only source that can continue to `practicably' complete the
    work in process.''
        I will now discuss how the A-76 rewrite would hold Federal
    employees far more accountable for failure than contractors.

        M. When Federal employees are found in default, the work must
    automatically be converted or competed; for contractors, however, it
    could be business as usual.\20\
    ---------------------------------------------------------------------------
        \20\ Actual Text [Attachment B, C.5.c.(2), page B-16]: ``If an
    agency, private sector, or public reimbursable provider fails to
    perform to the extent a termination for default is justified; agencies
    shall comply with the following: (a) for a private sector provider, the
    Contracting Officer complies with the FAR Part 49; (b) for an agency or
    public reimbursable provider, the head of the requiring organization
    shall issue a notice to terminate and shall recommend; in writing, that
    the (agency's privatization czar) approve either (1) a Direct
    Conversion based upon a Standard Competition Waiver or (2) a Standard
    Competition.''
    ---------------------------------------------------------------------------
        What happens to Federal employees under the rewrite is clear.
    However, the consequences for defaulting contractors aren't quite so
    dire. Per FAR Part 49, ``The following courses of action, among others,
    are available to the contracting officer in lieu of termination (of a
    contract) for default when in the Government's interest: (a) Permit the
    contractor, the surety, or the guarantor to continue performance of the
    contract under a revised delivery schedule. (b) Permit the contractor
    to continue performance of the contract by means of a subcontract or
    other business arrangement with an acceptable third party, provided the
    rights of the Government are adequately preserved. . .''
        Moreover, contractors can and do vigorously litigate to avoid
    default.\21\ Federal employees and their union representatives, on the
    other hand, have no such recourse.
    ---------------------------------------------------------------------------
        \21\ ``How To Avoid & Overturn Terminations for Default,'' a
    veritable Bible for contractors who have strayed from the path of
    compliance, lists a variety of aggressive defenses that have been used
    successfully by contractors to avoid default determinations, including
    excusable delay, defective specification and impossibility, waiver of
    contract due date, contracting officer's failure to follow procedural
    requirements, contracting officer's failure to exercise discretion, and
    contracting officer's abuse of discretion; and there are many more
    defenses for specific types of contracts.
    ---------------------------------------------------------------------------
        I will now discuss six different ways the A-76 rewrite favors
    contractors over Federal employees.

        N. Agencies should provide much more justification under the A-76
    rewrite before canceling an award to a contractor than when the work
    has been won by Federal employees.\22\
    ---------------------------------------------------------------------------
        \22\ When Federal employees win the work but the agency wants to
    cancel the solicitation, the contracting officer is merely required to
    cancel in accordance with the FAR. However, when a contractor wins, the
    agency's privatization czar must personally certify the cancellation.
    But wait--there's more. The agency's most senior official must then
    submit a detailed report to the OMB Deputy Director for Management, the
    agency's third most senior official, that states the contracting
    officer's cancellation decision was in accordance with the FAR. But
    wait--there's still more. The agency's most senior official must also
    justify to one of the most important officials in the Federal
    Government's most powerful agency that the cancellation ``was clearly
    in the public interest,'' ``provide the agency's rationale for
    canceling the solicitation,'' and then state the ``approximate date for
    reissuance of the solicitation. . .'' For the actual text, please see
    Attachment B, C.2.a.(14), page B-7.

        O. Under the A-76 rewrite, contractors--but not rank-and-file
    Federal employees directly affected by privatization or their union
    representatives--can participate in all appellate processes, to the
    Administrative Appeal Authority, the GAO, or the Court of Federal
    Claims.\23\
    ---------------------------------------------------------------------------
        \23\ Actual Text [Attachment B, C.6.a.( I), page B-17]: ``The
    Administrative Appeal Process provides directly interested parties an
    opportunity to have an independent agency official review the
    Performance Decision. ``
          ``Directly interested parties'' is not defined in the Definition
    of Terms. With respect to the in-house workforce, only the Agency
    Tender Official is identified in the rewritten circular as a ``directly
    interested party.'' Actual Text [Attachment B, B.1., page B-3]: ``The
    ATO shall be considered a directly interested party.''
          Directly affected Federal employees and their union
    representatives would not be allowed to participate in this process.
    Moreover, as the Agency Tender Official is a management official, it is
    manifestly unreasonable to expect that he could act independently on
    behalf of directly affected Federal employees in appealing to another
    management official who would serve as the Administrative Appeal
    Authority. Finally, it should be noted that the internal appellate
    process applies only after the Performance Decision. There is no
    provision for appeal of such important pre-performance questions as the
    decision whether to use sealed bidding or negotiation, the choice of
    evaluation factors and their weights, or an allegedly defective
    performance work statement. How can an internal appellate process be
    fair if it is forbidden to challenge the very ``ground rules'' of the
    competition?
          While directly affected Federal employees will be allowed only
    representation by a management official who will determine entirely on
    his own whether to appeal to another management official who is
    forbidden to review most questions raised by the privatization process,
    contractors, on the other hand, will still be allowed to appeal all
    pre-Performance Decision and post-Performance Decision questions to the
    GAO and the Court of Federal Claims. Moreover, per Attachment B,
    C.6.a.(1), page B-17, contractors will still be able to participate in
    the internal appellate process with respect to ``questions regarding a
    private sector offeror's compliance with the scope and technical
    performance requirements of the solicitation.''
          The rewritten circular is needlessly punitive with respect to the
    involvement of Federal employees in the appellate process. The current
    circular allows employees 20 calendar days during which to file an
    appeal. Per Attachment B, C.6.a.(2), page B-17, the submission period
    is reduced to 10 working days. Given that Federal employees, whether or
    not represented by unions, are less likely to have legal
    representation, this change will have a disproportionately adverse
    effect on the in-house workforce.

        P. Under the A-76 rewrite, only the confidential nature of
    proprietary information of the contractors' bids is protected.\24\
    ---------------------------------------------------------------------------
        \24\ Actual Text [Attachment B, C.6.a.(2), page B-17]: ``Where
    private sector proprietary information is involved a redacted copy of
    the appeal and decision documentation will be made available.''

        Q. The only conflicts of interest addressed by the A-76 rewrite are
    those that might conceivably benefit Federal employees in the
    privatization process; the longstanding conflicts of interest which
    demonstrably benefit contractors will continue to undermine the
    integrity of the privatization process.\25\
    ---------------------------------------------------------------------------
        \25\ Excerpted Actual Text [Attachment B, D.2.a.(1), D.2.b.(1),
    D.2.c.l., pages B-19-20]: ``To avoid any appearance of a conflict of
    interest, members of the Performance Work Statement Team shall not be
    members of the (In-House Bid) Team. Members of the (In-House Bid) Team
    shall not be members of the Source Selection Executive Board''
          As OMB officials know very well, the reason managers experienced
    with privatization often had to play multiple roles in the process is
    precisely because agencies employ so few of them. Because the rewritten
    circular means more competitions and conversions but no more staff or
    training, agencies will be forced to rely even more on contractors to
    conduct the competitions, particularly with respect to writing
    performance work statements and in-house bids.
          Again, because the radical overhaul of the privatization process
    is being accomplished only through a rewrite of the circular,
    contractors emerge completely unscathed. As anybody with even a modicum
    of experience with procurement understands, the privatization process
    is rife with conflicts of interest that benefit contractors. FAR
    Subpart 9.5, for example, purports to be designed to minimize
    contractor conflicts of interest. However, it is largely full of empty
    exhortations. Conflicts of interest arise when contractors recommend or
    otherwise advise buying agencies to make additional purchases from the
    contractors with whom the recommending contractors have business
    interests. While the FAR tries to address blatant conflicts (e.g.,
    contractors recommending themselves for jobs), the nature of modern day
    government contracting is replete with contractor ``partnerships,''
    ``strategic relationships,'' and other arrangements in which various
    contractors agree to help one another out--usually through various
    subcontracting relationships. The rewrite of the circular raises the
    very real prospect that contractors will be increasingly responsible
    for evaluating the work of other contractors--contractors with whom
    they have business interests at many levels. The inevitable conflicts
    of interest and the resulting corruption have the potential to make
    recent accounting and auditing scandals pale in comparison.

        R. Under existing law and regulation, Federal employees--but not
    contractors--would continue to be subject to a myriad of requirements
    and obligations under the A-76 rewrite.\26\
    ---------------------------------------------------------------------------
        \26\ As the independent scholar Dan Guttman has written, Federal
    employees, but not contractors, are subject to a variety of rules
    ``that address conflict of interest (e.g., 18 U.S.C. 208), assure that
    Government activities are (with limits) `open' to the public (e.g.,
    Freedom of Information Act), limit the pay for official service, and
    limit the participation of officials in political activities.''
          Despite this extraordinary effort to massively increase the
    number of politically well-connected contractors on the Federal payroll
    and so completely blur the appropriate and vital distinction between
    public and private, OMB will make no effort to ensure that contractors
    are as accountable to the American people as Federal employees already
    are.

        S. Under the A-76 rewrite, tenders submitted by Federal employees
    must include ``all'' costs, even when they are irrelevant or have
    already been counted, while contractors should be allowed to exclude
    significant costs from their own proposals.
        The calculation of costs has been an extraordinary obsession for
    contractors through the years. They know that if they could ever
    artificially inflate the cost of in-house tenders, they would win the
    vast majority of competitions. In OMB, contractors have an ally which
    is eager to help contractors finally fulfill this long-sought dream.
        OMB has made much ado about ensuring that in-house tenders account
    for all of their ``indirect costs.'' The existing circular already
    requires in-house tenders to include such overhead costs. The rewritten
    circular would require that in-house tenders be charged twice for the
    same overhead costs.\27\
    ---------------------------------------------------------------------------
        \27\ Actual Text [Definition of Terms, page F-7]: ``Overhead is a
    cost that is included in all cost proposals. The overhead used in cost
    estimates submitted by agency or reimbursable sources is the OMB
    required standard cost factor identified in Attachment E. This
    standardized cost factor accounts for indirect costs that are
    comparable to those included in private sector offers, represent costs
    to the taxpayer that are not necessarily visible at the installation,
    headquarters level or Department level, but are provided by the
    Government's budget at an expense to the taxpayer. . .''
    ---------------------------------------------------------------------------
        The 12 percent ``standardized cost factor'' for indirect costs in
    the existing circular would be retained in the rewritten A-76.\28\
    However, the rewritten circular would allow agencies to charge in-house
    tenders for indirect costs a second time, under ``personnel costs.''
    \29\
    ---------------------------------------------------------------------------
        \28\ Actual Text [Attachment E, B.4.b., page E-11]: ``The 12
    percent overhead factor is a rate established by OMB to represent an
    overhead cost factor for all Federal agencies when performing Standard
    Competitions . . . This overhead factor represents costs that are not
    visible, allocable, or quantifiable to the agency, activity, or the
    Most Efficient Organization (MEO, or in-house bid). Use of the rate
    accounts for all management and support costs internal and external to
    the agency not required on Line 1.''
          A 1998 GAO report (NSIAD-98-62) provides information on the
    origins of the 12 percent overhead that is charged to all in-house
    tenders: ``Absent (actual cost data about in-house overhead), OMB
    selected a single overhead rate of 12 percent, a rate that was near the
    midpoint of overhead rates suggested by Government agencies and private
    sector groups. Most Government and private sector groups (GAO)
    contacted agreed that reasonable levels of overhead should be included
    in A-76 cost estimates and, absent anything better, the 12 percent rate
    is acceptable at this time.'' The report noted that the 12 percent rate
    for ``(o)verhead was supposed to include two types of costs on a
    marginal or proportional basis: (1) operations overhead, which includes
    the costs of managing an organization that are not 100 percent
    attributable to the activity under study, and (2) general and
    administrative costs, which include the salaries and equipment, and
    work space related to headquarters management, accounting and finance
    support, personnel support, legal support, data processing support, and
    other common support activities such as facilities maintenance.''
        \29\ Actual Text [Attachment E, B.1.b.(2), page E-4]: ``Personnel
    costs for labor that is not dedicated to the MEO but clearly have
    responsibilities to the MEO are considered `indirect labor.' Indirect
    labor includes, but is not limited to, personnel costs for MEO
    management and oversight activities, such as managers and supervisors
    above the first line of MEO supervision who are essential to the
    performance of the MEO. Indirect labor also includes the labor of
    individuals who are responsible for oversight and compliance actions
    implicitly required by the MEO in order to comply with the solicitation
    (e.g., supervision, human resources, comptroller, general counsel,
    environmental, OSHA Act compliance management).''
    ---------------------------------------------------------------------------
        Not only would the rewritten circular charge the in-house tender
    twice for the same costs, but the definition of in-house indirect labor
    costs is so broad as to ensure that any time an agency wanted to ensure
    the privatization of a function under competition management could
    easily manufacture the additional superfluous overhead costs.\30\
    ---------------------------------------------------------------------------
        \30\ Actual Text [Attachment E, B.1.b.(2), page E-4]: ``The agency
    shall include in the Agency Cost Estimate the cost of indirect labor to
    reflect personnel who are responsible to manage, control, regulate,
    preside over, oversee, or supervise MEO related activities but are not
    dedicated to the MEO as a direct labor cost.'' With such a broad
    definition, the in-house tender could be charged for the cost of
    maintaining Air Force One because, of course, the President is
    ultimately charged with the responsibility for ``managing, controlling,
    presiding over, overseeing, and supervising'' the MEO. To belabor the
    obvious, the functions in the agency that are being charged twice
    against the MEO would in almost all cases need to exist, and thus
    require the same resources, regardless of the MEO. Moreover, it must be
    noted that the rewritten circular actually exacerbates the perverse
    incentive to privatize work in order to reduce the pay and benefits of
    those who perform work for the Federal Government by imposing redundant
    and irrelevant indirect personnel costs on in-house tenders.
    ---------------------------------------------------------------------------
        But it gets worse. Not only would the rewritten circular charge the
    in-house tender twice for indirect labor costs, some of them wholly
    irrelevant to the MEO, contractors would not even be charged for their
    indirect labor costs.\31\
    ---------------------------------------------------------------------------
        \31\ While contractors are charged with the cost of contract
    administration, they are not charged with the indirect labor costs of
    contract administration. For example, the costs associated with the
    personnel responsible for paying the contract administrators, or the
    cost of the human resources staff who hire the payroll staff, or the
    security guards who keep safe the building in which the contract
    administrators work, or the cost of the maintenance staff who keep
    clean the facility in which contract administrators work, or the
    managers of the contract administrators, or, in the words of the
    rewritten circular with respect to in-house bids, all of the other
    ``personnel who are responsible to manage, control, regulate, preside
    over, oversee, or supervise (contract administration-) related
    activities but are not dedicated to the (contract administration
    workforce) as a direct labor cost.''
    ---------------------------------------------------------------------------
        While the rewritten circular would charge in-house tenders with
    costs not once but twice and even when such costs are irrelevant, OMB
    is increasingly unwilling to charge contractors for their most basic
    costs. This raises serious equity and efficiency issues in the context
    of the circular and privatization generally.\32\
    ---------------------------------------------------------------------------
        \32\ One major factor in properly administering service contracts
    is cost control. Without adequate cost control mechanisms in place,
    ultimate contract costs, and consequently prices paid by the taxpayers,
    can rapidly spiral upward. Although, much has been said about
    performance-based service contracting, the facts reveal that
    contractors continue to press Government agencies to award contract
    types that minimize contractor risk and cost control.
          With the exception of common commercially available off the shelf
    services, cost evaluations and/or determinations play a significant
    role in Government contract pricing and/or reimbursement decisions. The
    simplest scenario is for cost-reimbursement contracts. For that
    contract type, actual reimbursement of the contractor is made on the
    basis of costs that have been determined to be allowable, allocable,
    and reasonable in accordance with specific accounting conventions,
    policy, and procurement regulations.
        However, even for so-called fixed-price contracts, many times
    initial cost evaluations and/or determinations are required when
    estimating what a fair and reasonable price should be. In other cases,
    cost evaluations and/or determinations are required to estimate the
    pricing of ``changed'' or added work that occurs during contract
    performance. In still other cases, cost evaluations and/or
    determinations are required under fixed-price contracts in order to
    effect profit and/or fee adjustments, make progress (i.e., financing)
    payments, etc.
        Traditionally, when cost evaluations were made, contractors were
    required to submit cost or pricing data (i.e., certified pricing data).
    Under the various acquisition reform (sic) laws, the need for formal
    cost evaluations has not been reduced, but the form in which
    submissions are made has been. Frequently, contractors are now
    permitted to submit ``information other than cost or pricing data''
    which is the same thing as cost or pricing data; it's just that the
    cost data is no longer certified, which legally relieves contractors
    from all manner of oversight. A contractor's certification must be that
    the cost data submitted are current, accurate, and complete. If it is
    later determined to be untrue, the Government can make a claim against
    the contractor for defective pricing under the Truth in Negotiations
    Act (TINA).
        The latest incarnation of the phenomenon of contractors running
    away from their costs is the rapidly increasing use of time and
    material (T&M) and labor hour (LH) contracts. These contracts place
    nearly all risk of cost control on the taxpayers, and substantially
    reduce cost visibility. T&M/LH contracts are frequently touted by
    contractors as an alternative to cost-reimbursement contracts.
    Unfortunately, T&M/LH contracts are prone to even less cost control
    than cost-type vehicles.
        T&M/LH contracts are contracts in which hourly rates are paid by
    the Government as services are rendered (e.g., $75 hour for IT
    services). Added to these rates are any additional costs of material.
    Contractors claim that T&M/LH contracts are frequently used in the
    ``commercial sector,'' thus, they should be used by the agencies.
    However, the increasing use of T&M/LH contracts has nothing to do with
    ``commercial practice,'' rather it has to do with shifting performance
    risk to the Government, and increasing profits for contractors. Under a
    T&M/LH contract, a contractor only promises to use its ``best efforts''
    to accomplish the work. Performance is not guaranteed. For example, if
    a computer programming job is budgeted at 500 hours x $75/hour, and the
    contractor does not complete the job within the hours specified, the
    Government's only real recourse is to pay for more hours. Worse yet,
    because contractors are asking that T&M/LH contracts be recognized as
    ``commercial''--a euphemism for no price protections, oversight or
    auditing--the Government has tremendously reduced its ability to ensure
    that taxpayers are getting a good deal. As FAR 16.601 has long stated''
    A time-and-materials contract provides no positive profit incentive to
    the contractor for cost control or labor efficiency.''
        Recently, as a part of a rule ostensibly designed to increase
    competition and accountability in DOD service contracting, OMB
    initially tried to specifically require that use of T&M/LH contracts be
    accompanied by audit and pricing protection clauses in order to ensure
    that the Government was getting a good deal. In doing so, OMB was only
    trying enforce an existing FAR provision (FAR 12.207) that restricted
    use of T&M/LH contracts to circumstances in which audit and TINA
    clauses are included in the contract award vehicle. Ultimately, in the
    face of ferocious opposition, from information technology contractors
    and their congressional supporters, particularly Representative Tom
    Davis (R-VA), Chair of the House Government Reform Subcommittee on
    Technology and Procurement Policy, OMB backed off its stance. It now
    appears reasonably likely that OMB will support allowing use of T&M/LH
    contracts without the safeguard provided by audit, TINA and Cost
    Accounting Standards contract clauses--while at the same time insisting
    the in-house tenders be charged twice for indirect labor costs, no
    matter how irrelevant.
    ---------------------------------------------------------------------------
        The A-76 rewrite changes how costs are calculated to benefit
    contractors in other ways as well:

              Exclusion of the cost of a performance bond, which is
            executed in connection with a contract in order to ensure
            performance so as to protect taxpayer and agencies' customers
            from the consequences of default, would give contractors an
            unfair advantage.\33\
    ---------------------------------------------------------------------------
        \33\ Actual Text [Attachment E, C.1.d., page E-12] ``When a
    solicitation requires the private sector offer to provide a performance
    bond; the cost of the performance bond is excluded from the private
    sector offer when entered on Line 7.''
    ---------------------------------------------------------------------------
              Security clearances are another example.\34\ With respect to
            security clearances for the Federal employee workforce, that is
            a sunk cost, one that has already been amortized, which is not
            the case with contractors.
    ---------------------------------------------------------------------------
        \34\ Actual Text: [Attachment B, C.2.a.(12), page B-7]: ``The costs
    associated with security clearance requirements shall not be included
    on the Standard Competition Form for an agency tender, private sector
    offer, or public reimbursable tender.''
    ---------------------------------------------------------------------------
              Phase-out costs are yet another example.\35\ The term
            ``phase-out plans'' does not appear in the rewritten circular's
            ``Definition of Terms.'' However, phase-out costs are
            considered to include such significant one-time costs resulting
            from the transfer or disposal of employees, equipment, and
            facilities.\36\
    ---------------------------------------------------------------------------
        \35\ [Actual Text, Attachment B, C.2.a.(6), page B-6]: ``For a
    Standard Competition, the Contracting Officer shall include in the
    solicitation a requirement for private sector offers, public
    reimbursable tenders and the agency tender to propose a phase-in plan
    to replace the existing incumbent service provider. Phase-in plans
    shall include details to minimize disruption, adverse personnel
    impacts, and startup requirements. The length and requirements of the
    phase-in must consider hiring, training, recruiting, security
    limitations, and any other special considerations to reflect a
    realistic phase-in plan. The costs associated with phase-out plans
    shall not be required by the solicitation or calculated on the Standard
    Competition Form.'' (Emphasis added)
        \36\ For example, equipment that might have been used by the MEO
    could become surplus and then be made available for transfer to another
    in-house activity or to the contractor. In the event of transferring
    material to a contractor, it may be appropriate to do a special joint
    physical inventory, which would be a phase-out cost. Personnel, or
    labor-related costs, would include certain one-time labor-related
    expenses such as health benefit costs, severance pay, homeowner
    assistance, and relocation and training expenses.
          A conversion to contract may also require an agency to take
    certain actions that would not be necessary if the activity had
    continued to be performed by Federal employees. For example, it may not
    be possible to terminate a rent or lease agreement without a penalty
    fee, or it may be necessary to move materials that are not associated
    with the activity under study to another location in order to complete
    the transition. Moreover, there are costs of labor associated with the
    transfer or disposal of equipment, property, or facilities. The
    rewritten circular should clearly define the many costs associated with
    phase-out and then count those costs against the proposals of the
    challenging offerors.
    ---------------------------------------------------------------------------
          3. THE THREAT TO USE ``BEST VALUE'' IN DOD'S PUBLIC-PRIVATE
                                  COMPETITIONS

        Section 824 of the legislative recommendations submitted by DOD for
    the fiscal year 2004 defense authorization bill calls for the end of an
    objective, cost-based competition process. It would be replaced by the
    controversial ``best value'' competition process, which allows
    contractors to submit more expensive and less responsive bids and still
    win contracts.
        Contractors are not happy about losing almost three-fifths of the
    public-private competitions conducted under OMB Circular A-76. Rather
    than cut their costs and provide taxpayers with a better deal,
    contractors want to junk the existing ultimately cost-based process and
    replace it with a pro-contractor ``best value''. Process.
        Instead of making the best decision for taxpayers, i.e., what costs
    less, acquisition officers would be encouraged to use all manner of
    subjective criteria to determine the winner of a public-private
    competition process, including such whimsical notions as a contractor's
    ability to respond ``flexibly'' to changing circumstances or the
    contractor's use of ``innovative'' approaches.
        ``Best value'' would tilt the field of play even farther in
    contractors' direction by allowing acquisition officials to ignore the
    standards established in the solicitation in favor of the ``bells and
    whistles'' included in the contractor's offer.
        ``Best value'' would also deny Federal employees the opportunity to
    reformulate their offer in response to a contractor offer that exceeds
    the standards in the solicitation. If a contractor includes a feature
    in its bid that DOD thinks should be included in the solicitation, DOD
    should be allowed to go back and revise that solicitation--and allow
    Federal employees to reformulate their bid so that it includes that
    feature.
        Contractors note that ``best value'' has been used in private-
    private competition. However, its use has been accompanied by
    extraordinary controversy and litigation because of its intrinsic
    subjectivity. Some of its most fervent critics are small business
    contractors. It is precisely that subjectivity that makes a ``best
    value'' process so dangerous in the context of public-private
    competition. While it is not possible to systematically discriminate
    against one group of contractors in favor of another group of
    contractors, ``best value'' could be used systematically to
    discriminate against Federal employees in favor of contractors,
    especially when wielded by an avowedly pro-contractor administration
    that is rushing to review for privatization 850,000 Federal employee
    jobs.
        Contractors know that, historically, ``best value'' competitions
    between contractors have cost taxpayers more and taken longer to
    complete. However, they try to justify the use of ``best value'' by
    falsely asserting that A-76 currently doesn't allow for qualitative
    improvements in service. Wrong. As currently written, A-76 allows
    agencies, under a highly objective process, to establish the standards
    they want met by Federal employees or a contractor, whether they are
    the same as before or more exacting, and then choose the provider with
    the lower cost. That's what's best for warfighters and taxpayers.
        Unlike other agencies, DOD is protected from a ``best value''
    process by 10 U.S.C. 2462 and 10 U.S.C. 129a. OMB is breaking with
    bipartisan tradition and encouraging non-DOD agencies to use a pro-
    contractor ``best value'' in public-private competitions. However, even
    OMB acknowledges that there are ``special considerations'' that must be
    taken into account with the use of ``best value'' in public-private
    competitions and that its use in non-DOD agencies should be limited to
    a pilot project and that there should be testing before wider
    application is authorized. There is no reason for DOD to be the guinea
    pig. If ``best value'' boosters are so sure their much-criticized
    process is superior to objective, cost-based competitions, then let
    them prove it through the experience of non-DOD agencies participating
    in the OMB pilot project.
        In the A-76 rewrite, OMB has created the worst possible ``best
    value'' pilot project process, one that would maximize the possibility
    of bias against Federal employees:

        A. No guidelines regarding the use of subjective competition
    processes, even though OMB acknowledges the need for caution.

        B. No traditional preference for sealed bidding, which would
    minimize management bias against in the in-house workforce.

        C. No preference for the use of a lowest price technically
    acceptable process in the event it can be shown why sealed bidding
    absolutely cannot be used.

        D. No limitation on the use of evaluation factors and subfactors,
    both objective and subjective, in the ``best value'' process.

        E. No requirement that the weights given to evaluation factors and
    subfactors, both objective and subjective, be revealed before proposals
    are submitted.

        F. No requirement that Federal employees be given a chance to
    reformulate their proposal if the contracting officer changes the
    solicitation in the ``best value'' process.

        G. No requirement that cost be emphasized in the weighting of
    evaluation factors and subfactors.

        H. The use of ``past performance'' is intrinsically biased against
    in-house proposals.

        Actual Text [Attachment B, C.2.a.(13), page B-7]: ``Solicitation
    requirements for the following shall not apply to an Agency Tender: . .
    . (6) past performance criteria.''
        FAR 15.304 requires evaluation of ``past performance'' in all
    competitions, although it provides an out if a contracting officer
    ``documents the reason `past performance' is not an appropriate
    evaluation factor for the acquisition.'' The FAR also provides that if
    an offeror has no record of ``past performance,'' the offeror ``may not
    be evaluated favorably or unfavorably'' on this factor. Historically,
    GAO has allowed agencies broad discretion in determining how to
    proceed. GAO has held that a Source Selection Authority, in making a
    trade-off decision, can weigh the value of a good (or poor) ``past
    performance'' rating against a neutral rating and conclude that the
    proposal with a good ``past performance'' rating offers better value
    than the offeror with a neutral rating. If this rule applies here, in
    competitions where cost and other technical factors are close, a
    contractor's good ``past performance'' rating can make the difference
    and result in a decision in favor of the contractor on the basis of a
    factor not applicable to the agency. In other words, the approach to
    ``past performance'' could skew the evaluation results against the in-
    house bidder.
             4. the army's ``third wave'' privatization initiative
        In his October 4, 2003, memorandum, Secretary White set in motion a
    process he called ``Third Wave,'' by which the agency would review for
    privatization, without any public-private competition, as many as
    210,000 Federal and military positions. Some of the non-competitive
    privatization mechanisms endorsed by Secretary White, such as employee
    stock ownership plans and transition benefit corporations, were even
    criticized by OMB officials. Other options mentioned by the Secretary
    were quasi-governmental corporations and the ever-popular ``negotiate
    with private sector.'' The one thing all of these options have in
    common is that they are not provided for in law. Even the Secretary
    acknowledged that ``Most of these alternatives to A-76 will require
    enabling legislation that does not exist yet.''
        What a difference 3 months make. Come January 2003, the Army's
    privatization-related congressional correspondence included this
    paragraph:

            ``The implementation of competitive sourcing will adhere to
            congressionally approved process, e.g., A-76. The only known
            exceptions to the requirement for public-private competition
            are where 10 or fewer civilian employees perform the function
            where preferential procurement programs are used, and where
            legal restrictions against using the A-76 process apply to the
            function.''

        Whether the Army will keep this assurance obviously remains to be
    seen. However, there are several disturbing questions that need to be
    answered:

        A. Is the Army out there all by itself?
        Some would write off the Army's preference for corporate welfare-
    style privatization as anomalous. However, senior DOD officials have
    expressed similar preferences. For example, on March 3, 2002, Michael
    Wynne, the Principal Deputy Under Secretary of Defense for Acquisition,
    Technology, and Logistics, wrote in his written testimony, that the
    department intended to ``divest'' itself of ``non-core'' work. When
    asked what he meant, Mr. Wynne said that ``divestiture means that you
    transfer assets to the private sector, and, actually, they absorb the
    assets in line and the employees as well, as is different, if you will,
    than competitive outsourcing where you only compete the positions. You
    might want to just transfer the assets and essentially convert that
    activity to the private sector.''

        B. Where does OMB stand on ``Third Wave''-style privatization?
        While offering criticisms of parts of the ``Third Wave,'' OMB
    officials refused to repudiate the initiative, notwithstanding that it
    was completely contrary to the administration's ostensible emphasis on
    ``competitive sourcing.'' In fact, when I challenged Ms. Styles to
    condemn the wholly anti-competitive nature of the ``Third Wave,'' she,
    according to GovExec.com, ``refused. `It's quite an exaggeration to say
    it's a privatization effort,'' she said. . . Styles had no reservations
    about the size of the Army plan. `It certainly is up to the departments
    and agencies to determine how they want to do it,' she said.'' \6\
    ---------------------------------------------------------------------------
        \6\ One can only assume Ms. Styles means that it ``is certainly up
    to agencies to determine how they want to do it'' when agencies want to
    do even more privatization than OMB has directed. Agencies that do less
    have had, according to Coast Guard memoranda, their in-house workforces
    slashed in retaliation by vengeful OMB privateers.
    ---------------------------------------------------------------------------
        Moreover, at the 2002 hearing in which Mr. Wynne extolled the
    benefits of divestiture, Ms. Styles did not rebuke him. When the
    discussion turned to how DOD would hit its 50 percent privatization
    quota after achieving its 15 percent privatization quota, Ms. Styles
    said purposefully, ``there will be appropriate elements of competition
    for the next 35 percent.'' (Emphasis added.) What does that mean?

        C. What changes might OMB and DOD seek that would allow the Army to
    pursue the ``Third Wave'' and still keep its pledge?
        For example, it is rumored that DOD will submit in its next fiscal
    year 2004 legislative package a proposal to gut or even eliminate 10
    U.S.C. 2461, which, however inadequate, does ensure that Pentagon
    privateers cannot simply give away the department to contractors.
        Moreover, OMB has never repudiated its September 2001 proposal to
    drastically expand the preferential procurement program to allow small
    businesses to receive contracts of any size to perform work that is
    currently performed by Federal employees without any public-private
    competition.
        However, it is actually OMB's ongoing rewrite of the A-76 process
    that will allow the Army--and the other Services as well--to ride the
    anti-public-private competition ``Third Wave.'' The rewrite expands on
    the already-existing direct conversion authorities to give work
    performed by Federal employees to contractors without public-private
    competition. More importantly, as noted earlier in my testimony, the
    rewrite creates hidden direct conversion authorities particularly if
    competitions are not concluded within arbitrary deadlines. A DOD
    official, who appeared at a recent American Bar Association event in
    Annapolis, MD, confirmed during a question-and-answer session that all
    of the Services are interested in the direct conversion possibilities
    of the arbitrary competition deadline. In other words, the A-76 rewrite
    is in many ways a stealthy continuation of the discredited ``Third
    Wave'' by other means.

       5. THE THREAT TO ELIMINATE IN-HOUSE DEPOT MAINTENANCE AND ARSENAL
                                  CAPABILITIES

        Section 324 of the defense authorization bill would lead to the
    destruction of any in-house depot maintenance capacity by radically
    changing the 50/50 rule governing the split of depot maintenance
    workload between Federal employees and contractors. Under the
    Pentagon's proposal, contractors would keep their 50 percent of the
    depot maintenance workload and then be given a chance to gradually take
    away the 50 percent of the work performed by Federal employees.
        Without that safeguard DOD would have privatized all public sector
    depot maintenance workload long ago. Although chronically underfunded,
    the depots are the one part of DOD that has managed to escape the
    devastating consequences of DOD's self-inflicted ``human capital
    crisis,'' precisely because of rules like 50/50, that ensure a strong
    in-house capability.
        It is important to note that even with the necessary statutory
    safeguards, depot employees are still better service providers than
    their contractor counterparts. According to GAO, depot prices are lower
    for 62 percent of items repaired by both depots and contractors.
        The Pentagon's recommendation ignores the reason for having public
    sector depots--so the warfighters always have a reliable capability to
    maintain national security-critical hardware that can respond instantly
    to ever-changing geopolitical conditions.
        Some may try to sell this unwise proposal by arguing that the only
    way depots will be able to bring more work on site, and thus make the
    installations less vulnerable to the next round of base closure, will
    be through public-private partnerships, and that the only way to
    establish such partnerships is by gutting the 50/50 rule. Wrong. Per 10
    U.S.C. 2474, work performed by contractors at depots with Centers of
    Industrial and Technical Excellence, which were established by Congress
    precisely to encourage public-private partnerships, doesn't count
    towards the 50/50 rule. Consequently, there is no rationale for gutting
    the 50/50 rule other than destroying the in-house depot maintenance
    capacity.
        AFGE is also concerned about the privatization threat faced by the
    Army's arsenals. Per 10 U.S.C. 4532, Secretary White could ``abolish
    any United States arsenal that he considers unnecessary'' without any
    congressional input. Given the Army's ``Third Wave'' privatization
    bias, it is imperative that such unfettered discretion be restricted,
    perhaps in the same fashion as Congress restricted Secretary White's
    discretion to privatize, divest, or transfer the Corps of Engineers in
    the Fiscal Year 2003 Omnibus Appropriations Bill.

      6. THE THREATENED INTRODUCTION OF THE SERVICE ACQUISITION REFORM ACT

        Perhaps the most anti-taxpayer bill to be considered in the House
    of Representatives during the last Congress was the Service Acquisition
    Reform Act (SARA, H.R. 3832). The legislation was strongly criticized
    by agencies' inspectors general; public interest groups such as the
    Project on Government Oversight; and several unions, including the
    American Federation of Government Employees, American Federation of
    State, County, and Municipal Employees, International Association of
    Machinists, National Association of Air Traffic Controllers, National
    Treasury Employees Union, Professional Airways Systems Specialists, and
    AFL-CIO Professional Employees Department.
        Last year's SARA was a lengthy service contractor wish-list that
    would have, among other things, drastically reduced Government
    oversight of service contractors, created many additional possibilities
    for service contractor conflicts of interest, substantially reduced
    competition between service contractors, and significantly increased
    the losses to taxpayers from service contractor waste, fraud, and
    abuse. SARA is being redrafted, and it is rumored that the legislation
    may have found something it didn't have in the 107th Congress: a Senate
    sponsor. If the SARA to be introduced in the 108th Congress is anything
    like its predecessors, keep your hands on your purses and wallets at
    all times.
        Among other things, the SARA legislation would have encouraged the
    use of risky share-in-savings contracts, which are proven losers and
    completely antithetical to public-private competition. Share-in-savings
    contracts are grievously mislabeled since they require agencies to
    borrow from contractors at high interest rates in exchange for
    services. This form of contracting has been criticized for locking
    agencies into long-term contracts that prevent shifting to superior
    contract or in-house options. Moreover, according to Ms. Styles' own
    testimony, although in existence for more than 25 years, share-in-
    savings contracts have not produced any savings.
        A contractor lobbyist, who is close to the bill's House sponsor,
    had touted the bill in testimony on the basis of a share-in-savings
    contract at the Department of Education (DoEd). It wasn't until
    recently that an Inspector General (IG) investigation determined that
    DoEd's experience with share-in-savings was actually disastrous.
    According to the IG, ``Performance measures were so inadequate that it
    could not be determined if the contractor was in compliance with the
    terms of the contract. There was no annual comparison of costs under
    the agreement to an outside market to determine whether the agreement
    actually provided the ``best value''. Even more alarming, an overstated
    baseline ``create(d) a larger contractor payment than is actually
    earned.''
        Finally, the use of share-in-savings is indisputably anti-public-
    private competition and clearly promotes privatizing the jobs of
    Federal employees without giving them a chance to compete. At the last
    moment, as an amendment to a popular piece of E-Government legislation,
    a controversial pilot program was established late in 2002 allowing
    agencies to undertake a handful of share-in-savings contracts. These
    experiments will surely be the subject of very thorough scrutiny
    because of the serious threat each and every one of them poses to the
    interests of taxpayers.

        7. THE RELEVANCE OF THE REPORT FILED LAST MAY BY THE COMMERCIAL
                                ACTIVITIES PANEL

    A. Introduction
        I found the Commercial Activities Panel (CAP) experience to be
    perhaps my biggest professional disappointment. I was naturally
    apprehensive about serving on a 12-member panel that was dominated by
    pro-contractor interests, including 4 administration representatives
    and 3 representatives from the contractor community. However, I chose
    to serve because of the assurance from Senator Carl Levin (D-MI), one
    of the co-creators of the panel, that the Senate Armed Services
    Committee would not take up a CAP recommendation that did not represent
    a consensus.
        I could have used that assurance as an excuse to take a never-give-
    an-inch, hard-line approach in the panel's deliberations, but I did
    not. As Ms. Styles noted in her additional comments to the CAP report,
    ``I commend the willingness of the four panel members that did not vote
    in favor of the final report to seriously and thoughtfully consider
    significant changes to the process for public-private competition.
    Indeed, I agreed with several elements of the counter proposals
    initiated by these panel members.''
        You read that last sentence right. There were actually several
    important points, at least at that point in time, on which AFGE and OMB
    might have been able to establish a basic consensus. (Please see
    Appendix I for one consensus proposal discussed by AFGE and OMB.)
    Unfortunately, Ms. Styles' willingness to look for common ground was,
    alas, not shared by the other seven members of the majority, and the
    final result was a harshly polarized panel that could agree on only 10,
    vague and often vapid principles and disagree sharply on the actual
    recommendation.
        I found the experience so professionally disappointing because the
    panel constituted a wasted opportunity. If both sides to this important
    public policy question had been more equitably represented, I believe
    the outcome could have been different. Similarly, even with a pro-
    contractor majority, I think a more satisfactory outcome might have
    been achieved if there had been a realization that a recommendation
    providing for incremental change with broad support was better than a
    recommendation for radical change with the support of only the
    majority.
        I understand that there will be an effort to reassemble the panel
    in May to examine what it has wrought. Unfortunately, for those who wax
    nostalgic, there is far less to the CAP's legacy than meets the eye.
    The panel's report has faded into irrelevancy, with OMB officials using
    the parts in the A-76 rewrite they like and coldly discarding the parts
    they don't like. To be perfectly honest, had there never been a CAP,
    OMB's A-76 rewrite wouldn't look any different. It was clear from the
    start that OMB officials knew what they wanted to do; they didn't look
    to a panel of outsiders for direction.
        That being so, I commend the chairman for doing the best he could
    with a very difficult assignment. I also appreciated the opportunity to
    discuss important public policy issues with such a distinguished group
    of Americans. While we were unable to agree on a recommendation, nobody
    can say we didn't try to work together in an ultimately unsuccessful
    attempt to reconcile our very serious differences.
        In any event, would anyone be surprised if a bunch of contractors
    and their friends in an avowedly pro-contractor administration got
    together and came up with a recommendation for making the service
    contracting process even more biased in favor of contractors? Of course
    not.
        That's exactly what happened. The CAP, with a solid majority of
    pro-contractor representatives, quite naturally served up a
    recommendation that would benefit contractors, switching from an
    objective, cost-based public-private competition process to an
    explicitly subjective one based on the FAR, known as ``best value''.
    The members of the pro-contractor majority were unable to change the
    mind of any panelist that did not join the CAP sharing their point of
    view. Of course, that won't stop some from touting the pro-contractor
    panel's pro-contractor recommendation as one that would, in the words
    of one contractor panelist, ``offer a path to the development of sound
    sourcing policies for the Federal Government.''
        Well, they have their work cut out for them. After all of that time
    and all of that money, the panel did little more than dust off a FAR-
    based ``best value'' proposal that has been on contractor wish-lists
    for years, one which had even been categorically rejected by the
    Clinton administration just 4 years ago when contractors strove,
    unsuccessfully, to attach it to the defense authorization bill. Anyone
    who has watched the crisis in Federal service contracting grow over the
    last 10 years knows that the Clinton administration was aggressively
    pro-contractor, and that its officials were completely possessed by the
    spirit of ``acquisition reform.'' However, even Clinton administration
    officials, as eager as they were to cater to contractors and experiment
    with procurement procedures, wanted nothing, absolutely nothing, to do
    with FAR-based public-private competitions, and FAR-based ``best
    value'' public-private competitions in particular.
        I was quite surprised by the contention made in last year's House
    Readiness Subcommittee hearing on the CAP report that the panel did not
    disproportionately represent pro-contractor interests. Only three
    members of the panel were specifically dictated for membership by the
    statute which established the CAP: the Comptroller General or his
    designee, a DOD official, and an OMB official. The other nine panelists
    were chosen at the discretion of the Chair.

          Panelists from the Bush administration (4)
          E.C. Pete Aldridge, DOD (required appointment)
          Kay Coles James, Office of Personnel Management (discretionary
    appointment)
          Angela Styles, OMB (required appointment)
          Stephen Goldsmith (discretionary appointment)

        Stephen Goldsmith, a discretionary appointment, is identified on
    the CAP report's inside cover as being the Senior Vice President of
    Affiliated Computer Services. Not until the Appendix J is it revealed
    that Mr. Goldsmith ``served as chief domestic policy advisor to the
    George W. Bush presidential campaign.'' The truth is, actually, a
    little more interesting. Mr. Goldsmith has been frequently mentioned as
    an appointee to a senior position in the Bush administration, often the
    Deputy Director for Management at OMB, which is responsible for
    outsourcing policy. In fact, Mr. Goldsmith, as a Bush campaign
    official, was the principle designer of the outsourcing policy
    currently being pursued by the Bush administration. Moreover, as the
    Mayor of Indianapolis, Mr. Goldsmith privatized nearly 70 public
    services, and was a fervent supporter of the anti-taxpayer policy of
    privatization-in-place, which has even been criticized by the GAO.
    While still mayor, Mr. Goldsmith testified in favor of the Freedom From
    Government Competition Act, a measure so replete with pro-contractor
    pork-barrel that it was eventually emphatically rejected by Republicans
    and Democrats alike. Therefore, it can be said that Mr. Walker actually
    picked four representatives from the pro-contractor Bush
    administration, only two of them required by statute.

          Panelists from the Contractors (2)
          Stan Soloway, Professional Services Council
          Marc Filteau, Johnson Controls
          Additional Pro-Contractor Panelist (1)
          Frank Camm, Rand Corporation

        Mr. Camm, as discussed in his own biography in Appendix J, is an
    employee of the Rand Corporation, known informally as ``DOD's Think
    Tank,'' and has advised DOD for most of the last quarter-century about
    how ``to improve services acquisition policy.'' For example, in his
    Rand monograph ``Expanding Private Production of Defense Services,''
    Camm opines that ``Current DOD contracting practice severely limits
    DOD's ability to follow the commercial move toward increased
    outsourcing. Contracting reform could help DOD overcome a number of
    important barriers to expanded outsourcing.'' Interestingly, in the
    comprehensive 55-page pro-contractor paper, Camm wrote virtually
    nothing at all about public-private competition. When he did mention
    the prospect of allowing DOD civilian employees to compete in defense
    of their jobs, however briefly, he quickly dismissed public-private
    competition as ``a tricky game (which) often fails.''
        Mr. Chairman, AFGE has never contended that the 7 pro-contractor
    panelists appointed by Mr. Walker to the 12 member-CAP, only 2 of whom
    were specifically required by statute, were unqualified, failed to
    conduct themselves honorably, or neglected to aggressively represent
    pro-contractor interests. Nor has AFGE contended that Mr. Walker was
    prevented by statute from exercising his discretion to impose a pro-
    contractor majority on the panel. Reasonable people can disagree about
    whether the use of discretion was consistent with the statute's
    requirement to ensure ``fair representation.'' There is, however, one
    point on which reasonable people absolutely cannot disagree: that
    discretion was used to impose a pro-contractor majority on the panel.
    Consequently, nobody should be surprised that the CAP produced a pro-
    contractor recommendation.

    B. How the CAP report should be characterized
        At a House hearing last year, the CAP Chairman said that there were
    only two ``primary differences'' between the panel's majority and
    minority. However, of the two differences mentioned, one is misstated
    and the other is minimized. As for all of the differences omitted, more
    later.
        1st ``Primary Difference'': ``. . . the recommendation as to
    whether or not cost should be the driver for all competitive sourcing
    decisions. The cost is important, but cost is not everything.''
        This is not now nor has it ever been the position of the minority.
    Any well managed cost-based competitive process, including OMB Circular
    A-76, explicitly takes into account quality and reliability. AFGE has
    contended that agencies should be able to decide what services they
    want, determine whether the offerors can provide the services they
    want, and then decide in favor of the offeror who can do that work for
    the least cost to the taxpayers. This allows agencies to secure the
    highest quality services at the lowest possible prices. It is not
    making ``cost everything.''
        2nd ``Primary Difference'': ``Second, the number of times that
    Congress should be required to act in order to deal with this issue.''
        This is a misleading reference to the fact that the minority
    insisted that any alternatives to the traditional public-private
    competition process be tested and evaluated before being implemented,
    preferably with the involvement of Congress. The majority demanded that
    the controversial and unprecedented FAR-based ``best value'' process be
    implemented ``immediately'' for every single agency other than DOD--
    without any involvement on the part of Congress--and that Congress
    ``immediately'' pass legislation for DOD to implement a FAR-based
    ``best value'' process, which has been repeatedly rejected by
    Republican and Democratic administrations as well as Republicans and
    Democratic Congresses. Well, that's a rather significant difference.
        We would also like to take the opportunity to review the proposals
    formally submitted by AFGE during the panel's deliberations.

        1. Ensure the rigorous application of cost accounting standards.
    Result: Included in Principles, but not the Recommendation.
        2. Allow agencies to use capital budgeting, like businesses and
    many state governments. Result: Rejected.
        3. Forbid the use of privatization-in-place, a controversial
    mechanism that has even been criticized by GAO. Result: Rejected.
        4. Expand the Army contractor inventory to include all of DOD,
    given the principle ostensibly designed to ensure that inherently
    governmental work is performed by Federal employees. Result: Rejected.
        5. Ensure the viability of an effective in-house workforce, using
    the 50/50 depot maintenance safeguard as a precedent, given the failure
    to prevent DOD from managing its workforce with arbitrary personnel
    ceilings, which has resulted in what GAO calls a ``human capital
    crisis.'' Result: Rejected.
        6. End the abuse of arbitrary personnel ceilings. Result: Included
    in Principles, but not the Recommendation.
        7. End the Native American direct conversion authority, given the
    majority's ostensible opposition to contracting out without
    competition. Result: Rejected.
        8. Actually treat agencies like businesses and allow Federal
    employees to bargain over wages and benefits. Result: Rejected.
        9. Strengthen the requirement to consult with bargaining unit
    employees during a competition, conversion, or privatization situation.
    Result: Accepted, but only in the context of a competition, despite the
    fact that much contracting out occurs without the work actually being
    competed.
        10. Enforce the law requiring DOD to consider bringing work back
    in-house. Result: Rejected.
        11. Repudiate the use of the OMB outsourcing quotas. Result:
    Accepted in Principles, but not the Recommendation; already repudiated
    by the administration and its contractor allies.
        12. Eliminate the use of direct conversions. Result: Rejected,
    notwithstanding much rhetoric about the importance of public-private
    competition.
        13. Strengthen the civilian acquisition workforce. Result:
    Rejected.
        14. Ensure that contractors are as accountable to the American
    people as Federal employees (e.g., Freedom of Information Act). Result:
    Rejected.
        15. Borrow the TRAC Act's comprehensive and reliable cost-tracking
    processes, given GAO's assertion, as part of its ``high risk'' series,
    that ``DOD continues to experience significant challenges relating to
    contract management, including improving oversight and accountability
    in the acquisition of services. . .'' Result: Rejected.
        16. Fix the holes in the Service Contract Act, which have nothing
    to do with its enforcement, that leave more than two-thirds of the
    Federal contractor workforce unprotected. Result: Rejected.
        17. Provide Federal employees and their unions with standing, just
    like contractors. Result: Explicitly accepted only for Federal
    employees, not their unions.
        18. Exclude wages and benefits from the competition process so that
    it concentrates on staffing levels and delivery methods. Result:
    Rejected.
        In summary, 13 of AFGE's common-sense recommendations were
    rejected, period. Two AFGE recommendations were accepted, albeit very
    incompletely. Two other recommendations were included only in the
    principles, but not the report's all-important recommendation. One
    recommendation was included in the principles, but not the report's
    recommendation, and has already been repudiated by the administration
    and the contractors.

        It was said by the chairman at last year's House Readiness
    Subcommittee hearing that ``the one thing I can tell you for sure is
    that the A-76 process does not meet the principles agreed to by the
    panel. It does not meet it.''
        While AFGE's testimony deals with this in much greater detail later
    on, we are compelled to correct this contention in an abbreviated
    fashion at this point of our testimony. First, the majority claimed
    that A-76 was too complicated. However, as proof, they could only point
    to a higher sustain rate for A-76 proposal protest decisions than for
    proposal protests generally. Unfortunately, that conveniently ignores
    the fact that the circular, as an objective process, is eminently
    easier to litigate against than the FAR because the latter process'
    subjectivity places most agencies' decisionmaking beyond judicial
    review.
        Then the majority contended that A-76 was unequal and unfair.
    Again, however, they could only point to one example of the circular
    being inequitable and then admitted that the problem, to the extent it
    actually was one, could easily be corrected, and, indeed, included such
    a fix in the report's recommendation.
        Finally, they turned their attention to A-76's ``best value''
    process. Unable to produce even a single example of how the circular's
    ``best value'' process had kept an agency from improving the quality of
    its services, the majority nonetheless insisted that the process was an
    abomination because it had been litigated--even though the replacement
    process it was recommending had also been litigated. So, after giving
    the majority its best shot and making the one minor change included in
    the report, A-76 does in fact meet the principles because it easily
    qualifies as a ``clear, transparent, and consistently applied
    process.''
        During the House Readiness hearing, the argument in favor of a FAR-
    based ``best value'' process was summed up as follows: ``You've got to
    have a process that everybody knows what the rules of the ballgame are
    before you get started, including what the weighting is going to be on
    various factors. You need to have appropriate appeals processes to
    qualified, independent third parties who don't have a vested interest
    in the result. Now, the panel recommendation, in conjunction with the
    integrated FAR-based process, among other things, would say that since
    Federal employees would be competing heads up with private sector
    entities that they should have, not only know what the rules are up-
    front, know what the criteria up-front, they should have the right to
    appeal the GAO if for some reason they believe they have been harmed.
    Now, we are a qualified independent third party. They don't have that
    right now.''
        Although the problems with the FAR-based ``best value'' process are
    dealt with later in AFGE's testimony, we are compelled to offer several
    corrections to the contentions made in those remarks. Offerors do not
    in fact ``know the rules of the ballgame'' when the offers are
    submitted. That's not the way the FAR-based ``best value'' process
    works. Moreover, litigation cannot control the subjectivity inherent in
    the FAR-based ``best value'' process.

              1. By its very nature, the FAR-based ``best value'' is an
            improvisational process. Judges need not decide on the specific
            weights of the technical/cost factors until after the offerors
            have submitted their proposals. That is, while they do have to
            reveal whether cost or technical factors will predominate, they
            do not have to reveal how much more important technical (or
            cost) factors will count, or how much specific technical (or
            cost) factors will count until after proposals have been
            submitted. Moreover, the judges are not obligated to reveal all
            subfactors related to the solicitation if they can argue that
            the offerors should have known of their existence.
              2. By its very nature, the FAR-based ``best value'' process
            is a subjective process and judges include explicitly
            subjective and even unnecessary factors. Moreover, the FAR-
            based ``best value'' process includes no rules, standards, or
            guidelines for the use of subjective factors.
              3. By its very nature, the FAR-based ``best value'' process
            encourages doubt and uncertainty as to what the agency is
            attempting to buy until after the offers have been submitted.
            In fact, judges actually award points to offerors for exceeding
            the requirements set forth in the solicitation, which is why a
            FAR-based ``best value'' process has historically been a burden
            on taxpayers.
              4. By its very nature, the FAR-based ``best value'' process
            gives judges extensive discretion over the process, from
            beginning to end, and the standards of review established by
            the Comptroller General are difficult to overcome. That's the
            principle reason why the GAO's docket has been more than halved
            in less than a decade. Consequently, litigation cannot control
            the subjectivity in the FAR-based ``best value'' process.
            Moreover, the CAP report explicitly endorsed standing only for
            Federal employees, not their unions. It is unrealistic to think
            that the working and middle class Americans who make up the
            Federal employee workforce could pool sufficient resources to
            take on the corporate contractors, without the coordination of
            their unions.
    C. The case made by the CAP's majority
        The essence of the CAP report is the recommendation that OMB
    Circular A-76 be replaced by an unprecedented FAR-based ``best value''
    public-private competition process. Rather than make an enthusiastic
    case for a FAR-based ``best value'' process, or to address the
    multitude of criticisms that have been leveled against the FAR-based
    ``best value'' process (because of how it has been used and abused in
    private-private competitions), the panel's majority contented itself
    with merely bashing A-76.
        As the OMB witness noted at the House Readiness hearing, ``There
    needs to be some recognition that there are problems in the private-
    private system for competition and FAR based competitions. It's not a
    perfect system and we may be exacerbating some of the problems when we
    try to apply the FAR based system private-private competitions to
    public-private competition.''
        This blinkered approach was obviously to the advantage of the
    majority. Although the essentially unchecked subjectivity that is
    intrinsic to the FAR-based ``best value'' process has been as
    documented as it has been criticized, that process has not been used
    for public-private competitions. Such cannot be said of OMB Circular A-
    76. Of course, any public-private competition process would be a
    lightning rod for criticism because so much is at stake with respect to
    Federal employee jobs and contractor profits, whether it is called A-
    76, Z-67, or ``best value''.
        Let us examine the criticisms, one by one, leveled against OMB
    Circular A-76 by the panel's majority.

        1. ``Complicated Process''
        The majority insists that A-76 is an unduly complicated process.
    Only one ``fact'' is offered in support of this assertion: although the
    vast majority of A-76 decisions are not protested, the GAO's sustain
    rate for the handful of A-76 decisions that are actually contested is
    higher than the GAO's sustain rate for protests overall.
        However, that is an apples-to-oranges comparison. Because it is an
    intrinsically subjective process, it is difficult to successfully
    challenge agencies' decisions in the context of the FAR. As noted by
    Mr. Marshall Doke, Jr., the distinguished conservative legal scholar,

            ``The discretion granted to agencies in the selection process
            precludes an effective policing system. The Comptroller
            General, for example, generally reviews agency decisions in the
            source selection process only to see if they have any
            reasonable basis and are consistent with the solicitation. This
            standard of review applies to determining requirements, minimum
            needs, evaluation of proposals, cost/technical tradeoffs, the
            source selection decision, and conflicts of interest. The
            Comptroller General's standards of review are even more
            difficult to overcome in decisions involving other issues. .
            .''

        GAO has a higher sustain rate for A-76 proposal protests because it
    is a more objective process, and, thus more accountable to offerors--as
    long as you're a contractor, of course.
        After offering that misleading comparison, the majority insists
    that the FAR would be an improvement on A-76 because the former
    constitutes a ``common language.'' But then the majority acknowledges
    that several significant chunks of A-76 would have to be added to the
    FAR in order to allow this unprecedented regulatory hybrid to actually
    work. That must mean that the FAR is not such a ``common language''
    after all, or that A-76 is more of a ``common language'' than the
    majority is willing to admit. Either way, the majority's argument
    clearly cannot withstand scrutiny.
        There is, however, no question that agencies need to do a better
    job of conducting public-private competitions. There are two ways to
    make sure that happens: a) ensure that public-private competition
    before work is given to contractors actually occurs, instead of leaving
    it as an option, so that agencies have an institutional investment in
    developing the capacities to conduct efficient, effective, and
    expeditious competitions; and b) provide agencies' acquisition
    workforces with sufficient staff and training to better manage their
    competitions.
        Unfortunately, the majority refused to close loopholes allowing
    work to be contracted out without any public-private competition, even
    the notorious loophole that allows for the direct conversions of
    hundreds of jobs at a time without public-private competition to any
    firm claiming to be 51 percent Native American owned. Moreover, the
    majority stubbornly opposed efforts to strengthen the Federal
    Government's acquisition workforce. That is, when presented with
    opportunities to undertake measures that would actually improve
    sourcing practices, the majority ran in the other direction.

        2. ``Inconsistent Application''
        This is nothing more than a shorter version of the first point. In
    fact, the first sentence in the first point asks whether A-76 is a
    ``consistently applied process.'' Owing to the flimsiness of its
    arguments, perhaps the majority felt the need to pad its case by making
    some of its points more than once.

        3. ``Unequal and Unfair''
        After acknowledging that differences are not necessarily
    inequities, the majority insists that in some A-76 competitions one set
    of evaluators reviews the private-sector offerors while another set of
    evaluators reviews the in-house proposal, and that this might result in
    the inequitable application of standards.
        The majority offers no evidence to suggest that a protest is more
    likely to be sustained when two different sets of evaluators are used
    on an A-76 competition. Therefore, it cannot even be said that this
    difference is actually an inequity. Moreover, GAO has not required
    agencies to use the same evaluators to review both proposals and on
    more than one occasion specifically upheld the use of different
    evaluators (in the absence of a showing that any of the evaluators'
    conclusions were unreasonable or inconsistent with the solicitation).
        Among the majority's recommendations for reforming A-76 is one that
    calls for ensuring that ``at least one individual'' review ``both the
    MEO (Most Efficient Organization) and private-sector proposals.'' That
    is, correcting the single example identified by the panel's majority of
    how A-76 is ``unfair and unequal''--although in truth it can't be said
    that it is an inequity at all--is that simple.

        4. ``Inadequate Support for Employees''
        That DOD civilians feel beleaguered has nothing to do with the
    circular and everything to do with the Pentagon being staffed by
    officials who are determined to divest hundreds of thousands of their
    jobs, regardless of the cost and regardless of the impact on military
    readiness. Even worse, the majority's sympathy for Federal employees is
    being used to justify replacing A-76 with an even more pro-contractor
    process.

        5. ``Conflicts of Interest''
        This point is almost as disingenuous as the previous point. Here's
    a news flash for our friends who make up the panel's majority: conflict
    of interest is a part of Federal service contracting, period. To single
    out OMB Circular A-76 for criticism because there is a possibility for
    conflicts of interest is like saying that only politicians from Idaho
    like to hear the sound of their own voices, or that only journalists
    from the print media prefer colorful controversy to complicated
    substance.
        GAO attorneys know this very well, as the Comptroller General has
    had to adjudicate conflict of interest cases in the FAR involving,
    among other issues, the composition of evaluation boards, bias, and bad
    faith. To his credit, even Mr. Mark Filteau, a member of the majority,
    acknowledged, in his additional remarks, that ``Public-private
    competitions under a FAR-type process, that allow for negotiated ``best
    value'' decisions open new dangers for conflicts of interest for source
    selection personnel.''
        In contrast, the only conflict of interest scenario cited by the
    majority in the panel's report specific to OMB Circular A-76, where
    employees whose positions were under study were also participating in
    the evaluation process, has, according to the majority, already been
    corrected.
        If only it were so easy to fix the conflict of interest problems
    that are intrinsic to the FAR. Because Government agencies enjoy broad
    discretion in the selection of evaluation factors and in the
    determination of the relative weight of those evaluation factors and in
    the use of subjective and unnecessary evaluation factors, and because,
    as noted earlier, the intrinsic subjectivity of the FAR leaves
    agencies' broad discretion beyond judicial review, the possibility for
    conflicts of interest are dramatically multiplied.

        6. Cost/Technical Tradeoffs
        The majority insists, repeatedly and stridently, that agencies
    cannot make qualitative improvements in services without resorting to a
    FAR-based ``best value'' process. Interestingly, in the report itself
    and in the additional remarks of all eight members of the majority, no
    instances were cited where an agency was deprived of the opportunity to
    make the qualitative improvements it sought--as opposed to those being
    touted by contractors' salespersons--because of OMB Circular A-76.
        Even in the absence of a reliable and comprehensive system to track
    the cost and quality of individual contracting efforts, we all know of
    service contracts that have gone horribly wrong, through poor
    performance or increased costs. The absence of even a single A-76
    quality ``horror story,'' despite the combined resources of OMB, DOD,
    and the contractors leaves the objective reader to draw just one
    conclusion: the shift to a FAR-based ``best value'' process is based on
    the majority's determination to impose a more pro-contractor process,
    rather than an effort to improve the quality of Government services.
        The only documented objection to the A-76 ``best value'' process
    included in the report by the majority was that ``GAO has sustained
    protests where it was alleged that an agency failed to implement it
    fairly (or at all).'' (Indeed, in Appendix D, a review of recent A-76
    litigation, a handful of cases were identified in which GAO sustained a
    protest against the use of the A-76 ``best value'' process. In other
    words, the errors were rectified in the few instances when the A-76
    ``best value'' process was used incorrectly.) This is a particularly
    weak and unenlightening criticism. Unlike in the first point, the
    majority is not contending that the sustain rate for A-76 ``best
    value'' proposal protests is higher than the GAO's sustain rate for
    proposal protests overall. For all we know, the use of A-76 ``best
    value'' may better withstand appellate scrutiny than the FAR, which
    would be quite an accomplishment considering that the subjectivity in
    the FAR leaves most agency decisionmaking beyond judicial review.
        AFGE would like to single this point out as a particularly
    unfortunate example of the ``Alice in Wonderland'' reasoning employed
    so often in the report by the majority. As mentioned earlier, the A-76
    ``best value'' process is portrayed as vaguely suspect because the GAO
    has sustained protests related to its use. In the preceding paragraph,
    the majority blithely asserts that protests related to the use of the
    FAR which had been sustained are testimony to the strength of the FAR.
    In other words, when the FAR is found by GAO to have been used in error
    it is good; but when the A-76 ``best value'' process is found by GAO to
    have been used in error it is bad. Curiouser and curiouser, indeed.
        The majority writes that ``Tradeoffs are widely credited with
    getting the Federal Government past the `low proposal' mentality of the
    past, and with increasing consideration of factors such as quality and
    past performance.''
        AFGE cannot let this canard pass without comment, especially given
    the inability of the majority to provide a single example of an agency
    being denied an opportunity to improve the quality of its service
    through an OMB Circular A-76 ``best value'' competition. Under any
    well-managed cost-based process, any agency can conduct a competition
    that leads to qualitative improvements while still being decided on the
    basis of costs--without opening up the process to the corrupting
    subjectivity of FAR-based ``best value''. An agency can simply identify
    the standards it needs by including them in the solicitation. If the
    offerors can realistically perform the work, then they are allowed to
    compete on the basis of costs. This is an objective process that is
    driven by agencies' actual needs, not whatever gold-plated bells and
    whistles are being touted that day by contractors' sales staff.
        Mr. Doke puts it far more pithily and pungently:

            ``It is a popular misconception that a low price means low
            quality. If you are buying or selling gold and specify 98
            percent purity, the price is irrelevant to quality if you
            specify the purity required, inspect to assure the product
            conforms, and reject any nonconforming products.'' (Emphasis
            original)

        What Mr. Doke says about products is equally true of services.

        7. ``Protest Rights''
        This is yet another disingenuous gripe about the circular,
    particularly so in that it uses the obvious inequity of Federal
    employees and their unions being denied the same legal standing enjoyed
    by contractors as an excuse to recommend replacing A-76 with a more
    pro-contractor public-private competition process. There is nothing in
    OMB Circular A-76 that would prevent Congress from taking action that
    would give Federal employees and their unions legal standing. That
    Federal employees and their unions don't have such standing cannot be
    attributed to the circular itself.

        8. ``Time and Money''
        The panel's majority criticizes the circular because the
    competitions conducted under its rules take too long. Only after a
    protracted behind-the-scenes struggle did the majority relent and
    reluctantly, very reluctantly, agree to include this admission in its
    report: ``Whether and to what extent FAR-based public-private
    competitions would be faster than A-76 cost comparisons is unknown.''
    (Historically, FAR-based ``best value'' competitions take longer,
    sometimes significantly so, than FAR cost-based competitions.)
        In other words, after all of this effort, the majority has served
    up a recommendation that is not an improvement--indeed, it may well be
    a step backwards--on the one widely-acknowledged flaw in OMB Circular
    A-76. Even at its debut when its advocates are in full flack mode and
    it is unsullied by experience, the majority cannot deny that the FAR-
    based ``best value'' competition process may take longer and thus cost
    more than competitions currently conducted under the circular.
        As discussed earlier, the key to conducting more expeditious
    public-private competitions, regardless of what process is used, is by
    making competition prior to conversion to contractor performance a sure
    thing instead of an option, as it is today, and by strengthening the
    acquisition workforce through increased staffing and the provision of
    training.
        The majority makes two points here that deserve responses.
        Concern is expressed over the money required to complete an A-76
    competition. What the majority does not address here or elsewhere in
    the report is that contracts entered into under a FAR-based ``best
    value'' competition process historically cost more for the taxpayers
    than if the contracts had been undertaken as part of a FAR-based cost
    competition process. I know I wasn't asked, but I have, all modesty
    aside, crafted the perfect advertising slogan for the introduction of a
    new competition process:

               FAR-BASED ``BEST VALUE''--COSTS MORE/TAKES LONGER

        No wonder the majority didn't want to see their controversial
    recommendation tested before it was implemented!
        The majority also expressed concern about the impact of A-76 on
    small businesses. What the majority does not address here or elsewhere
    in the report is that small businesses have historically had very
    strong objections to the use of the FAR. As Mr. Doke writes:

            ``One of the most serious erosions of competition (and perhaps
            the most subtle) has been the adverse impact of current
            procurement practices on small business concerns and minority
            enterprises. . . It is relatively easy to eliminate small
            business concerns from competition merely by including
            responsibility-type evaluation factors in the solicitation and
            then comparing the small business concern's capabilities with
            much larger, more experienced companies (even if the greater
            capabilities or resources of the large businesses exceed the
            Government's actual needs). . . The effective elimination of
            small business concerns from competition excludes numerous
            qualified competitors and creates a subtle restriction on
            competition to larger, over-qualified competitors without
            justifying that such a restriction is necessary to meet the
            Government's actual needs. . .''

        That is, the majority's recommendation would disadvantage both
    Federal employees and small contractors in order to advance the already
    considerable interests of the large contractors.

        ``Other Concerns''
        It is difficult to know what to make of this section, an unfocused
    stream-of-consciousness-style discussion by the majority of issues and
    concerns that are actually unrelated to OMB Circular A-76.
        ``. . . (O)ne concern raised by several witnesses before the panel,
    as well as by a number of panelists, was that an agency should always
    strive to be the most efficient organization possible, and not wait
    until an A-76 cost comparison to begin those efforts.'' AFGE would
    heartily agree that agencies should strive every day to hit their
    MEOs--without having to wait for an A-76 competition. That some don't
    because they lack enlightened management or sufficient resources cannot
    be blamed on the circular.
        The majority asserts that the Federal Government should employ
    human capital strategies necessary to recruit and retain a ``high-
    performing workforce.'' Of course, the imposition of a subjective FAR-
    based public-private competition process that makes it easier to
    contract out work for reasons other than merit will only make it harder
    for the Government to recruit and retain a qualified workforce.
        The only work done by the majority in relation to ``human capital''
    is the High Performing Organization (HPO) concept, which was reportedly
    important to the panel's chairman. Of course, the HPO part of the
    recommendation had to be scaled back significantly in the face of
    strong opposition from the contractor and the OMB panelists. As
    mentioned earlier, the administration has expressed no interest in
    following up on the part of the majority's recommendation to establish
    HPOs, even on the very ``limited'' basis called for in the report.
    Therefore, it can be said that the CAP report does next to nothing to
    improve the Government's ability to recruit and retain a capable
    workforce; and in exacerbating the crisis in Federal contracting by
    recommending the imposition of a more pro-contractor public-private
    competition process, the panel will only worsen the related ``human
    capital crisis.''
        The section ends with a wordy tribute to the ``innovative (human
    capital) initiatives that are common today in the commercial sector.''
    Unfortunately, the very last time sustained attention was paid to the
    status of the contractor workforce in a particular industry Congress
    and the President found the situation so abhorrent and contrary to the
    public interest that they effectively nationalized the industry. I am
    referring, of course, to the federalization of airport screening.
    Virtually all participants in that debate, regardless of their
    political affiliation or position on the ideological spectrum, agreed
    that the failure of contractors to provide workers with decent pay,
    benefits, protections, and advancement opportunities constituted an
    intolerable contractor ``human capital crisis.'' It is highly unlikely
    that the ``human capital crisis'' in the contractor workforce is
    limited to airport screening. Unfortunately, the extent of the ``human
    capital crisis'' in the contractor workforce is shrouded in secrecy
    because of poor contract administration and contractors' opposition to
    even the most basic efforts to determine what work contractors are
    performing and how much they cost. It should be noted that the majority
    opposed any effort to document the ``human capital crisis'' in the
    contractor workforce and take remedial measures to correct this crisis.
        Summary: As the foregoing made clear, the majority was unable to
    make a case for junking OMB Circular A-76, let alone for replacing it
    with a controversial, unproven, and subjective FAR-based ``best value''
    public-private competition process.

        1. ``Complicated Process'': This argument is flawed in that it
    relies on a misleading apples-to-oranges comparison.
        2. ``Inconsistent Application'': This redundant argument is merely
    a restatement of the flawed first argument.
        3. ``Unequal and Unfair'': The majority identified only one
    concern, although no documentation was provided to show that it
    actually is a problem. To the extent it is a problem, the majority
    acknowledged elsewhere in the report that it could easily be corrected.
        4. ``Inadequate Support for Employees'': This is indeed a problem,
    but it has everything to do with the service contracting process being
    stacked against Federal employees, rather than a flaw intrinsic to A-
    76.
        5. ``Conflicts of Interest'': This is a problem for the entire
    Federal service contracting process. Singling A-76 out for criticism on
    this score is manifestly mindless. Indeed, the majority acknowledged
    that the one identified conflict of interest problem related to A-76
    has already been corrected.
        6. ``Cost/Technical Tradeoffs'': The majority never bothered to
    demonstrate how the A-76 ``best value'' process had denied agencies
    opportunities to improve the quality of their services. The majority
    could identify only one concern with the A-76 ``best value'' process:
    that the GAO had sustained protests against its use. However, the
    majority could not say that the sustain rate for A-76 ``best value''
    protests is higher than the sustain rate for protests generally, i.e.,
    that it actually is a problem. Moreover, the majority used disingenuous
    reasoning in insisting that sustained protests against the FAR were a
    sign of strength whereas sustained protests against A-76s ``best
    value'' process were a sign of weakness.
        7. ``Protest Rights'': There is nothing in OMB Circular A-76 that
    would prevent Congress from providing Federal employees with the same
    legal standing that is possessed by contractors. The problem is that
    Congress has not passed the necessary legislation.
        8. ``Time and Money'': The majority acknowledged that its
    recommended alternative may be slower and thus cost more than A-76.

        It must also be noted that in most cases the imposition of a FAR-
    based public-private competition process would exacerbate most of the
    concerns identified by the majority, particularly with respect to
    conflicts of interest. Moreover, with respect to efforts to address
    concerns identified by the majority that were actually common to
    Federal service contracting generally, instead of A-76 specifically,
    the majority ignored efforts by the minority to recommend genuinely
    remedial measures, even including such seemingly non-controversial
    recommendations as improving the acquisition workforce, strengthening
    conflict of interest rules, and ensuring that public-private
    competitions are always conducted before work is given to contractors.
    D. The CAPs 10 sourcing principles
        Much is made by the panel's majority of the fact that one part of
    the CAP report--indeed, the only part of the CAP report--received
    unanimous support from the panel: the so-called sourcing principles.
    Unfortunately, there is much less to this unanimity than meets the eye.
    In some instances, the principles are so bland and soporific as to be
    almost meaningless. In other instances, the principles were not
    incorporated into the recommendations. That is, the majority played a
    classic game of bait-and-switch, asking the minority to support certain
    principles in order to provide the panel with a respectable air of
    unanimity while crafting a narrow and parochial recommendation that
    failed to pay even lip service to the principles. In still other
    instances, the majority's recommendation flatly contradicts the
    principles. In several cases, the administration has already indicated
    that it will defy the principles that its representatives on the panel
    supposedly supported.

        1.``Support agency missions, goals, and objectives.''
        This is almost too bland to bother discussing. How a narrowly-
    focused recommendation to replace OMB Circular A-76 with a subjective
    FAR-based ``best value'' process can even be remotely construed to
    ``support agency missions, goals, and objectives'' is unclear.
        For example, does a recommendation that would greatly increase
    contracting out of services without in any way enhancing agencies'
    abilities to track the cost and quality of the services performed by
    the Federal Government's ever-increasing contractor workforce ``support
    agency missions, goals, and objectives?'' Does a recommendation that
    does nothing to keep agencies from managing their in-house workforces
    by arbitrary personnel ceilings ``support agency missions, goals, and
    objectives?'' Does a recommendation that does nothing to ensure that
    Federal employees will actually be allowed to compete for new work or
    contractor work ``support agency missions, goals, and objectives?'' Of
    course not. Those are just three examples.

        2. ``Be consistent with human capital practices designed to
    attract, motivate, retain a high-performing Federal workforce.''
        A small part of this principle was actually incorporated into the
    report's recommendation, specifically the call for agencies to provide
    Federal employees with assistance from and access to management during
    the competition process. Of course, 10 U.S.C. 2467 already deals with
    such matters in large part, and, unlike the panel's approach,
    explicitly allows for the involvement of the employees' union
    representatives.
        For the most part, however, this principle was not incorporated by
    the majority into the report's recommendation. The commentary to this
    principle insists that agencies should consider the impact of
    outsourcing on recruitment and retention and that the workforce should
    be treated as ``valuable assets.'' In light of the Pentagon's adoption
    of a policy of divestiture of non-core work, i.e., giving it to
    contractors without any consideration of the impact on cost or
    readiness, can it be said that DOD civilian employees are viewed as
    ``valuable assets?'' Clearly, the Pentagon's acquisition executives,
    the vast majority of whom come from the contractor community, view the
    department's civilian employees as thoroughly dispensable and couldn't
    care less about the impact of wholesale privatization on the
    department's ability to recruit and retain employees. In fact, the
    department has no interest in recruiting and retaining civilian
    employees, period. Mr. Ray Dubois, the Deputy Defense Under Secretary,
    in an article in the March 4, 2002, edition of Federal Times, said that
    ``When public employees retire, they're [going to be] replaced with
    private sector employees. . .'' DOD has no intention of even replacing
    the part of the workforce that leaves through normal attrition, let
    alone recruiting new employees.
        While the policies of divestiture and no additional in-house hiring
    are too outrageous to even be endorsed in the CAP report, the panel's
    majority knows that DOD is pursuing these policies--and refused any
    effort to use the report to address them, let alone call unambiguously
    for their reversal. In fact, the majority refused to include in the
    panel's recommendation any reference to ending the use of the arbitrary
    personnel ceilings that were so instrumental in bringing on the ``human
    capital crisis'' although a foundation for such easy and obvious
    language was provided by Principle #6.
        It is surely self-evident that enlightened human capital practices
    are fundamentally in conflict with the widespread practice of
    privatizing work performed by Federal employees in order to lower
    workers' wages and reduce their benefits.
        It is well-established that contracting out has been used in the
    private sector and in the non-Federal public sector to shortchange
    workers on their pay and benefits. It is likely that this pernicious
    practice exists at the Federal level as well. In 1998, at the request
    of AFGE, Representatives Steve Horn (R-CA) and Dennis Kucinich (D-OH)
    asked the GAO to examine the pay and benefits of the Federal service
    contractor workforce. Congressional auditors, however, came back empty-
    handed: agencies couldn't be helpful because they did not keep the
    relevant information and contractors did not respond to surveys. A
    survey conducted by GAO in 1985 of Federal employees who were
    involuntarily separated after their jobs were contracted out revealed
    that over half ``said that they had received lower wages, and most
    reported that contractor benefits were not as good as their Government
    benefits.''
        The Economic Policy Institute (EPI), in a ground-breaking 2000
    study, has determined that more than 1 in 10 Federal contractor
    employees earn less than the ``living wage'' of $17,000 per annum,
    i.e., the amount of money necessary to keep a family of four out of
    poverty.

            ``The Federal Government saves money by contracting work to
            employers who pay less than a living wage ($8.20 per hour).
            Even the Federal Government jobs at the low end of the pay
            scale have historically paid better and have had more generous
            benefits than comparable private sector jobs. As a result,
            workers who work indirectly for the Federal Government through
            contracts with private industry are not likely to receive wages
            and benefits comparable to Federal workers. . .''

        Contractors ritualistically invoke the Service Contract Act
    whenever the human toll from service contracting is raised. However,
    EPI's research reveals the very limited reach of prevailing wage laws.

            ``In 1999, only 32 percent of Federal contract workers were
            covered by some sort of law requiring that they be paid at
            least a prevailing wage. . . But even this minority of covered
            workers is not guaranteed a living wage under current laws. For
            example, the Department of Labor has set its minimum pay rate
            at a level below $8.20 an hour for the workers covered by the
            Service Contract Act in 201 job classifications.''

        GAO has been unable to determine the extent to which contracting
    out undercuts workers on their wages and benefits. Despite its
    pioneering work in this area, EPI acknowledges that:

            ``Further research, such as a survey of contracting firms, is
            needed in order to know more about these workers and their
            economic circumstances.''

        The majority refused to address this issue in any meaningful way,
    whether conducting a study to determine the extent to which contractors
    provided their workers with inferior compensation or removing wages and
    benefits from the competition process so that the Federal and private
    sectors could compete on the basis of staffing levels and service
    delivery techniques, instead of how fast the contractors could
    transform the working and middle-class Americans in the Federal
    workforce into a poorly-paid contingent workforce with few if any
    benefits or protections. The majority never challenged the reliability
    of the EPI report. However, the only concession the majority would make
    is to call on agencies, in Principle #10, to make sure that the Service
    Contract Act is enforced. Of course, as the EPI report made clear, that
    law is irrelevant to the vast majority of contract workers.

        3. ``Recognize that inherently governmental and certain other
    functions should be performed by Federal workers.''
        So what? It is commonly acknowledged by even senior administration
    officials that inherently governmental work has been privatized. In a
    December 26, 2001, memo to OMB asking for relief from the onerous
    outsourcing quotas, Under Secretary for Acquisition, Technology, and
    Logistics Pete Aldridge, also a CAP member, wrote that ``a reassessment
    may very well show we have already contracted out capabilities to the
    private sector that are essential to our mission. . .''
        It was reported in a November 5, 2001, posting on GovExec.com that
    ``certain agencies have outsourced too many jobs and should consider
    bringing work currently done by contractors back in-house, the Bush
    administration's top procurement official said last week. Angela
    Styles, Administrator of the Office of Federal Procurement Policy in
    the Office of Management and Budget, (also a CAP member,) said that
    some agencies have sent so much work to the private sector that they
    are unable to provide effective oversight of the contracted work.''
        Of course, Federal agencies don't know how much they spend on
    service contracting, how many service contractor employees are
    indirectly on their payrolls, or even what work these contractors are
    actually performing. What we do know is that agencies have contracted
    out inherently governmental work. The absence of a reliable and
    comprehensive tracking process prevents us from knowing which
    inherently governmental work has been contracted out.
        Moreover, as times change, so do perspectives. Just as work that
    had once been considered inherently governmental can become commercial,
    work that had once been considered commercial can become inherently
    governmental. Indeed, airport screening is an excellent example of work
    that had once been considered commercial but has since become
    inherently governmental. Again, however, there is no comprehensive and
    reliable process--indeed, there is no process at all, let alone one
    that is comprehensive and reliable--to track work performed by
    contractors to determine whether changing times demand that it be
    redesignated as inherently governmental so that it can be performed by
    reliable and experienced Federal employees.
        In the panel's commentary for this principle, it is said that
    ``(c)ertain other capabilities . . . or other competencies such as
    those directly linked to national security, also must be retained in-
    house to help ensure effective mission execution.'' Although far too
    narrowly stated, this is an excellent point. That is, commercial
    functions can be contracted out to such an excessive extent that it
    undermines the Government's ability to perform its work. However, if
    agencies aren't tracking contractors' work, how do they know when too
    much commercial work has been contracted out?
        Therefore, it is meaningless to say that Federal employees ought to
    be performing inherently governmental work and certain other work if
    there is no mechanism for determining whether inherently governmental
    work is being performed by contractors or whether commercial functions
    have been given to contractors to an excessive extent.
        AFGE and other members of the minority repeatedly recommended
    borrowing the methodology perfected by the Army to track the cost and
    size of its workforce, both specifically and globally. As the panel
    noted, ``the FAIR Act has helped to identify commercial work being
    performed by the Government.'' Surely, any panelist who was motivated
    by a determination to actually fulfill the promise of this principle
    would have supported our efforts to provide for a comparable inventory
    of work performed by contractors.
        In fact, the only actual contractor in the panel's majority, in an
    article posted on the GovExec.com website, on April 5, 2002, said that
    the Army inventory was both manageable and valuable. According to:

            ``Mark Filteau, president of Johnson Controls, a Florida-based
            contractor, the changes should make it fairly easy for
            contractors to comply with the study. `So long as the Army
            doesn't invent new categories or require cross-correlation from
            old contract categories to some new set of definitions, then
            there won't be a significant cost impact on new bids or current
            contracts,' he said. While noting that contractors already
            report on a variety of topics to the Government, Filteau
            praised the concept behind the study. `Frankly, the Army ought
            to know what it is paying for contract labor,' he said. `As a
            citizen, a taxpayer, and an all-around fan of good management
            practice, I support what the Army is trying to do here.' ''

        However, the majority not only rejected any attempt to track the
    cost and size of the Federal Government's massive contractor workforce,
    it also refused to address the important principle of what's inherently
    governmental, period.
        But aren't inherently governmental issues the sort that a panel
    chaired by the Comptroller General should be considering, especially
    given the comments made to GovExec.com before the panel began its work?
    According to a June 8, 2001, posting:

             ``A high-level panel reviewing Federal outsourcing policy is
            working to better define when and why Federal jobs can be
            considered inherently governmental, Comptroller General David
            Walker said this week.
             ``Walker is chair of the Commercial Activities Panel, a 12-
            member working group that is reviewing Federal outsourcing
            issues. In an interview with GovExec.com, he addressed one of
            the most difficult aspects of outsourcing decisions: how to
            determine what functions must remain in-house to provide
            effective government. . . `One question that has to be on the
            table is what is a reasonable way to go about defining
            inherently governmental,' he said. `It's not well-defined
            today, and arguably not being consistently applied [by
            agencies] today.' ''

        On May 1, 2002, less than a year later, the GovExec.com reporter
    followed up on this issue, and the situation had changed:

              ``Some observers were disappointed that the panel did not
            spend more time studying broader contracting issues, such as
            the rules that govern what Federal jobs are eligible for
            outsourcing. `The hope is that with this process issue now out
            of the way we can get to the big picture,' said Dan Guttman, a
            fellow with the National Academy of Public Administration. `The
            [panel report] looks more like an interest group battle than a
            discussion of issues of great public consequence.'
              ``But most panel members weren't interested in studying the
            definition of `inherently governmental' work, which by law is
            off-limits to outsourcing, according to Walker. `That was not
            something that people felt we needed to spend a lot of time
            on,' he said.''

        Actually, members of the minority repeatedly pressed the panel to
    consider this issue, but met with failure. Of course, it would be
    foolish to expect otherwise.
        With a panel overwhelmingly comprised of representatives that are
    either part of, or beholden to, a special interest group that is
    dedicated to substituting its own interest for the public interest, why
    would there be any interest in dealing with important questions, such
    as what work is inherently governmental and should always be performed
    by reliable and experienced Federal employees? Contrary to a contention
    made at a hearing last year, this dereliction was not a result of too
    little time; rather it was because there was no interest on the part of
    the majority.

        4. ``Create incentives to foster high-performing, efficient, and
    effective organizations throughout the Federal Government.''
        As discussed earlier, the Comptroller General attempted to
    incorporate this principle into the recommendation with his HPO
    proposal. However, due to strong opposition from other members of the
    majority, this proposal was significantly watered down. Moreover, the
    administration has no interest in HPOs. Neither the DOD nor the OPM
    panelists mentioned HPOs in their additional remarks. The OMB panelist
    did--but only to denounce them. Consequently, it can be written that
    although this principle was incorporated into the recommendation to a
    very limited extent, that part of the recommendation is already being
    ignored by the administration.
        That's being polite, however. Actually, the majority refused
    efforts that would have created real ``incentives for its employees,
    its managers, and its contractors to seek constantly to improve the
    economy, efficiency, and effectiveness of the delivery of Government
    services through a variety of means. . .'' The only way to ensure that
    agencies actually have such incentives is by eliminating the easy out
    of privatization. Rather than take the time and expend the effort to
    reform and streamline operations internally, it's all too easy for
    agencies to contract out that work (along with the inefficiencies)
    without public-private competition, which ill serves taxpayer interests
    in the short-term as well as the long-term. The panel refused to
    eliminate the easy out of noncompetitive outsourcing, even to the
    point, as discussed earlier, of staunchly defending the ridiculous yet
    notorious direct conversion loophole for large contractors who claim to
    be 51 percent Native American-owned.

        5. ``Be based on a clear, transparent, and consistently applied
    process.''
        As we discussed earlier, the majority, in its lengthy attack on OMB
    Circular A-76, was unable to land even a single punch.
        The majority claimed that it was too complicated. However, as
    proof, it could only point to a higher sustain rate for A-76 proposal
    protest decisions than for proposal protests generally. Unfortunately,
    that conveniently ignores the fact that the circular, as an objective
    process, is eminently easier to litigate against than the FAR because
    the latter process' subjectivity places most agencies' decisionmaking
    beyond judicial review.
        Then the majority said that A-76 was unequal and unfair. Again,
    however, it could only point to one example of the circular being
    inequitable and then admitted that the problem could be easily
    corrected, and, indeed, included that fix in its recommendation.
        Finally, the majority turned its attention to A-76's ``best value''
    process. Unable to produce even a single example of how the circular's
    ``best value'' process had kept an agency from improving the quality of
    its services, the majority nonetheless insisted that the process was an
    utter abomination because it had been litigated--even though the
    replacement process it was recommending had also been litigated.
    However, the majority could not say if the number of sustained A-76
    ``best value'' process protests was proportionately greater than the
    number of protests sustained generally or under a FAR-based ``best
    value'' process.
        So, after giving the majority its best shot and making the one
    minor change included in the report, A-76 easily qualifies as a
    ``clear, transparent, and consistently applied process.''
        Is that true of a FAR-based ``best value'' process? As discussed
    earlier, agencies have extensive discretion over that process, from
    beginning to end, and the standards of review established by the
    Comptroller General are difficult to overcome. The subjective scoring
    that is intrinsic to FAR-based ``best value'', as Mr. Doke notes,
    ``permits the judges to postpone deciding what they want until after
    the competitors have completed their participation.'' For example, a
    solicitation might indicate that the award was going to be based on
    technical and cost factors, and that technical factors would be more
    important than cost factors. However, judges are permitted to wait
    until after the proposals are submitted to decide how much more
    important technical factors will be. That is, they decide after
    submission of proposals to assign the specific relative weights of the
    technical/cost split, be they 55/45, 70/30, or some other subjectively
    determined ratio. That's hardly a ``clear, transparent, and
    consistently applied process.'' Moreover, while agencies are required
    to identify all ``significant'' evaluation factors and subfactors in a
    solicitation, they are not required to identify all ``areas of each
    factor'' which may be taken into account, provided that the agency can
    contend that the unidentified areas are reasonably related to or
    encompassed by the stated criteria.
        In his comments at the House Readiness hearing, the Comptroller
    General said, ``(F)irst, if you look at the recommendations that we're
    talking about and come back and say that transparency is the key. I
    mean if you want to minimize the possibility of abuse you've got to
    have clearly defined criteria that are set out front. . . You've got to
    have a process that everybody knows what the rules of the ball game are
    before you get started, included what the weighting is going to be on
    various factors.'' (Emphasis added.) However, as the foregoing makes
    abundantly clear, the actual weighting is not made known in advance;
    nor are all of the subfactors which will be assigned weight identified
    in advance.
        As Mr. Doke reports, the use of subjective or even unnecessary
    factors in the FAR-based ``best value'' process has been extensively
    litigated. Eyebrow-arching examples include: ``creative or innovative
    thoughts'', ``visionary'' approaches, the importance of the contract to
    the offeror, ``aesthetics'', ``employee appearance,'' and the deeply
    strange ``availability of pop-up dispensers for paper towels.''
    Moreover, the FAR includes no rules, standards, or guidelines for the
    use of subjective standards. Consequently, how can the majority contend
    that its FAR-based ``best value'' recommendation would ensure that
    agencies use a ``clear, transparent, and consistently applied
    process?''
        Similarly, small businesses have pointed out repeatedly that
    competition under a FAR-based ``best value'' process is, reports Mr.
    Doke, ``prejudiced because there is no statutory or regulatory guidance
    to limit the evaluation of responsibility factors (e.g., corporate
    experience, risk) to the level that is adequate for the performance of
    the contract.'' (Emphasis original.) Is that what we should expect of a
    ``clear, transparent, and consistently applied process?''
        Under a FAR-based ``best value'' process, agencies never actually
    decide what they want until after the proposals have been submitted. In
    fact, agencies actually award points to offerors who exceed the
    requirements set forth in the solicitation. This is why a FAR-based
    ``best value'' process has historically been a burden on taxpayers.
    Instead of agencies telling contractors what they want, a FAR-based
    ``best value'' process has contractors telling agencies what they need.
    With the tail wagging the dog, is it any wonder contract administration
    is such a mess? Mr. Chairman, if you're at all like me, I doubt you've
    ever walked into an automobile dealer's showroom, walked up to the
    salesperson with the predatory smile, and blurted out: ``Tell me
    everything you think I need--and I mean everything! Don't scrimp on
    those expensive optional extras!''
        Should acquisition personnel follow developments in the private
    sector so they can take advantage of those elusive opportunities to
    improve the quality of their services? Of course. That's why AFGE and
    other members of the minority strongly urged the panel to recommend
    bolstering the acquisition workforce with additional staff and
    training, so that agencies can decide what they need, based on what's
    best for the taxpayers, as opposed to what's best for the commissions
    of contractors' sales staff. However, even with sufficient staff and
    training, there will, of course, be times when an offeror will include
    in its proposal additional services or features that, although not
    required in the solicitation, are desirable to the agency. Under the A-
    76 ``best value'' process, the agency allows the other offeror an
    opportunity to match the competitor's proposal, ensuring that the
    agency secures all of the quality it needs at the lowest possible
    prices. Under the FAR-based ``best value'' process, however, taxpayers
    are out of luck--as is that other offeror, even if it had submitted the
    lower-cost, more responsive proposal. . .
        As Mr. Doke writes:

            ``Competitive evaluations that award points for exceeding the
            Government's requirements raise real questions as to whether
            there is genuine competition at all. It is difficult to compete
            to meet the requirements, but with undisclosed evaluation
            plans, undisclosed and subjective evaluation factors, etc., how
            can there be any meaningful competition to exceed the
            requirements? How much more than the requirements is desired
            (and will be awarded points)? In what areas are additional
            performance or capabilities desired? What will you be competing
            against? Finally, how can the Government justify paying a
            higher price for something that exceeds its actual needs as
            reflected by the specification requirements?'' (Emphasis
            original.)

        Moreover, agencies need not identify the ``price premiums'' that
    are paid for contracts awarded to other than the low offeror and the
    specific factors for which those premiums are paid. Although the
    agency's negotiating memorandum normally will discuss the relative
    position of the proposals with respect to various factors, there is no
    requirement specifically to identify the reasons the evaluators
    considered that the higher priced proposal should be accepted.
    Frequently, the documentation merely reflects that the higher priced
    offer was rated more highly. How much of a price premium (as a
    percentage over the low offer) should be permitted? Similarly, there is
    no government reporting requirement to disclose such information under
    any of the many contract reports required by law and regulation.
    Therefore, there is no way that anyone knows how much money the agency
    is spending under FAR-based ``best value'' procurements for contracts
    awarded to offerors that do not have the lowest price proposal.
        Clearly, the FAR-based ``best value'' process is not more ``clear,
    transparent, and consistently applied process'' than A-76. In his
    remarks at the House Readiness hearing, the Comptroller General
    conceded that ``there's discretion in every process.'' Of course, the
    problem is that the majority recommends replacing an objective
    competition process that minimizes the role of discretion with an
    explicitly subjective process that maximizes the role of discretion.

        6. ``Avoid arbitrary full-time equivalent (FTE) or other arbitrary
    numerical goals.''
        This principle was never incorporated by the majority into the
    report's recommendation. For example, the recommendation includes no
    provision to abolish the infamous OMB outsourcing quotas. In fact,
    there is not even a reference in the recommendation to elimination of
    the pernicious practice of managing the in-house workforce by personnel
    ceilings. Although illegal in DOD the practice persists, both in DOD
    and in most other agencies. In fact, as discussed earlier, senior DOD
    officials are openly acknowledging their intention to let attrition
    take its inexorable toll by refusing to hire any additional staff. In
    other words, the backwards personnel policy of arbitrary personnel
    ceilings that did so much to bring about the ``human capital crisis''
    will now be pursued with an unchecked vengeance. As mentioned earlier,
    the panel's majority knows of DOD's policy, but refused to use the
    report to draw attention to this outrage or call for its repudiation.
    Moreover, OMB did not even wait until the ink was dry before defying
    this principle. Although the OMB panelist said in her additional
    remarks that the agency was ``revising (its) criteria for success,''
    agencies are still being directed to convert and compete the jobs of at
    least 425,000 Federal employees by the end of 2004.

        7. ``Establish a process that, for activities that may be performed
    by either the public or the private sector, would permit public and
    private sources to participate in competitions for work currently
    performed in-house, work currently contracted to the private sector,
    and new work, consistent with these guiding principles.''
        This is another principle that the majority didn't incorporate into
    the report's recommendation. For example, that DOD civilian employees
    should be allowed to compete for new work and contractor work is not an
    option; it's the law. 10 U.S.C. 129a requires DOD to shift work between
    its civilian, military, and contractor workforces, depending on what's
    best for the taxpayers. Nevertheless, DOD almost never reviews work
    performed by contractors to see if the public sector performance is
    appropriate and continues to systematically starve the civilian
    workforce of opportunities to take on new work.
        This principle is also an example of the majority's bait-and-switch
    tactics. In the commentary for Principle #7, it was written that
    ``Criteria would need to be developed, consistent with these
    principles, to determine when sources in either sector will participate
    in competitions.'' (Emphasis added.) However, the only reference in the
    recommendation to the development of participation ``criteria'' related
    to instances in which Federal employees would be competing for work.
    Why should such criteria only apply ``where there is no in-house
    workforce currently performing the work?'' (Emphasis added.) It is
    well-known that contractors, usually the smaller ones but often the
    larger ones as well, regularly bid on work for which they have no
    ``excess capacity.''
        Why shouldn't agencies be allowed to undertake the same ``make-or-
    buy'' decisions that are made every day by firms, including
    contractors, in the private sector, without having to jump through
    arbitrary hoops established by the panel's majority? Sometimes the
    agency will have excess capacity, sometimes the agency will be
    performing similar work, sometimes the agency will be able to make
    arrangements for performance by employees in another agency, and
    sometimes the agency will start from scratch as the Transportation
    Security Administration is doing right now with airport security
    screening. Agencies should vigorously consider all such options because
    that's what would best serve taxpayers and the people who depend on
    agencies for important services.
        However, while the majority talks the talk of competition, it could
    never walk the walk, and the report's recommendation preserves new work
    and contractor work as no competition zones.

        8. ``Ensure that, when competitions are held, they are conducted as
    fairly, effectively, and efficiently as possible.'' .
        This principle raises essentially the same issues as Principle #6;
    and my concerns over the failure of the majority to actually
    incorporate this principle in the recommendation are essentially the
    same.
        I would like to address one point. The commentary for this point
    insists that ``Fairness requires that competing parties, both public
    and private, or their representatives, receive comparable treatment
    throughout the competition regarding, for example, access to relevant
    information and legal standing to challenge the way a competition has
    been conducted at all appropriate forums, including the General
    Accounting Office and the United States Court of Federal Claims.''
    (Emphasis added.) Because of the nature of discussions surrounding what
    should have been an open-and-shut issue, we had asked that the word
    ``union'' be inserted before the word ``representative.'' Even this
    ambiguous language was not incorporated into the majority's
    recommendation, which gave standing only to offerors.
        In comments at the House Readiness hearing the importance of
    litigation in keeping decisionmakers in a FAR-based ``best value''
    process on the straight and narrow path was emphasized: ``(Y)ou need to
    have appropriate appeals processes to qualified, independent third
    parties who don't have a vested interest in the result.'' We find this
    invocation of litigation to be puzzling.
        First of all, an emphasis on litigation as a policing mechanism is
    wholly contrary to the most fundamental precepts of the acquisition
    reform movement, for which GAO has been a consistent advocate. More
    importantly, the onset of acquisition reform has resulted in a drastic
    decrease in the use of procurement litigation, both protests and
    disputes, as Professor Steven Schooner demonstrated in a ground-
    breaking article in the American University Law Review. Professor
    Schooner points out that the GAO's docket has been more than halved in
    less than a decade.
        As discussed earlier, giving agencies much greater discretion is
    the principal cause in the reduction of procurement litigation. In
    light of that important piece of information, the litigation argument
    can be scrutinized more carefully. GAO is arguing that the ill effects
    of shifting to a more subjective process can be made accountable by
    increased litigation when, in fact, litigation in the increasingly
    subjective private-private competition process has already decreased
    significantly precisely because the increased use of subjectivity
    undermines the threat of litigation.

        9. ``Ensure that competitions involve a process that considers both
    quality and cost factors.''
        That's obvious. Of course, the Federal Government already has such
    a process that considers both quality and cost factors. It is called
    OMB Circular A-76, which allows agencies to secure the highest quality
    services at the lowest possible prices, i.e., the best of both worlds
    for taxpayers and agencies. That is, the circular or any other well-
    managed cost-based process allows agencies ``to take into account the
    Government's need for high-quality, reliable, and sustained
    performance, as well as cost efficiencies.''
        No panelist, whether part of the majority or the pro-taxpayer
    faction, ever recommended that the Government ``buy whatever services
    are least expensive, regardless of quality.'' That is clearly not the
    way Federal sourcing should work and it is clearly not the way Federal
    sourcing under the circular works.
        As Mr. Doke reminds us, ``It is a popular misconception that a low
    price means low quality.'' Agencies should decide what services they
    want with the features they want, determine that the offerors can
    provide the services they want with the features they want, and then
    decide in favor of the offeror who can do that work for the least cost
    to the taxpayers. That's how it works under OMB Circular A-76 or any
    other well-managed cost-based competition process.
        Unfortunately, that common sense isn't part of the majority's
    recommendation. Although unwilling or unable to make the case that
    agencies have been deprived of opportunities to improve the quality of
    their services because of OMB Circular A-76, except for a tiny handful
    of cases that were rectified on appeal, the majority recommends that A-
    76 be junked in favor of an explicitly subjective process that
    historically has cost taxpayers more for the same services than if they
    had been acquired under a cost-based process. A FAR-based ``best
    value'' process is not needed to take into account quality, undermines
    the integrity of the sourcing process by introducing bias and
    subjectivity in a way that cannot be corrected by the appellate
    process, and undermines taxpayer interests.

        10. ``Provide for accountability in connection with all sourcing
    decisions.''
        This is another occasion when the majority was all talk and no
    action. The commentary for this point insists that ``accountability
    requires that all service providers, irrespective of whether functions
    are performed by Federal workers or by contractors, adhere to
    procedures designed to track and control costs. . .'' Yet, the part of
    the majority's recommendation dealing with the FAR-based ``best value''
    process does not address the tracking of costs, period. Not one word.
        With respect to the part of the report's recommendation relating to
    OMB Circular A-76, the majority offered four specific proposals dealing
    with tracking costs--all of them dealing with in-house costs. The only
    time the majority addressed the tracking of contractor costs was at the
    very end of the A-76 section when it included vague and meaningless
    boilerplate language that called on agencies to ensure ``that all
    contracts are properly administered.''
        It would be instructive to review what the Comptroller General's
    own staff had written just last year about the ability of DOD, the
    agency with the most experience with service contracting, to track its
    service contracting costs. They reported that DOD has chosen not to
    keep its commitment to Congress to improve its system for reporting the
    costs of contract services:

              ``The Department of Defense (DOD) spends tens of billions
            annually on contract services--ranging from services for
            repairing and maintaining equipment; to services for medical
            care; to advisory and assistance services such as providing
            management and technical support, performing studies, and
            providing technical assistance. In fiscal year 1999, DOD
            reportedly spent $96.5 billion for contract services--more than
            it spent on supplies and equipment. Nevertheless there have
            been longstanding concerns regarding the accuracy and
            reliability of DOD's reporting on the costs related to contract
            services--particularly that expenditures were being improperly
            justified and classified and accounting systems used to track
            expenditures were inadequate. . .
              ``. . . DOD has not developed a proposal to revise and
            improve the accuracy of the reporting of contract service
            costs. DOD officials told us that various internal options were
            under consideration; however, these officials did not provide
            any details on these options. DOD officials stated that the
            momentum to develop a proposal to improve the reporting of
            contract services costs had subsided. Without improving this
            situation, DOD's report on the costs of contract services will
            still be inaccurate and likely understate what DOD is paying
            for certain types of services.'' (Emphasis added.)

        But that's only the beginning. The majority has insisted that the
    replacement of A-76 with a FAR-based ``best value'' public-private
    competition process was necessary to improve the quality of Government
    services. However, not only does the majority's recommendation include
    no specific provisions to track contractor costs, the majority's
    recommendation includes no specific provisions to track the quality of
    services performed by contractors. Apparently, actually reducing costs
    and actually improving quality is not what's really important to the
    majority.
    E. The CAP's recommendation
        Let's not be distracted from the real reason the majority rammed
    through its FAR-based ``best value'' recommendation: pro-contractors
    can't compete on the basis of costs. Contractors are confounded that,
    despite all of their advantages, they lose almost 60 percent of all
    public-private competitions. Contractors simply can't win regularly
    enough when they compete on the basis of costs, the standard that is
    best for taxpayers. Rather than improve their efficiency, contractors
    have decided to change the rules of the game. They want to replace the
    current system with one that increases the role of bias and politics.
    This effort has been rejected repeatedly by both Republican and
    Democratic administrations over the last 50 years. Indeed, thanks to
    the vigilance of successive Congresses, Title 10 is replete with
    requirements that ensures the Government's service decisions are cost-
    based.
        The majority often reminds us that the FAR-based ``best value''
    process is used by agencies for conducting competitions between
    contractors. As discussed, the subjectivity of the FAR-based ``best
    value'' process often benefits one contractor at the expense of another
    contractor. Indeed, contractors are not reluctant to litigate when they
    think agencies are showing favoritism towards their competitors.
        However, the subjectivity in a FAR-based ``best value'' process can
    not be used systematically to favor one group of contractors over
    another because private-private competition is non-ideological. As we
    know, that is not the case with public-private competition, which is
    essentially politics by other means. When agency officials are
    indisputably predisposed towards the private sector, increasing the
    subjectivity of the service contracting process will provide those
    agency officials with opportunities to show their favoritism by skewing
    the outcomes of competitions in favor of contractors. As stacked as the
    deck is against Federal employees, the situation could become even
    worse by allowing agency officials already predisposed towards
    outsourcing to employ an openly subjective public-private competition
    process that permits them even more opportunities to favor the private
    sector.
        The four members of the pro-taxpayer faction crafted an alternative
    proposal to that offered by the majority that would have allowed for
    alternatives to OMB Circular A-76 to be thoroughly tested, including
    FAR-based, ``best value'' and FAR-based low-cost/technically
    acceptable. Given that the majority acknowledges that competitions
    conducted under FAR-based ``best value'' could take longer than those
    conducted under the circular, no time would be lost by continuing to
    use the circular or a reformed version thereof until the desirability
    of the alternatives had been determined. Given that the majority is
    unable to show that agencies are being deprived of opportunities to
    improve the quality of their services because of A-76, nothing
    substantive would be lost. Given that the history of acquisition,
    particularly during the last 10 years, is littered with serious
    mistakes, it is just common sense to look before we leap.
        The majority was uninterested in this more thoughtful approach.
    While acknowledging that its untested and unproven FAR-based ``best
    value'' process should be evaluated, an evaluation under its
    recommendation would not occur until after the recommendation had been
    implemented and widely used. At a time when the administration has
    unleashed a tidal wave of outsourcing, demanding that agencies compete
    or convert at least 425,000 Federal employee jobs by the end of 2004,
    now is clearly not the time to be making radical, unprecedented, and
    highly controversial changes to the public-private competition process.
    That is surely self-evident. However, the members of the faction
    understand that their recommendation cannot stand scrutiny, and
    therefore insist on its immediate implementation.
        The changes recommended by the majority to OMB Circular A-76 are
    typically one-sided. Four changes are recommended to the circular to
    improve tracking of in-house costs. No specific changes are proposed
    dealing with tracking contractor costs. In fact, tracking contractor
    costs goes unmentioned, except for a throw-away line at the end about
    ``ensuring that all contracts are properly administered.'' There is no
    mention of providing legal standing for Federal employees and their
    union representatives. OMB has said that there are ``obstacles'' to
    using the circular to contract in work in non-DOD agencies. No proposal
    is offered to surmount those alleged obstacles.
        The HPO part of the recommendation has been discussed earlier. In
    light of the administration's, at best, ambivalent attitude towards
    labor-management cooperation and investments in the workforce, even for
    purposes of training, the future for HPOs is not bright. Because of the
    subjectivity intrinsic to the process--with respect to determining the
    performance benchmarks and then determining compliance with those
    benchmarks--HPOs should first be tested and evaluated.

                                   CONCLUSION

        Chairman Ensign, I thank you again for holding this morning's
    hearing and inviting AFGE to testify about the important issues raised
    in your invitation letter as well as those important to rank-and-file
    DOD employees. Please let me know if AFGE can be of any service as you
    prepare your subcommittee's portion of this year's defense
    authorization bill. I look forward to attempting to answer any
    questions that you and your colleagues might ask.
                                     ______

      APPENDIX I--Competition with Oversight, Responsibility, and Equity
                                (CORE) Proposal

        The authors of the CORE Proposal have attempted to draft a set of
    proposals that supports the mission statement and the ten principles of
    the Commercial Activities Panel (CAP). We believe that the CORE
    Proposal makes improvements in the current system to better serve the
    taxpayers, while satisfying the needs of agencies, employees, and
    contractors.

                                  COMPETITION

    1. Proposal:
        Absent compelling national security rationales, Federal employees
    should be allowed to compete in defense of their jobs before their work
    is transferred to contractors.
    2. Proposal:
        A limited pilot project should be developed to experiment with new
    procedures for carrying out public-private cost comparisons as a means
    of assessing the viability of alternatives to the current OMB Circular
    A-76 system.
    Details:
        Any public-private competition process is bound to generate
    controversy because Federal employee jobs and contractor profits are at
    stake. However, A-76 circular remains the only tested and proven
    competition process. While agencies should always strive to reform and
    improve the process, it would be ill advised to abolish OMB Circular A-
    76, or even relegate it to a secondary role, in favor of an untried and
    untested replacement.
        Consequently, before instituting untested Government-wide changes,
    OMB should establish a limited pilot project to examine the various
    alternatives to OMB Circular A-76, including dollarization, ``best
    value,'' and low-cost/technical tradeoff on work performed by Federal
    employees, new work, and work performed by contractors. Alternatives to
    OMB Circular A-76 should include requirements to evaluate bids on the
    basis of cost, allow a cost differential for an incumbent service
    provider, ensure that an incumbent has the opportunity to reformulate
    its bid in response to a challenger's submission, allow Federal
    employees to compete as part of a most efficient organization, and
    utilize OMB Circular A-76 Handbook guidance with respect to the
    calculation of in-house personnel costs, in-house non-personnel costs,
    and in-house overhead costs.
        The alternatives explored in the pilot project should be evaluated
    by OMB, GAO, as well as an impartial independent review panel. Should
    any of these variations or alternatives prove to be consistently more
    efficient, expeditious, and equitable, consideration should be given to
    using these alternatives in more situations. Given that the proposal
    endorsed by GAO and private contractors is no more expeditious than OMB
    Circular A-76, time will not be lost waiting for the impartial review
    of the results from a ``limited pilot project.''
    3. Proposal:
        Federal employees should be allowed opportunities to compete for
    new work as well as work performed by contractors.

                                   OVERSIGHT

    1. Proposal:
        Agencies should implement reliable systems to track the costs and
    quality of services provided to the Government by contractors.
    Details:
        Agency managers and policymakers alike need reliable and
    comprehensive methods for tracking the cost and size of the contractor
    workforce and the quality of the work they perform.
    2. Proposal:
        Strengthen the civilian acquisition workforce.
    Details:
        The size of the acquisition workforce should be increased, the
    acquisition workforce should receive increased training, agencies
    should avoid contracting out work related to contract administration,
    and agencies should determine the appropriateness of returning to in-
    house performance any contract administration work currently performed
    in the private sector.
    3. Proposal:
        Establish an equitable appeals process.
    Details:
        Federal employees and their union representatives should be given
    rights to appeal service contracting decisions to the Court of Federal
    Claims and to the General Accounting Office.

                                RESPONSIBILITY

    1. Proposal:
        Agencies should not use arbitrary personnel ceilings.
    Details:
        Agencies should be allowed to manage their workforce by budgets and
    workloads. Like contractors, agencies should be allowed to ``staff up''
    when appropriate to assume additional responsibilities, whether that is
    new work or work that had previously been performed by contractors.
    Agencies should be allowed to engage in make-or-buy decisionmaking
    processes similar to those undertaken by private sector firms.

                                     EQUITY

    1. Proposal:
        Agencies should avoid undertaking service contracting that
    undercuts the pay and benefits of workers, whether in the public sector
    or the private sector.

                                      NOTE

        Signatories to the CORE Proposal agree to disagree among ourselves
    about the appropriateness of using conversion, competition, and
    privatization goals.
    Details:
        Please see the Appendix to the CORE Proposal for brief, 100-word
    summaries of the two competing perspectives held by the CORE Proposal
    signatories on the use of conversion, competition, and privatization
    goals.

        Senator Ensign. I thank both of you for your testimony.
        I think it is interesting when you are trying to figure out
    sometimes what the best policies are as lawmakers, and you hear
    testimony from people, sometimes the more objective that they
    sound, the more credibility that they have, at least with this
    lawmaker, in their testimony. I think that it is obvious that
    sometimes there are things that the private sector can do, and
    sometimes it is obvious that there are things that only the
    Government can do.
        Striking that balance, having come from the private sector,
    there are times when lowest cost, which is what the A-76 does
    today, that lowest cost is not lowest cost. Lowest cost is, as
    a matter of fact, what Ms. Styles said about cutting lawns is
    cutting lawns. If anybody has ever had a business where you
    hire out your landscaping, the lowest cost on cutting lawns
    sometimes is not lowest cost because they end up not taking
    care of things and you end up paying a lot more in the long run
    to have somebody else come in and clean it up.
        I think that is the idea of the new process, is to make
    sure that the value is there. It is never going to be a perfect
    process. I think that is something we all have to realize. It
    is difficult to measure, but you have to try to measure it. You
    have to have as objective of measures as possible.
        What the administration is attempting to do, I am sure is
    not going to be perfect. Nothing ever is when we do this, but
    we have to work together as Republicans, Democrats, as
    Americans basically, to try to get the best value for the
    taxpayer. To make sure our military has what they need, the
    best resources, and to use those resources in the best way to
    provide our men and women with the absolute finest technologies
    and finest services that they can have so they can continue to
    be the most dominant military in the world.
        Having said that, I want to start with a question for you,
    Mr. Soloway, about this. It has to do with contracting out a
    lot more overseas, especially at this time. There are questions
    about what protections that those or what some of those
    contractors need to maintain that.
        First is that some of them, I guess, are having problems.
    Their insurance companies are dropping them. It is difficult
    for some of those employees to get the insurance. I do not know
    if you are aware of some of these things.
        Maybe getting to, Mr. Harnage, some of your concerns, all
    those kinds of costs should be taken into account. In other
    words, if the Federal Government ends up holding the bag for
    some of those insurance costs in the bidding process or
    whatever, those kinds of things would seem to me to be very
    fair to take into account, because the indemnification if that
    comes to the Federal Government, then that is, obviously, a
    very or could be a very significant cost.
        So what other kinds of help do some of those people need
    when they are in danger zones, like what they are in over there
    right now in the Middle East. How does that affect basically
    the new integrated process?
        Mr. Soloway. Well, most of the work you are talking about
    is not related to the A-76, because this was work that was
    principally done by the military that the military is now no
    longer doing, has brought in contractor support to fulfill
    those roles.
        I went to the Balkans after the Kosovo conflict, when I was
    at the Department of Defense, to do an assessment of the
    contractor support. This issue that you raise about the costs
    of--the surge cost, if you will--and there are a number of
    issues associated with surge. Some of it had to do with the
    protection of the combatants and non-combatants. Some of it has
    to do with the numbers of people you suddenly need in theater
    and so forth.
        One point that was made to me by the warfighting side, as
    opposed to the business side, was that the alternative to them
    was going to be additional Reserve call ups, because there
    simply are not enough soldiers in uniform to do all of that
    day-to-day work. You do not get soldiers 24/7. You get them for
    a few hours. They have other duties as assigned.
        That is, we have to, if we are going to really do the
    assessment you are talking about, which DOD I believe has done
    periodically over the last several years as more contractor
    support has been used, you have to look not just at the
    immediate costs, but also all of the trailing costs associated
    with it, whether it is Reserve call ups and the economic impact
    of that, whether it is maintaining a permanent force of either
    civil service or uniformed personnel to do work that is
    temporary by nature in a conflict and so on.
        So those issues are appropriate. DOD has continued to look
    at them, and continued to conclude, as I believe the Fortune
    article that Senator Pryor mentioned earlier, that it has
    become part of that partnership.
        In terms of liability and indemnification insurance, any
    time there is a conflict when you have civilians in harm's way,
    there are issues associated with that. There are a number of
    provisions in the Defense Base Act that are designed to help
    deal with those issues.
        These are not all--to be very clear, these are not all
    contractors who have been deployed to support the fight. We
    have people working overseas for the U.S. Agency for
    International Development, whether they are NGOs or contractor
    employees who are also covered by the Defense Base Act.
        We have contractor workers at bases around the world
    providing critical technology support that are not there
    directly related to the operation in Iraq, but are there on an
    ongoing basis. As where they become encompassed by a zone of
    risk, if you will, these issues begin to arise, and they have
    to be dealt with.
        There may well be some costs. There always are some costs
    associated with it. But if you go back to the Gulf War, while
    the numbers may have been slightly lower, there were all kinds
    of commercial tankers being used to provide and move material
    into the Gulf. There were lots of contractors in the zone of
    conflict or in the theater of operations.
        This is an issue. It is something that continually has to
    be looked at. For the commercial insurance industry that you
    mentioned, it becomes a question of risk analysis, and you have
    to assess that.
        But, again, when you do that, it has to be balanced against
    the full set of costs, and the full set of challenges, and the
    full set of realities in terms of human capital, military
    manpower, and so forth.
        As we have talked with the Joint Staff and others over the
    last several months and the build up of the current conflict,
    and as I experienced it through the Balkans conflicts, there is
    a balancing and a constant thinking in the military about how
    to do this best and how to do it right.
        Senator Ensign. Well, thank you. I wish we had more time.
    Unfortunately, my time has expired, and I want to give Senator
    Akaka time for questions.
        Senator Akaka. Thank you very much, Mr. Chairman.
        Mr. Soloway, you were a member, as you stated, of the GAO
    Commercial Activities Panel and endorsed the panel's
    recommendations. I would like to explore your council's or
    organization's, which is PSC, position on three aspects of the
    panel's recommendations.
        One is the bid protests. First, the CAP report recommended
    that both the public and private sectors have equal access to
    the bid protest process. You have testified that PSC agreed
    with this recommendation. Would you support legislation to
    provide employee unions and other representatives of Federal
    employees the same protest rights that the private sector has?
        Mr. Soloway. Senator Akaka, the Commercial Activities Panel
    recommendations relative to the rights to be accrued to any
    individual parties involved in a competition are tied directly
    to the full set of 10 principles that we were unanimously
    agreed to.
        Those are my views and, I believe, in the view of the
    majority of the panel, those recommendations amount to a FAR-
    based process. Then, in the revisions that the administration
    has proposed, the piece that most closely aligns with that
    recommendation is what is called the integrated process that I
    mentioned in my testimony.
        I am speaking for myself here, because we were all members
    of the panel as individuals under that process. I believe under
    that process that it is likely that the public sector would
    have the same rights to protest that are currently available to
    the private sector.
        Two caveats to that statement, though, that I think are
    very important: From a strictly legal perspective, moving the
    same rights to the public sector does not, in my view,
    appropriately or legally allow the movement of those rights to
    a labor union or to an individual. Those rights do not exist
    for individuals or labor unions in the private sector.
        They are based on the Competition in Contracting Act. They
    are given to the parties legally responsible for the
    performance. In the case of a private sector bidder, it is the
    company, because the company is the signer of the contract, or
    the signer or certifier of the bid.
        In the case of the Government, what the administration has
    tried to do by creating what they call an agency tender
    official, and by creating in the Government side the same kind
    of contractual framework that they now have on the contractor
    side--as Ms. Styles said, contractors typically recompete every
    3 to 5 years.
        Building that same structure on the public side, you now
    have an official called the agency tender official, who I
    believe, under the integrated process, would likely have the
    ability to protest a decision. But it would not, for both legal
    and other reasons, ever, I believe, nor should it, accrue to a
    union or an individual. That right does not exist in the
    private sector either.
        Senator Akaka. Mr. Harnage, do you have any comment on Mr.
    Soloway's answer?
        Mr. Harnage. The reason for it is pretty obvious. If you
    put responsibility for the protest on an individual with
    limited resources it is not likely to happen. There is no
    justification for placing this responsibility solely on a
    tender who placed the bid, made the mistake to start with, and
    is now going to appeal their own decision.
        I believe that for this to be a fair competition a lot of
    things have to be changed, including that the same appellate
    process rights that the contractors enjoy be provided to
    Federal employees or their representatives.
        Senator Akaka. Mr. Harnage, like Mr. Soloway, you
    participated in the Commercial Activities Panel. You did not
    support the panel's final report and recommendations. I
    understand that AFGE has filed extensive comments on the
    administration's proposed revisions to OMB's Circular A-76. Are
    you concerned about the proposed revisions to OMB Circular A-76
    because these revisions would implement recommendations of the
    CAP report with which you disagree, or because these revisions
    are inconsistent with their recommendations of the CAP report,
    or both?
        Mr. Harnage. Let me say if it was wrong in the CAP, it is
    certainly wrong in the revision of A-76. The fact that the two
    might be related is simply recognizing a mistake of both
    entities.
        I did participate in the A-76, and there is a lot to be or
    is being said about this super majority. When you stack the
    deck eight to four, and in the end the vote comes out eight to
    four, there are no surprises there. The super majority was
    designed at the beginning of the process to achieve this biased
    conclusion.
        Now, I was encouraged during the process that we might be
    making some headway. I found it very educational. But though we
    moved in what I considered a more positive way, in the final
    debates everything reverted back to the initial debates. Things
    turned out as predicted at the beginning.
        Mr. Soloway. Senator, may I make a brief comment?
        Senator Akaka. In a moment. Mr. Harnage, can you point to
    any specific areas in which the proposed revision to OMB's
    Circular A-76 are inconsistent with the recommendations of the
    CAP report?
        Mr. Harnage. I believe the CAP report recommended that
    Federal employees have the right to appeal. I believe the CAP
    report also provided a much stronger language on insourcing.
    You noticed a while ago in Comptroller Walker's comments in
    response to a question was that insourcing is when things fail.
    Now, if he had thought a little bit longer about that, he
    probably would not have said that.
        But that is the mentality of this administration and many
    people in the contractor communities. I believe that when the
    contractor fails there is an opportunity to consider bringing
    work back in-house.
        But it is not a failure of the Federal employees that
    prompted the competition to start with. So why does a
    contractor have to fail for there to be recompetition? Why is
    that the only time private sector functions can be competed?
    But the Federal employee's job can always be competed. If
    competition provides savings, then why do we not have
    competitions to bring work back in-house?
        Pete Aldridge, the Under Secretary of Defense for
    Acquisition, Technology, and Logistics, who also served on that
    panel, came in late on a conversation we were having about
    bringing work back in-house if it saves money. Compete it, if
    it saves money. In a vast majority of the contracts that are
    already let to the private sector (you notice Ms. Styles said
    ``subject to competition,'' she did not say ``competition.'')
    There is no competition. The contracts are subject to
    competition, but there is no initial competition on recompeting
    of that contract.
        So if the Federal workforce is included in that
    competition, it may drive the same savings that you had in the
    beginning. So it is not a matter of the contractor failing. It
    ought to be a matter of policy that competition is where the
    savings are, not privatization, but competition. Therefore we
    ought to be able to compete work to bring it back in-house.
        What Pete Aldridge said was, ``Why in the world would you
    do that?'' To save money. The question was obvious, but the
    fact that he could not even think of an appropriate response
    was alarming.
        Then he said, ``You cannot do that. We do not have the
    capability of hiring the workforce.'' Well, Transportation
    Security Administration (TSA) just proved him wrong on that.
    They hired over 60,000 people in less than a year. Surely, DOD
    can hire 200 or 300 in less than a year.
        Senator Akaka. Mr. Chairman, my time has expired, but let
    me ask Mr. Soloway for his comment.
        Mr. Soloway. Thank you, Senator. I appreciate it. I just
    wanted to make a couple of brief comments to clarify a few
    points. As we parse through this--and, Senator Ensign, you made
    the point that there are widely divergent points of view when
    you hear this, knowledgeable people saying exactly different
    things, but exactly the same subject. Just to be clear about
    what we are talking about private sector employees are
    competing every day for their work, because if their company
    does not perform, and the contract is recompeted, as it
    routinely is, their company loses the work and they have
    absolutely no follow-on rights to go with that work.
        Under A-76, we do have public/private competitions, but
    from a management standpoint, if the decision is made to
    outsource something, you cannot afford to retain all of that
    infrastructure internally, once you have made a decision to
    move out to contract. So it is easy enough to say we should
    always have Federal employees competing for their jobs later
    on, but, in fact, the infrastructure has been moved. Usually
    most of those employees have gone with the work.
        But if we are really concerned about Federal employees--and
    I think we should be, because somebody made a comment earlier
    on--it may have been Senator Chambliss--about Federal employees
    being an asset. A-76 does not treat either private or public
    sector employees as assets. It is really a numbers game. It is
    a low-bid, how-cheap-can-I-do-this kind of process.
        There are numerous cases that I would encourage you to look
    at where agencies have made smart strategic decisions that they
    cannot compete well for the work because they are way behind in
    terms of technology, and we know that is a problem across the
    Government, that they do not have the skill set. They do not
    have the budgetary resources. So they have avoided a public/
    private competition.
        But in doing that, they have treated the employees, the
    incumbent employees, as major assets in the process. In those
    cases, they have required the bidders in the private sector to
    compete to do better by the employees.
        There are great opportunities to do more of that, where it
    clearly makes no sense for the Government to continue to
    perform the work. Unfortunately, by mandating public/private
    competitions in every circumstance, you make that impossible.
        Finally, you made the point earlier about concerns relative
    to whether or not the administration's competitive sourcing
    agenda actually is going to inhibit the ability of the
    Government to attract and retain people in light of the
    retirement wave that is coming. Clearly in any organization and
    in the private sector, outsourcing or competitive sourcing or
    whatever term you want to use, is a constant. It is always
    going on. It always creates a certain degree of turbulence.
        But if we look across the board today, it is very clear
    that the Government is not competing effectively for a lot of
    the critical skill sets we need. Those skills are going to the
    private sector.
        As Mr. Harnage has testified on many occasions, there is a
    pay gap between the public and private sector that is part of
    the reason for that. But there is also a whole set of other
    issues in terms of development and support of the workforce and
    so forth. The Government does not match up well.
        But if the Government is today losing the people to the
    private sector, where competition is a day-to-day experience,
    why do we think that competition in Government is an inhibitor
    to people coming into Government? Because people are already
    voting with their feet, to go to an environment where fierce
    competition is part of the day-to-day process.
        Clearly, there are other human resource strategies and
    capabilities in the private sector from which the Government
    can learn, but that are driving the balance of employment. I
    think that is a very important factor to keep in mind, so we do
    not assume that the existence of competition is somehow an
    inhibitor or discouragement to people to coming to work in an
    organization.
        Senator Ensign. I thank both of you. We have a briefing
    over in the Capitol so, unfortunately, we are going to have to
    cut this short.
        This subcommittee stands in adjournment.
        [Questions for the record with answers supplied follow:]

                 Questions Submitted by Senator Daniel K. Akaka

                              GOVERNMENT CONTRACTS

        1. Senator Akaka. Ms. Styles, I agree with your statement that
    morale will be affected unless there are adequate resources for
    training and hiring when it comes to outsourcing. You also mentioned
    that the proposed changes to A-76 acknowledge this need. However, given
    the deficit and the impact of the war on the budget, how is the
    administration ensuring that adequate funding is made available?
        Ms. Styles. I did not make a statement about ``outsourcing'', which
    presumes an outcome. OMB is committed to seeing that progress is made
    with each of the five initiatives contained in the President's
    management agenda including competitive sourcing. Where an agency makes
    a compelling case for resources to achieve those goals, OMB will
    discuss and consider the appropriate level of resource allocation.

        2. Senator Akaka. Secretary Aldridge, I am concerned about the
    continued rise in operation and maintenance costs for many of our
    existing weapon systems. While these may be costs we are forced to bear
    until we can bring replacements on line, I worry that we may not be
    paying enough attention to total life-cycle costs as part of the
    acquisition process of these replacement systems. If we focus on the
    issue early in the acquisition process, there is a lot we can do to
    minimize long-term logistics and maintenance costs, build training
    enablers into new weapon systems, and include instrumentation that
    allows for more effective testing. I am also concerned about reports
    that DOD fails to consider spectrum supportability until late in the
    development and fielding cycle, when problems are more difficult to
    address. I believe that the ongoing revision of DOD Directive 5000,
    governing the acquisition of major systems, provides an opportunity to
    address these issues. Do you agree that life-cycle costs and spectrum
    supportability are key issues that must be addressed early in the
    acquisition process?
        Secretary Aldridge. I agree that total life-cycle cost and spectrum
    supportability are important issues that must be addressed early in the
    acquisition process. Our new DOD acquisition policies require life-
    cycle cost and, where feasible, total ownership cost to be addressed
    during the requirements generation process, even before we initiate an
    acquisition program. Spectrum supportability is also considered during
    the requirements process, and staff activities to meet certification
    requirements must be in progress before a program can be initiated. At
    program initiation, our acquisition policies require a detailed and
    comprehensive review of the entire planned program. This review
    includes specific consideration of both total life-cycle cost and
    spectrum supportability.

        3. Senator Akaka. Secretary Aldridge, will you ensure that the
    revised Directive 5000 addresses these issues and includes some kind of
    enforcement mechanism to ensure that they are fully considered?
        Secretary Aldridge. Yes, the discussion centers on total life-cycle
    cost and spectrum supportability. Both issues are tracked closely, and
    our new acquisition policies include the necessary enforcement
    mechanisms.

        4. Senator Akaka. Ms. Styles, the GAO CAP recommended that Federal
    outsourcing policy be fair to both the public and private sectors,
    allowing comparable appeal rights to both sides. The panel stated,
    ``Fairness is critical to protecting the integrity of the process and
    to creating and maintaining the trust of those most affected. Fairness
    requires that competing parties, both public and private, or their
    representatives, receive comparable treatment throughout the
    competition regarding, for example, access to relevant information and
    legal standing to challenge the way a competition has been conducted at
    all appropriate forums, including the GAO and the United States Court
    of Federal Claims.'' The administration proposes to amend Title 10 to
    allow DOD to implement ``best value'' competitions--implementing one of
    the CAP report's recommendations. However, we have not received any
    proposal from the administration to implement the report's
    recommendation on bid protests, which would also require legislation.
    You approved the CAP report on behalf of the administration. Do you
    agree that fairness dictates that the public and private sectors
    receive comparable treatment in the bid protest process?
        Ms. Styles. We are addressing appeal rights in the new circular
    with the goal of treating directly interested parties with fairness
    allowing them right to contest an agency's performance decision. GAO
    will determine whether a directly interested party has standing to
    protest.

        5. Senator Akaka. Mr. Walker, do you view the CAP recommendations
    as the menu from which it is appropriate to pick and choose
    recommendations to implement on a piecemeal basis, or as a cohesive set
    of principles, which should be considered on a comprehensive basis?
        Mr. Walker. The 12-member CAP produced two sets of recommendations
    for improving the way Federal agencies make sourcing decisions. The
    first set, which the panel unanimously agreed to, consisted of a set of
    principles to guide sourcing policy for the Federal Government. The
    panel specifically noted that while each principle is important, no
    single principle stands alone and that the principles were adopted as a
    package. The second set of recommendations was adopted by a two-thirds
    super majority of the panel. These recommendations involved use of the
    Federal Acquisition Regulation to conduct public-private competitions,
    limited changes to Circular A-76, and the promotion of high-performing
    organizations across the Federal Government. This set of
    recommendations was also intended to be adopted as a package, rather
    than on a piecemeal basis.

        6. Senator Akaka. Secretary Aldridge, I have a copy of a memorandum
    to the Secretary of Defense from Joseph E. Schmitz, the Inspector
    General of the Department of Defense, in which Mr. Schmitz states that
    his office has determined that a ``consultant's error in a public/
    private competition . . . resulted in the award of an A-76 contract
    with potential 10 year value of $346 million to the contractor rather
    than to the lower in-house bid.'' The memorandum indicates that the
    error inflated the in-house cost estimate by $31.8 million, resulting
    in an incorrect conclusion that it would cost $1.9 million more to keep
    the work in-house (when it would actually have cost almost $30 million
    less). Can you tell me what steps the Department has taken to address
    this problem?
        Secretary Aldridge. Your question is in reference to an Office of
    Management and Budget (OMB) Circular A-76 study conducted by the
    Defense Finance and Accounting Service (DFAS) in 2001. The error
    occurred because the anticipated annual salary increases in the
    Government bid were not correctly computed. The computation was
    performed by a DFAS contractor, and the certification of the
    computation by Government officials overlooked the erroneous
    computation. The Government certifications of the computation were
    performed by DFAS and the Department of Defense (DOD) Inspector General
    (the Independent Review Official under Circular A-76). The directly
    affected Government employees (and their representatives) were offered
    an opportunity to appeal the decision under the A-76 administrative
    appeal process but they did not identify the error. DOD is taking the
    following actions to address this problem:

              1. The Deputy Under Secretary of Defense (Installations and
            Environment) has updated the DOD A-76 costing software
            (win.COMPARE\2\) to include four separate features, or
            checkpoints, for flagging, or assisting a user in avoiding,
            errors of this type. In response to recommendations from DOD,
            OMB has clarified its guidance on this subject in the proposed
            revision to Circular A-76.
              2. DFAS reviewed its entire competitive sourcing process,
            and, specifically, how the error occurred. DFAS is upgrading A-
            76 training to ensure that future proposals undergo a rigorous
            quality check.
              3. DFAS will put more emphasis on the A-76 independent review
            process and use a new Independent Review Official.

        7. Senator Akaka. Secretary Aldridge, what has happened to the
    Federal employees who lost their jobs to a higher bidder because of
    this ``consultant's error''?
        Secretary Aldridge. No permanent Federal employees lost their jobs.
    All of the affected permanent Federal employees had the option of
    accepting another position within DFAS, taking advantage of retirement
    or separation incentives, and/or accepting a position with the
    contractor. Everyone who wanted employment was given that opportunity.
    Twenty-nine employees were asked to accept jobs at a lower grade. None
    of those placed in lower graded positions suffered any loss of pay.
    Twenty-six of the employees have been placed in new positions, which
    will lead to re-promotion when the employees are fully qualified. The
    remaining three employees have been afforded grade retention and
    priority consideration for re-promotion through the DOD Priority
    Placement Program. They will become eligible for indefinite pay
    retention in January 2004. DFAS will continue to extend priority re-
    promotion consideration to these employees indefinitely, and will
    consider seeking legislative relief to extend grade retention beyond
    the legally permitted 2 years if necessary.

        8. Senator Akaka. Mr. Walker, doesn't this episode reinforce the
    recommendation of the CAP that all parties to a public-private
    competition, including representatives of Federal employees, should
    have the same access to the bid protest process to challenge the way a
    competition has been conducted?
        Mr. Walker.  It is quite appropriate for both sides to be able to
    challenge the results of public-private competitions. In fact, public
    employees, like private-sector vendors, have long had the right under
    Circular A-76 to file an appeal at their agency challenging the results
    of a public-private cost comparison. It is true, though, that only
    private-sector vendors can go on--if they lose an agency-level appeal--
    to file a bid protest at GAO or in court. As your question notes, the
    Commercial Activities Panel recommended that all parties to a public-
    private competition should have rights as nearly equal as possible to
    challenge the way the competition was conducted, including protest
    rights. The panel noted, however, that granting protest rights should
    be part of an effort to address the full range of issues related to
    competing for and performing Government contracts. The panel also
    recognized that, if a decision were made to permit public-sector bid
    protests of the results of public-private competitions, the question of
    who would have representational capacity to file such a protest would
    have to be carefully considered.

        9. Senator Akaka. Secretary Aldridge, over the last 2 years, this
    committee has enacted a series of provisions directed at improving the
    management of the Department's $66 billion per year in contracts for
    services. Section 801 of the National Defense Authorization Act for
    Fiscal Year 2002 required the Department to establish a management
    structure for services contracts. Under this section, each of the
    military departments was required to designate an official responsible
    for managing the service contracts of that department; DOD was
    responsible for designating a responsible senior official for the
    defense agencies. These officials, and subordinate officials in the
    management structure, were to be responsible for implementing
    requirements for performance-based service contracting, compliance with
    competition requirements, and the appropriate use of inter-agency
    contracts. As far as I am aware, the Air Force is the only one of the
    three military departments that has taken specific steps to comply with
    this requirement. Will you take steps to ensure that the other two
    military departments comply?
        Secretary Aldridge. On May 31, 2002, I issued policy to all of the
    military components, which implemented the requirements of Section 801
    of the National Defense Authorization Act for Fiscal Year 2002. This
    policy required that each component develop and institutionalize a
    process for the management and oversight of the acquisition of
    services. In October 2002, all three of the military departments
    provided their processes to me for my review and approval. Working with
    each of their designated acquisition officials, we refined their
    processes, and on February 7, 2003, I approved each of the three
    military department's Management and Oversight of Acquisition of
    Services processes. My staff has also been working with representatives
    from the General Accounting Office (GAO), who are currently auditing
    our compliance with the provisions of Section 801.

        10. Senator Akaka. Secretary Aldridge, I do not believe that DOD
    has yet taken the action required to designate a single official
    responsible for managing the service contracts of the defense agencies.
    Can you tell us when the Department will comply with this requirement?
        Secretary Aldridge.  As I have stated, I issued policy on May 31,
    2002 that implemented the provisions of Section 801 of the National
    Defense Authorization Act of Fiscal Year 2002 across the Department.
    That policy was addressed to all military components, including all
    defense agencies and DOD field activities. To date, in addition to
    approving the management and oversight processes of the three military
    departments, I have received certification memorandums from over 20
    combatant commands, defense agencies, and DOD field activities. These
    memorandums certify to me that they have designated a responsible
    management and oversight official, and have developed and put in place
    adequate processes that comply with the May 31 policy for the
    management and oversight of acquisition of services.

        11. Senator Akaka. Mr. Walker, in your January 16, 2003, letter to
    OMB Director Mitch Daniels, you characterized the required timeframes
    in the proposed revision to OMB Circular A-76 as ``unrealistic'' and
    questioned whether aggressive, fixed deadlines were the right approach
    to expedite the process. You stated that ``additional training,
    technical resources, or other support for agency officials in preparing
    for and participating in public-private competitions may be needed''
    and recommended that ``OMB ensure that agencies provide sufficient
    resources to comply with the new A-76 requirements.'' I said much the
    same in my comments of December 19, 2002 in response to OMB's proposed
    revisions to A-76. GAO's ``high risk'' report on DOD programs notes
    that the Department has downsized its acquisition workforce by almost
    half over the last decade. This subcommittee has been concerned for
    several years now that this downsizing process may have gone too far.
    Would you agree that the challenges of meeting the administration's
    goals for public-private competition, and of managing services
    contracts that result from such competition, are more likely to require
    an increase in acquisition resources than a decrease?
        Mr. Walker. The administration's goals for conducting public-
    private competitions could have a significant impact on the acquisition
    workforce in a number of ways. First, as noted by the Commercial
    Activities Panel, the current process for conducting these competitions
    is complicated, and therefore requires a skilled acquisition workforce
    to support the studies. Any changes to the process will require
    additional resources for training and perhaps additional personnel.
    Second, the number of positions proposed for study in the coming years
    is significantly higher than in the past, greatly increasing the
    competitive sourcing workload at many agencies. At DOD, for example,
    the number of positions proposed for study during the next 5 years is
    double what the department has been able to review between fiscal years
    1997 and 2002. Civilian agencies, which have not conducted nearly as
    many public-private competitions as DOD, will face even greater
    challenges in building the necessary infrastructure to conduct these
    competitions.\1\ Finally, to the extent that an increase in competitive
    sourcing studies results in an increase in the award of service
    contracts to the private sector, agencies will need to ensure that they
    have a sufficient acquisition workforce in numbers and abilities to
    administer those contracts effectively. In this regard, the private
    sector historically has won half the public-private competitions.
    ---------------------------------------------------------------------------
        \1\ The costs for additional training or personnel needed to
    conduct public-private competitions could be offset, of course, through
    the savings realized from conducting the competitions.

        12. Senator Akaka. Secretary Aldridge, your predecessor wrote a
    memorandum in August 2000, in which he said that the acquisition
    workforce had been reduced far enough and that further reductions were
    likely to have ``significant adverse impacts on the DOD acquisition
    system.'' Your prepared statement indicates you agree. Will you work
    with us to oppose legislation that would mandate such reductions?
        Secretary Aldridge. We are eager to work with you to oppose
    legislated reductions that are not carefully synchronized with DOD's
    management streamlining efforts. In my letter dated March 27, 2003 to
    Senator Ensign on this matter, I emphasized that workforce reductions
    not driven by our strategic planning and efficiency improvements have
    the potential for exposing the Department to significant risk. I also
    referred to the DOD Inspector General (``DOD Acquisition Workforce
    Reduction Trends and Impacts'') and the General Accounting Office
    (``Acquisition Workforce: Department of Defense's Plans to Address
    Workforce Size and Structure Challenges'') warnings that DOD is
    experiencing risk in contracting and program management as a result of
    past workforce reductions.
        We are continuing to examine opportunities to gain further
    efficiencies and will adjust our workforce to reflect the results of
    our human capital strategic planning and those efficiencies.

        13. Senator Akaka. Ms. Styles, what is your reaction to my
    recommendation, and that of the Comptroller General's, that you
    lengthen the periods provided for competition and provide agencies with
    additional resources to run these competitions?
        Ms. Styles. We believe that one of the biggest problems with the
    implementation of the old circular was that it often took agencies many
    years to complete the process. A 3- to 4-year process benefits no one.
    We plan to include timeframes with sufficient flexibility where
    appropriate.

        14. Senator Akaka. Secretary Aldridge, please provide information
    on the assumptions made in the fiscal year 2004 budget request for each
    of the military services and defense agencies (through fiscal year
    2009) for savings as a result of outsourcing and competitions. Please
    include the percentage of jobs expected to be competed, as well as the
    total dollar amount of savings expected to be realized.
        Secretary Aldridge. The assumptions made in DOD's fiscal year 2004
    budget request (through fiscal year 2009) for savings attributed to A-
    76 competitions are as follows:

             Projected savings are a function of number of
            positions saved and average burden cost per position.
             The average ``burden'' cost (i.e. total cost to the
            Government including salary and benefits) is $65,000 per
            position.
             A minimum of 20 percent of the positions are
            eliminated beginning the second year following the completion
            of the A-76 initiative. The first year after the study is
            completed reflects a half-year of savings, or 10 percent (note:
            the actual budget-assumption varies by military service).
             Completion of initiatives occurs 2 to 3 years after
            initiatives are announced (depending on the complexity of the
            study).
             Any anticipated savings are realigned to meet other
            Service requirements.

        Within the Future Years Defense Program (fiscal year 2004-2009),
    the Department plans to initiate competitions under Circular A-76 with
    respect to 84,590 positions. Assuming that all positions are competed,
    total cumulative savings are estimated at $3 billion, offset by $500
    million in cost to conduct the initiatives.
        The estimated savings attributed to ``alternatives to A-76'' will
    vary and be unique to the business tool used. The Department is in the
    process of developing plans for these alternatives, for submission in
    the fiscal year 2005 President's budget.

        15. Senator Akaka. Mr. Soloway, the CAP report endorsed competition
    as the mechanism for determining whether to outsource work currently
    performed by Federal employees. The report states: ``Competitions,
    including public-private competitions, have been shown to produce
    significant cost savings for the Government, regardless of whether a
    public or private entity is selected. Competition also may encourage
    innovation and is key to continuously improving the quality of service
    delivery.'' Does the Professional Services Council (PSC) endorse
    competition as the appropriate mechanism for determining whether to
    outsource work currently performed by Federal employees, or does PSC
    believe that it is appropriate to use ``direct conversions'' in which
    work is transferred to the private sector without even giving Federal
    employees an opportunity to compete for their own jobs?
        Mr. Soloway. The PSC believes strongly in the use of competition to
    drive higher efficiency and performance in the provision of Government
    services. Indeed, competition is a constant in the Government
    procurement arena and contractors not only compete for new work but
    also must continually compete for work they currently have. As such, as
    acknowledged in the CAP report, the advent of a Government ``bidder''
    does not create competition--competition is already robust.
        In terms of determining whether to outsource work currently being
    performed by Federal employees, PSC believes that the extent to which
    public-private competitions are held should not be dictated by law or
    regulation but by the mission needs and strategic goals of the agency
    involved. The first principle of the 10 overarching principles to guide
    sourcing policy agreed to unanimously by the CAP states that sourcing
    must be viewed and approached as a strategic exercise which focuses
    first and foremost on agency mission execution. Thus, in cases where
    the agency management believes its incumbent activities have the
    appropriate mix of skills, resources, management innovation, and
    technology, a competition involving the incumbent Federal workforce may
    well be appropriate.
        Consistent with Principle One of the CAP report, in cases where the
    agency is performing commercial activities that it determines are not
    core to its mission, or for which the agency does not have the
    requisite mix of skills, technology, resources, and management
    innovation with which to ensure optimal performance, it is entirely
    appropriate for an agency to decide not to conduct a public-private
    competition and to instead compete the work among private offerors
    only.
        Finally, it is PSC's position that in cases where a strategic
    decision is made not to conduct a public-private competition, the
    interests and importance of the incumbent Federal workforce must be an
    essential element of the process. Indeed, there are a number of
    examples of Government agencies making the decision to not conduct a
    public-private competition while also ensuring that the incumbent
    workforce is actually advantaged in the process. In those cases, the
    offerors commitments to the incumbent workforce were a significant
    evaluation criteria, thus creating a significant incentive for
    companies to provide benefits and opportunities for that workforce that
    far exceed anything that could have been offered by the Government or
    under a competition in which the incumbent workforce was a participant.
    This focus on the Federal workforce and recognition that they are a
    major asset is impossible under the construct of OMB Circular A-76 but
    is possible in those cases where a thoughtful management decision has
    been made to not conduct a public-private competition.
        In summary, public-private competitions have their place but they
    should not be mandated by laws or regulations; rather, their role is an
    outgrowth of strategic and performance-driven management decisions, as
    the very first principle of the CAP report clearly suggests. To mandate
    them across the board would be to create far less effective
    competitions, waste significant amounts of precious resources, and
    create unnecessary chaos and turbulence among the workforce.
    Outsourcing need not and should not be viewed as a ``life or death''
    decision. Unfortunately, those who continue to battle against
    strategic, performance-focused management, and outsourcing, refuse to
    acknowledge this reality and instead continue to sow fear and
    trepidation among the affected Federal workforce.

        16. Senator Akaka. Mr. Soloway, the CAP report endorsed competition
    giving Federal employees an opportunity to compete for work that is not
    currently performed in the public sector. The report states that both
    public and private sectors should have an opportunity to compete ``for
    work that is currently performed in-house, work currently contracted to
    the private sector, and new work.'' Does PSC support public-private
    competition as a two-way street, or does PSC believe that only work
    currently performed by Federal employees should be subject to public-
    private competition?
        Mr. Soloway. The CAP report endorses giving Federal employees an
    opportunity to compete for some new work and/or work currently
    contracted to the private sector. But the unanimously agreed to
    principle under which that statement is made also intentionally
    includes the phrase ``consistent with these principles'', and it is
    within that phrase that the real meaning of the recommendation is
    found. As with the answer to Question 15 above, one must return to the
    remaining principles unanimously adopted by the CAP (since those
    principles were explicitly designed to be taken as a single, integrated
    recommendation), the first one of which states that sourcing is a
    strategic, not arbitrary process. As such, the answer to this question
    is, in part, very similar to the answer to the above Question 15.
        Further, the question of whether the Federal Government should
    expend resources competing for work currently contracted to the private
    sector implies that only by doing so does competition remain vibrant.
    This is not the case. The vast majority of service contracts entered
    into by the government are subject to constant competitive pressures.
    The existence, or lack thereof, of a Government bidder is rarely, if
    ever, the determinant of whether meaningful competition already exists.
    As such, the very premise of the question, that ``competition is a two-
    way street'' must be changed. Competition is a constant in the
    marketplace; it is only with the vast bulk of commercial activities
    currently performed by the Government that competition remains a
    rarity. Thus, if a decision has been made previously that the work
    involved is: (1) commercial in nature; and (2) suitable for performance
    by the private sector, then the ongoing competitions that take place in
    the government marketplace are more than adequate to ensure continued
    performance and efficiency by contractors.
        In addition, for work already contracted to the private sector,
    there is no incumbent Federal workforce affected by the continuing
    outsourcing of that work. Thus, not only is competition already
    present, but the question of ``fairness'' for Federal employees is not
    in play either.
        Public-private competitions for work currently contracted to the
    private sector should, therefore, be very limited to circumstances in
    which the competitive marketplace for the work being performed no
    longer exists and where the Government has such significant excess
    capacity it can legitimately afford to dedicate resources to the
    requirements involved. Otherwise, there is no justification for
    conducting public-private competitions for already contracted work. The
    continued presence of ongoing competition is the best guarantor that
    performance and efficiency will continue to be improved and there is no
    issue of ``fairness'' for Federal employees since there are no
    incumbent, affected Federal employees. This is entirely consistent with
    the CAP report, and its focus on the strategic nature of sourcing.
                                     ______

             Questions Submitted by Senator Hillary Rodham Clinton

                              GOVERNMENT CONTRACTS

        17. Senator Clinton. Secretary Aldridge, I have a few questions
    regarding recent news articles, including a recent article in the Wall
    Street Journal, indicating that multimillion dollar contracts for
    rebuilding Iraq are in the process of being awarded. According to the
    Wall Street Journal, ``the Bush plan, as detailed in more than 100
    pages of confidential contract documents, would sideline United Nations
    development agencies and other multilateral organizations that have
    long directed reconstruction efforts in places such as Afghanistan and
    Kosovo. The plan also would leave big nongovernmental organizations
    largely in the lurch: With more than $1.5 billion in Iraq work being
    offered to private U.S. companies under the plan, just $50 million is
    so far earmarked for a small number of groups such as CARE and Save the
    Children.'' Can you tell me what, if any, firms have already been
    awarded reconstruction contracts and how were these contracts
    solicited?
        Secretary Aldridge. These questions deal with contracting done by
    the U.S. Agency for International Development (USAID). I am not in a
    position to answer the questions since they do not involve Department
    of Defense contracting actions. General information about the
    contracting being done by USAID to support Iraq reconstruction is
    available at http://www.usaid.gov/iraq/about--reconstruction.html.

        18. Senator Clinton. Secretary Aldridge, the Wall Street Journal
    article states that ``a 10-page USAID contract proposal went out to
    companies last month.'' How were firms identified to receive the USAID
    contract proposal?
        Secretary Aldridge. Please see question #17.

        19. Senator Clinton. Secretary Aldridge, will you be making these
    contract documents publicly available?
        Secretary Aldridge. Please see question #17.

        20. Senator Clinton. Secretary Aldridge, according to the Wall
    Street Journal article, ``USAID is expected this week to pick the prime
    contractor for a $900 million job rebuilding Iraq's infrastructure,
    including highways, bridges, airports, and Government buildings.'' Has
    that contract been awarded yet? If so, who received the contract?
        Secretary Aldridge. Please see question #17.

        21. Senator Clinton. Secretary Aldridge, can you tell me what steps
    are being taken to avoid any conflicts of interest when these contracts
    are awarded?
        Secretary Aldridge. Please see question #17.

        22. Senator Clinton. Secretary Aldridge, what type of data is
    provided to the firms to enable them to bid on the reconstruction work?
        Secretary Aldridge. Please see question #17.

        23. Senator Clinton. Secretary Aldridge, were any estimates given
    to these firms as to how long their services might be necessary?
        Secretary Aldridge. Please see question #17.

        24. Senator Clinton. Secretary Aldridge, will non-governmental
    organizations be allowed to bid on contracts regarding Iraq's
    reconstruction? If not, why not?
        Secretary Aldridge. Please see question #17.

        [Whereupon, at 11:56 a.m., the subcommittee adjourned.]

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2004

                                  ----------

                             TUESDAY, APRIL 1, 2003

                               U.S. Senate,
                      Subcommittee on Readiness
                                and Management Support,
                                   Committee on Armed Services,
                                                        Washington, DC.

          IMPACTS OF ENVIRONMENTAL LAWS ON READINESS AND THE RELATED
                      ADMINISTRATION LEGISLATIVE PROPOSAL

        The subcommittee met, pursuant to notice, at 9:04 a.m., in
    room SD-106, Dirksen Senate Office Building, Senator John
    Ensign (chairman of the subcommittee) presiding.
        Committee members present: Senators Ensign, Warner, McCain,
    Inhofe, Akaka, and Pryor.
        Committee staff members present: Judith A. Ansley, staff
    director; and Cindy Pearson, assistant chief clerk and security
    manager.
        Majority staff members present: William C. Greenwalt,
    professional staff member; and Ann M. Mittermeyer, counsel.
        Minority staff member present: Peter K. Levine, minority
    counsel.
        Staff assistants present: Leah C. Brewer, Andrew W.
    Florell, and Sara R. Mareno.
        Committee members' assistants present: Christopher J. Paul
    and Dan Twining, assistants to Senator McCain; John A. Bonsell,
    assistant to Senator Inhofe; Douglas Flanders, assistant to
    Senator Allard; Arch Galloway II, assistant to Senator
    Sessions; D'Arcy Grisier, assistant to Senator Ensign; James W.
    Irwin and Clyde A. Taylor IV, assistants to Senator Chambliss;
    Russell J. Thomasson, assistant to Senator Cornyn; Davelyn
    Noelani Kalipi, assistant to Senator Akaka; William K. Sutey,
    assistant to Senator Bill Nelson; Mark Phillip Jones, assistant
    to Senator Dayton; and Terri Glaze, assistant to Senator Pryor.

           OPENING STATEMENT OF SENATOR JOHN ENSIGN, CHAIRMAN

        Senator Ensign. The Subcommittee on Readiness and
    Management Support is meeting to review the administration's
    fiscal year 2004 Readiness Range Preservation Initiative, which
    addresses legislation clarifications on the management of
    endangered species, marine mammals, air pollution, and
    munitions on active ranges.
        In this subcommittee's March 13 hearing on this subject,
    the Vice Chiefs testified about the cumulative adverse impacts
    of urban sprawl and environmental regulation. Their testimony
    highlighted the fact that efforts to provide training
    flexibility have been curtailed by litigation. This
    subcommittee meets again on this subject to hear testimony from
    the regulatory agencies and various public policy and State
    witnesses.
        This is not a new issue. In a series of hearings held in
    the House and the Senate over the last 3 years, senior military
    witnesses alerted Congress to diminishing training and
    increased risk to readiness due to pressures from urban
    encroachment and environmental restrictions. The military
    departments have endeavored to ease the pressure by working
    with the regulators and communities. Unfortunately, efforts to
    ensure military testing and training flexibility have been
    successfully challenged in court.
        With the ongoing war in Iraq, I am very concerned about how
    the pressures of urban encroachment and environmental
    restrictions may continuously diminish the quality of military
    testing and training. Diminished training will eventually erode
    readiness and that is unacceptable.
        The Department of Defense (DOD) maintains that the
    administration's legislative proposal strikes a balance between
    environmental protection and the readiness of our men and women
    in uniform. I believe some of the witnesses who will appear
    before the subcommittee today will agree that that balance has
    been achieved, while others will disagree.
        I want to know how we solve the problem. That is our goal
    here. I also want to know if there are concerns related to the
    administration's proposals. For example, perchlorate is present
    in the public drinking water supply in several areas in
    California and in my own State in Lake Mead. I want to ensure
    that the administration's proposals do not affect cleanup
    efforts related to drinking water sources such as Lake Mead.
        Conversely, I am aware that some opponents of these
    proposals assert that under current law, national security
    exemptions and exclusions are available to address any threat
    to the military testing and training. I question whether these
    claimed mechanisms for relief could serve to comprehensively
    preserve ongoing military training regimens or to safeguard the
    environment. Where is the balance?
        If there are concerns or issues related to the legislative
    proposals, please raise them and explain your position. Then I
    would like to hear productive and meaningful testimony about
    the proposed compromises and creative solutions. Congress
    cannot afford to embrace the notion that the administration's
    proposals roll back environmental laws and respond by doing
    nothing for fear of controversy.
        I believe we are beyond that point. Based on the testimony
    of the Vice Chiefs, it is evident that the status quo is no
    longer the answer. I fundamentally believe that finding this
    balance is both necessary and possible here. That said, I hope
    that Congress, the administration, and other stakeholders will
    work together to address these issues in a responsible,
    meaningful way.
        Senator Akaka, who is not here today, and I believe we
    share particular interest in the valuable perspectives of the
    environmental interest groups and States represented here
    today. I also believe that the hearings held by our
    subcommittee and other committees of jurisdiction will
    facilitate meaningful Senate review and action on the
    administration's legislative proposals.
        As soon as Senator Akaka gets here, we will have him make
    an opening statement. We do have a long hearing today and I
    would ask that each of the witnesses summarize their testimony,
    try to keep it under 5 minutes, and your full statements will
    be made part of the record.
        I would like to welcome our first panel: John Peter Suarez,
    Assistant Administrator, Office of Enforcement and Compliance
    Assurance, U.S. Environmental Protection Agency; Julie
    MacDonald, Special Assistant to the Assistant Secretary for
    Fish and Wildlife and Parks, Department of the Interior; and
    Dr. Rebecca Lent, Deputy Assistant Administrator for Fisheries,
    National Oceanic and Atmospheric Administration.
        Senator Inhofe. Mr. Chairman?
        Senator Ensign. Yes. Senator Inhofe has done yeoman's work
    and we welcome any opening statement.
        Senator Inhofe. Having chaired this subcommittee for a
    number of years and gone down this road before, I am quite sure
    now that we are in the middle of a war people are going to look
    at this a little differently than they have in the past. It is
    not that we do not have the very finest men and women out there
    fighting and the very best-trained right now, but certainly
    that training is in jeopardy.
        I can remember going over a very serious thing that you
    were interested in at one time, Mr. Chairman, on Vieques. We
    have lost a range there, a live range. That loss has directly
    contributed to the loss of four American lives on the Dara
    Range in Kuwait. So we are talking about something very
    serious, life and death matters. We look at Camp Pendleton that
    has some 17 miles of shoreline; they are down to about 2,000
    yards of the beach that are available for amphibious landings.
    The gnatcatcher could cause us to lose about 57 percent of the
    base as critical habitat.
        I think it is important to realize that some of the things
    that we are trying to do actually started in a Democratic
    administration, in the Clinton administration. I think we have
    to keep saying that, because allowing the military to use the
    integrated natural resource management plans (INRMP) in place
    of critical habitat, that was a key component of the Pentagon's
    proposal during the Clinton administration.
        So these things that we are dealing with are very serious,
    Mr. Chairman. I believe we should get all four of these
    legislative proposals passed and it is the very least we can do
    for our fighting troops over there now and those who will be
    going over there.
        Now, Mr. Chairman, I chair the Environment and Public Works
    Committee. I have to go up for a nomination hearing at 9:30.
    Then I am going to come right back down, because I plan to stay
    here all the way through this hearing.
        Thank you.
        Senator Ensign. We welcome your participation, especially
    with all of your experience on this issue.
        Mr. Suarez.

     STATEMENT OF HON. JOHN PETER SUAREZ, ASSISTANT ADMINISTRATOR,
         OFFICE OF ENFORCEMENT AND COMPLIANCE ASSURANCE, U.S.
                    ENVIRONMENTAL PROTECTION AGENCY

        Mr. Suarez. Thank you, Mr. Chairman, members of the
    subcommittee, Senator Inhofe. Thank you for inviting me here to
    speak to you today on behalf of the United States Environmental
    Protection Agency (EPA) about the administration's proposed
    National Defense Authorization Act for Fiscal Year 2004.
        We believe the administration's proposal appropriately
    addresses two equally compelling national priorities, military
    readiness and the protection of human health and the
    environment. These priorities can both be achieved at the same
    time, and we appreciate the DOD's willingness to work with us
    to craft the proposals before you today.
        The administration's proposal would make changes to certain
    pollution control laws that EPA administers and to laws
    concerning wildlife protection and habitat preservation, which
    are the province of other Federal agencies. I will confine my
    remarks here today to the laws under EPA's jurisdiction.
        EPA and the DOD share an important mission, especially in
    light of September 11, and that is the protection of both our
    national and environmental security. One holds little value
    without the other, and we believe neither mission should be
    sacrificed at the other's expense. Toward that end, EPA and DOD
    have for years worked cooperatively towards achieving these
    goals with tangible benefits to the American people.
        The bill before this committee is the result of just such
    collaboration. I would like to highlight for the subcommittee
    some of the proposed statutory changes that the agencies have
    developed to facilitate our twin missions that are vital to the
    health and security of our Nation. First, EPA recognizes that
    military readiness depends on DOD's ability to move assets and
    material around the Nation, perhaps on short notice. Such
    large-scale movements of people and machines may have impacts
    on State implementation plans, or SIPs, for air quality.
    Accordingly, EPA and DOD developed proposed changes to the
    Clean Air Act to allow the Armed Forces to engage in such
    activities while working toward ensuring that its actions are
    consistent with the plan's air quality standards. Under the
    administration's proposal, the military would still be
    obligated to quantify and report its impacts on air quality
    prior to initiating the readiness activity, but would be given
    3 years to comply.
        Second, the administration's bill proposes two changes to
    the Resource Conservation and Recovery Act (RCRA), the Nation's
    solid and hazardous waste law. The bill contains language that
    would change the statutory definition of solid waste under RCRA
    to provide flexibility from DOD regarding the firing of
    munitions on operational ranges, while clarifying that the
    definitional changes are not applicable once the range ceases
    to be operational.
        This change is compatible with existing EPA policy and the
    military missions rule that has defined EPA's oversight of
    fired munitions at operational ranges since 1997. The bill
    specifically maintains the ability of EPA, the States, and
    citizens to take actions against the Government in the event
    that munitions or their constituents migrate off-range and may
    pose an imminent and substantial endangerment to human health
    or the environment.
        The agencies also worked together to craft a clear common
    sense definition of range. Under the revised definitions of
    solid waste and range, the military will have statutory
    assurance that EPA will not intervene in the firing or training
    with munitions while the public may rest secure in the
    knowledge that EPA, States, and citizens have authority to take
    action against the U.S. Government if munitions pose a threat
    off-range or after a range is closed.
        Third, the administration's bill proposes analogous changes
    to the Comprehensive Environmental Response, Compensation, and
    Liability Act (CERCLA) also known as the Superfund law. It
    would exempt from the definition of release under CERCLA
    explosives and munitions deposited during normal use while on
    an operational range. It is important to note that EPA would
    retain authority to take action to abate an imminent and
    substantial endangerment to public health and the environment
    due to the deposit or presence of munitions on an operational
    range while still affording the military the flexibility they
    need in handling munitions at these ranges.
        Indeed, the administration has recently developed language
    clarifying that the proposed changes to solid waste and
    Superfund laws apply only to operational ranges under the
    jurisdiction and control of military services.
        In conclusion, we believe that the administration's
    proposed bill accommodates the concerns of the military, the
    EPA, and the public. I want to assure the subcommittee that
    both Administrator Whitman and I support this bill and believe
    that the bill's provisions will ensure that America's Armed
    Forces are able to carry out their national security mission
    and to train the way they fight, and that the agency is able to
    carry out its mission of protecting human health and the
    environment at the same time.
        This concludes my prepared remarks and I will be happy to
    answer any questions that the subcommittee may have.
        [The prepared statement of Mr. Suarez follows:]

                    Prepared Statement by John Peter Suarez

        Mr. Chairman and members of the subcommittee: Thank you for
    inviting me to speak with you today on behalf of the U.S. Environmental
    Protection Agency (EPA) about the administration's proposed National
    Defense Authorization Act of Fiscal Year 2004. We believe the proposed
    bill appropriately addresses two important national priorities:
    military readiness and the protection of human health and the
    environment. These priorities can both be achieved at the same time,
    and we appreciate the Defense Department's willingness to work with us
    to craft the proposals before you today.
        The proposed bill would make changes to certain pollution control
    laws that EPA administers and to laws concerning wildlife protection
    and habitat preservation, which are the province of other Federal
    agencies. I'll confine my remarks here today to the laws under EPA's
    jurisdiction.
        In the wake of September 11, we understand more than ever the
    importance of military readiness in combating traditional and emerging
    foes. Both EPA and DOD leadership recognize the vital importance of
    both the mission of protecting human health and the environment and the
    mission of protecting national security. Both believe that neither
    mission should be sacrificed at the expense of the other. Toward that
    end, EPA and DOD have for years worked cooperatively toward achieving
    these goals, with tangible benefits to the American people. The bill
    before this subcommittee is the result of just such collaboration.
    Together, the two agencies resolved key issues in a way that allows the
    Services to continue to ``train the way they fight,'' while protecting
    the health of our citizens and safeguarding our natural resources.
    Indeed, we have recently reached agreement with DOD on language
    clarifying that the proposed changes to solid waste and Superfund laws
    apply only to operational ranges under the jurisdiction and control of
    the military services. The administration has cleared this language and
    intends to send it to Congress in the near future. This action
    underscores the administration's interest in keeping any changes
    limited and sharply focused.
        Today, I would like to highlight for the subcommittee several of
    these proposed statutory changes the two agencies developed to
    facilitate our twin missions.

      PROPOSED CHANGES TO THE CLEAN AIR ACT PROVIDE THE ARMED FORCES WITH
                NEEDED FLEXIBILITY, WHILE PROTECTING AIR QUALITY

        EPA recognizes that military readiness depends on DOD's ability to
    move assets and materiel around the Nation--perhaps on short notice.
    Such large-scale movements of people and machines may have impacts on
    State Implementation Plans (SIPs) for air quality.
        Accordingly, EPA and DOD developed proposed changes to the Clean
    Air Act's SIP provisions to allow the Armed Forces to engage in such
    activities while working toward ensuring that its actions are
    consistent with a SIP's air quality standards. Under the proposed bill,
    the Armed Forces would still be obliged to quantify and report their
    impacts on air quality prior to initiating the readiness activity, but
    would be given 3 years to ensure that their actions are consistent with
    a given State's SIP. We believe this compromise effectively addresses
    military readiness concerns, while ensuring timely compliance with air
    quality standards.

    PROPOSED CHANGES TO RCRA WILL ALLOW FLEXIBLE AND APPROPRIATE MUNITIONS
                                   OVERSIGHT

        The administration's bill also proposes two changes to the Resource
    Conservation and Recovery Act (RCRA), the Nation's solid and hazardous
    waste law. First, the bill contains language that would change the
    statutory definition of ``solid waste'' under RCRA to provide
    flexibility for DOD regarding the firing of munitions on operational
    ranges, while clarifying that the definitional exemptions are not
    applicable once the range ceases to be operational. This change
    comports with existing EPA policy and the Military Munitions Rule that
    have defined EPA's oversight of fired munitions at operational ranges
    since 1997. The bill specifically maintains the ability of EPA, the
    States, and citizens to take actions against the U.S. Government in
    accordance with the law in the event that munitions or their
    constituents migrate off-range and may pose an imminent and substantial
    endangerment to human health or the environment, if such materials are
    not addressed under the Comprehensive Environmental Response,
    Compensation and Liability Act (CERCLA).
        Second, the agencies worked together to craft a clear, common-sense
    definition of ``range.'' Under the revised definitions of ``solid
    waste'' and ``range,'' the Armed Forces will have statutory assurance
    that EPA will not intervene in the firing of or training with
    munitions, while the public may rest secure in the knowledge that EPA,
    States, and citizens have authority to take action against the U.S.
    Government in accordance with the law if munitions pose a threat off-
    range or after a range is closed.
        The history of interaction between EPA and DOD demonstrates that
    the two can work together effectively to achieve their respective
    missions, and this should instill confidence that the two agencies will
    continue to work together well to carry out those missions under the
    proposed legislation. EPA has in only one instance found it necessary
    to take an enforcement action that resulted in the cessation of live-
    fire training at a military base--namely, at the Massachusetts Military
    Reservation (MMR) on Cape Cod, Massachusetts. There, EPA took action
    under the Safe Drinking Water Act when it determined that the
    groundwater aquifer underlying MMR, the sole source of drinking water
    for hundreds of thousands of Cape Cod residents, was threatened with
    contamination--and only after efforts to support voluntary action
    failed to stop the spread of contamination. Today at MMR, EPA is
    overseeing cleanup work to ensure that the drinking water supply for
    Cape Cod residents meets all relevant standards now and in the future.
    In response to EPA's decisions, the Defense Department shifted some of
    this training to another facility and limited its training at MMR to
    using small arms, as well as other training without using explosives,
    propellants, and pyrotechnics.

       ANALOGOUS CHANGES TO CERCLA WILL PRESERVE THE AGENCY'S SUPERFUND
       AUTHORITY TO ADDRESS CONTAMINATION WHICH PRESENTS AN IMMINENT AND
                            SUBSTANTIAL ENDANGERMENT

        The administration's bill proposes analogous changes to the CERCLA,
    also known as the Superfund law. It would exempt from the definition of
    ``release'' under CERCLA explosives and munitions deposited during
    normal use while on an operational range. It is important to note that
    EPA would retain authority to take action to abate an imminent and
    substantial endangerment to public health and the environment due to
    the deposit or presence of explosives and munitions on an operational
    range. As with the proposed changes to RCRA, the change to CERCLA
    affords flexibility to the Armed Forces in handling munitions at
    operational ranges, but ensures that EPA has the ability to act when
    necessary to address the most important public health and environmental
    concerns.

                       ONGOING COLLABORATION ON MUNITIONS

        Meanwhile, EPA continues to collaborate with DOD and State and
    tribal regulators to develop a new approach to cleaning up ordnance,
    explosives, and munitions at nonoperational ranges throughout the
    United States. This new approach, an expected product of the Munitions
    Response Committee (MRC), is designed to work within the framework of
    existing Federal and State authorities. Under the new process, military
    departments, EPA, Federal Land Managers, and the States and tribes will
    coordinate, where appropriate, and integrate their respective statutory
    and administrative authorities under Federal and State environmental
    laws. The development of Federal, State, and tribal partnerships and
    public participation will be key characteristics of the new process. We
    believe that the proposed bill complements the partnerships we are
    building through the MRC and will help the Agency ensure that munitions
    at both operational and nonoperational ranges are subject to sound
    environmental management.

     THE NEW PROPOSAL WOULD AUTHORIZE THE TRANSFER OF OBSOLETE VESSELS FOR
                            USE AS ARTIFICIAL REEFS

        The bill would also authorize the Secretary of the Navy to transfer
    certain vessels for use as artificial reefs, but retain key
    environmental safeguards under CERCLA, RCRA, and the Toxic Substances
    Control Act (TSCA). These ships are often contaminated with asbestos
    and polychlorinated biphenyls (PCBs). EPA is working closely with the
    Maritime Administration to determine if and when reefing is
    appropriate, and to find suitable ship-scrapping facilities at home or
    abroad to dispose of obsolete ships in a safe and environmentally sound
    manner.

                PROPOSED CHANGES IN WETLANDS MITIGATION BANKING

        One other environmental provision of the bill deserves mention
    here. It would allow military departments to use military construction
    funds to make payments to wetlands mitigation banking programs and
    consolidated user sites when the Department is engaged in an activity
    that may adversely affect a wetland. A wetlands mitigation bank is
    typically a privately-owned site--in many instances, prior converted
    crop land--where wetlands are restored. Wetlands mitigation banks have
    enjoyed increasing acceptance and success since the mid-1990s, and the
    new bill would simply clarify that military funds could be used for
    this purpose.

                                   CONCLUSION

        Working together, EPA and DOD have developed a legislative proposal
    that addresses the concerns of the Armed Forces about future
    applications of EPA's statutes and regulations, while at the same time
    preserving the Agency's ability to protect public health and the
    environment. In the context of MMR, for example, EPA would still have
    the authority to protect the drinking water from imminent and
    substantial endangerment under the provisions of the proposed bill.
        Similarly, the proposed legislation would codify the so-called
    ``munitions rule'' under RCRA--an existing EPA regulation that sets
    forth the conditions under which EPA and the States can respond under
    RCRA to environmental threats at both operating and closed military
    ranges. The proposed legislation also states clearly that EPA is
    authorized under CERCLA section 106 to address imminent and substantial
    environmental threats at both operating and closed ranges.
        In conclusion, both the Administrator and I support this bill. We
    believe that it appropriately takes account of the interests of the
    American people in military readiness and in environmental protection.
    I am confident that DOD and EPA can work together within the framework
    of the proposed law to ensure that America's Armed Forces are able to
    train to carry out their national security mission and that the Agency
    is able to carry out its mission of protecting human health and the
    environment.
        This concludes my prepared remarks. Thank you for the opportunity
    to present EPA's views. At this time, I would be happy to answer any
    questions you may have.

        Senator Ensign. Ms. MacDonald.

       STATEMENT OF JULIE A. MacDONALD, SPECIAL ASSISTANT TO THE
     ASSISTANT SECRETARY FOR FISH, WILDLIFE, AND PARKS, DEPARTMENT
                            OF THE INTERIOR

        Ms. MacDonald. Good morning, Mr. Chairman and members of
    the subcommittee. I appreciate the opportunity to testify on
    the role of the Department of the Interior on this important
    subject.
        Secretary Norton and Assistant Secretary Manson understand
    the unique nature of the duties and missions of the military
    and the need to train effectively for military activities. This
    is particularly true for Assistant Secretary Manson, who is a
    graduate of the Air Force Academy and a colonel in the Air
    National Guard. The Fish and Wildlife Service (FWS) has
    actively sought to work with the DOD to achieve a balance
    between meeting the requirements of the various natural
    resource laws without impacting the military's ability to
    train.
        I would like to focus my testimony on the proposals set
    forth by the DOD with regard to the Endangered Species Act
    (ESA) and the creation of INRMP. At least 300 listed species
    occur on the DOD managed lands and access limitations due to
    increased security, the necessity for buffer zones, and good
    military stewardship has resulted in some of the finest
    remaining habitats occurring on military land.
        The ESA requires the FWS to designate critical habitat for
    listed species if it is prudent and determinable. We recognize
    that critical habitat designations on DOD lands can impact the
    ability of the military to prepare and train. INRMPs serve as
    an effective vehicle through which the DOD can comprehensively
    plan for the conservation of fish and wildlife species. This
    planning can address important needs for endangered and other
    species of fish and wildlife, including the protection of
    habitat.
        The Department of the Interior's policy is to exclude
    military facilities from critical habitat designations if the
    facility has an approved INRMP which addresses the species in
    question. We support the efforts of the administration to
    codify this policy in the Range Readiness and Preservation
    Initiative.
        The ability of the Department of the Interior to exclude
    areas covered by an INRMP has allowed us to address a number of
    the DOD concerns over critical habitat designations. For
    example, critical habitat proposed for the purple amole, a
    plant in California, included significant portions of Camp
    Roberts and Fort Hunter Ligett. We excluded Fort Roberts from
    the final designation because it had a completed INRMP which
    addressed conservation of the plant. Working with the DOD, we
    were also able to remove Fort Hunter Ligett from the
    designation, although the INRMP to address the protection of
    the plant had not yet been approved. The DOD was able to
    provide us detailed information on the impact of the proposed
    designation on the military readiness activities. The benefits
    of those military readiness activities to our national defense
    exceeded the benefit of including the area in a designation and
    we therefore excluded the property.
        I have included additional examples of the excellent
    cooperation between the FWS and the DOD in my written
    testimony. However, a recent court case in the district of
    Arizona has cast doubts on our ability to continue to exclude
    military lands from critical habitat based on an INRMP which
    addresses the needs of the species in question. The FWS
    excluded lands covered by a national forest management plan
    from critical habitat proposed for the Mexican spotted owl and
    the court ruled that the FWS could not exclude lands from
    critical habitat designations based on the existence of a
    management plan.
        We felt it important to advise the committee of the
    decision and the cloud it casts over our continued ability to
    exclude military lands with approved INRMPs from critical
    habitat. The decision adds additional weight to the
    administration's proposal for statutory exclusion. Codifying
    the Department of the Interior's policy on excluding military
    lands from critical habitat based on the existence of INRMPs
    would likely reduce future litigation and challenges and
    provide more certainty to the DOD that their lands will
    continue to be excluded from designation if they have an
    approved INRMP which provides for the conservation of the
    species in question.
        In closing, Mr. Chairman and subcommittee members, I
    believe both the Interior Department and the DOD have acted
    cooperatively to implement the natural resource conservation
    laws passed by Congress. We are aware of the challenges that
    have arisen during this endeavor. The Interior Department is
    prepared to explore and craft creative solutions to balance our
    conservation mandates with military readiness. We look forward
    to continued work with the DOD on this vitally important
    matter.
        This concludes my testimony. I appreciate the opportunity
    to appear today and I would be pleased to answer any questions
    you may have.
        [The prepared statement of Ms. MacDonald follows:]

                     Prepared Statement by Julie MacDonald

        Mr. Chairman and members of the subcommittee, I am Julie MacDonald,
    Special Assistant to the Assistant Secretary for Fish and Wildlife and
    Parks in the Department of the Interior. I am pleased to appear before
    you today to discuss the role of the Department of the Interior in
    implementing Federal natural resource laws and our continuing working
    relationship with the Department of Defense (DOD) on natural resource
    issues. My statement will address the Fish and Wildlife Service's
    responsibilities and authorities under the Endangered Species Act
    (ESA), the Sikes Act, and the Marine Mammal Protection Act (MMPA).
    These laws reflect our Nation's long-standing commitment to the
    conservation of our natural resources for the benefit of future
    generations.
        The Department interacts with DOD activities through its bureaus,
    including the U.S. Fish and Wildlife Service, the Bureau of Land
    Management, and the National Park Service. The Fish and Wildlife
    Service strives to ensure flexibility in meeting our joint
    responsibilities under the various natural resource laws without
    impacting the military's ability to train its personnel. I believe that
    the Fish and Wildlife Service and the military have done a commendable
    job at working together to strike a balance between our legal
    responsibilities and the Armed Forces' duty to be both protectors of
    our national security and stewards of our natural heritage. I also
    acknowledge that more can be done. I will address both our successes
    and challenges as I discuss issues associated with the applicable laws.

                             ENDANGERED SPECIES ACT

        The ESA was passed in 1973 to conserve vulnerable plant and animal
    species that, despite other conservation laws, were in danger of
    extinction.
        DOD has a critically important role to play in the conservation of
    many rare plants and animals. At least 300 species listed as threatened
    or endangered occur on DOD-managed lands. DOD manages approximately 25
    million acres on more than 425 major military installations throughout
    the United States. Access limitations due to security considerations
    and the need for safety buffer zones have sheltered many military lands
    from development pressures and large-scale habitat loss. As a result,
    some of the finest remaining examples of rare wildlife habitats exist
    on military lands.
        The Fish and Wildlife Service has strived to establish good
    relationships with DOD that enable the military to carry out its
    mission of protecting our country while also ensuring the conservation
    of ESA-listed species on land it manages. Some outstanding examples of
    these partnerships are included at the end of my testimony.
    Candidate Conservation
        Conserving species before they need protection under the ESA is
    easier, more efficient, and poses fewer challenges to Federal agencies,
    including the military. In partnership with DOD and NatureServe, the
    Fish and Wildlife Service is developing a list of all at risk, non-
    federally listed species that may be found on or near military lands.
    This partnership project was developed by the military agencies, and
    demonstrates their interest in working with the Fish and Wildlife
    Service to benefit species.
        The term ``species at risk'' is a term used by NatureServe for a
    native species that is either a candidate for listing or is considered
    by NatureServe and the Network of Natural Heritage Programs to be
    ``imperiled'' or ``critically imperiled.'' In NatureServe's use of the
    term, ``species at risk'' refers to species that are presumed extinct,
    historical, critically imperiled, imperiled, and vulnerable (GX, GH,
    G1, G2, G3 ranks, respectively). Although the Fish and Wildlife Service
    generally means the same thing when we use the term ``species at
    risk,'' we use the term as a descriptive, illustrative term for those
    species that may warrant conservation to prevent the need to list under
    the ESA. A ranking of G1, G2, or G3 indicates those kind of species.
    ``Imperiled'' and ``critically imperiled'' are defined by NatureServe
    as terms referring to G1 and G2 ranked species.
        Once a species at risk is identified based on a mutual priority
    between the DOD installation and the FWS office, the Fish and Wildlife
    Service works with DOD to develop and implement conservation
    recommendations for the relevant activity. DOD working on a particular
    ``species at risk'' is based on a mutual priority between the DOD
    installation and FWS office.
        In addition to this local and regional cooperation, Fish and
    Wildlife Service and DOD personnel have been meeting quarterly for
    several years in an ``Endangered Species Roundtable.'' This informal
    session allows for open discussion and can lead to the referral of
    particularly difficult issues to headquarters for guidance or
    resolution. The group also reviews the Sikes Act and Integrated Natural
    Resource Management Plan (INRMP) development and implementation as they
    pertain to endangered species management.
    Challenges
        Even with these successful partnerships, we acknowledge that there
    have been challenges in resolving endangered species conservation and
    the military mission at some DOD bases and facilities. For example, 18
    threatened or endangered species occur on Camp Pendleton, a Marine
    Corps Base in California. For some of these species, like the tidewater
    goby, the base harbors the only known remaining populations. Preventing
    potential conflicts between endangered species conservation and Camp
    Pendleton's primary military mission continually challenges the
    creativity of both the Fish and Wildlife Service and the base
    leadership.
        Section 7(j) of the ESA provides a national security exemption that
    DOD can invoke in cases where national security would be unacceptably
    compromised by conservation responsibilities. This exemption has never
    been invoked by DOD, a fact that speaks very well to the creativity of
    our military and natural resource professionals. However, it is
    apparent that we must avoid penalizing the military for having done
    positive things for conservation of species and we must not unfairly
    shift the burden of species protection to the military. Additionally,
    in some cases, issues arise because of differing perceptions between
    our respective agencies about the effects of the provisions of the ESA.
    Finally, I must note that many of the challenges presented to the
    military under the ESA are similarly faced by other Federal agencies
    and private landowners. We look forward to continuing to work with the
    DOD to clarify these issues and build upon the relationship we have
    established.

     RECENT COURT DECISION ON DEFINITIONAL EXCLUSIONS FROM CRITICAL HABITAT

        Integrated Natural Resource Management Plans (INRMPs) are planning
    documents that allow the military to implement landscape-level
    management of its natural resources while coordinating with various
    stakeholders. The Department of the Interior initiated a policy in the
    previous administration, which we have continued, to exclude military
    facilities from critical habitat if there was an approved INRMP for
    that facility which addressed the species in question. However, a
    recent court case has cast doubt on our ability to continue this
    practice.
        The policy is based on the definition of critical habitat which
    states, in part:

            . . . the specific areas within the geographical area occupied
            by the species . . . on which are found those physical or
            biological features--(I) essential to the conservation of the
            species and (II) which may require special management
            considerations or protection;

        The exclusion policy was based on a decision that military lands
    with an approved INRMP, and other types of land with approved
    management policies, did not require special management consideration
    because they already had adequate management and, thus, by definition
    would not be considered critical habitat.
        However, the U.S. District Court in Arizona has ruled, in a case
    relating to Forest Service lands (Center for Biological Diversity v
    Norton), that this interpretation is wrong, and the fact that lands
    require special management necessitates their inclusion in, not
    exclusion from, critical habitat. The Court went on to say that the
    Government's interpretation amounted to our inserting the word
    ``additional'' into the statute (between ``require'' and
    ``management''), and that only Congress can so revise the definition.
        While the implications of this decision go far beyond military
    lands, we felt it important to advise the committee of it and the cloud
    it casts over our continued ability to exclude military lands with
    approved INRMPs from critical habitat. We believe this adds additional
    weight to the administration's proposal for a statutory exclusion.
        To avoid possible confusion in light of the Court's ruling, we
    would suggest striking the words ``provides the `special management
    considerations or protection' required under the Endangered Species Act
    (16 U.S.C. 1532(5)(A)) and'' from the proposed new section 2017(a).
    While that phrase is consistent with our interpretation of the law, it
    could cause future litigation problems due to the Court's ruling that
    the necessity for ``special management considerations or protection''
    requires that land to be included, not excluded, from critical habitat.
    This change would leave the section with an unambiguous statement that
    completion of an INRMP for the species in question precludes
    designation of critical habitat at that facility.

                        RECENT CRITICAL HABITAT ACTIONS

        The ESA portion of the administration's proposal addresses critical
    habitat designations. The Department has been able to address a number
    of DOD concerns over critical habitat designations.
        Critical habitat proposed for the purple amole, a plant, in
    California included significant portions of Camp Roberts and Fort
    Hunter Liggett. Camp Roberts had a completed INRMP which addressed
    conservation of this plant, and we excluded it from the critical
    habitat designation on this basis.
        While Fort Hunter Liggett was developing an INRMP to address the
    plant, it did not have the plan completed at the time we had to make
    the decision on the critical habitat designation. However, the DOD had
    provided us with detailed comments on the adverse impacts to military
    readiness that would result from the proposed designation, and these
    justified removing the fort from the critical habitat under section
    4(b)(2) of the ESA. We determined that the benefits of excluding the
    area exceeded the benefits of inclusion, in that the adverse impacts to
    national defense exceeded the benefits that would result from
    designating the area as critical habitat.
        Although not the basis for our decision, the fact that Fort Hunter
    Liggett had a statutory obligation to complete its INRMP, and to
    include the plant within that plan, provided us with an additional
    comfort level for that exclusion.

           SIKES ACT AND INTEGRATED NATURAL RESOURCE MANAGEMENT PLANS

        In fiscal year 2002, the Fish and Wildlife Service and State fish
    and wildlife agencies assisted in development, review, and/or
    implementation of INRMPs for 225 military installations in the United
    States.
        INRMPs serve as an effective vehicle through which DOD and the
    Military Services can comprehensively plan for conservation of fish and
    wildlife species. This planning has the potential to address important
    needs for resident endangered species, including the protection of
    habitat.
        We are committed to improving and expanding our existing
    partnerships with DOD, the Army, the Navy, the Air Force, and the
    Marine Corps. We look forward to opportunities to increase the utility
    of INRMPs as tools to maximize the potential benefits of DOD lands to
    fish and wildlife conservation while ensuring effective training of our
    troops.

                          MARINE MAMMAL PROTECTION ACT

        The Marine Mammal Protection Act of 1972 established a Federal
    responsibility, shared by the Secretaries of the Interior and Commerce,
    for the management and conservation of marine mammals. The Department
    of the Interior is responsible for sea otters, walrus, polar bears,
    dugongs, and manatees, while the Department of Commerce is responsible
    for cetaceans and pinnipeds, other than walrus, including seals,
    whales, and dolphins. In 1994, Congress enacted a number of amendments
    to the statute. One of the provisions, with broad applicability
    throughout the act, added the definition of ``harassment'' as an
    element of the act's take provisions.
        Over the last several years, the Fish and Wildlife Service has
    worked diligently with the National Marine Fisheries Service (NMFS),
    the Marine Mammal Commission (MMC), the United States Navy, and Alaska
    Natives to develop proposals that enhance marine mammal conservation,
    and provide greater certainty to the regulated public regarding certain
    areas of the existing law. During this process, revisions to the
    definition of harassment were considered to address a number of
    concerns, including those expressed by the Navy. The text of this
    proposed amendment to the definition of harassment is contained in
    administration's Range Readiness and Preservation Initiative in a way
    that only applies to DOD military readiness activities. We note that
    this same language applying to all entities, in addition to other
    important proposals related to the MMPA, are contained in the
    administration's comprehensive legislative proposal to reauthorize and
    amend the MMPA. This MMPA reauthorization proposal was transmitted to
    Congress at the end of last month. The Department strongly supports
    enacting this comprehensive legislative proposal, which will address
    the concerns of the Navy regarding harassment.
        The administration's Range Readiness and Preservation Initiative
    contains two other provisions related to the MMPA--an incidental take
    provision related to military readiness activities, and a national
    defense exemption. Because the Department of Commerce has the most
    interaction with DOD regarding these particular MMPA issues, we will
    defer to their comments on these provisions.

                                   CONCLUSION

        In closing, Mr. Chairman, I believe both the Department of the
    Interior and DOD have acted cooperatively to implement natural resource
    conservation laws passed by Congress. We are aware of the challenges
    that have arisen during this endeavor. The Department is prepared to
    explore and craft creative solutions to balance our conservation
    mandates with military readiness. We look forward to continue work with
    the DOD on this vitally important matter.
        This concludes my testimony. I appreciate the opportunity to appear
    today before the subcommittee, and I would be pleased to answer any
    questions you have.
        Examples: FWS-DOI Cooperation in Endangered Species Conservation
        United States Air Force Academy, Colorado. The U.S. Air Force
    Academy recognized the value of long-range planning when it
    commissioned a baseline study of small mammals in 1994. The survey
    aided the Air Force in identifying the presence of the Preble's meadow
    jumping mouse, which at the time was a candidate for listing. A species
    receives protection under the ESA when it is listed as endangered or
    threatened. In order to help DOD agencies plan their activities, the
    Fish and Wildlife Service shares information on listing candidates and
    upcoming listing actions. As a result, the Academy entered into a
    partnership with the Colorado Natural Heritage Program to study the
    mouse and provide information for management and conservation
    strategies.
        When the jumping mouse was listed as threatened in 1998, the Fish
    and Wildlife Service took steps to ensure that the Academy would be a
    full partner in the species' management and recovery. The Academy's
    natural resources manager is a member of the Science Advisory Team, a
    group of scientists and managers dedicated to compiling the best
    science available to support the conservation of the mouse throughout
    its range. An Academy representative also holds a position on the
    executive committee for a habitat conservation plan (HCP) under
    development for El Paso County, Colorado. Through the HCP process, the
    Academy will coordinate with non-Federal entities in the development of
    regional conservation strategies for the mouse. In addition, at the
    request of the Fish and Wildlife Service, the Academy's natural
    resources manager is representing the Air Force on the Preble's Meadow
    Jumping Mouse Recovery Team, which is charged with developing a plan to
    restore the species to a secure status. The Air Force also initiated a
    programmatic formal consultation under section 7 of the ESA for its
    Preble's meadow jumping mouse conservation management plan and
    conservation agreement. The biological opinion provided by the Fish and
    Wildlife Service on the Academy's conservation management plan
    significantly reduced the regulatory burden on both the Academy and the
    Fish and Wildlife Service by removing the need for section 7
    consultations for each instance of regular maintenance.
        Camp Pendleton, California. In 1999, substantial areas of Camp
    Pendleton were included in proposed designations of critical habitat
    for 5 of the 18 listed species that are present on the base. The Fish
    and Wildlife Service was able to work within the provisions of the ESA
    to avoid designating critical habitat on the training areas within Camp
    Pendleton.
        The ESA requires the Fish and Wildlife Service to determine whether
    designation of critical habitat is prudent and determinable. Under
    sections 4(b)(2) of the ESA, the Secretary of the Interior can exclude
    areas from critical habitat designations when economic or policy
    interests outweigh the expected benefits of designation. The Fish and
    Wildlife Service has used military readiness as a reason to exclude
    training areas from critical habitat designations many times now.
        For example, the 1999 proposals for critical habitat on Camp
    Pendleton would have designated over 50 percent of the base as critical
    habitat for listed species, including the California gnatcatcher, the
    Tidewater goby, the Riverside fairy shrimp, the San Diego fairy shrimp,
    and the arroyo toad. As a result of the exclusion process discussed
    above, the Fish and Wildlife Service was able to exclude most of Camp
    Pendleton from the designated critical habitat due to Marine Corps
    concerns about the effects the designations could have on military
    training critical to national security. The land area currently
    designated as critical habitat on Camp Pendleton encompasses less than
    4 percent of the 125,000 acre, over half of which is located on land
    leased by the State, rather than the base proper.
        Fort Hood, Texas. Under the section 7(a)(2) of the ESA, Federal
    agencies are required to consult with the Fish and Wildlife Service to
    ensure that actions they authorize, fund, or carry out are not likely
    to jeopardize the continued existence of listed species or adversely
    modify designated critical habitats. A good example of this process
    occurred recently at Fort Hood. As one of the largest heavy artillery
    training sites in the country, it conducts live-weapons fire and
    aviation training and houses more than 500 tanks. Much of the 220,000-
    acre base resembles barren, scorched battlefields with ruts as deep as
    trenches. However, it also contains essential nesting habitat for two
    endangered songbirds, the golden-cheeked warbler and black-capped
    vireo. Fort Hood is balancing its military mission with environmental
    stewardship.
        As part of its responsibility under the ESA, the post manages
    66,000 acres, more than 25 percent of the land on base, for the
    recovery of these two endangered species. The post also provides a
    haven to wintering bald eagles, occasional visiting whooping cranes,
    peregrine falcons, and other rare plant and animal species.
        The Army entered into an interagency consultation with the Fish and
    Wildlife Service under section 7 of the ESA. In 1993, the Fish and
    Wildlife Service issued a ``no jeopardy'' biological opinion (BO).
    Following the issuance of the BO, Fort Hood contracted with the Nature
    Conservancy of Texas for further research and monitoring of the birds.
    In conjunction with Fish and Wildlife Service and Army biologists,
    conservancy researchers are compiling the most comprehensive body of
    information on the birds to date. Fort Hood has followed the
    requirements of the 1993 BO (including a version amended in 2000) and
    has funded valuable research and management strategies that can be
    applied to warbler and vireo issues range-wide. The birds are
    benefiting from our partnership with the Garrison Commander and base
    natural resources staff.
        Fort Bragg, North Carolina. For listed species, recovery is the
    ultimate goal. Section 7(a)(1) of the ESA directs Federal agencies to
    use their statutory authorities to fulfill this goal. The Sandhills
    region of North and South Carolina supports the largest population of
    red-cockaded woodpeckers (RCW) in the United States. Fort Bragg is the
    only Federal authority managing lands in that region for the recovery
    of RCWs. The area around Fort Bragg is being rapidly developed, and if
    critical tracts are not protected soon, they will be lost to the
    woodpecker. Loss of these lands due to development also would limit
    Fort Bragg's ability to sustain current and future military training.
    In response, the Army launched a Private Lands Initiative with The
    Nature Conservancy and other partners to purchase land or conservation
    easements from willing sellers. The lands will not only become
    available for red-cockaded woodpecker recovery, but also for compatible
    military training activities and recreation.
        Fort McCoy, Wisconsin. Fort McCoy encompasses 59,750 acres and is
    home to a diversity of vegetation, including wild lupine, which is the
    only known food plant for larvae of the endangered Karner blue
    butterfly. Since 1990, when the installation discovered Karner blues on
    its land, military training and the butterflies have coexisted and
    thrived. Fort McCoy officials began coordinating with the Fish and
    Wildlife Service on the impact of both military and non-military
    activities affecting the Karner blue butterfly in 1992. In early 1994,
    the Fish and Wildlife Service issued Fort McCoy a no-jeopardy BO that
    included ``reasonable and prudent measures'' and ``terms and
    conditions,'' both as provided under the ESA. As part of an effort to
    fulfill those terms, Fort McCoy submitted a draft Karner Blue Butterfly
    Conservation Plan to the Fish and Wildlife Service in 1995. The plan
    outlined the direction Fort McCoy would take to manage its lands for
    the butterfly while allowing for the successful completion of the
    installation's military training mission. The final conservation plan
    was completed in 1997. Fort McCoy has been able to comply with the ESA
    while having only minimal impact on military training.
        Pearl Harbor, Hawaii. A Navy team recently created some critical
    mudflat habitats for endangered waterbirds on the shores of Pearl
    Harbor. These mudflats are home to a number of Hawaiian waterbirds,
    including four endangered species and a variety of migratory birds. The
    site is a small pond within a unit of the Pearl Harbor National
    Wildlife Refuge. While the underlying land and water is owned by the
    Navy, the refuge is managed by the Fish and Wildlife Service. Over the
    years, the pond has provided decreasing value to waterbirds because of
    the increasing growth of invasive plants and weeds. Fish and Wildlife
    Service staff had attempted to create clear spaces by changing the
    water levels, but it wasn't enough to make the area suitable habitat
    for waterbirds. Additional work with heavy equipment was needed to
    create conditions favorable for wildlife.
        In August 2000, a Navy Seabee unit answered the Refuge Manager's
    request for help and at the same time benefited from some real-life
    training. Two Seabee heavy equipment operators maneuvered a bulldozer
    and grader to sculpt the bottom of the pond. Putting their Navy
    engineering skills to work in this training exercise, they reshaped
    mudflats for endangered Hawaiian stilts and constructed a drainage
    system according to a refuge restoration plan. This project was just
    one example of the Navy's strong partnership with the Fish and Wildlife
    Service's national wildlife refuge in Pearl Harbor. For years, sailors
    and their families also have volunteered numerous weekend hours
    creating new habitats and clearing away trash and excess vegetation at
    the refuge.
        Air Force in Alaska and Peregrine Falcon Recovery. Since the early
    1980s, the Air Force has worked with the Fish and Wildlife Service to
    minimize or eliminate impacts of Air Force activities on peregrine
    falcons in Alaska. Through the section 7 consultation process, the Air
    Force and the Fish and Wildlife Service identified major peregrine
    nesting areas in proposed Air Force training locations. Much of this
    training involves very low-level and high-speed flights, a combination
    with the potential to disturb many wildlife species, including nesting
    peregrine falcons. The Air Force agreed to a protective ``no-fly'' zone
    of 2 miles horizontal distance and 2,000 feet above the nest level in
    these dense nesting areas. Additionally, the Air Force is monitoring
    several nearby peregrine populations that fall outside the protected
    areas. This monitoring effort, which has continued since 1995, shows
    that the protective zones appear to provide adequate protection in the
    densest nesting areas and that the incidental loss of nestlings outside
    these zones is below the levels originally anticipated. Rather than
    making a minimal effort to comply with the ESA, the Air Force actively
    pursued programs to promote peregrine recovery, which helped make it
    possible to remove this magnificent bird from the threatened and
    endangered species list in 1999.

        Senator Ensign. Thank you.
        Dr. Lent.

     STATEMENT OF DR. REBECCA LENT, DEPUTY ASSISTANT ADMINISTRATOR
      FOR FISHERIES, NATIONAL MARINE FISHERIES SERVICE, NATIONAL
                 OCEANIC AND ATMOSPHERIC ADMINISTRATION

        Dr. Lent. Thank you, Mr. Chair. I appreciate this
    opportunity to address issues of environmental protection in
    the context of military operations and readiness. National
    Oceanic and Atmospheric Administration (NOAA) fisheries is
    responsible for the management of nearly 150 stocks of marine
    mammals under the Marine Mammal Protection Act (MMPA).
        I am happy to report that over the past few years NOAA has
    been working very closely with our partners at the DOD,
    particularly the Navy since we have a shared responsibility for
    the oceans. We have developed a productive relationship. We
    have worked on efforts to improve coordination between agencies
    working on the process, research coordination, and strategic
    planning.
        The DOD bill proposes changes to three areas of the MMPA.
    First of all, the definition of harassment; second, the
    incidental take authorization language; and third, a national
    defense exemption to the MMPA.
        The change in the definition of harassment, not a surprise,
    it is the same as the definition that we have proposed. That is
    because we have been working closely with our partners at the
    DOD. This change in the case of the DOD bill is only for
    military operations. In our bill that we sent to Congress in
    February of this year, it would be for all activities.
        The purpose of the change in the definition is to focus on
    those activities that truly have an impact on the marine
    mammals and not insignificant impacts. The proposed change is
    also consistent with the National Research Council
    recommendations.
        Also included in the DOD bill, the second area are changes
    to permitting legislative requirements. These are for
    incidental take permits, takes that happen that are
    unintentional, but not unexpected, during activities that are
    otherwise lawful. NOAA Fisheries can authorize such takes as
    long as the takings have no more than a negligible impact on
    the stocks and will not have an unmitigable impact on the
    subsistence harvest of these species.
        A couple points about these changes to the permitting
    process. First of all, in order to get this permit, the DOD
    will still have to show that these activities are having a
    negligible impact on the marine mammals species. Also, military
    readiness activities small take authorizations will still have
    to abide by the processes under the ESA, the National
    Environmental Policy Act, the Administrative Procedures Act, et
    cetera, these acts which provide for analyses of options,
    public hearings, public comment, and input.
        Also, in terms of these changes in permits, it would be
    necessary for us to know in order to make this negligible
    impact determination what activities are taking place by the
    military as well as when and where. So the changes in the
    legislation do not change the type of analyses that we will
    have to do to authorize the activities.
        Finally, the third area of change to the MMPA is an
    exemption clause for actions necessary for national defense.
    This exemption clause already exists in the ESA. It does
    require or recommend a consultation with the Secretaries of
    Commerce and Interior and this exemption can last for up to 2
    years.
        In conclusion, NOAA and the Department of Commerce support
    the DOD authorization bill. We are confident that DOD and NOAA
    can continue to work together within the framework of the
    proposed law to ensure that our Armed Forces are able to train
    to carry out their national security mission while we can carry
    out our mission of marine conservation. We will continue to
    work with the Navy to make sure this happens.
        Thank you very much.
        [The prepared statement of Dr. Lent follows:]

                   Prepared Statement by Rebecca Lent, Ph.D.

        Mr. Chairman and members of the subcommittee, thank you for
    inviting me to testify today regarding the fiscal year 2004 Department
    of Defense Readiness and Range Preservation Initiative (RRPI). I am Dr.
    Rebecca Lent, Deputy Assistant Administrator for Fisheries at the
    National Oceanic and Atmospheric Administration (NOAA).
        I appreciate the opportunity to address issues of environmental
    protection in the context of military operations and readiness. NOAA
    Fisheries' strategic goals regarding environmental stewardship are to
    build sustainable fisheries, recover protected species, and sustain
    healthy coastal ecosystems. Our stewardship of living marine resources
    is conducted for the benefit of the Nation through science-based
    conservation and management. NOAA Fisheries' role in environmental
    stewardship is defined legislatively through the Marine Mammal
    Protection Act (MMPA), the Endangered Species Act (ESA), the Magnuson-
    Stevens Fishery Conservation and Management Act, and other statutes.

                                 MARINE MAMMALS

        With regard to marine mammals, NOAA Fisheries is responsible for
    the conservation and management of 147 marine mammal stocks of
    cetaceans and pinnipeds under the MMPA. NOAA cannot fulfill this
    mission by itself. We must work with our constituents, other resource
    management agencies, such as the Fish and Wildlife Service and the
    Environmental Protection Agency, and agencies such as the Department of
    Defense (DOD) to help us fulfill these stewardship responsibilities.
        Over the last few years, NOAA has been working more closely with
    our Federal partners at DOD, particularly the Navy, due to our shared
    responsibilities for the oceans. We have developed a productive working
    relationship. NOAA Fisheries and the Navy have undertaken a number of
    efforts to improve coordination between the two agencies, including
    research coordination and strategic planning opportunities. Discussions
    have focused on the integration of agency processes under the ESA and
    the MMPA, as well as the concerns raised by the military in achieving
    its mission responsibilities.
        To build on efforts at the staff level, NOAA Fisheries has been
    meeting with H.T. Johnson, Acting Secretary of the Navy, on ways to
    expand our partnership in achieving our distinct yet complementary
    missions. These meetings have focused on opportunities to expand
    coordination efforts for complying with applicable resource laws, and
    ways to continue to increase cooperative research and outreach on
    complex scientific issues.
        Additionally, NOAA Fisheries is working hard to meet the increasing
    demands being placed on our regulatory program to process applications
    and authorizations under MMPA. The phenomenon of sound in the ocean has
    grown tremendously and, as with many scientific issues, the more
    questions you ask about its impacts on marine mammals, the more you
    find that are yet to be answered. Not only has the complexity of the
    analyses increased, but public scrutiny as well.

                              MMPA REAUTHORIZATION

        In February of this year, the administration transmitted its
    proposed MMPA Amendments of 2003 to Congress. One important provision
    contained in the administration's MMPA bill relative to RRPI is a
    change to the definition of harassment. Although the existing regime
    under the MMPA and ESA is fairly flexible, the administration
    recognizes that the definition of harassment under the MMPA needs
    clarification. As a result, NOAA Fisheries worked closely with the DOD,
    the Department of the Interior, the Marine Mammal Commission, and
    others to develop a revised definition as part of the administration's
    MMPA reauthorization package. We believe that a clearer definition of
    harassment would be beneficial to the regulated community as a whole.
        We look forward to working with congressional members and staff to
    help provide any necessary information or assistance that will aid in
    the reauthorization of the MMPA in the current Congress.

     DOD AUTHORIZATION: THE READINESS AND RANGE PRESERVATION INITIATIVE OF
                                      2003

        The National Defense Authorization Act for Fiscal Year 2004
    contains a number of provisions that are relevant to NOAA Fisheries and
    the MMPA. The RRPI would make a number of amendments to the MMPA
    specifically for military readiness activities. These amendments would
    apply to both the DOD and the U.S. Coast Guard. NOAA Fisheries
    understands the timing issues relative to military readiness. Because
    these proposed amendments deal solely with military readiness
    activities and national security, they have been included in the draft
    National Defense Authorization Act for Fiscal Year 2004 and not the
    draft Marine Mammal Protection Act Amendments of 2003 that the
    administration transmitted to Congress on February 21, 2003.
        The key points noted in the ``Purposes'' section of the RRPI
    legislation are: ``To ensure military readiness by addressing problems
    created by encroachment on military readiness activities, marine areas,
    and airspace reserved, withdrawn, or designated for military use;
    reaffirm the principle that such lands, marine areas, and airspace
    exist to ensure military preparedness; shield military readiness
    activities and lands, marine areas . . . from encroachment, while
    ensuring that the DOD fulfills its environmental stewardship
    responsibilities . . . re-establish the appropriate balance between
    military readiness and environmental stewardship. . . .'' The term
    ``military readiness activities'' is broadly defined and would include
    any training and operations that could be related to combat readiness.
        Definition of Harassment: The RRPI includes a change to the
    definition of `harassment' in section 3 of the MMPA. This definition is
    the same as the one contained in the administration's proposed MMPA
    Amendments; however, the RRPI definition only applies to military
    readiness activities, rather than all regulated activities.
        Incidental Take Permits: Additional amendments to the MMPA that are
    contained in the RRPI include a group of changes to the current
    legislative requirements that govern applications for incidental take
    permits (section 101(a)(5)(A) in the MMPA). Incidental takes are those
    that are unintentional, but not unexpected. These takes occur during
    otherwise lawful activities. The MMPA established a moratorium on the
    taking of marine mammals in U.S. waters by any person, as well as by
    U.S. citizens in international waters.
        In 1981, Congress amended the MMPA to provide for `small take'
    authorizations for otherwise lawful activities. Under the present
    scheme, NOAA Fisheries will authorize the takes of small numbers of
    marine mammals if the takings will have no more than a negligible
    impact on those marine mammal species or stocks, and not have an
    unmitigable adverse impact on subsistence harvests of these species.
    Through regulation, NOAA Fisheries has defined ``negligible impact'' to
    be an impact resulting from the specified activity that cannot be
    reasonably expected to, and is not reasonably likely to, adversely
    affect the species or stock through effects on annual rates of
    recruitment or survival.
        These small take authorization regulations are implemented through
    letters of authorization (LOAs), can last for up to 5 years, and
    require notice and comment rulemaking. Navy and other DOD activities
    sometimes need authorization for the incidental take of marine mammals.
        In 1986, Congress amended both the MMPA, under the small take
    program, and the Endangered Species Act, to authorize takings of
    depleted (and endangered or threatened) marine mammals, again provided
    that the taking (lethal, injurious, or harassment) was small in number
    and had a negligible impact on marine mammals.
        In 1994, MMPA section 101(a)(5) was amended to establish an
    expedited process by which U.S. citizens can apply for authorization to
    incidentally take small numbers of marine mammals by harassment,
    referred to as Incidental Harassment Authorizations (IHAs). IHAs may
    only last up to 1 year in duration. However, this program allows
    authorizations to be issued within 120 days, instead of the 6-8 months
    required for LOAs issued under ``small take'' regulations. Most LOAs
    and IHAs to date have authorized the incidental harassment of marine
    mammals by noise.
        The RRPI makes a number of changes to section 101(a)(5) of the
    MMPA, as it applies to military readiness activities. The RRPI would
    add the words ``military readiness activities'' after ``other than
    commercial fishing'' and adds a new paragraph 7(A) to this section.
    This new paragraph, is similar to the current paragraph 5(A), with the
    following exceptions:

             (7)(A) does not contain the terms ``specified
            activity,'' ``specified geographical region,'' and ``small
            numbers.''
             (7)(A) does not contain (5)(A) language that requires
            publication of the proposed authorization in the Federal
            Register, public media, etc., to provide opportunity for public
            comment. This was inadvertently omitted in the drafting and
            there was no intention to limit the opportunity for public
            comment.

        The important point in evaluating the impact of these proposed
    amendments to the MMPA small take program provisions on NOAA's trust
    resources and the MMPA is that DOD will still have to show that its
    activities are having a negligible impact on the marine mammal species
    and populations. Additionally, it will have to demonstrate that its
    activities will not have an unmitigable adverse impact on the
    availability of such species or stocks for taking for subsistence uses
    pursuant to the MMPA. These are the key elements to maintaining the
    health of marine mammal species and are the premise for the integrity
    of the incidental take authorization section of the MMPA. Additionally,
    military readiness activity small take authorizations will have to
    abide by all ESA, National Environmental Policy Act, and Administrative
    Procedure Act requirements where they apply.
        To make the requisite negligible impact determination and to comply
    with these other environmental laws, NOAA Fisheries would have to know
    what activities would be taking place--also, when and where they would
    occur. A substantive effect on more than a small proportion of a
    population would likely have more than a negligible impact; therefore,
    numbers are taken into account, based upon biological significance,
    which is how NOAA Fisheries has been implementing the program.
    Consequently, I predict that the proposed amendments to the MMPA would
    have no adverse impact on the protection of marine mammals.
    Exemption Clause:
        With regard to the exemptions clause for actions necessary for
    national defense, the language would allow the Secretary of Defense,
    after consulting with the Secretary of Commerce and the Secretary of
    the Interior, to exempt any action or category of actions undertaken by
    the DOD from compliance with any requirement of the MMPA. These
    exemptions may be granted for 2 years, with additional 2 year
    exemptions possible after further consultation between the Secretaries.
    This exemption is similar to the one found in the ESA.

                                   CONCLUSION

        We support the fiscal year 2004 DOD RRPI and believe that it takes
    account of the interests of the American people in military readiness
    and in environmental protection. I am confident that DOD and NOAA can
    work together within the framework of the proposed law to ensure that
    America's Armed Forces are able to train to carry out their national
    security mission and that the Agency is able to carry out its marine
    conservation responsibilities. NOAA will also continue to work with the
    Navy and the rest of the DOD to improve coordination between our
    programs. We look forward to continuing our partnership.

        Senator Ensign. I want to thank all of the witnesses who
    are appearing before the subcommittee today.
        I will start with my line of questioning. I offered Senator
    Akaka to do his opening statement and he would rather do that
    at the start of his questions, so we will have that occur at
    that time.
        I want to start with Mr. Suarez. There were some reports in
    the news that we are all aware of about the Administrator's
    supposed comments and some controversy about those comments.
    Can you clarify for this subcommittee today what the
    Administrator's position is on these proposals that are before
    us today?
        Mr. Suarez. Yes, I can, and thank you for that opportunity,
    Mr. Chairman. The Administrator wants to make it perfectly
    clear that she supports the bill. She believes the bill is a
    reasonable compromise to allow the military the flexibility
    that they need to conduct their readiness and training
    activities while at the same time remaining protective of
    public health and the environment.
        We believe, and the Administrator believes, that the public
    will be sufficiently protected given these modest requested
    changes that the Defense Department has requested and she fully
    supports the bill.
        Senator Ensign. I am glad you clarified that. I actually
    spoke to the Administrator last night just so I would hear with
    my own ears. Not that we did not trust you, Mr. Suarez.
        Mr. Suarez. I had to hear it for my own ears, too.
        Senator Ensign. Yes, I wanted to make sure that there was
    no question in case anybody brought something up or whatever
    today. It was fairly clear, it was actually abundantly clear,
    from her comments to me last night that she felt--and correct
    me if I am wrong in any of this statement--that she felt that
    with the administration's proposal that EPA had all the
    authority that they needed to enforce and protect the
    environmental laws and the environment for this country.
        Mr. Suarez. Mr. Chairman, I think that exactly
    characterizes her position.
        Senator Ensign. Very good.
        I have another question, dealing with perchlorate. There
    have been some reports in my State that this proposal would
    somehow affect the cleanup of perchlorate in southern Nevada. I
    spoke to the Administrator last night, but I would like to hear
    it on the record from you. Would this proposal from the
    administration today, any of the proposals, affect any of the
    cleanup going on as far as perchlorate going into the Colorado
    River from southern Nevada?
        Mr. Suarez. Mr. Chairman, it would not. A couple of things
    to keep in mind as to the proposal. First, the proposal does
    not affect at all any of our authorities under the Safe
    Drinking Water Act. The Safe Drinking Water Act remains
    untouched and any action that we would need to take to protect
    any threats or imminent threats to safe drinking water remains
    unaffected.
        Second, we still retain the authority to take action on an
    operational range under the jurisdiction and control of the
    military if a release of a hazardous substance on that range
    poses an imminent and substantial endangerment to public health
    or the environment.
        Third, we are working with DOD to clarify language to make
    perfectly clear that the proposed changes apply only to
    operational ranges in the jurisdiction and control of the DOD.
        So I think across the board, we are comfortable that there
    is nothing that would change our ability and our efforts to
    address perchlorate contamination in drinking water supplies.
        Senator Ensign. Thank you very much. That is obviously very
    important to the constituents of my State, as well as downriver
    in the State of California, and we appreciate that because I
    think it is very important for us to be able to clean that up
    in the future. As many people have said, we do not want to let
    the DOD off if they are indeed responsible, that they should be
    part of that cleanup.
        Let me address Ms. MacDonald. Fish and Wildlife on these
    proposals going forward, if we did nothing, Fish and Wildlife,
    the proposals that have been put in place, you feel that they
    have been adequately protecting endangered species and plants,
    correct?
        Ms. MacDonald. Yes. The INRMPs are developed with the
    consultation of the FWS and they are not complete until the FWS
    has signed them as well as the DOD.
        Senator Ensign. Some have said that if we go forward we are
    rolling back protections for these plants and animal species.
    What is your opinion and the Department's opinion on that type
    of a statement?
        Ms. MacDonald. Well, that is inaccurate because the FWS
    again participates in developing these plans, and does not sign
    off on them if they think they are inadequate.
        Senator Ensign. In general, would you say that the people
    that work at the FWS are the kind of people that care or do
    not? In other words, do the kind of people that go to work for
    you, are they the kind of people that want to take care of the
    environment or are they the kind of people that just do not
    care about the environment?
        Ms. MacDonald. In my opinion, I have not met a group of
    people that care more for the environment than the FWS
    employees.
        Senator Ensign. So you feel very comfortable speaking for
    the FWS and those employees at the FWS, that you are concerned
    and that you think that there is a balance here that can be
    maintained in the future, that can work well for the military
    and for the protection of those species covered under the ESA?
        Ms. MacDonald. Yes.
        Senator Ensign. Thank you very much.
        My time has expired, so I have to turn it over. I do have
    more questions and we may have to submit some of those
    questions for the record. But I would like to turn it over now
    to Senator Akaka for an opening statement, and that will not go
    against your questioning time, so make your opening statement
    and then you can start with your questions.

                  STATEMENT OF SENATOR DANIEL K. AKAKA

        Senator Akaka. Thank you very much, Mr. Chairman. You are
    very kind and it is good to be here this morning. I want to add
    my welcome to the panel.
        In a sense, this is an unusual hearing because we are going
    to be hearing from the Government sector as well as the private
    sector and those who have interests. So we will be trying to
    bring together all of these views.
        We began our review of the impacts of environmental laws on
    military readiness about 2 weeks ago with a hearing at which we
    heard the representatives from the four military services.
    Today we will be hearing from you and from outside experts and
    organizations as well as local and State governments.
        Our subcommittee does not usually hear from witnesses like
    you because we do not have jurisdiction over the environmental
    laws or other statutes that impact the general public. This is
    a very difficult issue that we have before us, not only because
    of the competing interests of military readiness and
    environmental protection, but because of the complexity of some
    of the statutes and regulations involved. That is why I
    appreciate, Mr. Chairman, your decision to schedule this second
    hearing.
        I believe that the members of the subcommittee will greatly
    benefit from hearing the diverse views and perspectives
    presented by the range of witnesses you have assembled for us
    today. I hope we will be able to hear the views and
    perspectives and work together to develop a common
    understanding and constructive approach to this difficult
    issue. So I look forward to the discussions, the testimonies,
    and the responses to the questions.
        My first question, Mr. Chairman, is to Mr. Suarez. During
    the interagency coordination process last year, EPA was asked
    for its comments on the proposal to exempt certain DOD
    activities from the Clean Air Act (CAA). I have here a
    memorandum in which EPA senior staff recommends that the agency
    oppose the proposal and I will read the memorandum in part:
    ``This proposal should have negative impact on the air
    quality''--let me read that again: ``This proposal could have
    negative impact on the air quality in communities surrounding
    the military facility conducting the readiness activities and
    on the States' ability to attain and maintain the ambient air
    quality standards. Individuals living near the facilities could
    potentially be exposed to higher and more frequent pollutant
    concentrations which exceed the national ambient air quality
    standards.
        ``Since EPA's general conformity regulations already
    include exemptions for emergencies and for routine military
    activities that do not require the construction of new support
    facilities, the proposal legislation would basically affect
    only routine activities that require the construction of
    additional support facilities. Such activities could have
    significant adverse air quality impacts.''
        Now, my question to you is, do you either agree or disagree
    with the views presented by EPA's senior staff in this
    memorandum and why do you feel that way?
        Mr. Suarez. Senator, I am not familiar with that particular
    memo or the opinion expressed therein. I can tell you that,
    much like Ms. MacDonald, my staff and our staff in our agency
    have a number of different views on environmental issues and we
    enjoy a fairly healthy dialogue about those views among our
    staff. It is without doubt, though, that we support the
    administration's bill and we believe that in the context of the
    CAA proposal the military is still required to report and
    quantify the impacts on air quality and their impacts on a
    State's ability to achieve the national ambient air quality
    standards and must come into compliance, but in a slightly
    extended period of 3 years rather than right away.
        We believe that is an appropriate balance. Again, the view
    that is expressed there perhaps expresses a different view. I
    can tell you that we support, and the EPA supports, the
    administration's proposal as to this provision.
        Senator Akaka. Thank you for your response.
        This legislation has been characterized as allowing DOD to
    construct facilities first and identify the necessary emissions
    reductions or offsets later. Do you believe that it is a sound
    compliance strategy to build first and address regulatory
    issues later?
        Mr. Suarez. Senator, I believe that the provisions of the
    bill under the CAA actually exclude specifically those routine
    types of activities such as construction and transportation of,
    let us say, a power plant and relate only to military readiness
    activities and combat activities that are necessary to support
    our fighting troops. We believe that exempting those activities
    and allowing the military 3 years to demonstrate compliance is
    an appropriate balance.
        Senator Akaka. Mr. Suarez, the EPA senior staff memorandum
    also recommends that the agency oppose DOD proposals to exempt
    certain activities from the requirements of RCRA and CERCLA.
    The memorandum notes that the provision would limit cleanup
    requirements under these statutes to munitions and munitions
    constituents that migrate off of an operational range.
        It then raises a series of questions, and I am quoting:
    ``What constitutes migration for the purposes of determining
    whether or not an imminent and substantial endangerment is
    posed by contamination from spent munitions on an operational
    range? Assuming DOD was unwilling to take action to start
    removing a plume of contaminated ground water, could EPA use
    its imminent hazard authority under CERCLA to address moving
    ground water contamination on an operational range, or would
    EPA be required to wait until an adjoining municipality's water
    supply indicated the presence of contamination originating from
    the range?''
        Do you agree or disagree with the view that the legislation
    leaves these questions unanswered, as stated in the memorandum?
        Mr. Suarez. Flatly disagree. It is clear that the
    legislation provides for the authority under section 106 of
    CERCLA for EPA to take action to abate an imminent and
    substantial endangerment on an operational range. The
    legislation also makes clear, Senator, that once a pollutant or
    contaminant migrates off-range that the regular authorities
    available to EPA become active. In other words, we can take
    action under CERCLA or RCRA.
        Third, no authority is affected under the Safe Drinking
    Water Act, so that if a contaminant poses a threat or may pose
    a threat to drinking water, EPA retains the authority under the
    legislation to take action to prevent an imminent and
    substantial endangerment under the Safe Drinking Water Act.
        Senator Akaka. Thank you very much for your response.
        Thank you, Mr. Chairman.
        Senator Ensign. Thank you, Senator Akaka, and we will go
    for another round of questions. It sounds like you have more
    and I certainly do.
        Dr. Lent, I would like to explore the term harassment when
    we are dealing with marine mammals. It is a big issue,
    obviously, for the Navy and I think it is an important issue
    all the way around for a lot of different purposes. People in
    your Department are very familiar, I know, with that term. You
    mention in your opening statement, some of the words that I
    heard you talk about, about the need for significant affect, or
    I do not remember exactly how you put it. But it seems to me to
    be very important that we--because harassment itself can mean
    almost anything, and because a fish or a dolphin had to turn
    because of something does that mean harassment, or are we
    talking about reproductive effects, are we talking about
    species decline, or what are we talking about here?
        Because I think it is very important that those type of
    things be put where we can measure, and so it is not just some
    subjective thing that somebody is saying, well, I think that it
    may affect some kind of species down the line.
        Can you just address the whole issue?
        Dr. Lent. Thank you, Senator. Yes, indeed, this is
    something we have been struggling with ever since the term was
    in the act. The way we are struggling with it now, the way it
    is written, is that you have to go through a two-tier process
    to prove that someone is harassing. First you have to prove
    that someone is doing pursuit, torment, or annoyance, and then
    they have to prove that it has the potential to injure or
    disturb.
        The way it is written now--and again I emphasize it is the
    same in our bill as it is in the DOD bill, only for DOD it is
    only for military activities--is that it is two levels. First
    of all, it injures or has a significant potential to injure a
    marine mammal. That is level A. Then level B is disturbing or
    is likely to disturb.
        Now again, these are not words that provide numbers, but
    they clearly set a threshold that is higher, in the sense of
    what we want to focus on, those activities that can really make
    a difference. The way it is written now, you could argue that
    just someone out in their boat and if a dolphin rides in the
    ripples around the boat for easier swimming that that would be
    harassment, or if you are walking down a beach and a dolphin
    lifts its head to look at you, or a marine mammal, that that
    could be harassment.
        We do not think we should be focusing on activities like
    that. We should be focusing on the activities that truly can
    affect the marine mammals. In particular, as you mentioned,
    affect their migration, their surfing behavior, breeding,
    feeding, or sheltering, to the point where these behavioral
    patterns are abandoned or significantly altered.
        So again, we are trying to focus on where there is really
    an impact.
        Senator Ensign. The basis for the change? In other words,
    can you just address, is it somebody's just willy-nilly opinion
    or how are we going to--how are we making this basis for
    change? Is it based on opinion or is it based on, I guess,
    studies, science?
        Dr. Lent. It will be based on science, as we do base our
    decisions now. But we feel it is easier to address something
    like significant impact and particular behaviors of the animals
    rather than the vague and broad definition that is currently in
    place. It will allow us to focus our limited resources on where
    we can really make a difference in marine mammals.
        Senator Ensign. Ms. MacDonald, on February 27, 2003, the
    FWS designated 177 acres--and this gets to your State, so I do
    not know if this is a question that you have, but I want to try
    to clear this up--on the Pacific Missile Range Facility in
    Hawaii critical habitat for an endangered dune grass. The Navy
    is concerned that this designation will adversely impact an
    irreplaceable training asset, particularly troubling given the
    fact that the grass, from what we have learned, has not been
    found anywhere on the range.
        How might this problem be resolved through the
    administration's proposed legislative clarification?
        Ms. MacDonald. In this particular case, had there been an
    INRMP that addressed that particular grass, the administration
    would have been able to, and presuming the INRMP had been
    signed by both the DOD and the FWS, the administration would
    have been able to exclude the military base from the critical
    habitat designation.
        Senator Ensign. Going further on this particular, how does
    this range get designated like that without the grass being
    there?
        Ms. MacDonald. Critical habitat designations typically
    consist of those areas that are actually populated by the
    species of concern, in this case the grass. But we are allowed,
    where it is necessary, to include areas that are not inhabited.
    In this particular case, I think that grass only exists in one
    place. It lives on hillsides and the only appropriate hillside
    that it could ever grow in--and this is based on the
    information we get from our biologists--existed on this 177
    acres, which is why it was designated.
        Senator Ensign. So even though it was not there----
        Ms. MacDonald. Yes.
        Senator Ensign.--it potentially could----
        Ms. MacDonald. Could have been there.
        Senator Ensign.--have been there, because----
        Ms. MacDonald. It is a very specialized--it has very
    specialized growing requirements and those particular
    requirements only existed in that particular area.
        Senator Ensign. Wow.
        Senator Akaka.
        Senator Akaka. Thank you very much, Mr. Chairman. Thank you
    for your interest about an issue in Hawaii.
        At our previous hearing we were told that the Navy talked
    to the FWS and offered to amend their INRMP to address the
    grass in question. It is my understanding that FWS officials in
    Hawaii worked closely with the Navy region Hawaii officials on
    this matter and discussed two opinions regarding critical
    habitat exclusion.
        One option was for the Navy to support the State and
    Service in planting the species on nearby State-owned lands off
    the base to reduce extinction risk. Another option was to
    develop a viable INRMP amendment that included consideration of
    the potential reintroduction of some plants to the dune areas
    at the Pacific Missile Range Facility (PMRF).
        It is my understanding that the field staff for the Service
    and the Navy tentatively agreed to reintroduce panasom into--
    panasom is the grass--into several areas on the base that would
    have a very low likelihood of ever encumbering Navy operations.
    It is my understanding that when officials in Washington
    refused to adhere to this agreement the area was designated as
    critical habitat. That is my understanding.
        This seems to be a breakdown in what is an otherwise, I
    thought, reasonable process. Can you explain, Ms. MacDonald,
    what is an otherwise reasonable process?
        Ms. MacDonald. I think I would not want to presume to
    second-guess. I have no information on the process that
    occurred. I am assuming your information is accurate. I would
    not want to presume on the process, commenting on the process
    the Navy went through to make whatever determination they made.
        For our part, we worked with the Navy to identify those
    acres that we did designate as critical habitat did not
    conflict with any existing or planned testing and training. So
    from our perspective, we designated those areas that we felt
    were necessary for the conservation of the plant and would not
    impede the Navy's ability to perform their training.
        Senator Akaka. Thank you.
        Dr. Lent, two of the three administration proposals for
    changes to the Marine Mammal Protection Act appear to have a
    potential application outside the DOD: one, the change to the
    definition of, as was mentioned, of harassment; and two, the
    elimination of the requirement that small take permits be
    limited to small numbers and specific geographic regions.
        Does NOAA believe that these changes should be limited to
    the DOD, or would you like to see them adopted across the
    board?
        Dr. Lent. Thank you, Senator. As I mentioned, the change in
    the definition of harassment, our bill that went to the Hill in
    February of this year does propose that same definition for all
    potential harassment. So we have that in for all potential
    cases, not just Defense. The DOD bill has it just for Defense.
        In the case of eliminating the requirement for small
    numbers and the specific geographical areas, that is in the DOD
    bill just for the military case. We have not evaluated the
    potential impact of that, of expanding that to all possible
    permittees. As I noted, even without those requirements on the
    small takes, small numbers, and specific geographical areas, in
    order to do the adequate National Environment Policy Act (NEPA)
    analyses and Administrative Procedures Act and public hearing
    and comment, we would still need to know what numbers of
    animals are involved so that we would know whether or not there
    is a negligible impact and we would need to know the specific
    geographical area so we could know which stocks or sub-stocks
    are affected.
        So we do not believe it would change the type of analyses
    and science that underpin our decision on the permit.
        Senator Akaka. My time is expired, Mr. Chairman. I want to
    thank the witnesses for your responses. Thank you.
        Senator Ensign. Senator Pryor.
        Senator Pryor. I do not have any questions right now. Thank
    you.
        Senator Ensign. I want to address before we excuse the
    panel--if you have any other single questions, we could allow
    that as well. Just to the witnesses, because, Dr. Lent, you do
    not have an exemption, but the whole exemption issue is, some
    opponents of this legislation have said that the exemptions are
    there, you do not need this legislation. Could both of you just
    address that, the exemption issue and why that is or is not
    adequate?
        Mr. Suarez. I would be happy to, Mr. Chairman. First, I
    would suspect that our colleagues at the DOD would probably be
    much better able to articulate exactly their difficulties that
    they have.
        Senator Ensign. We have had their response on the record. I
    was just curious on yours.
        Mr. Suarez. The difficulties I would imagine are, first,
    the statutory standard is it must be in the paramount interest
    of the United States, which I would imagine is a fairly high
    standard to need to be met. The second concern is getting to
    the President. I do not imagine that it is easy to get to the
    President on a regular basis to address these exemptions as
    they come up on a case-by-case basis in the various
    circumstances, and I imagine there is some difficulty in
    getting to him regularly to try to pursue these exemptions.
        So it is my understanding that it is the cumbersome nature
    of the national security exemption that troubles DOD.
        Senator Ensign. Ms. MacDonald?
        Ms. MacDonald. I think, as I noted in my testimony--it has
    been our policy to exclude the INRMPs under the section 3
    exclusion of the ESA, which we have said that section 3
    requires special management. So we say that these INRMPs are
    special management, therefore we are going to exclude these
    areas.
        The recent court case has called that into question, our
    ability to do that, and while we will continue to exclude under
    the definitional exclusion, we think codifying our ability to
    do so would be a good thing.
        Senator Ensign. Mr. Suarez, just a quick follow-up on that
    with the munitions rule and the RCRA exemption. Ms. MacDonald,
    what you just said about--the court case we are afraid is
    changing current law, and so under the old the exemptions as
    far as the FWS were considered adequate, but under the way that
    the courts are now changing law that does not seem to be
    adequate. Is that a fair characterization?
        Ms. MacDonald. We had an adverse decision on that and so,
    while we still have a 3(b), a 4(b)(2) exclusion, it requires
    more work without any additional benefit to the species. It is
    more a matter of creating a record that there is a benefit to
    exclusion that outweighs the benefit of including.
        Senator Ensign. Mr. Suarez?
        Mr. Suarez. I think that is right. I do not mean to be
    glib, but I think that the concern is the prospective
    application of the law and its prospective application by
    courts that maybe reach conclusions that would impair the
    military's ability to train and to prepare for actions,
    because, as I understand the military's concern, they are
    largely concerned about the direction in which it may go.
        Senator Ensign. Does anybody else have anything for this
    panel?
        Senator Akaka. No.
        Senator Ensign. I would once again like to thank you very
    much for your excellent testimony. We will proceed with this
    hearing by calling the second panel of witnesses: Dr. Robert
    Pirie, Senior Fellow, Center for Naval Analysis; Dr. Darlene
    Ketten, Senior Scientist, Department of Biology, Woods Hole
    Oceanographic Institution; Nina Young, Director of Marine
    Wildlife Conservation, the Ocean Conservancy; Jamie Rappaport
    Clark, Senior Vice President for Conservation Programs,
    National Wildlife Foundation; and Lenny Siegel, Executive
    Director, Center for Public Environmental Oversight. [Pause.]
        I once again remind the panel that your entire testimony
    will be made part of the record and if you could try to
    summarize in under about 5 minutes we would sure appreciate
    that, so we can have plenty of time for questions. We will
    start with you, Doctor Pirie.

     STATEMENT OF DR. ROBERT B. PIRIE, JR., SENIOR FELLOW, CENTER
                           FOR NAVAL ANALYSIS

        Dr. Pirie. That is right, Mr. Chairman.
        Senator Ensign. Very good. It was a complete guess, so I am
    glad it was right.
        Dr. Pirie. Thank you, Mr. Chairman, Senator Akaka, Senator
    Pryor. I am really honored to be called back to life to address
    the subcommittee on these issues.
        I did not come easily to the decision to support the
    Defense Department's legislative initiatives. While I had
    responsibility for these matters in the Navy Department, we
    worked extremely hard with our fellow stakeholders in the
    regulatory agencies to hammer out agreements that would allow
    military training to go forward while still protecting the
    environment. So long as there was a hope that we could proceed
    in accordance with these agreements, I did not believe that
    asking for special legislative relief for the Defense
    Department was wise.
        Developments in the past several years, however, have
    persuaded me that our attempts to achieve a balance between
    military needs and environmental protection under the existing
    legislation and regulatory system have failed. The reason is
    not lack of goodwill and effort by the Department or the
    regulators. It is the persistent drumfire of litigation from
    environmental activists.
        When DOD is able to accommodate the concerns of and reach
    agreement with regulators, the regulators are in turn sued by
    nongovernment organizations (NGOs) alleging failure to enforce
    the statutes. Where the statutes are loosely drawn or
    ambiguous, the courts often find for the litigants, resulting
    in delays, uncertainty, and diversion of attention of military
    leaders from training to fighting legal battles.
        I do not fault the NGOs or the courts in all this. They are
    doing what they should in a democratic society. What is needed
    is for Congress to clarify its intent in the specific cases in
    which DOD has asked for relief. Hence the proposed legislative
    fixes.
        I would urge two more points for your consideration. First,
    the proposed changes are not broad and sweeping rollbacks. They
    are, rather, specific and limited measures that amount to
    clarification of congressional intent rather than major
    modification of important environmental laws.
        Second, I have seen frequent allusions to the failure of
    DOD to document the interference with training caused by
    environmental regulation. There is, it is said, no smoking gun.
    With all respect, ``smoking gun'' is not the right metaphor.
    Rather, it is the death of a thousand cuts. It was not by a
    single stroke that the available beach front for amphibious
    landings at Camp Pendleton was cut from 17 miles to 500 yards.
    It was a long accretion of agreements, accommodations, and
    compromises. We see similar situations everywhere. They have
    come to be called encroachment.
        The DOD needs some help in bounding this process so that it
    can continue to prepare its forces to fight for our country.
        Thanks, Mr. Chairman.
        [The prepared statement of Dr. Pirie follows:]

                 Prepared Statement by Dr. Robert B. Pirie, Jr.

        Mr. Chairman and members of the subcommittee, I am Robert B. Pirie,
    Jr. I am grateful to the subcommittee for this opportunity to testify.
    I have been deeply involved in national defense issues for many years.
    During that time I have seen at close range the interaction between
    national defense needs and environmental protection. I served on active
    duty in the Navy for 20 years, and was privileged to command U.S.S.
    Skipjack, a nuclear attack submarine, for 3 years. I served in the
    Carter administration as the Assistant Secretary of Defense for
    Manpower, Reserve Affairs, and Logistics--the senior official in the
    Department of Defense with environmental protection as a primary duty.
    I served as a consultant and analyst on defense issues during the
    intervening years between the Carter and Clinton administrations. More
    recently, I was Assistant Secretary of the Navy (Installations and
    Environment) and Under Secretary of the Navy in the last
    administration, and am currently a Senior Fellow at the Center for
    Naval Analyses. The views reflected in my testimony today, however, are
    entirely my own, and are not associated with any organization of which
    I am now or have ever been a member.
        My testimony today concerns proposals by the Department of Defense
    to modify certain provisions of environmental statutes to reconcile
    some specific differences between the need to pursue protection of the
    environment and the need to preserve military readiness. When I was in
    office in the last administration, I took the view that it was better
    policy, so long as it offered some prospect of success, to avoid having
    the Department of Defense ask for direct legislative relief, but rather
    to try to reach consensus and accommodation with regulators and
    environmental advocacy groups that permitted our operations and
    training to go forward with agreed modifications to meet environmental
    goals. This was desirable, I believed, since asking for DOD exclusions
    tended to unite environmental groups against the request and offer them
    the opportunity to paint DOD as anti-environmental in the press.
        Serving in two different administrations spanning 26 years, start
    to finish, I have had the opportunity to observe the transformation of
    the environmental programs of the military services from nearly the
    dawn of the modern era of environmental protection to the present.
    Although no program is perfect, the military services have made
    tremendous strides in environmental protection, so much so that in some
    cases, their very stewardship has made military bases and ranges
    islands of biological diversity in a sea of urban sprawl. In the last
    decade, the military services have poured even more scarce resources
    into environmental protection and conservation. For example, this
    included funding millions of dollars of research to protect marine
    mammals at sea and creation of integrated natural resource management
    plans (INRMPs) to manage natural resources on our bases, including
    endangered species, as holistic ecological systems instead of species
    by species. For another example, the Navy spent $10 million on an
    unprecedented, independent, scientific research program to determine
    the effect of the Navy's new Low Frequency Active, Surface Towed Array
    Sonar System (SURTASS LFA) on marine mammals and another $10 million on
    further environmental analyses of that system.
        Recent developments have led me to reconsider my position on
    legislative relief. It appears that some environmental advocacy groups
    will not be satisfied with any agreement worked out between the
    Department and the regulators accountable to Congress for ensuring that
    the environment is protected. These groups stake out categorical and
    ideological positions that hold in essence that no risk to the
    environment is permissible, even to support national security. These
    groups challenge the interpretations of statutes that allow regulators
    to meet defense requirements halfway, balancing two ``public goods.''
    Over time they have found some courts that agree with them. The result
    has been that the Department of Defense has been restricted in its
    training activities and prevented from deploying an important new sonar
    system. Some of our environmental laws permit private groups or
    individuals, often with the best of intentions to protect the
    environment, but without any expertise in defense matters or
    accountability to the American people, to obstruct military operations
    and training, forcing American servicemen to assume greater risk. I
    treasure the environment and have worked hard to protect it, but I also
    treasure the young men and women that the people of America ask to
    defend them. I therefore believe that consensus building and
    accommodation have failed, at least at present and in particular cases,
    and that Congress should step in to redress the balance.
        At least some of the difficulty with the enforcement of
    environmental statutes that affect DOD is vagueness and ambiguity in
    the legislation. A case in point is the definition of harassment in the
    Marine Mammal Protection Act. The statute defines harassment in terms
    of ``annoyance'' and ``potential to disturb''. A court has determined
    that the National Marine Fisheries Service, the principal regulatory
    agency, must interpret this as virtually anything that would cause even
    one marine mammal to react to sounds or visual cues. An interpretation
    this broad, however, would mean that any ship, boat, or aircraft
    operating in the neighborhood of marine mammals would require a permit
    covering the incidental harassment. I do not believe that this is what
    Congress intended.
        The designation of critical habitat provides another example.
    Endangered species are already provided with two levels of protection
    at a military base like United States Marine Corps Base Camp Pendleton,
    California. Although Congress has established military bases and ranges
    primarily for national defense purposes, military commanders must
    already consult with the U.S. Fish and Wildlife Service or the National
    Marine Fisheries Service if military actions, including training, may
    affect endangered species and must avoid jeopardizing them. In
    addition, under the Sikes Act, military commanders must consider how to
    manage endangered species on their bases along with all the other
    natural resources in the base's INRMP--which is reviewed by the U.S.
    Fish and Wildlife Service. At Camp Pendleton, measures to protect
    endangered species restrict amphibious landings to a tiny fraction of
    the beach and limit realistic training in many respects. Despite this,
    some environmental advocacy groups have tried to add a third layer of
    regulation, going to court to force the U.S. Fish and Wildlife Service
    to designate well over half of Camp Pendleton, most of which is not
    even occupied by endangered species, as critical habitat. Once
    designated as critical habitat, this land would have to be managed
    primarily to foster the recovery of endangered species. Military
    training on this critical base would become a secondary priority. I do
    not believe that this is what Congress intended.
        The Migratory Bird Treaty Act presented a similar example of
    expansive application of a statute to the detriment of national defense
    and also shows what can be done to protect military readiness and the
    environment. This statute was enacted in 1918 to stop the
    indiscriminate slaughter of migratory birds to supply the restaurants
    of the east and the millinery industry. The Act makes it unlawful ``at
    any time, by any means, or in any manner to pursue, hunt, take, capture
    [or] kill . . . any migratory bird [or] any part, egg, or nest of such
    bird. . .'' The Act allows enforcement only against persons,
    associations, partnerships, or corporations, so its applicability to
    Federal agencies was vague until a court decision in 2000--82 years
    after it was passed, found that the statute applied to Federal
    agencies. Although this statute has never been enforced against the
    lumber industry, which arguably destroys large numbers of birds, nests,
    and eggs in the process of logging tracts of land, in 2001 an
    environmental group sued to stop critical military training. The suit
    asked the court to halt Navy, Marine Corps, and Air Force training
    activities at Farallon de Medinilla without a permit from U.S. Fish and
    Wildlife Service for incidental take of migratory birds. Training at
    Farallon de Medinilla provides the last training opportunity for many
    pilots to refresh perishable skills before dropping live ordnance in
    Afghanistan. Even the trial judge, who felt obliged to issue the
    injunction, raised the question whether Congress should consider
    amending the statute. Last year Congress wisely solved this problem by
    making the Migratory Bird Treaty Act inapplicable to the incidental
    taking of birds during military readiness activities, but leaving
    application of the act to the rest of DOD's activities in place.
        It is clear from these and other similar cases that there is a need
    for clarification of congressional intent with respect to a number of
    environmental statutes as they affect the operations of the Department
    of Defense. What the Department has proposed is not a program of
    sweeping exemptions but a discreet number of limited fixes and
    clarifications in specific problem areas. They all preserve the role of
    regulators as participants and in fact strengthen the position of
    regulators by providing clearer guidelines. Thus I believe the
    Department's proposals should be adopted.

        Senator Ensign. Dr. Ketten.

         STATEMENT OF DR. DARLENE R. KETTEN, SENIOR SCIENTIST,
      DEPARTMENT OF BIOLOGY, WOODS HOLE OCEANOGRAPHIC INSTITUTION

        Dr. Ketten. Good morning, Mr. Chairman. Thank you very much
    for the opportunity to testify before this subcommittee. As you
    have stated, I am a Senior Scientist at Woods Hole
    Oceanographic Institution. I also have a joint appointment and
    responsibilities in the Department of Otolaryngology, that is
    ear, nose, and throat, at Harvard Medical School.
        I am not here to represent my institutions' views
    officially. I am here to represent my views as a scientist, as
    an individual scientist. I want to underscore that point.
    However, these views have been arrived at based on
    approximately 15 years of experience working on hearing in
    general, on head and neck trauma, on acoustic trauma, and on
    modeling to understand endangered species hearing abilities.
        Also, most recently I have served on two panels relevant
    for this hearing; that is, the National Academy of Sciences
    National Resources Council Panel on Ocean Noise and Assessing
    Ocean Noise and Its Effects on Marine Mammals and on NOAA
    Fisheries Advisory Panel for Determining Safe Underwater Noise
    Exposures.
        Now, having said all of that, again, it is an individual
    scientist's views. My concerns are based largely on discussions
    with my colleagues and many of the difficulties that they are
    facing as well as concerns for the military and their ability
    to carry out their requirements for readiness.
        There is no human activity in the oceans that does not add
    noise, whether it be industrial, military, research, or
    recreation. We add noise to the oceans. The National Academy of
    Sciences panel was able to determine that we are adding about 3
    decibels per decade. That is, the noise budget of the oceans is
    doubling every 10 years mostly based on human activity.
        Of that human activity, the military component is less than
    5 percent. However, as Secretary Pirie was stating there is no
    smoking gun, the question ``Is there a smoking sonar?'' which
    has brought a lot of public attention to military activity in
    particular.
        For marine mammals, hearing is arguably their primary
    sense. Therefore, it is appropriate that we be concerned about
    noise effects.
        The precautionary principle is a reasonable metric to
    apply. However, one of the reasons for this hearing is that
    many of our guidelines have been based on opinion, on
    extrapolation from science. My statement will be mercifully
    short because Dr. Lent has already very eloquently outlined
    many of the positions that I advocate. I need not go over those
    again, but I do need to emphasize that there is no safe sound
    byte that I can give you. I would love to give you a number
    that is safe for any type of noise exposure. We do not have
    that number.
        What has happened recently that has led us to a highly
    polarized and litigious climate is that relatively few but very
    dramatic stranding events have led to an overly broad
    interpretation and concern for protection of marine mammals.
    Consequently, guidelines are being extrapolated and the
    precautionary principle is being applied, in my opinion, in the
    extreme and has the risk of leading to stagnation. Activities
    that are critical not only to our Nation's defense, but also,
    ironically, for obtaining the data that are needed to provide
    useful guidelines are being stymied.
        It is imperative that we start looking at impacts with
    balance and perspective. Our focus has shifted away from the
    original MMPA guideline, which was for population level
    concerns--that is the fundamental meaning of ``biological
    significance``--to instead individual significance. We are
    looking at individual impacts on relatively few animals from
    relatively rare events and broadening those to essentially a
    global level concern, which has led to a great many lawsuits.
        I underscore that it is timely and appropriate that we look
    at noise impacts, but I do not think we need to be in a
    stagnant pool of concern for ocean noise. What we need to do is
    to begin to look at biological significance. Significance is a
    timely, appropriate, and reasonable element that is proposed in
    this bill, particularly biological significance for the
    population level locally and globally.
        If we start looking, as Dr. Lent has suggested, at that
    type of harassment, at that type of impact, then we can go
    forward not only militarily, but also with research, to provide
    the critical information we need for responsible stewardship of
    the ocean.
        Thank you.
        [The prepared statement of Dr. Ketten follows:]

                 Prepared Statement by Darlene R. Ketten, Ph.D.

        This testimony is being submitted to the subcommittee to represent
    my views as an individual scientist. It does not represent those of
    either institution with which I am affiliated. I have arrived at my
    position stated below based primarily upon my experience as a
    researcher with over 15 years experience in the combined fields of
    mammalian hearing, ear disease, and head and neck trauma. My work
    focuses on understanding marine mammal hearing mechanisms and modeling
    the hearing of endangered species. My comments are also based on my
    experience as a member of the recent National Research Council panel on
    Ocean Noise and as a member of NOAA Fisheries advisory board on noise
    exposure.
        Concomitant with man's increasing use of the oceans is an increase
    in the ocean's acoustic budget. As indicated in the current NRC report
    on Ocean Noise, noise from human related activity is increasing on
    average throughout the oceans at 3 dB per decade; i.e., potentially
    doubling every 10 years. Given our ever-increasing activity in all seas
    and at all depths, this figure is not surprising. Anthropogenic noise
    is an important component of virtually every human endeavor in the
    oceans, whether it is shipping, transport, exploration, research,
    military activities, construction, or recreation. For some activities,
    such as military exercises and oil exploration, impulsive and explosive
    devices are fundamental tools that are relatively short-term but
    locally intense; for others, such as shipping, the source levels may on
    average be lower, but the sounds are constant and cumulatively dominate
    the noise fields in high traffic areas of the oceans.
        Because there is no human activity in the oceans that does not add
    noise and because our activities span the globe and produce sounds over
    the entire audible range of most animals, it is reasonable to assume
    that any manmade noise in the oceans may have a significant and adverse
    impact on marine animals. Because marine mammals are especially
    dependent upon hearing and in many cases are endangered, the concern
    over noise impacts on these animals is particularly acute. These
    concerns are both logical and appropriate, but it is also important to
    note that at this time, there is no data that gives us a firm answer on
    what will be the extent of impact from any one sound source. We simply
    do not have sufficient data to put accurate boundaries on our concerns.
        This lack of discrete knowledge on impacts of underwater sound,
    coupled with the relatively open wording of the original Marine Mammals
    Protection Act (MMPA) and with recent dramatic stranding events, has
    led to a heated, highly polarized, litigious climate. An example of
    broad extrapolation from one event to another, which has military
    relevance, is a suit brought to halt LFA use based on the fact that
    beaked whale mass strandings have been shown to correlate with naval
    exercises involving mid-range sonars. Whales that stranded in three
    such cases, the Bahamas, Madeira, and Canary Islands, have been found
    to have an unusual suite of traumas, the mechanisms for which are still
    under investigation. However, there are substantial differences between
    LFA and mid-range tactical sonars, and, to date, there is no evidence
    of physical harm from LFA.
        Nevertheless, this suit, which adduced as part of its concerns the
    Bahamian findings, was successful. Recently, other cases have been
    brought to halt physical oceanographic and behavioural research as
    well, admittedly motivated in part by very sincere but broad,
    undocumented concerns for the use of these unrelated sound sources.
    Clearly, the issue of restrictions of sound sources is not simply a
    military concern; decisions that are made here may impact indirectly
    the permitting and use of many forms of sound in our seas.
        As noted above, virtually every human activity in the oceans
    involves sound either intentionally or as a by-product. For responsible
    use of the seas, it is imperative to consider to the best of our
    ability the probable impact of each sound we add and to determine
    whether that impact is worth its inherent risk. At some level, some
    individuals may be impacted by any sound beyond the natural, average
    ambient. We must consider for any effort introducing sound use in the
    oceans whether and to what extent the projection and repetition of the
    signals employed will adversely impact significantly or negligibly any
    species within the ``acoustic reach'' of the source. Realistically,
    because of the diversity of hearing characteristics among marine
    animals, it is virtually impossible to eliminate all acoustic impacts
    from any endeavor, therefore the key issues that must be assessed are:
    (1) what combination of frequencies and sound pressure levels are
    proposed to fit each anthropogenic task; (2) what species are present
    in the area the device will ensonify at levels exceeding ambient; (3)
    what is the probable severity of any potential impacts to the exposed
    animals from the combined frequency-intensity-temporal characteristics
    of the source.
        The important point is to know whether these factors produce any
    biologically significant impact to a species. Of course sound operates
    at the individual level, but the fundamental concern is for the well
    being of populations. All data to date have been gathered on individual
    or local populations. As the NRC report on Ocean Noise and Marine
    Mammals emphasized, our major concern is for population level impacts
    and consequently a major recommendation was to structure all research
    on marine mammals to allow predictions of population-level
    consequences. Individual effects are inputs to our database, but the
    true metric to apply is biological significance.
        The original MMPA noted a concern for impact on marine mammal
    populations. Yet, much of the debate and contention that we see today
    over the issues of sound in the oceans derives from and focuses on
    relatively few impacted individuals. For example, in the case of the
    Bahamian stranding, seven animals died under circumstances clearly
    correlated with the use of military sonars. Reviews of past strandings
    suggest that there have been 8 to 10 similar events within the last 40
    years, all involving only beaked whales. Clearly there should be
    concern; there is substantial reason to believe that sonars are at
    least a contributory cause of strandings under certain circumstances.
    The mechanisms involved are extremely important to determine, and there
    is now considerable research effort being devoted to this problem.
    Nonetheless, the strandings must be kept in perspective. The total
    mortality of suspected military related strandings in 40 years is fewer
    than 350, all involving two genera of beaked whales. We do not have
    evidence that a population level much less multi-species threat exists
    from those strandings. At this time we do not have any evidence to
    suggest that sonars in general use have a similar effect. NOAA
    Fisheries in a review of stranding and necropsy records for the same
    species did not find any evidence of similar traumas in single beaked
    whale strandings nor were these traumas found in any species other than
    beaked whales.
        Precaution is appropriate; however, currently, extraordinarily
    precautionary positions are holding sway in which very broad and
    scientifically unfounded extrapolations are being made. We are losing
    sight of the need for balance and for perspective. High profile events,
    like the dramatic strandings in the Bahamas and Canaries, are being
    construed as virtually global, both in terms of species and sound
    source types. This is a potentially hazardous position since,
    ironically, this type of over-interpretation is actually preventing
    research that could provide precisely the answers that are needed to
    protect and conserve marine species. In a sense, precaution, in the
    extreme, may lead us to stagnation, and worse, because it is a position
    founded on assumed rather than known effects, it may prevent us from
    determining the true sources of greatest potential harm.
        For responsible stewardship of our oceans, it is imperative that we
    understand our impacts and that we proceed with a balanced and informed
    view. Therefore, it is equally important that views of all parties with
    legitimate interests be considered. Risk assessment must be a part of
    that debate. There is undeniably some risk to some individuals from any
    underwater sound, but individual risk must be balanced by potential
    gain to the species. The addition of significant to the proposed
    revisions is a conceptual step forward worthy of consideration. It
    implies that our focus be shifted from the impossible goal of avoiding
    any possible individual impact to biologically significant, population
    level concerns. Such a shift, implemented with caution and judicious
    oversight, will not only reduce litigation for military operations, but
    also provide opportunities for education and understanding by the
    public of the appropriate scope for our concerns and of the critical
    need for research that will provide data to finally allow us to place
    clear and valid limits on sound use in our seas.

        Senator Ensign. Ms. Young.

        STATEMENT OF NINA M. YOUNG, DIRECTOR OF MARINE WILDLIFE
                  CONSERVATION, THE OCEAN CONSERVANCY

        Ms. Young. Mr. Chairman, members of the subcommittee, thank
    you for the opportunity to present our views on the National
    Defense Authorization Act that would amend the Marine Mammal
    Protection Act (MMPA).
        The MMPA is our Nation's leading instrument to conserve
    marine mammals. For more than 30 years the protections afforded
    by Congress have been critical to the recovery of vulnerable
    species of marine mammals, such as the great whales that were
    nearly decimated by whaling. Although we are extremely
    sensitive to the issue of military readiness, we do not believe
    that the DOD has demonstrated that the proposed changes to the
    MMPA within the National Defense Authorization Act are
    necessary or even that it has exhausted all administrative
    remedies available under existing law.
        The DOD proposes to modify the MMPA's definition of
    harassment, amend its incidental take authorization process,
    and create a separate broad exemption for national defense. The
    proposed changes in the definition of harassment would severely
    undermine the precautionary nature of the act. The definitional
    changes would significantly raise the threshold that would
    trigger the DOD's obligation to secure an authorization to
    conduct activities that have the potential to harm marine
    mammals.
        Federal agencies would be required to make difficult, if
    not impossible, judgments about whether a given activity is
    subject to the act's permitting and mitigation requirements. As
    a result, many military activities that would either be exempt
    outright or could obey the act's requirement by relying upon
    the uncertainty and the ambiguity created by this new language.
        Overall, the result would be greater controversy and
    debate, diminished transparency, loss of scientific research
    and mitigation measures, impaired enforcement of the act, and
    increased numbers of marine mammals that would be harmed by
    military activities.
        The proposed changes to the incidental take authorization
    process would remove key conservation elements that restrict
    the scope of the incidental take to small numbers of marine
    mammals within a specified geographic region. These existing
    provisions provide an effective conservation and management
    strategy for restricting take geographically and numerically to
    prevent any further depletion of marine mammals and to aid
    their recovery. The DOD has failed to show that the existing
    incidental take process is overly burdensome, let alone that
    the proposed statutory changes are needed.
        Since 1994 when the MMPA was last amended, the DOD has
    applied for over 28 incidental take and harassment
    authorizations. None of the applications have been denied and
    in general they have been issued within the required time
    frames. Rather than amend the statute, we believe that improved
    coordination and advance planning may be the most expedient way
    to achieve both marine mammal conservation and improve
    efficiency in the issuance of permits for military readiness.
        The third major amendment to the MMPA is the Defense
    Department's proposed exemption for national defense, which
    effectively creates an escape clause to allow the Defense
    Department to bypass incidental take permitting process
    altogether. This exemption is not limited to the incidental
    take permitting process and as written it authorizes the
    Secretary of Defense to exempt any action or category of
    actions undertaken by the Defense Department or its components
    from compliance with any requirement of the MMPA for reasons of
    national defense and for a potentially unlimited number of
    successive 2-year periods.
        Again, the Defense Department has failed to demonstrate
    that irreconcilable conflicts exist within the MMPA or that the
    flexibility currently afforded under the Armed Forces code is
    insufficient to merit such a comprehensive and wide-ranging
    exemption, one that would render the MMPA's conservation goals
    and mandates virtually meaningless.
        Given the significant risk of changing these keystone
    provisions in the MMPA, the Ocean Conservancy and other
    interest groups should be given the opportunity to work
    constructively with the committees of jurisdiction, the DOD,
    the other agencies that appeared before you earlier, to address
    the concerns of all parties. Adopting these changes to the
    definition of harassment and to the incidental take
    authorization process in the National Defense Authorization Act
    could be disastrous for marine mammals. Instead, the issues
    raised by the DOD as well as those by Dr. Ketten pertaining to
    the pursuit and permitting of scientific research should be
    considered by the House and Senate committees of jurisdiction
    after we have significant discussions with other Federal
    agencies, scientists, and conservation groups in the context of
    an overall MMPA reauthorization.
        Mr. Chairman, members of the subcommittee, thank you for
    the opportunity to comment on the Defense Department's
    proposal. I will be happy to answer any questions.
        [The prepared statement of Ms. Young follows:]

                      Prepared Statement by Nina M. Young

        Mr. Chairman and members of the subcommittee, thank you for the
    opportunity to present our views on provisions in the National Defense
    Authorization Act for Fiscal Year 2004 that would amend the Marine
    Mammal Protection Act (MMPA). My name is Nina M. Young; I am the
    Director of Marine Wildlife Conservation for The Ocean Conservancy.
        The Ocean Conservancy (TOC) strives to be the world's foremost
    advocate for the oceans. Through science-based advocacy, research, and
    public education, we inform, inspire, and empower people to speak and
    act for the oceans. TOC is the largest and oldest nonprofit
    conservation organization dedicated solely to protecting the marine
    environment. Headquartered in Washington, DC, TOC has regional offices
    in Alaska, California, Florida, and Maine.

                              I. SUMMARY STATEMENT

        The MMPA is our Nation's leading instrument for the conservation of
    whales, dolphins, sea otters, seals, sea lions, polar bears, and
    walrus. Although we are sensitive to the issue of military readiness;
    we do not believe that the Department of Defense has demonstrated that
    the proposed changes to the MMPA within the National Defense
    Authorization Act for Fiscal Year 2004 are necessary or even that the
    Defense Department has exhausted all administrative remedies available
    to it under existing law.
        The Department of Defense proposes to modify the MMPA's definition
    of harassment, amend its incidental take authorization process, and
    create a separate broad categorical exemption for military readiness
    activities. The proposed changes in the definition of harassment and
    changes in the incidental take authorization process for military
    readiness would severely undermine the precautionary nature of the act,
    remove key conservation elements that restrict the scope of the
    incidental take to small numbers of marine mammals within a geographic
    region, and significantly raise the threshold that triggers the
    Department of Defense's obligation to secure authorization to conduct
    activities that have the potential to harass marine mammals. The
    proposed definition and incidental take authorization would not only
    increase injuries and deaths of marine mammals, but also diminish
    transparency, result in a loss of scientific research and mitigation
    measures, require Federal agencies to make difficult, if not
    impossible, scientific judgments about whether a given activity is
    subject to the act's permitting and mitigation requirements, and impair
    enforcement of the act. The end result would be that many military
    readiness activities would either be exempt outright or could evade the
    act's requirements by relying upon the uncertainty and ambiguity
    created by this new language.
        Since 1994, when the MMPA was last amended, the Department of
    Defense has applied for over 20 incidental take and harassment
    authorizations. None of these applications has been denied, and in
    general they have been issued within the expected or required
    timeframes. The Department of Defense has failed to show that the
    existing incidental take process is overly burdensome, let alone that
    the proposed statutory changes are needed. To the contrary, it appears
    that the program is functioning much as Congress intended. Rather than
    amend the statute, we believe that improved coordination and advanced
    planning may be the most expedient way to achieve both marine mammal
    conservation and improve efficiency in the issuance of permits for
    military readiness activities.
        To add insult to injury, the proposed exemption for national
    defense effectively creates an escape clause which allows the Defense
    Department to bypass the incidental take permitting process altogether.
    Moreover, this exemption is not even limited to the incidental take
    permitting process. As written, it authorizes the Secretary of Defense
    to exempt ``any action or category of actions undertaken by the
    Department of Defense or its components from compliance with any
    requirement'' of the MMPA for reasons of national defense for a
    potentially unlimited number of successive 2-year periods. The
    Department of Defense has failed to demonstrate that an irreconcilable
    conflict exists within the incidental take authorization or other
    provisions of the MMPA or that the flexibility currently provided under
    the Armed Forces Code is insufficient to merit such a comprehensive and
    wide-ranging exemption--one that could render the MMPA's conservation
    goals and mandates virtually meaningless.
        Given the significant risks of changing these provisions in the
    MMPA, The Ocean Conservancy and other interest groups should be given
    the opportunity to work constructively with the committees of
    jurisdiction and the agencies to address the concerns of all parties.
    Adopting significantly flawed changes to the harassment definition and
    incidental take authorizations in the National Defense Authorization
    Act, coupled with the proposed virtually unfettered exemption for
    national defense, would not only be disastrous for marine mammals, but
    would set a double standard by significantly limiting, or exempting
    altogether, the military from MMPA requirements that all other Federal,
    State, and private actors must follow. We strongly recommend that
    Congress refrain from amending some of the most important provisions of
    the MMPA through this bill. We believe that the issues raised by the
    Department of Defense should be considered by the House and Senate
    committees of jurisdiction, after significant discussions with other
    Federal agencies, scientists, and conservation groups, in the context
    of an overall MMPA reauthorization package.
        Our more detailed comments are organized as follows. First, we
    provide background on the MMPA and its incidental take provisions.
    Second, we address the problems with the Defense Department's proposed
    changes to the definition of ``harassment.'' Third, we address the
    proposed amendments to create an incidental take authorization process
    specific to military readiness activities. Fourth, we explain why the
    proposed statutory changes to the incidental take authorization process
    are not necessary. Finally, our testimony will address the proposed
    MMPA broad categorical exemption for purposes of national defense.

               II. BACKGROUND ON THE MARINE MAMMAL PROTECTION ACT

    A. Moratorium on Taking
        The MMPA is the most comprehensive marine mammal conservation and
    management legislation in the world. Passed to rectify the consequences
    of ``man's impact upon marine mammals, which has ranged from what might
    be termed malign neglect to virtual genocide,'' H.R. Rep. No. 707, 92d
    Cong., 1st Sess. 11 (1971) the MMPA, enforced by the U.S. Departments
    of Commerce and the Interior, governs every interaction within U.S.
    jurisdiction between an individual and a marine mammal. Its purpose is
    to protect marine mammal species of ``great international significance,
    aesthetic and recreational as well as economic.'' Among the species
    protected under the act are whales, dolphins, porpoises, seals,
    walruses, sea otters, manatees, and polar bears.
        It is the goal of the MMPA that these species be ``protected and
    encouraged to develop to the greatest extent feasible commensurate with
    sound policies of resource management . . . [in order to] maintain the
    health and stability of the marine ecosystem.'' 16 U.S.C. Sec. 1361(6).
    Congress also mandated marine mammals are to be protected and managed
    so that they do not ``cease to be a significant functioning element in
    the ecosystem of which they are a part'' or be allowed to ``diminish
    below their optimum sustainable population'' (OSP). 16 U.S.C. 1361(2)
    (1994). A species or population stock that is determined to be below
    its OSP level, or is listed as endangered or threatened under the ESA,
    is designated as ``depleted'' under the MMPA.
        Congress sought to achieve broad protection for marine mammals by
    establishing a moratorium on their importation and ``take.'' The term
    ``take'' means ``to harass, hunt, capture, or kill or attempt to
    harass, hunt, capture, or kill any marine mammal.'' 16 U.S.C. 1362(13).
    However, certain activities may be exempted from this moratorium, such
    as: scientific research; activities designed to enhance the survival or
    recovery of a marine mammal species or stock; commercial and
    educational photography; first-time import for public display; capture
    of wild marine mammals for public display; incidental take during
    commercial fisheries; and incidental take during non-fishery
    activities.
    B. Exemptions for Incidental Take
        Under sections 101(a)(5)(A) and 101(a)(5) (D) of the MMPA, the
    Secretary of Commerce or Interior may waive the moratorium and issue a
    permit or letter of authorization for taking small numbers of marine
    mammals, provided he or she determines, using the best available
    scientific evidence, that such take would have only a negligible impact
    on the marine mammal species or stocks.
        Under section 101(a)(5)(A) of the MMPA, the Secretaries of Commerce
    or Interior may authorize the taking of small numbers of marine mammals
    incidental to activities other than commercial fishing (covered by
    other provisions of the act) within a specified geographical region
    when, after notice and opportunity for public comment, the responsible
    regulatory agency (either the National Marine Fisheries Service (NMFS)
    or the Fish and Wildlife Service (FWS)) determines that the taking
    would have negligible effects on the affected marine mammal species or
    stock, and that the take will not have an unmitigable adverse impact on
    subsistence harvests of these species. The act also requires the
    Secretary to set forth permissible methods and levels of ``take''
    within a specified geographic region as well as requirements for
    monitoring and reporting. Issuance of a ``small take'' authorization,
    also known as a letter of authorization (LOA), includes two comment
    periods, possible public hearings, and consultations prior to the
    promulgation and publication of regulations in the Federal Register. It
    can take from 6 to 12 months for the agencies to complete this process.
        Section 101(a)(5)(D), added to the MMPA in 1994, provides a more
    streamlined mechanism for obtaining authorizations when the taking will
    be of small numbers of marine mammals by incidental harassment only.
    Under this provision, referred to as an Incidental Harassment
    Authorization (IHA), the Secretary is required to publish in the
    Federal Register a proposed authorization within 45 days after
    receiving an application. Following a 30-day public comment period, the
    Secretary then has 45 days to either issue or deny the requested
    authorization. Because the incidental harassment authorization process
    has eliminated the need for promulgating specific regulations on the
    incidental taking, IHAs provide individuals who wish to carry out or
    undertake relatively short-term activities that might inadvertently
    harass marine mammals an expedited means to acquire an incidental take
    authorization. By law, the entire process can run no longer than 120
    days.
    C. Definition of Harassment--The 1994 Amendment
        The exemptions for incidental take are wedded to the definition of
    ``harassment'' since the definition establishes the regulatory
    threshold to allow the applicant to make an initial assessment whether
    a small take or an incidental harassment authorization is needed. The
    definition describes a range of impacts that the regulatory agencies
    must assess during the authorization process to determine whether to
    authorize the activity. In 1994, Congress amended the MMPA to
    differentiate between two general types of harassment: Level A, having
    the potential to cause physical injury and Level B, having the
    potential to impact behavior of marine mammals in the wild. The
    definition is as follows:

            (18)(A) The term ``harassment'' means any act of pursuit,
            torment, or annoyance which----

                    (i) has the potential to injure a marine mammal or
                    marine mammal stock in the wild; or
                    (ii) has the potential to disturb a marine mammal or
                    marine mammal stock in the wild by causing disruption
                    of behavioral patterns, including, but not limited to,
                    migration, breathing, nursing, breeding, feeding, or
                    sheltering.

            (B) The term ``Level A harassment'' means harassment described
            in subparagraph (A)(i).
            (C) The term ``Level B harassment'' means harassment described
            in subparagraph (A)(ii).

             III. PROPOSED CHANGES TO THE DEFINITION OF HARASSMENT

    A. Proposed New Definition
        The Department of Defense claims that the definitions of Level A
    and Level B harassment added to the MMPA in 1994 are overly broad and
    somewhat ambiguous. In an attempt to resolve this perceived problem,
    the Department of Defense has proposed the following definition:

              For purposes of military readiness activities, the term
            `harassment' means any act which----
              (i) injures or has the significant potential to injure a
            marine mammal or marine mammal stock in the wild; or
              (ii)(I) disturbs or is likely to disturb a marine mammal or
            marine mammal stock in the wild by causing disruption of
            natural behavior patterns, including, but not limited to,
            migration, surfacing, nursing, breeding, feeding, or sheltering
            to a point where such behavioral patterns are abandoned or
            significantly altered; or
              (II) is directed toward a specific individual, group, or
            stock of marine mammals in the wild that is likely to disturb
            the individual, group, or stock of marine mammals by disrupting
            behavior, including, but not limited to migration, surfacing,
            nursing, breeding, feeding, or sheltering.
    B. Problems with the Proposed Definition
        The most salient effect of this language is to raise the threshold
    of regulatory action. For Level A harassment, the proposed definition
    would shift from ``has the potential to injure'' to ``injures or has
    the significant potential to injure.'' For Level B harassment,
    ``potential to disturb'' would become ``disturbs or is likely to
    disturb;'' and an addition would be made to the language governing
    behavioral disruptions, requiring that ``natural'' behaviors be
    ``abandoned or significantly altered.'' (emphasis added).\1\
    ---------------------------------------------------------------------------
        \1\ The third subparagraph, which establishes a somewhat more
    conservative standard for behavioral impacts, would apply only to
    activities that are directed toward a specific individual, group, or
    stock of marine mammals, not to activities that take marine mammals
    incidental to their operation. This provision would not cover any of
    the activities for which the DOD has sought small take permits or
    incidental harassment authorizations under the MMPA.
    ---------------------------------------------------------------------------
        This new language would also introduce new uncertainty into the
    act. Adding the term ``significant'' to the definition would take the
    act into a scientific and policy arena that is beset by ambiguity. NMFS
    has struggled with this term and has yet to define it with regard to
    the ``significant adverse impact'' clause in the act's ``incidental
    take'' provisions for commercial fishing (16 U.S.C.
    Sec. Sec. 1383(g)(2), 1387(g)(4)). Currently, the state of marine
    mammal science will not yield a clear, practical definition of
    ``significant potential'' or of ``significantly altered''; indeed,
    these terms are likely to generate more scientific questions than
    answers.
        The term ``potential'' is clear and requires no further evaluation
    of the significance of an activity's likelihood to injure or disturb.
    It is protective of the species, requiring only the disruption of basic
    biological functions or behavioral patterns such as migration,
    breathing, nursing, breeding, feeding, or sheltering--impacts that are
    reasonably verifiable--rather than significant alteration of these
    biologically important behaviors, to trigger the act's prohibitions.
    Moreover, because the definition references ``disruptions in behavioral
    patterns,'' it is clear that it does not encompass any and all
    behavioral modifications.
        The bill also adds a new requirement to Level B harassment that
    natural behavioral patterns be disrupted to the point where such
    behavioral patterns are abandoned. Requiring the abandonment of
    critical biological behaviors for an action to constitute harassment
    violates the precautionary goals of the act and sound scientific
    conservation principles. In addition, what constitutes ``abandonment''
    of behavioral patterns under the proposed new definition of Level B
    harassment will vary according to species, gender, time scale, and the
    nature of the behavior itself. The proposed amendment offers no basis
    to determine what constitutes abandonment of behavioral patterns. For
    example, would abandonment of a nursing bout between an endangered
    right whale mother and calf be treated the same as temporary
    abandonment of the migratory path of a gray whale? In fact, it is
    unclear whether either event would count as ``abandonment'' under the
    revised definition.
        Taken together, these changes would have a debilitating effect on
    enforcement. Under the terms of the act, the Defense Department itself
    would have initial authority to decide whether its activities have the
    ``significant potential to injure'' marine mammals or are likely to
    ``significantly alter'' marine mammal behavior. A great many activities
    could simply evade the act's requirements by the Defense Department's
    relying upon the uncertainty and ambiguity in this new language and not
    seeking authorization in the first place. For the public or NMFS to
    enforce the act in these circumstances would be difficult.
        The practical outcome is that many more marine mammals would be
    harmed by military activities. Potentially injurious activities that
    were once assessed, monitored, and mitigated under the act would no
    longer enter the permit process. NMFS could not ensure that the impacts
    of such activities on populations or stocks would be negligible. In
    addition, small take permit and incidental harassment authorization
    mitigation measures and monitoring requirements that have been
    effective in protecting marine mammal populations and resulted in
    critical information on the impacts of a particular activity would be
    lost. Overall, the result of these changes is likely to be more injury
    and death of marine mammals, less mitigation and monitoring of impacts,
    less transparency for the public and the regulatory agencies, and even
    more controversy and debate.
    C. Mischaracterizations of Issues Related to the Definition of
            Harassment
        In his written testimony before the Subcommittee on Readiness of
    the House Armed Services Committee, Deputy Under Secretary of Defense,
    Raymond F. Dubois, Jr. stated that: ``The new definition, as we
    requested last year, reflects the position of the National Research
    Council (NRC) and focuses on minimizing injury and biologically
    significant disruptions to behavior critical to survival and
    reproduction.''
        The NRC convened a panel on marine mammals and low frequency sound
    that, among other things, looked at the MMPA's definition of harassment
    (National Research Council 2000). However, the NRC recommendations
    differ substantially from the Defense Department's proposed amendment.
    First, the NRC panel proposed no modifications to the definition of
    ``Level A'' or injurious harassment. Second, the NRC retained the
    current standard of probability in the definition for ``Level B''
    harassment, by including the phrase ``has the potential to disturb a
    marine mammal.'' Third, the NRC did not raise the threshold for the
    disruption of natural behaviors in Level B harassment to the Department
    of Defense's level of ``abandonment or significantly altered.'' \2\
    ---------------------------------------------------------------------------
        \2\ The definition proposed by the NRC, while more conservative
    than that proposed by the Department of Defense, introduces two new
    subjective and ambiguous terms--``meaningful'' and ``biologically
    significant.'' The Marine Mammal Commission (MMC) noted in its
    testimony before the House Resources Committee in 2001 that:
          ``Even were there a common understanding of these terms, their
    inclusion appears to be premised on an unrealistically high assessment
    of our ability to differentiate between biologically significant and
    insignificant responses. However, when assessing activities that cause
    behavioral modification, we often cannot distinguish between those
    activities that will have significant, long-term effects and those that
    will not. Until we have the capability to distinguish reliably between
    what is and is not significant, or what will or will not have long-term
    consequences, the commission believes that it would be ill-advised to
    adopt a definition that excludes consideration of short-term impacts
    entirely.''
    ---------------------------------------------------------------------------
        In its testimony, the Defense Department, to bolster its assertion
    that the definition of harassment is flawed and must be changed, cites
    two examples of recent Federal district court cases where scientific
    research was stopped due to concerns about acoustic impacts to marine
    mammals. Deputy Assistant Secretary of the Navy, Wayne Arny, before the
    Subcommittee on Readiness of the House Armed Services Committee,
    stated:

            ``In one case, the court enjoined seismic airgun research on
            geological fault lines conducted by the National Science
            Foundation off the coast of Mexico based on the court's concern
            that the research may be harming marine mammals in violation of
            the ESA and NEPA. In another case a court enjoined a Navy
            funded research project by the Woods Hole Oceanographic
            Institute designed to study the effectiveness of a high
            frequency detection sonar (similar to a commercial fish finder)
            in detecting migrating Grey Whales off the coast of California.
            The court's order stopped research on the development of a
            promising mitigation measure to avoid harming marine mammals
            from acoustic sources.''

        In the case of the National Science Foundation's (NSF) use of
    seismic airguns to undertake geological research, NSF never even
    applied for an incidental take authorization under the MMPA. In
    addition, the project was funded and implemented without completing an
    Environmental Assessment or Environmental Impact Statement under the
    National Environmental Policy Act (NEPA). The Woods Hole case involved
    a series of permits issued by NMFS for scientific research pursuant to
    section 104 of the MMPA. Moreover, the challenge to these permits was
    brought under NEPA for failure to perform the required analysis of
    environmental impacts, not the MMPA. Although we understand the adverse
    reactions that these decisions have engendered within the scientific
    community, these cases have little or no bearing on the sweeping
    statutory changes to the MMPA sought by the Department of Defense.

       IV. PROPOSED CHANGES TO THE MMPA'S SMALL TAKE AND THE INCIDENTAL
                             HARASSMENT PROVISIONS

        The Department of Defense proposes to create a separate incidental
    take authorization process for military readiness activities. While
    similar to the existing small take and incidental harassment
    authorizations in sections 101(a)(5)(A) and 101(a)(5)(D) of the MMPA
    respectively, the proposed process eliminates key conservation elements
    that restrict the scope of the incidental take to small numbers of
    marine mammals while engaging in a specified activity within a
    specified geographic region.
    A. Deletion of Requirement That Incidental Take Authorization Be
            Limited to Small Numbers of Marine Mammals of a Species or
            Population Stock
        Sections 101(a)(5)(A) and 101(a)(5)(D) of the MMPA allow the
    Secretary to authorize the incidental take of only ``small numbers of
    marine mammals of a species or population.'' Although in restricting
    the take to ``small numbers'' of marine mammals the committee
    acknowledged that it was unable to offer a more precise formulation
    because the concept was not capable of being expressed in absolute
    numerical limits; it made clear its intent that the taking should be
    infrequent, unavoidable, or accidental. H.R. Rep. No. 228, 97th Cong.,
    1st Sess. 19 (1981). Therefore, it is obvious that the incidental take
    authorization is not intended to provide the Department of Defense with
    the ability to take unlimited numbers of marine mammals. In addition,
    the committee noted that this requirement is separate and distinct from
    the required finding that the taking of small numbers of marine mammals
    will have a negligible impact on such species or stock. Id.
        The requirement that incidental take under these provisions be
    limited to ``small numbers of marine mammals of a species or population
    stock'' is an important and independent requirement that should
    continue to apply to all persons, including the Department of Defense.
    Deleting this requirement would allow increased and potentially
    unsustainable levels of injury or harassment. Although it is true that
    the bill retains the requirement that the Secretary find that the
    incidental taking have a negligible impact on the species or stock,
    these impacts are difficult to analyze, especially for marine mammal
    stocks for which little is known about their abundance or biology.
    Without the ``small number'' limitation, it may be difficult to
    evaluate the effects of injury or harassment on annual rates of
    recruitment and thereby establish sufficiently stringent quantitative
    standards for negligible impact, this creates the risk that adverse,
    possibly irreversible impacts will occur before they can be assessed.
    The additional requirement in the existing law, that the take be
    restricted to small numbers of marine mammals, ensures that the
    biological consequence of that take will not hinder a marine mammal
    population's ability to grow or recover.
    B. Deletion of Requirement That Activities Take Place Within a
            Specified Geographical Region
        Congress amended the MMPA in order to ensure that the specified
    activity and the specified region are narrowly identified so that the
    anticipated effect would be substantially similar. H.R. Rep. No. 228,
    97th Cong., 1st Sess. 19 (1981). NMFS defines specified geographical
    region as ``an area within which a specified activity is conducted and
    that has certain bio-geographic characteristics.'' C.F.R. Sec. 216.103.
    The Defense Department's proposal would strike this requirement--
    despite its importance to environmental assessment under the act, and
    its consonance with sound management of marine mammals.
        Restricting the activities to a specified region is in keeping with
    the requirements that the incidental taking must have a negligible
    impact on a stock of marine mammals and ensure that the taking has the
    least practicable adverse impact on its habitat. NMFS criteria for
    stocks states that stocks should be defined on the smallest divisible
    unit approaching that of the area of take unless there exists evidence
    of smaller subdivisions provided by ecology, life-history, morphology,
    and genetics data. (NMFS 1995 and 1997). In combination with the
    ``small numbers'' limitation discussed previously, this fine-scale
    approach to defining stocks provides an effective conservation and
    management strategy for restricting take geographically and numerically
    to prevent depletion of marine mammal populations and for prescribing
    mitigation that is appropriately tailored and scaled.
        In addition, geographic regions themselves serve different
    biological purposes for marine mammal stocks. Some areas are vital to
    foraging, others are migratory corridors, and still others are vital to
    breeding, calving, and reproduction. The biological significance of a
    particular habitat or region is critical for determining whether the
    taking will have a negligible impact on the population of marine
    mammals and result in the least practicable adverse impact on its
    habitat.
        Removing the requirement that the incidental take be restricted to
    a specified geographic region is contrary to effective conservation and
    management practices that limit take to narrowly defined marine mammal
    stocks on a restricted geographic basis to avoid depletion. It also
    jeopardizes the MMPA's goals of habitat conservation as it undermines
    effective consideration of the biological role or significance of the
    habitat to that marine mammal stock.
    C. Other Proposed Changes to the Incidental Take Provisions
        The Defense Department has proposed a number of additional changes
    to the incidental take authorization that could impair the process of
    environmental review.
        First, under current law, both the incidental take and incidental
    harassment authorizations must prescribe ``permissible methods of
    taking by harassment pursuant to such military readiness activity, and
    other means of affecting the least practicable impact upon such species
    or stock and its habitat, paying particular attention to rookeries and
    mating grounds and areas of similar significance. . .'' The Department
    of Defense proposes to remove the phrase ``and areas of similar
    significance.'' This amendment is scientifically indefensible and could
    significantly limit the types of habitats to be considered, further
    eroding the conservation goals of this provision.
        Second, the law currently provides for public notice and comment on
    small take authorizations. The bill, however, would limit that
    requirement to decisions to withdraw or suspend an already existing
    authorization (except, as under current law, when the Secretary
    determines that an emergency exists and therefore the notice and
    comment provisions do not apply). Perhaps this is an oversight, but
    there is no logical reason to provide notice and comment only on
    decisions to withdraw or suspend an existing small take authorization
    and not on the decision whether to issue such an authorization in the
    first instance.
        Third, the incidental harassment authorization currently requires
    the applicant to apply and for NMFS to solicit public comments on that
    application through a notice in the Federal Register, ``newspapers of
    general circulation, and appropriate electronic media and to all
    locally affected communities.'' In comparison, the bill requires only
    that the Secretary receive a ``request'' to trigger the public notice
    and comment requirement and limits notification to the Federal
    Register. This change could be interpreted to eliminate the application
    requirement thus reducing the ability for the public to effectively
    evaluate the proposed incidental harassment. By restricting
    notification to the Federal Register, this provision of the bill would
    also significantly curtail public notice, thereby limiting meaningful
    public participation on proposals that could have serious implications
    for private citizens.
        Finally, the bill would add a provision stating, ``Nothing in this
    chapter shall require disclosure of information classified in the
    interest of national defense.'' We are concerned that specifically
    protecting classified documents from disclosure for purposes of
    environmental review will further undermine NMFS's ability to do an
    effective environmental analysis and prescribe mitigation measures.

    V. THE DEPARTMENT OF DEFENSE HAS NOT MADE A COMPELLING CASE THAT THESE
                          STATUTORY CHANGES ARE NEEDED

    A. Incidental Take Permits Are Routinely Granted on a Timely Basis
        Since 1994, when the current definition of ``harassment'' was
    adopted, the Department of Defense has submitted 6 applications for
    small take authorizations and 16 under its ``incidental harassment
    authorizations,'' one of which was subsequently withdrawn. As Assistant
    Administrator William Hogarth noted in his testimony before the
    Committee on Armed Services in March 2002, no application for either a
    small take or incidental harassment authorization submitted by the
    Defense Department has ever been denied.
        From the period 1994 to present, the Defense Department sought six
    small take authorizations. For four of these applications, it took an
    average of just over 15 months from application date to the effective
    date of authorization. As noted above, decisions on small take
    applications can take from 6-12 months to promulgate regulations and
    issue the LOA. Fifteen months barely falls outside of that range.
        In only two cases, applications to take marine mammals incidental
    to shock testing of the U.S.S. Seawolf and the deployment of the
    Surtass LFA, the decision process took approximately 3 years. This was
    due to a myriad of factors, unique to these applications, including
    their scope, complexity, number of public comments received, and time
    required to comply with the National Environmental Policy Act.
        Similarly, the incidental harassment authorizations averaged just
    over 4 months from application to effective date of authorization. Most
    of these fell within the statutory mandate of 120 days. In light of
    this information, the Department of Defense has not shown either that
    it is unable to comply with the existing permitting requirements or
    that the length of the existing incidental take process is burdensome.
    To the contrary, it appears that the program is functioning much as
    Congress intended.
    B. Results of a GAO Study Support This Conclusion
        The conclusion that the Defense Department has not demonstrated the
    need for major changes in the MMPA is consistent with a recent study,
    released last June, by the General Accounting Office (GAO). The GAO
    concluded that commanders throughout the Armed Forces continue to
    report a high level of combat readiness, and that the Defense
    Department has failed to document either the adverse impacts on
    training or the increased costs associated with meeting its stewardship
    responsibilities.\3\
    ---------------------------------------------------------------------------
        \3\ General Accounting Office, Military Training: DOD Lacks a
    Comprehensive Plan to Manage Encroachment on Training Ranges (June
    2000) (GAO-02-614).
    ---------------------------------------------------------------------------
    C. Opportunities Exist to Improve Implementation of the Act
            Administratively
        The Defense Department's proposal to create a separate incidental
    take exemption process for military readiness activities would
    introduce substantial ambiguity and would eliminate critical elements
    from the authorization process. Rather than pursue dramatic legislative
    change, the need for which has not been demonstrated, we believe that
    the Department should look to non-legislative alternatives to further
    streamline the administrative process. In this context, Assistant
    Administrator Hogarth, in his March 2002 testimony, stated:

            Our ability to be efficient stems in large part from our
            ability to discuss activities with our Navy counterparts in
            advance, and with an understanding of the overall activities
            and needs of the program. With respect to our regulatory
            program, our limited staff is directly related to our ability
            to meet the increasing demands by Navy and other agencies.
            However, to the extent the Navy and other action agencies can
            plan sufficiently far in advance of activities and provide us
            with adequate time to work with them at the earliest possible
            stages, the implications of the permit process should be
            minor.\4\
    ---------------------------------------------------------------------------
        \4\ Available at this time in transcript form from www.house.gov/
    hasc/openingstatementsandpressreleases/107thcongress/02-03-
    14hogarth.html.

        The Department of Defense and NMFS are about to sign a memorandum
    of understanding that would further improve the authorization process.
    Based on these statements, and our own knowledge of how the current
    program functions, we believe there are a number of ways to
    administratively improve its implementation to address the concerns of
    the Department of Defense, without amending the statute or undermining
    its conservation objectives. We believe that this approach is the most
    expedient way to achieve both marine mammal conservation and to improve
    efficiency in the issuance of permits for military readiness
    activities. As a first step, we urge NMFS to undertake a programmatic
    review of the incidental take authorization program as a means to
    improve efficiency and meet the goals and mandates of the MMPA.
       vi. proposed exemptions of actions necessary for national defense
        Under subsection (e), Exemptions of Action Necessary for National
    Defense, the Secretary of Defense may exempt any action or category of
    actions undertaken by the Department of Defense from compliance with
    any requirement of the MMPA if the Secretary determines it is necessary
    for national defense. The exemption is for a period of 2 years with the
    possibility of unlimited additional exemptions, each 2 years in
    duration. The effect of this provision is to create an escape clause
    that allows the Defense Department to bypass the incidental take
    permitting process entirely. Moreover, this exemption would apply
    broadly to any requirement of the MMPA for any action or category of
    actions undertaken by the Defense Department which the Secretary
    determines are necessary for national defense.
        We believe this exemption is excessively broad for four reasons.
    First, it would vest authority to grant an exemption entirely in the
    Secretary of Defense. Second, the exemption applies to ``any action or
    category of actions undertaken by the Department of Defense or its
    components''--and so is not limited to individual activities,
    technologies, or exercises, allowing in theory for a sweeping
    application of this provision. Third, the exemption confers immunity
    from ``compliance with any requirement'' of the MMPA. Fourth, the
    Secretary of Defense can avail himself/herself of endless renewals of
    the exemption. Even more fundamentally, we believe the Department of
    Defense has failed to demonstrate an irreconcilable conflict exists
    within the incidental take authorization or any other provision of the
    MMPA that would merit such an exemption--one that would render the
    MMPA's conservation goals and mandates virtually meaningless.
        The Department of Defense has flexibility under the Armed Forces
    Code, 10 U.S.C. Sec. 2014, to seek special accommodation and relief
    from any agency action that, in its determination, would have a
    ``significant adverse effect on the military readiness of any of the
    Armed Forces or a critical component thereof.'' If the accommodations
    it seeks are not forthcoming and an agreement is not reached directly
    with the head of the executive agency concerned, it may take its case
    directly to the President. These provisions have never been invoked
    with regard to the MMPA, presumably because the Department's requests
    for authorization under the act have never been denied and because any
    mitigation required by the agency was judged not to have a significant
    adverse effect on readiness. The Department of Defense has not
    demonstrated that either the flexibility to seek special accommodation
    and relief under the Armed Forces Code is insufficient or that the
    broad exemptions it now seeks are warranted.

                                VII. CONCLUSION

        Our groups support the military's efforts to protect national
    security and are sensitive to the issue of military readiness. We do
    not believe, however, that the Defense Department has demonstrated that
    the dramatic changes proposed are necessary or that it has utilized the
    administrative remedies available to it under existing law. The
    Department of Defense's proposals to modify the MMPA's definition of
    harassment, create a separate incidental take authorization process for
    military readiness activities, and create a broad exemption to the
    MMPA, threaten to severely undermine the precautionary nature of the
    act and lead to significantly increased harm to marine mammal
    populations.
        We support a process, in the context of MMPA reauthorization, in
    which all stakeholders can work together to develop creative and
    collaborative approaches to demonstrated problems. We hope this
    subcommittee will allow us the opportunity to work constructively on
    alternative approaches with all of the affected agencies and
    organizations to try and address the Department's concerns before any
    fundamental changes are made to this keystone conservation law.

        Senator Ensign. Thank you.
        Ms. Clark.

     STATEMENT OF JAMIE RAPPAPORT CLARK, SENIOR VICE PRESIDENT FOR
          CONSERVATION PROGRAMS, NATIONAL WILDLIFE FEDERATION

        Ms. Clark. Good morning, Mr. Chairman and members of the
    subcommittee. I am here this morning on behalf of the 10
    national conservation organizations identified in my written
    submission to testify on why exempting the Defense Department
    from key provisions of the ESA would be a serious mistake.
        Prior to arriving at the National Wildlife Federation in
    2001, I served for 13 years at the U.S. FWS, with the last 4
    years as Director of the Agency. Before my time with the
    Service, I held a variety of positions with the military,
    including the FWS Administrator for the Department of the Army.
    I am the daughter of an Army officer and grew up on military
    installations across the country throughout my childhood.
        During my tenures at the FWS and the Defense Department,
    DOD routinely worked with wildlife agency experts to comply
    with environmental laws and to conserve imperiled wildlife
    while achieving military readiness. This approach of working
    through compliance issues on an installation-by-installation
    basis really works. As DOD themselves have acknowledged, our
    Armed Forces are as prepared today as they have ever been in
    their history and their state of readiness has been achieved
    without broad, sweeping exemptions from environmental laws.
        The Defense Department's proposed ESA exemption suffers
    from three basic flaws. First, DOD's exemption would eliminate
    a key tool for conserving endangered species. Their proposal
    would effectively eliminate the potential for critical habitat
    designations on DOD lands, thus eliminating many of the ESA
    consultations that have enabled DOD to look before they leap
    into a potentially harmful training exercise. This could mean
    significant losses for our Nation's rich natural heritage and
    potential negative effects to the long-term land sustainability
    needed for readiness training.
        DOD manages approximately 25 million acres of land across
    the country, home to at least 300 federally-listed species.
    Without the refuge provided by these bases, many of these
    species could rapidly slide towards extinction.
        Second, an exemption from the ESA is truly unnecessary.
    Three provisions of the current law already provide the
    flexibility needed to balance military readiness and species
    conservation. Section 7(a)(2) of the act provides Defense with
    an opportunity to negotiate locally tailored solutions in
    consultation with the Service's wildlife experts. Section
    4(b)(2) of the ESA obliges the Services to, and they do,
    exclude any area from a critical designation if they determine
    that the benefits of exclusion outweigh the benefits of
    specifying the area.
        The court case, Mr. Chairman, referred to in the earlier
    panel has no effect on the ability of the Services to balance
    out critical habitat. It dealt with a definitional issue, and
    so no flexibility has been taken from the Services as a result
    of the spotted owl court case.
        Section 7(j) of the ESA says that an exemption must be
    granted for an activity if the Secretary of Defense finds the
    exemption is needed for reasons of national security. He does
    not need to go to the President. The Secretary of Defense
    declares the exemption is there.
        It is really unfortunate, Mr. Chairman, that this debate
    has relied so heavily on anecdotes in an attempt to show that
    Defense agencies have not been able to balance military
    readiness and conservation objectives. Some of the anecdotes
    are just unpersuasive on their face, such as the assertion that
    environmental laws have prevented the armed services from
    learning how to dig foxholes.
        Others are frustrating or misleading. For example, there
    has been repeated discussions that 57 percent of Camp Pendleton
    is subject to restrictions on training due to proposed critical
    habitat designations. Well, I was there. Those proposed
    designations are now final designations that cover less than 1
    percent of Pendleton's training lands, not 57 percent.
        In a June 2002 report on encroachment, the GAO looked into
    many of the anecdotes. It found that DOD agencies have never
    inventoried their training resources, planned for their
    training needs, or performed any in-depth analysis of civilian
    encroachment on readiness activities. Without any real evidence
    that environmental laws are at fault for any presumed readiness
    gaps and many conflicting facts, DOD has no basis for
    requesting wholesale exemptions from these important statutes.
        The third reason why enacting DOD's proposed ESA changes
    would be a huge mistake is because the current approach,
    developing solutions at the local level rather than relying on
    broad national exemptions, has really worked. There are plenty
    of examples of Defense working with Federal wildlife agencies
    to develop win-win solutions at the local level, but today I
    will just focus on one, the protection of red-cockaded
    woodpeckers amidst intense training activities at Camp Lejeune
    Marine Corps Base in North Carolina.
        Rather than characterizing the experience myself, I will
    rely on the words of Major General Mize from Camp Lejeune, who
    stated the following at a recent national symposium: ``I can
    say with confidence that the efforts of our natural resources
    managers and the training community have produced an
    environment in which endangered species management and military
    training are no longer considered mutually exclusive, but are
    compatible.''
        With the ongoing war in Iraq and continuing threats of
    terrorism, no one can dismiss the importance of military
    readiness. However, there is no justification for Defense to
    retreat from their environmental stewardship commitments at
    home. I know that there is concern and even conflicts between
    military training needs and sustainable natural resources
    conservation at times, but Congress should pay close attention
    to the words of Major General Mize and the many others who are
    continually crafting solutions at the installation level and
    reject the Pentagon's effort to undermine those solutions with
    broad-based exemptions to the ESA.
        Thank you, Mr. Chairman.
        [The prepared statement of Ms. Clark follows:]

                  Prepared Statement by Jamie Rappaport Clark

        Good morning, Chairman Ensign, Senator Akaka, and members of the
    subcommittee. My name is Jamie Rappaport Clark, Senior Vice President
    for Conservation Programs at the National Wildlife Federation, the
    Nation's largest conservation education and advocacy organization. I am
    here to testify on behalf of National Wildlife Federation, as well as
    Defenders of Wildlife, the Endangered Species Coalition, Fund for
    Animals, Humane Society of the United States, Military Toxics Project,
    Public Employees for Environmental Responsibility, Public Interest
    Research Group, Natural Resources Defense Council, and World Wildlife
    Fund. I thank the subcommittee for this opportunity to testify on the
    administration's Readiness and Range Preservation Initiative.
        Prior to arriving at the National Wildlife Federation in 2001, I
    served for 13 years at the U.S. Fish and Wildlife Service, with the
    last 4 years as the director of the agency. Prior to that, I served as
    Fish and Wildlife Administrator for the Department of the Army, Natural
    and Cultural Resources Program Manager for the National Guard Bureau,
    and Research Biologist for U.S. Army Medical Research Institute. I am
    the daughter of a U.S. Army colonel, and lived on or near military
    bases throughout my entire childhood.
        Based on this experience, I am very familiar with the Defense
    Department's long history of leadership in wildlife conservation. On
    many occasions during my tenures at FWS and the Defense Department, DOD
    rolled up its sleeves and worked with wildlife agency experts to find a
    way to comply with environmental laws and conserve imperiled wildlife
    while achieving military preparedness objectives.
        The administration now proposes in its Readiness and Range
    Preservation Initiative that Congress scale back DOD's responsibilities
    to conserve wildlife and to protect people from the hazardous pollution
    that DOD generates. This proposal is both unjustified and dangerous. It
    is unjustified because DOD's longstanding approach of working through
    compliance issues on an installation-by-installation basis works. As
    DOD itself has acknowledged, our Armed Forces are as prepared today as
    they ever have been in their history, and this has been achieved
    without broad exemptions from environmental laws.
        The DOD proposal is dangerous because, if Congress were to broadly
    exempt DOD from its environmental protection responsibilities, both
    people and wildlife would be threatened with serious, irreversible, and
    unnecessary harm. Moreover, other Federal agencies and industry sectors
    with important missions, using the same logic as used here by DOD,
    would line up for their own exemptions from environmental laws.
        My expertise is in the Endangered Species Act (ESA), so I would
    like to focus my testimony on why exempting the Defense Department from
    key provisions of the ESA would be a serious mistake. I will rely on my
    fellow witnesses to explain why the proposed exemptions from other
    environmental and public health and safety laws is similarly unwise.

                        CONCERNS WITH THE ESA EXEMPTION

        The Defense Department's proposed ESA exemption suffers from three
    basic flaws: it would severely weaken this Nation's efforts to conserve
    imperiled species and the ecosystems on which all of us depend; it is
    unnecessary for maintaining military readiness; and it ignores the
    Defense Department's own record of success in balancing readiness and
    conservation objectives under existing law.
    1. Section 2017 Removes a Key Species Conservation Tool
        Section 2017 of the administration's Readiness and Range
    Preservation Initiative would preclude designations of critical habitat
    on any lands owned or controlled by DOD if DOD has prepared an
    Integrated Natural Resources Management Plan (INRMP) pursuant to the
    Sikes Act and has provided ``special management consideration or
    protection'' of listed species pursuant to section 3(5)(A) of the ESA.
        This proposal would effectively eliminate critical habitat
    designations on DOD lands, thereby removing an essential tool for
    protecting and recovering species listed under the ESA. Of the various
    ESA protections, the critical habitat provision is the only one that
    specifically calls for protection of habitat needed for recovery of
    listed species. It is a fundamental tenet of biology that habitat must
    be protected if we ever hope to achieve the recovery of imperiled fish,
    wildlife, and plant species.
        Section 2017 would replace this crucial habitat protection with
    management plans developed pursuant to the Sikes Act. The Sikes Act
    does not require the protection of listed species or their habitats; it
    simply directs DOD to prepare INRMPs that protect wildlife ``to the
    extent appropriate.'' Moreover, the Sikes Act provides no guaranteed
    funding for INRMPs and the annual appropriations process is highly
    uncertain. Even the best-laid management plans can go awry when the
    anticipated funding fails to come through. Yet, under section 2017,
    even poorly designed INRMPs that allow destruction of essential habitat
    and put fish, wildlife, or plant species at serious risk of extinction
    would be substituted for critical habitat protections.
        Section 2017 contains one minor limitation on the substitution of
    INRMPs for critical habitat designations: such a substitution is
    allowed only where the INRMP provides ``special management
    consideration or protection'' within the meaning of section 3(5)(A) of
    the ESA. Unfortunately, this limitation does nothing to ensure that
    INRMPs truly conserve listed species.
        The term ``special management consideration or protection'' was
    never intended to provide a biological threshold that land managers
    must achieve in order to satisfy the ESA. The term is found in section
    3(5) of the ESA, which sets forth a two-part definition of critical
    habitat. Section 3(5)(A) states that critical habitat includes areas
    occupied by a listed species that are ``essential for the conservation
    of the species'' and ``which may require special management
    consideration or protection.'' Section 3(5)(B) states that critical
    habitat also includes areas not currently occupied by a listed species
    that are simply ``essential for the conservation of the species.''
        As this language makes clear, an ESA Sec. 3(5) finding by the U.S.
    Fish and Wildlife Service or National Marine Fisheries Service
    (Services) that a parcel of land ``may require special management
    consideration or protection'' is not the same as finding that it is
    already receiving adequate protection. Such a finding simply highlights
    the importance of a parcel of land to a species, and it should lead to
    designation of that land as critical habitat. See Center for Biological
    Diversity v. Norton, 240 F. Supp. 2d 1090 (D. Ariz. 2003) (rejecting,
    as contrary to plain meaning of ESA, defendant's interpretation of
    ``special management consideration or protection'' as providing a basis
    for substituting a U.S. Forest Service management plan for critical
    habitat protection). By allowing DOD to substitute INRMPs for critical
    habitat designations whenever it unilaterally makes a finding of
    ``special management consideration or protection,'' section 2017
    significantly weakens the ESA.
        Section 2017 is also problematic because it would eliminate many of
    the ESA section 7 consultations that have stimulated DOD to ``look
    before it leaps'' into a potentially harmful training exercise. As a
    result of section 7 consultations, DOD and the Services have routinely
    developed what is known as ``work-arounds,'' strategies for avoiding or
    minimizing harm to listed species and their habitats while still
    providing a rigorous training regimen.
        Section 2017 purports to retain section 7 consultations. However,
    the duty to consult only arises when a proposed Federal action would
    potentially jeopardize a listed species or adversely modify or destroy
    its critical habitat. By removing critical habitat designations on
    lands owned or controlled by DOD, section 2017 would eliminate one of
    the two possible justifications for initiating a consultation, reducing
    the likelihood that consultations will take place. This would mean that
    DOD and the Services would pay less attention to species concerns and
    would be less effective in conserving imperiled species and maintaining
    the sustainability of the land.
        The reductions in species protection proposed by DOD would have
    major implications for our Nation's rich natural heritage. DOD manages
    approximately 25 million acres of land on more than 425 major military
    installations. These lands are home to at least 300 federally-listed
    species. Without the refuge provided by these bases, many of these
    species would slide rapidly toward extinction. These installations have
    played a crucial role in species conservation and must continue to do
    so.
    2. The ESA Exemption is Not Necessary to Maintain Military Readiness
        The ESA already has the flexibility needed for the Defense
    Department to balance military readiness and species conservation
    objectives. Three key provisions provide this flexibility. First, under
    the consultation provision of section 7(a)(2) of the act, DOD is
    provided with the opportunity to develop solutions in tandem with the
    Services to avoid unnecessary harm to listed species from military
    activities. Typically, the Services conclude, after informal
    consultation, that the proposed action will not adversely affect a
    listed species or its designated critical habitat or, after formal
    consultation, that it will not likely jeopardize a listed species or
    destroy or adversely modify its critical habitat. See, e.g., U.S. Army
    Environmental Center, Installation Summaries from the fiscal year 2001
    Survey of Threatened and Endangered Species on Army Lands (August 2002)
    at 9 (noting successful conclusion of 282 informal consultations and 36
    formal consultations, with no ``jeopardy'' biological opinions). In
    both informal and formal consultations, the Services either will
    recommend that the action go forward without changes, or it will work
    with DOD to design ``work arounds'' for avoiding and minimizing harm to
    the species and its habitat. In either case, DOD accomplishes its
    readiness objectives while achieving ESA compliance.
        Second, under section 4(b)(2) of the ESA, the Services are
    authorized to exclude any area from critical habitat designation if
    they determine that the benefits of exclusion outweigh the benefits of
    specifying the area. (An exception is made for when the Services find
    that failure to designate an area as critical habitat will result in
    the extinction of a species--a finding that the Services have never
    made.) In making this decision, the Services must consider ``the
    economic impact, and any other relevant impact'' of the critical
    habitat designation. DOD has recently availed itself of this provision
    to convince the U.S. Fish and Wildlife Service to exclude virtually all
    of the habitat at Camp Pendleton--habitat deemed critical to five
    listed species in proposed rulemakings--from final critical habitat
    designations. Thus, for situations where the section 7(a)(2)
    consultation procedures place undue burdens on readiness activities,
    DOD already has a tool for working with the Services on excluding land
    from critical habitat designation. Attached to my testimony is a
    factsheet that shows how the Services have worked cooperatively with
    DOD on these exclusions, and another factsheet showing the importance
    of maintaining the Services' role in evaluating proposed exclusions.
        Third, under section 7(j) of the ESA an exemption ``shall'' be
    granted for an activity if the Secretary of Defense finds the exemption
    is necessary for reasons of national security. To this date, DOD has
    never sought an exemption under section 7(j)--highlighting the fact
    that other provisions of the ESA have provided DOD with all the
    flexibility it needs to reconcile training needs with species
    conservation objectives.
        Where there are site-specific conflicts between training needs and
    species conservation needs, the ESA provides these three mechanisms for
    resolving them in a manner that allows DOD to achieve its readiness
    objectives. Granting DOD a nationwide ESA exemption, which would apply
    in many places where no irreconcilable conflicts between training needs
    and conservation needs have arisen, would be harmful to imperiled
    species and totally unnecessary to achieve readiness objectives.
        a. DOD Has Misstated the Law Regarding Its Ability to Continue with
            a Cooperative, Case-by-Case Approach to Critical Habitat
            Designations
        DOD has stated that the ESA exemption is necessary because a recent
    court ruling in Arizona would prevent DOD from taking the cooperative,
    case-by-case approach to critical habitat designations that was
    developed when I served as Director of the Fish and Wildlife Service
    (FWS). This description of the court ruling is inaccurate--the ruling
    clearly allows DOD to continue the cooperative, case-by-case approach
    if it wishes.
        The court ruling at issue is entitled Center for Biological
    Diversity v. Norton, 240 F. Supp. 2d 1090 (D. Ariz. 2003). In this
    case, FWS excluded San Carlos Apache tribal lands from a critical
    habitat designation pursuant to ESA Sec. 4(b)(2) because the tribal
    land management plan was adequate and the benefits of exclusion
    outweighed the benefits of inclusion. The Federal district court upheld
    the exclusion as within FWS's broad authority under ESA Sec. 4(b)(2).
    At the same time, the court held that lands could not legitimately be
    excluded from a critical habitat designation on the basis of the
    ``special management'' language in ESA Sec. 3(5).
        Under the court's reasoning, FWS continues to have the broad
    flexibility to exclude DOD lands from a critical habitat designation on
    the basis of a satisfactory INRMP and the benefits to military training
    that the exclusion would provide. The ruling simply clarifies that such
    exclusions must be carried out pursuant to ESA Sec. 4(b)(2) rather than
    ESA Sec. 3(5). Thus, DOD's assertion that the Center for Biological
    Diversity ruling prevents it from working with FWS to secure exclusions
    of DOD lands from critical habitat designations is inaccurate.
        b. DOD's Anecdotes Do Not Demonstrate That the ESA Has Reduced
            Readiness
        The DOD has offered a series of misleading anecdotes describing
    difficulties it has encountered in balancing military readiness and
    conservation objectives. Before Congress moves forward with any
    exemption legislation, the appropriate congressional committees should
    get a more complete picture of what is really happening at DOD
    installations.
        Some of DOD's anecdotes are simply unpersuasive on their face, such
    as DOD's repeated assertion that environmental laws have prevented the
    armed services from learning how to dig foxholes and that troops abroad
    have been put at greater risk as a result. There is simply no evidence
    that environmental laws have ever prevented foxhole digging. Moreover,
    given its vast and varied landholdings and the many management options
    available, the Defense Department certainly can find places on which
    troops can learn to dig foxholes without encountering endangered
    species or other environmental issues.
        Other anecdotes have simply disregarded the truth. For example, DOD
    and its allies have repeatedly argued that more than 50 percent of Camp
    Pendleton may not be available for training due to critical habitat
    designations. In fact, only five species have been proposed for
    critical habitat designations at Camp Pendleton. In each of these five
    instances, DOD raised concerns about impacts to military readiness, and
    in each instance, FWS worked closely with DOD to craft a solution. FWS
    ultimately excluded virtually all of the habitats for the five listed
    species on Camp Pendleton from critical habitat designations--even
    though FWS had earlier found that these habitats were essential to the
    conservation of the species. As a result of FWS's exclusion decisions,
    less than 1 percent of the training land at Camp Pendleton, and less
    than 4 percent of all of Camp Pendleton, is designated critical
    habitat. (Most of the critical habitat designated at Camp Pendleton is
    non-training land leased to San Onofre State Park, agricultural
    operations, and others. DOD's repeated suggestion that more than 50
    percent of Camp Pendleton is at risk of being rendered off-limits to
    training due to critical habitat is simply inaccurate.
        DOD also has argued that training opportunities and expansion plans
    at Fort Irwin have been thwarted by the desert tortoise. Yet just 2
    weeks ago this official line was contradicted by the reality on the
    ground. In an article dated March 21, 2003, Fort Irwin spokesman Army
    Maj. Michael Lawhorn told the Barstow Desert Dispatch that he is
    unaware of any environmental regulations that interfere with troops'
    ability to train there. He also said there isn't any environmental law
    that hinders the expansion.
        Attached to my testimony is a factsheet outlining a series of
    additional misleading anecdotes used by DOD and the additional facts
    that must be considered before drawing any conclusions about the impact
    of the ESA on military readiness.
        These examples of misleading anecdotes highlight the need for
    Congress to look behind the reasons that are being put forward by DOD
    as the basis for weakening environmental laws. DOD uses the anecdotes
    in an attempt to demonstrate that conflicts between military readiness
    and species conservation objectives are irreconcilable. However,
    solutions to these conflicts are within reach if DOD is willing to
    invest sufficient time and energy into finding them. DOD has vast acres
    of land on which to train and vast stores of creativity and expertise
    among its land managers. With careful inventorying and planning, DOD
    can find a proper balance.
        Has DOD made the necessary effort to inventory and plan for its
    training needs? In June 2002, the General Accounting Office issued a
    report entitled ``Military Training: DOD Lacks a Comprehensive Plan to
    Manage Encroachment on Training Ranges,'' suggesting that the answer is
    no. The GAO found:

             DOD has not fully defined its training range
            requirements and lacks information on training resources
            available to the Services to meet those requirements, and that
            problems at individual installations may therefore be
            overstated.
             The armed services have never assessed the overall
            impacts of encroachment on training.
             DOD's readiness reports show high levels of training
            readiness for most units. In those few instances of when units
            reported lower training readiness, DOD officials rarely cited
            lack of adequate training ranges, areas, or airspace as the
            cause.
             DOD officials themselves admit that population growth
            around military installations is responsible for past and
            present encroachment problems.
             The armed services' own readiness data do not show
            that environmental laws have significantly affected training
            readiness.

        Ten months after the issuance of the GAO report, DOD still has not
    produced evidence that environmental laws are at fault for any of the
    minor gaps in readiness that may exist. EPA Administrator Whitman
    confirmed this much at a recent hearing. At a February 26, 2003, Senate
    Environment and Public Works Committee hearing on EPA's budget, EPA
    Administrator Whitman stated that she was ``not aware of any particular
    area where environmental protection regulations are preventing the
    desired training.''
        To this date, DOD has not provided Congress with the most basic
    facts about the impacts of ESA critical habitat requirements on its
    readiness activities. Out of DOD's 25 million acres of training land,
    how many acres are designated critical habitat? At which installations?
    Which species? In what ways have the critical habitat designations
    limited readiness activities? What efforts did DOD make to alert FWS to
    these problems and to negotiate resolutions? Without answers to these
    most basic questions, Congress cannot fairly conclude that the ESA is
    at fault for any readiness gaps or that a sweeping ESA exemption is
    warranted.
        3. DOD has Worked Successfully with the Services to Balance
            Readiness and Species Conservation Objectives
        The third reason why enacting DOD's proposed ESA changes would be a
    mistake is because the current approach--developing solutions at the
    local level, rather than relying on broad, national exemptions--has
    worked. My experience at both FWS and DOD has shown me that solutions
    developed at the local level are sometimes difficult to arrive at, but
    they are almost always more intelligent and long-lasting than one-size-
    fits-all solutions developed at the national level.
        Allow me to provide a few brief examples. At the Marine Corps Base
    at Camp Lejeune in North Carolina, every colony tree of the endangered
    red-cockaded woodpecker is marked on a map, and marines are trained to
    operate their vehicles as if those mapped locations are land mines.
    Here is the lesson that Major General David M. Mize, the Commanding
    General at Camp Lejeune, has drawn from this experience:

              ``Returning to the old myth that military training and
            conservation are mutually exclusive; this notion has been
            repeatedly and demonstrably debunked. In the overwhelming
            majority of cases, with a good plan along with common sense and
            flexibility, military training and the conservation and
            recovery of endangered species can very successfully coexist.''
              ``Military installations in the southeast are contributing to
            red-cockaded woodpecker recovery while sustaining our primary
            mission of national military readiness.''
              ``I can say with confidence that the efforts of our natural
            resource managers and the training community have produced an
            environment in which endangered species management and military
            training are no longer considered mutually exclusive, but are
            compatible.''

        These sentiments, which I share, were relayed by Major General Mize
    just 8 weeks ago at a National Defense University symposium sponsored
    by the U.S. Army Forces Command (FORSCOM) and others. At that
    symposium, representatives of Camp Lejeune Marine Corps Base, Eglin Air
    Force Base, Fort Bragg Army Base, Fort Stewart Army Base, Camp Blanding
    Training Center in Florida, the U.S. Army Environmental Center, and
    other Defense facilities--some of the most heavily utilized training
    bases in the country--heralded the success that Defense Department
    installations have had in furthering endangered species conservation
    while maintaining military readiness.
        On the Mokapu Peninsula of Marine Corps Base Hawaii, the growth of
    non-native plants, which can decrease the reproductive success of
    endangered waterbirds, is controlled through annual ``mud-ops''
    maneuvers by Marine Corps Assault Vehicles. Just before the onset of
    nesting season, these 26 ton vehicles are deployed in plow-like
    maneuvers that break the thick mats of invasive plants, improving
    nesting and feeding opportunities while also giving drivers valuable
    practice in unusual terrain.
        Attached to my testimony is a factsheet with additional examples of
    successful efforts by DOD installations across the country to balance
    military readiness and species conservation.
        These success stories highlight a major trend that I believe has
    been missed by those promoting the DOD exemptions. In recent years, DOD
    has increasingly recognized the importance of sustainability because it
    meets several importance objectives at once. Sustainable use of the
    land helps DOD achieve not only compliance with environmental laws, but
    also long-term military readiness and cost-effectiveness goals. For
    example, by operating tanks so that they avoid the threatened desert
    tortoise, DOD prevents erosion, a problem that is extremely difficult
    and costly to remedy. If DOD abandons its commitment to environmental
    compliance, it will incur greater long-term costs for environmental
    remediation and will sacrifice land health and military readiness.
        A November 2002 policy guidance issued by the then-Secretary of the
    Navy to the Chief of Naval Operations and the Commandant of the Marine
    Corps suggests that certain members of DOD's leadership are indeed
    willing to abandon the sustainability goal. The policy guidance on its
    face seems fairly innocuous--it purports to centralize at the Pentagon
    all decisionmaking on proposed critical habitat designations and other
    ESA actions. However, the Navy Secretary's cover memo makes clear that
    its purpose is also to discourage any negotiation of solutions to
    species conservation challenges by Marines or Navy personnel in the
    field, lest these locally-developed ``win-win'' solutions undercut
    DOD's arguments on Capitol Hill that the ESA is broken. According to
    paragraph 2 of the cover memo, ``concessions . . . could run counter to
    the legislative relief that we are continuing to pursue with
    Congress.''
        Similar sentiments were voiced by Deputy Defense Secretary Paul
    Wolfowitz in his March 7, 2003, memo to the chiefs of the Army, Navy,
    and Air Force. Deputy Secretary Wolfowitz argued that ``it is time for
    us to give greater consideration to requesting exemptions'' from
    environmental laws and pleaded for specific examples of instances in
    which environmental regulations hamper training. The implicit message
    is that efforts at the installation level to resolve conflicts between
    conservation and training objectives should be suspended, and that such
    conflicts instead should be reported to the Pentagon, where
    environmental protections will simply be overridden.
        These messages to military personnel in the field mark a very
    unfortunate abdication of DOD's leadership in wildlife conservation. To
    maintain its leadership role as steward of this Nation's endangered
    wildlife, DOD must encourage its personnel to continue developing
    innovative solutions and not thwart those efforts.
                                   conclusion
        With the Iraq war ongoing and terrorism threats always present, no
    one can dismiss the importance of military readiness. However, there is
    no justification for the Defense Department to retreat from its
    environmental stewardship commitments at home. As base commanders have
    been telling us, protecting endangered species and other important
    natural resources is compatible with maintaining military readiness.
        Surveys show that the American people today want environmental
    protection from the Federal Government, including the Defense
    Department, as much as ever. According to an April 2002 Zogby Poll, 85
    percent of registered voters believe that the Defense Department should
    be required to follow America's environmental and public health laws
    and not be exempt. Americans believe that no one, including the Defense
    Department, should be above the law.
        Congress should reject the proposed environmental exemptions in the
    administration's defense authorization package. This proposal, along
    with the parallel proposal in the administration's fiscal year 2004
    budget request that Congress cut spending on DOD's environmental
    programs by $400 million, are a step in the wrong direction.
        DOD has a long and impressive record of balancing readiness
    activities with wildlife conservation. The high quality of wildlife
    habitats at many DOD installations provides tangible evidence of DOD's
    positive contribution to the Nation's conservation goals. At a time
    when environmental challenges are growing, DOD should be challenged to
    move forward with this successful model and not to sacrifice any of the
    progress that has been made.

        Senator Ensign. Mr. Siegel.

       STATEMENT OF LENNY SIEGEL, EXECUTIVE DIRECTOR, CENTER FOR
                     PUBLIC ENVIRONMENTAL OVERSIGHT

        Mr. Siegel. Good morning, Mr. Chairman, members of the
    subcommittee. Thank you for the opportunity to address the
    challenge of balancing the competing yet compatible objectives
    of military readiness, environmental protection, and community
    development. My organization, the Center for Public
    Environmental Oversight, works with community groups across the
    country.
        I have six main points to make today. The first is that the
    Readiness and Range Preservation Initiative purports to resolve
    problems that really have not been documented. In the cases of
    the CAA, RCRA, and CERCLA, there are no documented examples of
    those laws ever interfering with training or other military
    readiness activities. In fact, people do not even realize it,
    but the CAA does not even directly apply to the flight of
    military airplanes. There is no direct regulation. They are
    only subject through the conformity plans. In addition to
    presidential exemptions, the CAA has a series of stepping
    stones through which military readiness activities may be
    exempted from the CAA if indeed there ever were a situation
    where those were proposed to get in the way.
        In the case of RCRA and CERCLA, the military has pointed to
    a case in Fort Richardson in Alaska. If you look carefully at
    the case, there is nothing in RCRA or CERCLA in that lawsuit
    which would prevent the military from continuing training at
    the Eagle River Flats Training Area.
        The second point is that the military's initiative appears
    to be designed to do other things than the protect readiness.
    In the case of RCRA and CERCLA, they appear to be limiting the
    military's obligation to conduct and pay for the cleanup of
    contamination. If you compare the Readiness and Range
    Preservation Initiative language with the military munitions
    rule, you see there is a big difference. It has to do with
    munitions constituents such as perchlorate and Royal Demolition
    Explosive (RDX). That is what the issue is, not readiness.
        In the case of the CAA, the military itself has said it is
    about the basing of aircraft. To me that is an issue for base
    realignment and closure; it is not an issue of readiness. Those
    are important issues. They need to be discussed, but I think
    they are not part of the readiness debate. These laws that I am
    addressing today--RCRA, CERCLA, and the CAA--are not
    interfering with readiness.
        The Pentagon's language would endanger public health and
    the environment. Even if the language were narrowed to exclude
    the Las Vegas Wash and to exclude the chemical weapons
    facilities in places like Arkansas and Colorado, you still have
    operational ranges, which include inactive as well as active
    ranges, where contaminants such as perchlorate have been found
    to be migrating off the ranges and contaminating our water
    supplies at places like the Aberdeen Proving Ground and the
    Massachusetts Military Reservation.
        Changing these laws would severely handicap the ability of
    regulatory agencies using the statutes that they normally use
    to oversee the characterization of those sites and for the
    military to fund the cleanup through the processes that they
    normally use. So it is not--while the threat to readiness as
    far as I am concerned is purely theoretical or hypothetical,
    the threat to public health and the environment which would be
    caused by changing these laws is real, it is happening now.
        The next point is that the language is poorly drafted. I
    have read testimony by attorney generals from eight States
    suggesting that the language could apply to the Las Vegas Wash,
    it could apply to Arrow Jet in Sacramento, it could apply to
    any facility where any research, development, test, and
    evaluation is being carried on. The language needs to be
    cleaned up. The Defense Department says it is their intent to
    confine it to operational ranges. I would like to see them
    change the language, put it in plain English so everybody can
    understand.
        The fifth point, many of you Senators may be aware of what
    I consider to be the real threat to military readiness
    activities, and that is urban sprawl. You can see it at the
    proposal to build the North Hills Development in the pathway
    for the planes from Nellis Air Force Base. You can see it in
    the subdivisions that have been creeping up against Luke Air
    Force Base in Arizona. You can see it in development which has
    occurred near Fort Sill in Oklahoma.
        This is a problem that I agree--when I go around the
    country and talk to community groups, I say, environmentalists,
    neighbors of military bases, and the military can all attack a
    common enemy, and that is urban sprawl. There are steps that
    you could take to support State initiatives in Arizona,
    California, Oklahoma, to deal with sprawl that interferes with
    readiness. That would go a lot further than any of these
    changes in the environmental laws to allow our troops to train
    and fly and conduct other activities.
        There are specific things you can do. The States are doing
    it. The local installations are trying to do it. Help them out.
        The final point I have to make, I have taken part in a
    series of dialogues with the military where you bring together
    regulators, the military, community groups, and other
    stakeholders from around the country to try to solve problems.
    The national dialogue on military munitions came up with a set
    of principles from outside the military that the military
    brought into two directives even before we finished our work as
    a dialogue. I think a lot of the issues that we are seeing here
    today, things which are not even covered by the Pentagon's
    legislative language, could be resolved by the establishment of
    a national commission on sustainability and readiness.
        Those of us on the outside want to work with the military
    to solve these problems. We are nervous about rolling back the
    environmental laws, but we agree that there are problems that
    need to be resolved. Encourage the military to continue the
    small steps that it has made to establish that dialogue.
        Again, we all agree that there are threats to military
    readiness. We just do not believe that this legislation that
    the Pentagon has put forward is the way to go. Thank you.
        [The prepared statement of Mr. Siegel follows:]

                       Prepared Statement by Lenny Siegel

                                    SUMMARY

            ``Defense and the environment'' is not an either-or
            proposition. To choose between them is impossible in this real
            world of serious defense threats and genuine environmental
            concerns. The real choice is whether we are going to build a
            new environmental ethic into the daily business of defense. .
            .''--Dick Cheney, 1990 \1\
    ---------------------------------------------------------------------------
        \1\ Dr. James Arnold Miller, ``Moving Toward a Comprehensive and
    Long-Term Department of Defense Environmental Strategy: The Report of
    the Forum on Our Nation's Defense and the Environment,'' Department of
    Defense, Office of the Deputy Assistant Secretary of Defense
    (Environment), September 6-7, 1990, p. 8.

        Mr. Chairman, members of the subcommittee, thank you for the
    opportunity to address the challenge of balancing the competing, yet
    compatible, objectives of military readiness, environmental protection,
    and community development. My organization, the Center for Public
    Environmental Oversight, works with the people who live and work on or
    near current and former military bases and ranges throughout the U.S.,
    from Puerto Rico to Alaska, from Maine to Hawaii.
        Secretary Cheney's vision is realistic, but the Department of
    Defense's new Readiness and Range Preservation Initiative (RRPI),
    proposed as section 316 of the National Defense Authorization Act for
    Fiscal Year 2004, is a giant step in the wrong direction. Instead of
    making the Defense Department a leader in ``environmental compliance
    and protection,'' the RRPI would give the military special treatment
    that is not necessary for it to fulfill its mission.

             The RRPI purports to resolve problems that have not
            been documented.
             The RRPI appears designed to limit the Defense
            Department's obligations in areas unrelated to readiness.
             The RRPI would endanger public health and the
            environment.
             The RRPI is poorly drafted.
             The RRPI fails to support cooperative efforts of
            military officials, environmental organizations, and State,
            tribal, and local governments to address a common enemy, urban
            sprawl.
             The environmental challenges to military readiness
            would be best addressed by one or more continuing, multi-
            stakeholder dialogues.

        I have been asked today to address the proposed changes to the
    Clean Air Act (CAA), as it applies to State Implementation Plans, and
    the Resource Conservation and Recovery Act (RCRA) and Comprehensive
    Environmental Response, Compensation, and Liability Act (CERCLA), as
    they apply to munitions and explosive constituents. I have seen no
    evidence that these three laws have ever interfered with readiness. The
    impact of these laws on training and other readiness activities is
    purely hypothetical. In fact, even if regulatory agencies or third
    parties were to challenge training or other readiness activities using
    these statutes, they already provide the flexibility to balance
    environmental and military requirements on a site-by-site basis.
        Furthermore, these proposals appear to address Defense Department
    objectives other than readiness. The language dealing with munitions
    response seems designed to minimize the Department's responsibility for
    cleaning up not only unexploded ordnance, but explosive constituents
    such as perchlorate. Even if the language is modified to clearly apply
    only to active munitions ranges, it would prevent regulatory agencies
    from addressing contamination that threatens public health and the
    environment--until it's too late--and it would undermine incentives for
    pollution prevention on ranges.
        Similarly, the language exempting military pollution from
    conformity requirements under the CAA seems more related to the
    military's plans for base closure and realignment than to readiness.
    Our population's right to breathe clean air should be a factor in
    decisions where to base or fly aircraft, and current law provides more
    than enough flexibility to accommodate public health concerns with
    military readiness activity.
        The subsection of the proposal dealing with munitions and explosive
    constituents--what the military not so long ago called ordnance and
    explosive wastes--continues an inglorious Pentagon tradition of
    addressing a significant, complex problem through convoluted
    definitions that invite litigation while failing to resolve genuine,
    significant issues. It doesn't help resolve disputes over whether an
    inactive range is closed. It opens up a loophole in the oversight of
    open burning/open detonation (OB/OD) facilities on operational ranges.
    It appears to ignore ordnance and explosive wastes that were never used
    on operational ranges. According to some legal experts, it still
    doesn't definitively exclude former ranges from the exemptions the
    Department says it is seeking only for operational ranges.
        While the threat of these laws to military readiness is purely
    theoretical, the risk to public health and the environment at
    operational ranges is real. For example, a dozen years ago, Army
    researchers at Fort Richardson's Eagle River Flats range in Alaska,
    concluded that military munitions containing white phosphorous caused
    high waterfowl mortality. At the Massachusetts Military Reservation,
    Royal Demolition Explosive (RDX) and perchlorate are poisoning an
    aquifer that is the sole source of drinking water for hundreds of
    thousands of people. At the Aberdeen Proving Ground, the public water
    supply comes, in part, from on-base wells, and those wells are also
    contaminated with perchlorate. These are hazards that should be
    addressed at the source, not when they cross arbitrary boundary lines.
        Section 2018 of the Defense Department initiative would make air
    pollution from certain military activities invisible to the agencies
    responsible for protecting our air. Four of the five exemptions in the
    proposed law would be permanent. It could potentially expose tens of
    millions of Americans to unhealthy levels of air pollution. State and
    local air quality officials would be forced to allow ongoing exposure
    to dirty air or to restrict private economic activity to compensate for
    unchecked military pollution. Furthermore, because the list of routine
    activities excluded from ``military readiness activities'' does not
    include power plants, it's conceivable that the Defense Department
    expects to shoehorn these polluting activities into the proposed
    readiness exemptions.
        Despite the military's sweeping efforts to rewrite the Nation's
    foundational environmental laws to suit its convenience, environmental
    and community groups, as well as State and local governments, are
    willing to work with Congress, the military, and other Government
    agencies to counter ``encroachment''--that is, the impact of community
    development on military readiness activities. I believe that
    encroachment is interfering with the armed services' ability to train,
    test, fly aircraft patrols, and conduct other readiness activities.
    Contrary to the official Pentagon message, military officers and
    officials in the field suggest that the threat comes from urban sprawl,
    not laws designed to protect human health. In my home State of
    California, a wide range of stakeholder groups supported legislation,
    proposed by the Navy on behalf of the armed services, to require local
    jurisdictions to consider military readiness in their planning
    activities. That law, S.B. 1468, is now on the books, but it is not
    being implemented yet, because the Pentagon has not yet figured out how
    to provide a small amount of funding. I've heard estimates that it
    would cost only $500,000 a year.
        Environmental groups, community organizations, and others in
    California and many other States stand ready to implement cooperative
    initiatives that promote smart growth, to create or sustain livable
    communities, to protect the environment, and to enhance the
    sustainability of military operations. I call upon the Defense
    Department to focus on the real problem, development that encroaches
    upon military bases and ranges, rather than use readiness concerns to
    undermine the health of the people and natural resources that it is
    sworn to protect. Furthermore, I call on the military to work with
    other stakeholders, in a continuing dialogue, to resolve conflicts
    among readiness, community development, and the environment.
    I. The Readiness and Range Preservation Initiative Purports to Resolve
            Problems That Have Not Been Documented.
        In my visits to military facilities across the country, I have been
    convinced that encroachment is hampering, and is likely to further
    restrict, the U.S. Armed Forces' ability to train, test, and fly
    aircraft. But I have never seen, nor have I heard of any limitations on
    military readiness activities caused by the CAA, the RCRA, or the
    CERCLA.
        RCRA/CERCLA
        Department of Defense officials warn that a lawsuit brought by
    Alaska Community Action on Toxics and others against the Army, at Fort
    Richardson, Alaska, could set a precedent constraining munitions
    training throughout the United States. I've read that complaint, and
    I've consulted legal experts and Alaska regulators. The only element of
    that lawsuit that in any way might impact training is a plea that the
    Army seek a permit, not under RCRA but the Clean Water Act.
        I am familiar with one location where environmental regulators have
    issued a cease-fire order, Camp Edwards on the Massachusetts Military
    Reservation (MMR). When it was shown that explosive constituents were
    poisoning the sole-source aquifer that provides drinking water to
    hundreds of thousands of Cape Cod residents and visitors, U.S. EPA
    issued an order halting the use of high-explosive weapons on that
    range. Though RCRA has played a small role at MMR, the order
    restricting training invokes the Safe Drinking Water Act.
        Even if, through some unprecedented regulatory action or third-
    party litigation, these laws were to threaten military readiness
    activities, the President has the clear authority to issue an
    exemption. In fact, Presidents Clinton and George W. Bush have
    repeatedly invoked the RCRA section 6961(a) exemption at Nevada's Groom
    Lake range. There wasn't a threat to readiness at Groom Lake. The
    proposed application of RCRA at this site dealt with the management of
    toxic wastes, not military munitions.
        Finally, some might argue that the requirement to conduct cleanup
    on operational military ranges in itself might, in some unprecedented
    circumstances, threaten readiness, if munitions and explosive
    constituents are considered a hazardous waste. However, both RCRA
    Corrective Action and CERCLA provide decisionmakers with the
    flexibility to consider a wide range of factors in setting cleanup
    goals and selecting remedies. Dozens of military airfields, for
    example, are undergoing remediation with minimal interference to flight
    operations. Moreover, the Air Force routinely clears unexploded
    ordnance from its ranges, and the Marine Corps does the same at its
    Twentynine Palms, California training facility, because they believe
    ordnance clearance actually supports readiness by sustaining and
    extending the life of training ranges. Even at Camp Edwards, national
    guardsmen continue to train despite the ongoing EPA-directed
    environmental response.
        Clean Air Act (CAA)
        As for the CAA, I've never even heard of inaccurate examples of
    that law getting in the way of readiness. Remember, aircraft emissions
    are not directly regulated. Unlike power plants, for example, private
    and military airfields don't obtain permits for pollution from
    aircraft. Still, should the conformity provisions unexpectedly pose a
    threat to readiness, section 118 of the CAA provides the President with
    the authority to exempt Defense activities from the law upon a finding
    of ``paramount national interest.'' But that's not all. The general
    conformity regulations allow the Defense Department to override clean
    air requirements in national emergencies such as war and terrorists
    attacks. On top of that, the Defense Department may conduct ``routine
    movement'' of ships and aircraft, activities already exempt from Clean
    Air permitting requirements, without regard for their impact on
    Implementation Plans under the law.
        When the Defense Department proposed these same CAA exemptions last
    year, the Nation's non-partisan associations of State and local air
    pollution control officials declared the amendments unnecessary. They
    pointed out that the CAA already provides the Defense Department ample
    flexibility to carry out its mission, and importantly, that ``the
    significant adverse air quality impacts that could result from such
    exemptions could unnecessarily place the health of our Nation's
    citizens at risk.'' (I have attached a copy of that letter.)
    II. The Readiness and Range Preservation Initiative Appears Designed to
            Limit the Defense Department's Obligations in Areas Unrelated
            to Readiness.
        So why then, is the Defense Department investing in the passage of
    these provisions of the RRPI? I believe it is hoping to use the growing
    concern over encroachment to buy relief from some of its more long-term
    environmental challenges.
        RCRA/CERCLA
        As a growing number of Members of Congress are recognizing,
    millions of acres of our land are contaminated with ordnance and
    explosive wastes. People are finding old bombs and shells in new
    subdivisions in Texas and North Carolina. Parklands and wildlife
    refuges, from California to Indiana to Maryland and New York, are
    literally minefields of unexploded ordnance. Last year the Defense
    Department estimated the cost of cleaning up or restricting access to
    former ranges--``closed, transferred, and transferring'' ranges in the
    regulatory vernacular--at $15 billion. I think we're all hoping that
    the inventory of such sites, due for report to Congress this spring,
    will provide an accurate accounting of the sites, their acreage, and
    their projected response costs.
        Legal experts, including a bipartisan group of 33 State Attorneys
    General, challenged the Defense Department's 2002 proposal, stating
    that the proposed exemption of operational ranges from hazardous waste
    laws would carry over to ranges when they were closed. That is, the
    RRPI proposal could undermine the already contested oversight authority
    of regulators at former ranges.
        Defense officials assert otherwise, and this year they added a
    clause that seems to restrict the restriction on oversight to responses
    on operational ranges only. However, the new language submitted by the
    Defense Department does not do the job. It's hard to comprehend the
    convoluted language in the Defense proposals, but here's how it falls
    short.

         The new language refers only to one subparagraph in the
    RCRA section of the legislation.
         The proposed language still exempts from oversight certain
    munitions and explosive constituents--used in research and development,
    for example--that were never on operational ranges.
         The military can avoid environmental response at closed
    ranges on active installations simply by continuing to consider them
    ``inactive,'' a subset of operational ranges. This is not a
    hypothetical suggestion. In 2000, a U.S. EPA survey suggested that many
    inactive ranges across the country should be assessed and probably
    classified as closed:

            The Redstone Arsenal in Huntsville, Alabama, is a facility that
            contains 23 ranges, 22 of which are inactive. This facility
            provides several good examples of ranges that have been
            inactive for years, but which have not been officially closed
            by DOD. For example, the Inactive Mustard Gas Demilitarization
            Site/Range at the Redstone Arsenal was last used in the mid- to
            late-1940s and is currently forested and partially underwater.
            Given current environmental conditions, nearby populations, and
            today's more stringent regulatory framework, it is highly
            unlikely the facility will be used for mustard gas
            demilitarization again.\2\
    ---------------------------------------------------------------------------
        \2\ Used or Fired Munitions and Unexploded Ordnance at Closed,
    Transferred, and Transferring Military Ranges: Report and Analysis of
    EPA Survey Results, U.S. Environmental Protection Agency, Office of
    Solid Waste and Emergency Response, EPA-505-R-00-01, September 2000, p.
    11.

        Even if these loopholes were fixed, the RRPI proposal would still
    prevent regulatory agencies from doing their job--protecting public
    health and the environment--on operational ranges. Rarely has anyone
    proposed requiring the widespread clearance of munitions or explosive
    constituents from active ranges. Even at Fort Richardson, the
    plaintiffs are merely seeking a remedial investigation and feasibility
    study under CERCLA, steps that are unlikely to lead to full-scale
    ordnance clearance as long as the range remains active. Yet there are
    instances--I provide examples below--where regulators should act.
        The key point here, however, is that the Defense Department has
    proposed the new, restrictive definition of when munitions and
    explosive constituents become hazardous wastes because it is attempting
    to eliminate potential cleanup requirements, not to enable our Nation's
    Armed Forces to conduct essential readiness activities. This applies
    not only to ordnance itself, but to the energetic chemicals known as
    ``munitions constituents'' in the Defense proposals.
        Clean Air Act (CAA)
        In the Department of Defense's sectional analysis of section 2018,
    it finally provided a clue as to what it felt is ``broke'' and needs
    fixing. It wrote, ``Under the requirements of current law, it is
    becoming increasingly difficult to base military aircraft near
    developed areas.'' That is, as it moves toward a new round of base
    realignment and closure (BRAC), the Defense Department doesn't want the
    impact of air squadron transfer to be a factor in its decisions. This
    was the issue in the mid-1990s, when the Navy shifted attack aircraft
    squadrons to the Lemoore Naval Air Station, in California's polluted
    Central Valley. Though the aircraft, additional mobile ground
    equipment, and increased employee vehicular traffic were not subject to
    air permits, they were all evaluated as part of the base's conformity
    with the Implementation Plan. The new basing arrangement was approved
    only after the Navy obtained emission reduction credits from a nearby,
    closing installation, Castle Air Force Base.
        Long-term changes in the deployment of military aircraft are an
    important issue, but they are not directly a readiness issue. They
    should be debated in the context of BRAC or military construction, not
    authorized in an initiative that the Pentagon asserts is designed to
    shield military readiness activities from encroachment.

      III. THE READINESS AND RANGE PRESERVATION INITIATIVE WOULD ENDANGER
                       PUBLIC HEALTH AND THE ENVIRONMENT.

        In RRPI, the Department of Defense proposes to roll back key
    statutes that form the foundation of America's bipartisan framework of
    environmental protection. The requirements that the Department seeks to
    relax are not merely technicalities or check-off boxes. They target
    identifiable hazards to public health, public safety, and our natural
    ecosystems.
        Like many other institutions, the Department of Defense has a
    legacy of environmental mismanagement. According to the Defense
    Environmental Restoration Program Annual Report to Congress for Fiscal
    Year 2001, the military's 126 most costly sites, contaminated with
    toxic substances as well as munitions, will cost well over $28 billion
    to address. We, as taxpayers, will be paying the bill on that legacy
    for decades to come. Over the past two decades, however, it has made
    important strides forward. Congress has appropriated funds for
    environmental security. Individuals within the Department have shown
    genuine leadership. Regulatory oversight has brought along those who
    have not seen environmental protection as a priority.
        The laws and programs that bring cleanup not only deal with legacy
    wastes; they encourage the prevention of future problems. Under
    pressure from outside, elements of the military are integrating
    pollution prevention and environmental management into their
    operations, as Secretary Cheney suggested in 1990.
        Environmental regulation is necessary, not only to encourage
    reluctant officials to do their jobs properly, but to see that
    competent, motivated military leaders can obtain funding for their
    projects. Environmental compliance projects at the Defense Department,
    such as improvements in RCRA-governed treatment, storage, and disposal,
    are funded not simply on need, but according to the level of external
    regulatory requirements that they address.
        RCRA/CERCLA
        While the threat to readiness from these environmental laws is
    theoretical, the impact of munitions and explosive constituents on the
    environment is real. Under the Defense Department's proposals,
    regulatory agencies would be unable to insist on access controls to
    keep the public off military ranges--to prevent incidents such as the
    death of a Mississippi teenager near Camp Shelby in 2000. Under its
    proposal, States would no longer be able to regulate the operation of
    open burning/open detonation pits located on operational ranges, such
    as Fort Carson in Colorado. It appears that communities would be unable
    to question proposed OB/OD permits, as the neighbors of the Makua
    Military Reservation, Hawaii did a decade ago.
        Pentagon lawyers hypothesize that a Fort Richardson lawsuit could
    hamper readiness, but they don't explain why Alaskan communities are
    concerned. In the early 1990s, the Army itself concluded that white
    phosphorous from munitions on the Fort's Eagle River Flats artillery
    range was killing substantial numbers of waterfowl. Though that problem
    was successfully addressed, cooperatively by Alaska State regulators
    and the Army, under CERCLA, RRPI would remove that regulatory
    authority. (I have attached an Army article documenting this history.)
    In fact, as a result of that effort, the Army no longer uses munitions
    containing white phosphorous at Eagle River Flats, and it limits when
    it trains with high explosives to avoid the re-suspension of residual
    white phosphorous wastes.
        Perhaps the most pernicious aspect of this particular language is
    the Defense Department's proposal to exempt contamination from the
    Nation's hazardous waste laws until it has migrated across the boundary
    line of the range upon which it has been deposited. Please note that
    explosives and propellants are toxic chemical compounds. Some of the
    Nation's most contaminated public and private properties--on EPA's
    ``Superfund'' list--are Army Ammunition Plants and facilities that have
    produced, tested, and demilitarized military rockets.
        There is growing evidence that most current and former military
    munitions ranges, not just production sites, are polluted with
    explosive chemicals such as trinitrotoluene (TNT), RDX, and
    perchlorate. As I mentioned earlier, EPA restricted military exercises
    involving the use of high explosives at Camp Edwards, Massachusetts
    Military Reservation, under other statutes, because RDX and perchlorate
    have poisoned Cape Cod's drinking water supplies. Similarly, two
    distinct communities adjacent to the Aberdeen Proving Ground in
    Maryland have learned recently that their drinking water is
    contaminated with perchlorate emanating from that installation. (I have
    attached articles about MMR and Aberdeen.)
        Since the military has found perchlorate on typical infantry
    ranges, not just rocket and ordnance plants, further investigation may
    show some level of contamination at hundreds of locations. The Defense
    Department has conducted a nationwide survey that likely shows
    widespread use of ordnance containing perchlorate, but it has not
    shared the results of that survey with other parties. All those sites
    should be investigated and perhaps sampled, but I fear that Defense
    Department lawyers will argue, if the proposed RRPI language is
    enacted, that there is no legal requirement.
        RRPI would prevent State and Federal regulators from using RCRA and
    CERCLA--the laws that govern routine characterization and remediation
    of contamination--to address such sites until the pollutants have
    migrated off base. In fact, even after the plumes have crossed facility
    boundary lines, source areas, under RRPI, would remain off limits to
    the regulatory agencies. Furthermore, since a Federal health standard
    for perchlorate seems years away, it appears that the RRPI proposal
    would directly undermine public health by making it difficult, if not
    impossible for States to utilize their own, health-based standards on
    any property covered by the legislation. Ironically, if this proposal
    is enacted, the military might even argue that regulators have no
    authority to protect military personnel and their families from
    contaminated water supplies that never leave their bases.
        Furthermore, it's unlikely that this happened by accident. In
    preparing my testimony, I compared the Defense Department's RRPI
    language with the EPA's Military Munitions Rule, the current legal
    authority on the subject. As you may recall, EPA promulgated the
    Munitions Rule in 1997, as directed by Congress in the Federal
    Facilities Compliance Act of 1992, to determine when munitions become a
    hazardous waste. Defense Department lawyers drew from the Munitions
    Rule, which does not cover munitions constituents, in developing the
    RRPI language, so they must have made conscious decisions to include
    munitions constituents among the classes of items to be excluded from
    the hazardous waste laws. It appears that the Department is looking for
    one more way to absolve itself of its massive projected liability--
    reportedly billions of dollars nationally--for the characterization and
    remediation of perchlorate and other energetic contamination, at the
    expense of public health.
        Clean Air Act (CAA)
        The case against the CAA modifications is much more simple.
    Emissions from military aircraft and other readiness activities would
    be exempt from the most significant regulatory tool for addressing
    them, potentially exposing tens of millions of people to dirty air.
    That is, military pollutants would infiltrate our lungs and be visible
    in our skies, but they would disappear from the bi-partisan regulatory
    framework we have built to protect ourselves.
        The CAA exemptions in this bill are not simply unjustified, they
    represent sweeping and unprecedented permission for military air
    pollution--unlike other sources of air pollution from industry,
    government, or even the public--to escape regulation under the CAA. Air
    pollution from military readiness activities would be allowed to cause
    or contribute to violations of health-based air quality standards for
    smog, soot, and carbon monoxide; to increase the frequency or severity
    of such violations; or to delay timely attainment of the standards or
    interim milestones. Worse, to cover up the harm caused by these
    exemptions, the bill actually defines dirty air to be clean.
        Under this legislation, States and local communities would lose
    their ability to influence new military basing plans, such as those
    forthcoming under the 2005 BRAC round, based upon their air pollution
    impact. Unable to influence the growth of military operations, they
    might be forced to restrict private growth--or place the public at risk
    of even more exposure to unhealthy air.
        While I recognize the military's prerogative to override community
    concerns when absolutely necessary for paramount national security
    interest or national emergencies, I believe it is imperative that clean
    air and other natural resource concerns remain a factor in decisions on
    the long-term basing of military aircraft.
    IV. The Readiness and Range Preservation Initiative is Poorly Drafted.
        Earlier I warned that the proposed RRPI language leaves ambiguous
    the Department's intent to restrict the changes in the law to
    operational ranges. I challenge any mere mortal--that is, someone who
    is not a lawyer specializing in hazardous waste law--to sort through
    the maze of paragraphs and clauses in this section.
        That language is confusing because a Federal agency has once again
    resorted to the modification of definitions instead of directly
    addressing a problem. I have repeatedly suggested that the Department,
    regulators, and representatives of the affected public cooperatively
    describe the unique features of munitions-related waste, and once they
    determine what must be done to protect both the public and response
    personnel from explosive hazards, that they together propose statutory
    or regulatory solutions. This language not only fails to identify and
    resolve key issues, but it invites, through its web of interlocking
    definitions, years of litigation.
        The CAA amendment suffers from its own complexities, but I wish to
    call your attention to a simple, fixable problem with the wording. In
    defining routine installation support functions not subject to the
    proposed statutory changes, the definition of ``military readiness
    activities'' excludes schools, housing, recreational facilities, etc.,
    but it does not specifically exclude from readiness activities the
    installation function that has generated the most heat in interagency
    debates over air pollution: electrical power plants. If indeed the
    Defense Department is not using readiness to address yet another
    problem, it should have no problem adding such facilities to the
    exclusion in the definition.
    V. The Readiness and Range Preservation Initiative Fails to Support
            Cooperative Efforts of Military Officials, Environmental
            Organizations, and State, Tribal, and Local Governments to
            Address a Common Enemy, Urban Sprawl.
        I first learned about encroachment a few years ago when I was
    invited to address Air Force Explosive Ordnance Disposal (EOD)
    specialists, from throughout the country, at Luke Air Force Base in
    Arizona. I had been invited, by the way, to explain the public's
    concern about ordnance and explosive wastes on military ranges. My
    driver, an EOD Sergeant, pointed out, one-by-one, the new residential
    developments that stretched across the desert toward the base. A few
    more, he said, and the jets wouldn't be able to fly.
        Across the country, from Fort Stewart, Georgia to Nellis Air Force
    Base, Nevada, to the Navy SEALS' Camp La Posta mountain training base
    in the southern California desert, development or proposals for
    development are threatening the Armed Forces ability to fly planes,
    maneuver, and conduct other readiness activities. Unchecked urban
    growth, not environmental protection, is the problem. At some
    locations, such as Beale Air Force Base, community leaders have already
    made the link. In February, I took part in a community meeting in
    Marysville, California, in which local officials and residents of the
    semi-rural communities adjacent to the base opposed the construction of
    a new city on the base's fenceline, both because it would undermine
    their lifestyles and because it would encroach upon the Air Force's
    operations.
        Last year environmental and community organizations supported the
    buffer zone provisions of RRPI, and they stand prepared to support
    additional measures designed to resolve encroachment problems
    constructively. Some States have passed, or are considering legislation
    designed to integrate readiness into local planning activities. For
    example, my own State of California, on the front lines of the
    encroachment battle, enacted S.B. 1468 last year. This legislation,
    proposed by the armed services, drew widespread support and no visible
    opposition.
        Admiral J.L. Betancourt, Commander of the Navy Region Southwest,
    wrote Governor Gray Davis urging him to sign the bill. He explained,
    ``We applaud this as an effort to finally recognize that long-term
    operations of military installations must involve a partnership between
    State and local agencies and the military. In addition to providing
    critical protection for military installations at a time of
    unprecedented growth in California, S. B. 1468 provides needed
    consideration of designated air space and military training routes.''
    (I have attached the entire letter.)
        This initiative from the field deals not with hypothetical
    problems, such as those addressed by the RCRA/CERCLA and Clean Air
    language in RRPI, but genuine threats to military operations. For
    example, developers are proposing to build 14,000 housing units just
    north of Camp Pendleton in southern California. One section of this
    proposed development, with 1,400 housing units and over 1.2 million
    square feet of commercial space, would border the base's northern
    boundary and appears to underlie special use airspace. It is my
    understanding that the Marines oppose this development because it
    threatens readiness, and environmental groups oppose because it
    represents the worst in urban sprawl.
        S.B. 1468 would provide the military, environmental organizations,
    and local planning agencies with the tools to question the proposed
    development, as well as other California development proposals likely
    to impact readiness. But S.B. 1468, as designed by its military
    proponents, does not come into force unless the Defense Department
    provides a small amount of funds to support the additional local
    planning required--it's the whole issue of unfunded mandates. As I
    understand it, $500,000 this year in Federal funds could leverage
    influence over development plans involving investments that are several
    orders of magnitude higher!
        Similarly, in Nevada, another developer proposes a new city,
    including parks, schools, and 30,000 homes in the flight corridor
    through which Air Force planes laden with ordnance depart from Nellis
    Air Force Base. Again, both the Air Force and environmental groups
    oppose the proposal. I believe Defense Department support for
    considering readiness in local planning activities would encourage
    Nevada to adopt a program of its own, and that would encourage
    developers to invest in plans for development in more suitable
    locations.
        If Congress really wants to fight encroachment where it counts,
    legislation and appropriations to support S.B. 1468 and similar
    initiatives in other States--already in place or under consideration in
    Arizona, Texas, and Florida, for example--would go much further than
    RRPI.
    VI. The Environmental Challenges to Military Readiness Would be Best
            Addressed by One or More Continuing, Multi-Stakeholder
            Dialogues.
        While I have seen no evidence that the Defense Department's
    proposals to modify the CAA, RCRA, and CERCLA would enhance readiness,
    I believe that there are numerous existing or potential community
    development and environmental protection challenges to training,
    aircraft use, and other military readiness activities. Many of these
    challenges are beyond the scope of RRPI. But our country will need to
    address them, whether or not Congress enacts the proposed legislation.
    If you ask the armed services, environmental regulators, land
    management agencies, environmental and community organizations, tribes,
    and local governments who should design the solutions, you're asking
    for a political brawl.
        However, if you ask those parties to sit down in the same room to
    devise common strategies, everyone will be surprised by the
    opportunities for win-win solutions. This is the experience of the
    Army-sponsored National Dialogue on Military Munitions, which developed
    the Principles for Sustainable Range Use/Management in the late 1990s.
    Participants in that dialogue, from the Department of Defense and its
    critics, will affirm its success. Even before the dialogue issued its
    final report, the Department used its work as the basis for two
    directives. I have appended my article on that dialogue, published in
    the Winter 2003 Journal of Policy Analysis and Management, to my
    testimony.
        Congress could help resolve the encroachment debate by asking the
    Defense Department to establish a new dialogue or dialogues to
    establish constructive communication channels among stakeholder groups.
    I envision such a body establishing models for conducting sampling for
    explosive contaminants on active military munitions ranges, or it might
    develop standard approaches for keeping trespassers out of operational
    range areas. Such a group could look into the Army's concerns at Fort
    Irwin and perhaps elsewhere, about the impact of new particulate
    standards on future training. It could build national models for
    evaluating the impact of sprawl on readiness that discourage developers
    from investing in unsuitable projects.
        In calling for such a dialogue, Congress could establish guidelines
    that would make it easier for the Defense Department to create formal
    environmental advisory groups, under the Federal Advisory Committee
    Act, without triggering some of the burdensome bureaucratic
    requirements designed to facilitate advice on acquisition and military
    technical issues.
        In conclusion, the CAA and munitions sections of RRPI would do
    nothing to enhance readiness; they appear designed to deal with the
    Pentagon's concerns over cleanup and base realignment; and they would
    subject the public and the environment to more unhealthy contamination.
    Instead of taking on environmental organizations, the communities who
    live near military installations, and State regulatory agencies,
    Congress, and the Department of Defense should encourage problem-
    solving dialogue and join these groups in fighting a common enemy,
    urban sprawl.

        Senator Ensign. Well, thank you very much, each one of the
    panelists.
        I want to start. First of all, Ms. Young, you mentioned
    that the Defense Department was looking for an exclusion. I
    think Dr. Lent addressed that in your testimony when she talked
    about--and Dr. Ketten, you mentioned it as well--that while the
    DOD only included defense language, that Dr. Lent was looking
    at making this definition continue broadly across so that there
    is a good, scientifically sound definition.
        I want to start with that for Dr. Ketten and Ms. Young.
    First of all, Dr. Ketten, are you aware--I know you are--of the
    Surface Towed Array Sonar System (SURTASS) Low Frequency Active
    (LFA)? If you are around the military you know you have to have
    acronyms. Without acronyms the military cannot operate, or any
    of this body around here.
        Do you think that there is--or do you know of any credible
    scientific evidence of physical harm to marine mammals from
    SURTASS LFA?
        Dr. Ketten. Yes, I am fully aware of SURTASS LFA. There is,
    let me be clear, there is no data that demonstrates any harm
    from LFA. There were extensive behavioral experiments carried
    out by several of my colleagues. I did not work on those
    directly. I do physiology, anatomy, and trauma analyses.
        What has happened is that traumas that occurred coincident
    with the use of mid-range sonars in two genera of beaked whales
    only have been extrapolated. That is a classic example of
    overinterpretation or extrapolation from one event to another.
    It is worse than mixing apples and oranges. It is one type of
    sonar with what appears to be particularly susceptible species,
    not for acoustic trauma, but possibly for panic and secondary
    effects.
        Having moved that effect into the domain of LFA is
    inappropriate. For LFA there is no data that demonstrates any
    physical harm from its deployment.
        Senator Ensign. Ms. Young, just to follow up on that--and
    by the way, just so you all know where my--I am a big, strong
    supporter of the military, but I am also a veterinarian by
    profession and grew up watching Jacques Cousteau and all of
    that and thought that that was what I was actually, when I lost
    my 1998 Senate race, that was what I was going to do. I was
    going down to work with the veterinarians down at Sea World and
    I was going to oversee a large aquarium. So this is something
    that I have a very strong interest in and I care deeply about
    these issues.
        But I also come at it from a scientific perspective and I
    like science to determine what we are doing here, and because I
    also know that emotions can get involved. I mean, everybody,
    especially when it comes to marine mammals, everybody, they
    just evoke very strong emotions in people.
        So along those lines, Ms. Young, are you aware of any peer
    reviewed scientific evidence that the LFA causes any problems
    amongst marine mammals? I emphasize ``peer reviewed`` because I
    know what that means.
        Ms. Young. I think Dr. Ketten speaks from an expert point
    of view on LFA, and LFA is not really the issue here that is
    more important. What we get back to is the definition of
    harassment and how that change in the definition of harassment
    will significantly raise the threshold to what types of
    military activities would be authorized or would require an
    authorization for a permit.
        With that threshold being raised so significantly, many of
    the military activities that normally would be required to get
    a permit would no longer be required to do so. They could
    simply evade the process. When that happens, we lose important
    scientific research, such as the research surrounding LFA that
    was undertaken by the military. That research helped us to
    understand the impacts to these animals. All of that will be
    lost. We will lose the monitoring capability, we will lose the
    mitigation capability, and I believe that is what we need to
    focus on because we know so little about these animals. We
    cannot afford to lose the science that is associated with that
    permitting process.
        Senator Ensign. Just real briefly, Dr. Ketten, when the
    definition--and you mentioned--and I do not know, basically
    biological significance, however you want to describe that. Can
    you comment on what Ms. Young has just said about the
    definition of harassment? Because in your opening statement you
    commented on the whole idea of biological significance and why
    you think that there needs to be, not a rollback, but something
    fairly objective to measure from from a scientific perspective.
    That is what I think is important here.
        Dr. Ketten. Yes, I would like to make several comments
    along those lines. First of all, in terms of harassment,
    changing that definition, I would underscore my reasoning of
    the bill is that in subsection (2), section (a)(1), it states
    explicitly that the Secretary of Defense must have
    predetermined that there will be no significant impact or
    negligible impact to individuals, no harassment.
        That has to have been determined, and my understanding is
    that it was explicitly placed in the hands of the Secretary of
    Defense so that there was the option for review, that it not be
    presidential, which would eliminate review. Therefore I have to
    disagree--Nina and I have known each other for a number of
    years and I suspect she knows this is coming--I have to
    disagree with her interpretation that this eliminates the
    oversight element. Oversight is repeatedly stated within this
    bill.
        Second, the issue of harassment. It has been very broadly--
    it is difficult--you know better than I, it is really damned
    hard to write legislation clearly enough. The MMPA was written
    very broadly and has been interpreted, as we have heard,
    literally to be the case of an animal turns its head. We do not
    put that in the perspective of how often it turns its head from
    its own natural exposure from its con-specifics, that is from
    other animals in its own pod or group.
        As you have pointed out, we are dealing with charismatic
    megafauna. People look at dolphins and think that that
    permanent smile they have means that they have a great deal of
    intelligence and that they have a great deal of appeal, and we
    are making a lot of our decisions based on that notion.
        As far as interfering with readiness also, I cannot think
    of anything that impacts our readiness more greatly than to
    have ship shock trials stopped cold, as in the case of the John
    Paul Jones, or the LFA deployment and training that is not
    going forward. LFAs--the LFA-dependent research gave us a great
    deal of information, but now that information is not being used
    to allow training, but rather to stop it.
        I think I may have lost one of the points that you wanted
    me to address. Sorry.
        Senator Ensign. That is fine. My time has expired and I
    need to turn it over to Senator Akaka.
        Senator Akaka. Thank you very much, Mr. Chairman.
        My question is to Ms. Clark and Dr. Pirie. The Clinton
    administration addressed proposed critical habitat designations
    on military lands through case-by-case negotiation between the
    military services and the FWS. The FWS would take the existence
    of an integrated natural resource management plan for a
    military installation into consideration in determining whether
    to designate critical habitat, but the existence of such a plan
    was not determinative.
        In many cases, military lands were excluded from critical
    habitat designation only after DOD agreed to revise its INRMP
    to ensure adequate protection for endangered species.
        Dr. Pirie, do you believe that DOD needs an automatic
    exemption for lands covered by INRMPs or would you support
    legislation codifying the case-by-case approach taken by the
    DOD and the Department of the Interior in the last
    administration?
        Dr. Pirie. The case-by-case approach has been challenged in
    court and may not indeed hold. The integrated natural resource
    management plans are just one of the tools which FWS can use to
    assure itself that the activities that are going on on a
    particular military installation are not adversely affecting
    threatened or endangered species.
        The ESA applies to the DOD whether or not there is an
    integrated natural resource management plan or whether or not
    there is critical habitat. So in essence, the regulators have a
    first level of defense, that is the act itself; a second level,
    the integrated natural resource management plans which the
    regulators must approve; and it seems to me that that is a
    fairly high level of protection for the species.
        Senator Akaka. Ms. Clark, I understand that you oppose the
    automatic exemption for military lands covered by INRMPs in the
    legislation before us. But would you also oppose codification
    of the case-by-case approach taken by the Clinton
    administration, Ms. Clark?
        Ms. Clark. Yes, I appreciate the opportunity to chat about
    this a bit since a lot of the standards and the requirements
    and the sideboards by which we would evaluate INRMPs happened
    while I was at the FWS working with the DOD.
        But if I could, just one more clarifying point about this
    lawsuit and this case in the southwest that seems to make
    people concerned about constraining the FWS's flexibility. All
    interpretations of this law--excuse me--of this court case
    suggest that the only thing the FWS did wrong, if in fact there
    is a declaration of wrong, is they relied on the wrong piece of
    the act to do what they ultimately did and that was upheld.
    They took the definition of critical habitat and the notion of
    special management area as a rationale when in reality they had
    all the flexibility in the world under section 4(b)(2), the
    exclusion paragraph, to balance out the lands that they
    ultimately balanced out.
        So that the notion--the lands that they balanced out
    ultimately were upheld and I think, if nothing else, it sent a
    message to the FWS and the Department of the Interior is that
    they need to clarify in their rulemaking the rationale by which
    they balance out. But they have tremendous flexibility under
    section 4(b)(2). We had a definitional problem that the judge
    brought attention to in the court case.
        While I was at the Service, we spent a lot of time working
    with the Defense Department, given the sensitivities of the
    military mission and the defense readiness needs, and we worked
    up an administrative way to evaluate these INRMPs. Now, I think
    it is important to note that not all INRMPs are created equal.
    There is no such thing as a cookie-cutter integrated natural
    resource management plan. While I was director, we signed an
    MOU with the Defense Department that laid out the procedural
    expectations of collaboration and cooperation in the
    development of these integrated plans.
        The fact of the matter is, both for Defense and the FWS,
    successful implementation of these reviews and development of
    these INRMPs were heavily dependent on available funding to
    both agencies to be able to conduct and carry out. But
    nonetheless, we were very clear from a policy standpoint, and
    it radiated throughout the FWS, that if an INRMP that was
    developed for a military installation provided a net
    conservation benefit to the species and that there were
    assurances from the military it would be implemented and
    funded, because a plan is only a plan unless it is implemented,
    and that there was some scientific recognition or belief that
    the conservation strategies that were laid out in the
    integrated plans would be effective. So you had to provide
    benefit, you had to guarantee implementation of the plan, and
    you had to be assured that the conservation benefits would be
    effective. Then it was clearly a candidate for exclusion from
    critical habitat designation, and I would welcome that
    clarification in any way possible.
        Senator Ensign. Senator Inhofe.
        Senator Inhofe. Mr. Chairman, I would temporarily defer to
    Senator McCain, who has some other commitments.
        Senator McCain. I thank my colleague from Oklahoma and I
    thank Senator Ensign.
        I will not try to establish my environmental credentials
    here, particularly as far as the State of Arizona is concerned.
        Senator Ensign. Senator McCain, if you need a couple extra
    minutes go ahead and take them right now.
        Senator McCain. Thank you. I will let my record speak for
    itself. But I am concerned about our ability to train our men
    and women to engage in combat, and as also a former member of
    the military, I know the importance of being able to train with
    the use of live ordnance.
        I note with some interest, Ms. Clark, your ``rest of the
    story'' stuff here. Somebody has to get these reconciled. We
    have to get some objective person in here or entity, because
    they differ wildly. But one that I do not think there is a lot
    of difference of concerns the Barry Goldwater Range. The DOD
    assertion is that in calendar year 2000 almost 40 percent of
    the live-fire missions at the Goldwater Range were cancelled,
    and the rest of the story is that we have 99 animals, 99
    Sonoran pronghorns, in the United States.
        You cannot run a military efficiently, Ms. Clark, by
    cancelling 40 percent of the training that is being conducted.
    You cannot do that. Now, are we faced here with a choice
    between the pronghorn, Sonoran pronghorn, and conducting
    realistic training for our men and women who as we speak are in
    harm's way? Is that our choice here?
        Ms. Clark. No, Senator McCain.
        Senator McCain. What are our choices?
        Ms. Clark. It is not and it should not. But again, the
    facts of this case need to be evaluated. I am painfully aware
    of the role that Barry Goldwater Range plays in sustainability
    of the Sonoran pronghorn antelope population. But again----
        Senator McCain. Are you aware of the importance of the
    Barry Goldwater Range in maintaining the readiness of our
    military?
        Ms. Clark. Yes, sir, I am. But again, the proposal by the
    Defense Department does not address the conflict at Barry
    Goldwater at all because there is no critical habitat
    designated for the Sonoran pronghorn and the Defense proposal
    is talking about exempting critical habitat. I believe there is
    a lot of work that needs to be done and conflicts to be worked
    out.
        Senator McCain. Do you think there is a lot of work that
    needs to be done so that 40 percent of the training missions do
    not have to be cancelled as we speak?
        Ms. Clark. Yes, I do.
        Senator McCain. Then what is your answer to getting this
    issue resolved, Ms. Clark?
        Ms. Clark. We need to set aside what the discussion is
    today because today's represent does not accomplish anything to
    help the Barry Goldwater Range achieve military readiness. I do
    believe it is going to require--the military at Barry Goldwater
    and the FWS, the State of Arizona, have been working together
    on a very significantly comprehensive Sonoran conservation
    strategy to try to take pressure off the Barry Goldwater Range
    and to radiate out the species conservation needs and the
    conservation strategy for that part of Arizona beyond the
    military borders.
        I believe support of that initiative, with some high-level
    expectations of forward movement, would be very well warranted.
        Senator McCain. When would we expect this agreement to be
    reached, Ms. Clark?
        Ms. Clark. I think that is something you will have to
    address to the military and the Secretary of the Interior,
    Senator. I would gladly work to see that move forward.
        Senator McCain. Since the year 2000 they have not been able
    to reach any high level agreement and 40 percent of our
    training missions are being cancelled. That is not acceptable.
        Ms. Clark. I agree.
        Senator McCain. Then I hope you would withdraw objections
    which are lodged by your organization which would prevent these
    training missions from being conducted. Are you ready to do
    that?
        Ms. Clark. I am ready, on behalf of my organization, to
    work on a common sense solution that ensures that the Sonoran
    pronghorn do not go extinct while trying to radiate pressure
    away from the military installation, Senator.
        Senator McCain. So we have pretty well established your
    priorities, Ms. Clark.
        Dr. Pirie, do you have anything to say about that,
    including the allegation that operations, by Ms. Clark's
    organization, operations at Camp Pendleton have basically been
    unimpeded?
        Dr. Pirie. My information is that had critical habitat been
    declared at Camp Pendleton, that operations would have been
    very significantly reduced there. Critical habitat, after all,
    changes the burden, the question of what goes on in these
    areas, from military training to protection of species. If a
    place is declared critical habitat, its primary purpose is to
    protect the endangered and threatened species that are located
    on that property, not to do the training.
        So it was certainly General Hanlon's take on it when he
    negotiated the original agreement to let the INRMP be the
    protection for the species at Camp Pendleton. It was his
    appreciation of the matter that he would be very substantially
    shut down were critical habitat to be declared for numerous
    endangered species on Camp Pendleton.
        Mr. Siegel. May I add something, Senator?
        Senator McCain. In your view, Dr. Pirie, would any cleanups
    at any installation--significant cleanups, are going and bases
    have been closed--be affected by this legislation, by this
    proposed legislation?
        Dr. Pirie. Not cleanups, not at all, Senator.
        Senator McCain. Thank you.
        I really believe that, with Vieques being shut down for
    live ordnance training, I am not sure where else there is in
    the country besides the Barry Goldwater Range and that area,
    and we simply cannot afford to have the delay in our training
    where 40 percent of the missions are cancelled. That is not an
    acceptable situation.
        I want to preserve the Sonoran pronghorn as much as other
    living Americans, perhaps more since I am a resident of the
    State of Arizona. But I am also interested in winning conflicts
    and not sacrificing needlessly young Americans' lives. This
    issue of the Goldwater Range needs to be resolved and it needs
    to be resolved quickly, and I hope that we will do so, and I
    will do whatever is necessary to resolve it as quickly as
    possible. My priorities are the safety and efficiency of our
    military.
        When the Goldwater Ranges was set up, we were fully aware
    of where the Goldwater Range was and what the habitat was and
    what animals lived there and what did not. We are not going to
    shut down the Goldwater Range for any reason that I know of
    beyond an issue of national security because of the criticality
    that they pose, the criticality of the role that they play in
    training the men and women of the United States Navy, Marine
    Corps, and Air Force.
        I thank you. I thank you, Mr. Chairman.
        Senator Ensign. Thank you.
        Senator Pryor.
        Senator Pryor. Mr. Chairman, I would like to defer to
    Senator Warner.
        Senator Warner. Mr. Chairman, I thank this gentleman very
    much.
        I would like to ask one question of Ms. Clark. Ms. Clark,
    at one time you were with the Department of the Interior and
    the FSW, am I not correct?
        Ms. Clark. Yes, Senator, I was Director from 1997 to 2001
    and an employee of the FWS from 1988 until that time.
        Senator Warner. Did you not work on the formulation of
    legislation which is very much like what is before this
    committee now?
        Ms. Clark. I worked with the late Senator Chafee on an
    isolated piece of legislation that dealt with critical habitat,
    I did, sir.
        Senator Warner. In terms of the military bases and so
    forth?
        Ms. Clark. We worked on administrative proposals to clarify
    how INRMP requirements could be framed in a way to allow for
    the balancing out through the relevant provisions of the ESA.
        Senator Warner. Mr. Chairman, I am going to go back and
    research that period, because it seems to me the current
    measures before this subcommittee are not unlike what you
    worked on when you were in that position, and yet somehow I
    feel today you have come around full circle and are now
    opposing it.
        Ms. Clark. No, Senator. As I mentioned before you arrived,
    what I am opposing is a full-scale, across the board, no holds
    barred national exemption, as opposed to specific requirements,
    administrative work-arounds, taking advantage of the current
    law. I should have responded to Senator McCain, if in fact
    there is an irreconcilable conflict at Barry Goldwater, the
    Secretary of Defense has all the authority he needs in the ESA
    today to declare an exemption, which does not even bring in the
    critical habitat issue.
        But I would be happy to work that out with you.
        Senator Warner. Would you prefer the site-specific
    exemption approach rather than the amendment of the law or the
    regulation?
        Ms. Clark. I do not think either is necessary. I believe
    that what is necessary is a clarification of what the
    requirements of an appropriate INRMP at each specific
    installation should comprise, that would allow the FWS to make
    use of current law and exclude military bases from critical
    habitat designation.
        I do not think you need a national, broad, sweeping
    exemption. I do not think you need a site-specific exemption.
    The law today allows for the appropriate address of military
    needs as long as the administrative sideboards and the
    expectations of INRMPs are clear to all the agencies involved.
        Senator Warner. I thank my colleague, Senator Pryor, for
    your courtesy. I thank the chair.
        Senator Ensign. Senator Inhofe. You yielded to Senator
    McCain. Pryor yielded to Warner.
        Senator Pryor. That is fine, Senator Inhofe.
        Senator Inhofe. That is fine.
        First of all, let me just ask a general question to Dr.
    Pirie. Dr. Pirie, during the Clinton administration you served
    as Assistant Secretary of the Navy, Installations and
    Environment, in 1994, Under Secretary of the Navy in 2000,
    Acting Secretary of the Navy in 2001. Now, the administration's
    legislative proposals have been characterized as a rollback of
    major environmental laws.
        The question, of course, that Senator Warner was getting to
    was, these are essentially the same as were proposed during
    your service in the Clinton administration. Based on your
    experience, is it a fair characterization to say that the
    legislative proposals are a rollback of major environmental
    laws?
        Dr. Pirie. No. No, Senator Inhofe, I would not say that
    they are a major rollback. I would say that they are rather
    specific and particularly targeted requests for amplification
    or clarification of congressional intent in particular
    instances.
        Senator Inhofe. Do you believe that the DOD commitment to
    environmental protection and stewardship will decrease if these
    legislative proposals are enacted?
        Dr. Pirie. No, I do not believe that at all, sir.
        Senator Inhofe. Ms. Clark, you have mentioned Camp Lejeune
    and General Mize and I would like to have you repeat what you
    have said in your statement about his comments on the red-
    cockaded woodpecker at Camp Lejeune. You do not have to have it
    exactly, just what do you recall that he said?
        Ms. Clark. I have the direct quote. It says: ``I can say
    with confidence that the efforts of the natural resource
    managers and the training committee have produced an
    environment in which endangered species management and the
    military training are no longer considered mutually exclusive,
    but are compatible.''
        Senator Inhofe. That is really interesting because--and I
    am going to follow up with him to see when he said this and
    what the circumstances were. I chaired this Readiness and
    Management Support Subcommittee for a number of years and I
    made several trips to Camp Lejeune. Each time I went--I will
    say this, that the military have been great stewards of the
    environment. In fact, they have done such a good job that they
    are their own worst enemy.
        Mr. Chairman, I can remember going into the Camp Lejeune
    and seeing the areas where, because of suspected critical
    habitat, they were not able to train and then go back 2 years
    later and they have used up even more of it. So this does
    concern me because without exception on the trips that I have
    made down there they all say that this is having a very bad
    effect on our quality of training and we are not able to do the
    things we should be able to do.
        This means a lot to me. Senator McCain talked about live-
    ordnance training and those of us who have been in the military
    understand that it is very significant. In my opening statement
    I said that we have a--in the case of Vieques, when we lost the
    range there, there was an accident that occurred on the Daru
    Range in Kuwait that actually had the effect, it killed five
    people, four of whom were Americans. The accident report
    specifically said that that was the result of not having live-
    range training.
        This really concerns me, particularly when you look at one
    of the few live ranges left as being the one in Arizona losing
    perhaps 40 percent of its capability.
        Now, let me just ask you a question. Where are we going to
    go and find areas for live training if all these court
    decisions go against us and if these current problems that we
    have continue?
        Ms. Clark. Well, first, Senator--and I am painfully aware
    of the amount of litigation surrounding the ESA. It was huge
    when I was still with the Department and I suspect it is pretty
    high today. But again, the court decision that everyone is
    referring to does nothing to constrain the flexibility of the
    FWS as it addresses critical habitat.
        Another point about Camp Lejeune or Fort Bragg or Fort
    Benning or Avon Park, all those installations that have red-
    cockaded woodpeckers in the Southeast, is, like Barry Goldwater
    and the Sonoran pronghorn, the proposal before this committee
    by the Defense Department really does not do anything to
    address those conflicts because there is no critical habitat
    designated for the red-cockaded woodpecker, though I would
    agree with you that there are some pretty significant
    challenges at those installations in the southeast that need a
    very different kind of work-around solution.
        But today's discussion on critical habitat and the outcome
    of the deliberations on this will have nothing to do with
    solving any of the challenges at Camp Lejeune or any other
    installation with red-cockaded woodpeckers.
        Senator Inhofe. But you had brought up Camp Lejeune and
    General Mize and the statement that he made.
        Ms. Clark. Correct.
        Senator Inhofe. I wanted to make sure that we pursued that
    a little bit.
        Ms. Clark. Absolutely.
        Senator Inhofe. Because I have spent some time there.
        Let us look into a real operational situation. What would
    be the result--we were talking about the LFA, Dr. Ketten. What
    would be the result if the judge in the final decision rules in
    June against the DOD in terms of what our capabilities would
    be? First of all, can we utilize the wartime exemption under
    the Marine Mammal Protection Act?
        Dr. Ketten. Actually, sir, I am not an appropriate person
    to address that.
        Senator Inhofe. Or Ms. Clark? I think we cannot; is that
    correct?
        Ms. Clark. Ms. Young.
        Ms. Young. I will be happy to respond, Senator. There is an
    exemption that is afforded to the Secretary under the Armed
    Forces Code that could be utilized in that situation. Also, the
    court case is germane to the testing of LFA. It could go
    forward during time of war as we are in now. So LFA can and
    probably is being used in this instance and is not impeded in
    any such way.
        Also, I would like to go back to a couple of statements
    that were made earlier with regard to the ship shock trials.
    The John Paul Jones ship shock trial was not stopped. It was
    merely moved out of the Monterey Bay sanctuary.
        Senator Inhofe. I am going to interrupt you because that is
    not the question I asked you. Now, the MMPA does not have the
    national security exemption that the others have; is that
    correct?
        Ms. Young. That is correct.
        Senator Inhofe. All right. So let us look and see what kind
    of exposure we would have. If we cannot use the SURTASS LFA
    sonar, can our fleet adequately detect a quiet diesel submarine
    operating on battery power without using that?
        Ms. Young. They can, because they can use the exemption
    under the Armed Forces Code.
        Senator Inhofe. Dr. Ketten?
        Dr. Ketten. Senator, the reason I deferred the question off
    of me is that your question was about what would be the
    alternatives and I think that is actually an appropriate
    question for NOAA Fisheries or for any of the regulatory
    agencies, rather than anyone on this immediate panel to answer
    in terms of speculations, from the knowledge that we do have.
        I would have to disagree that we could effectively detect
    diesel subs. They are not detectible by conventional sonars
    readily and the advantage to LFA is being able to detect them
    long-range.
        Senator Inhofe. Detect diesel subs?
        Dr. Ketten. Well, to detect all types of subs, but
    explicitly diesel, which do not have an acoustic signature that
    is readily detectible.
        So the issues of what would happen if LFA--I do not think
    that anyone here, certainly--well, possibly Dr. Pirie would be,
    but--is qualified to say if we would have other adequate
    techniques, but my familiarity with subs and their detection
    techniques would suggest that we do not.
        Senator Inhofe. Maybe I am wrong, but I have been told that
    the LFA is the only way you are going to be able to detect a
    diesel sub, and if you are not able to use that for any of the
    restrictions that we are talking about there is no other way it
    can be detected. Am I wrong, Dr. Pirie?
        Dr. Pirie. The issue is very quiet submarines, in shallow
    waters particularly, Senator Inhofe, and there the LFA is a
    major improvement of our capability, I would say an order of
    magnitude improvement of our capability. We would really need
    that.
        Dr. Ketten. If I might interject, it is specifically using
    lower frequencies, longer wavelengths, greater distances. While
    you can detect it nearby with conventional sonars, it is too
    late. Therefore I do not think we have an alternative.
        Senator Inhofe. So the lives of sailors on a ship not able
    to use this type of sonar could be jeopardized?
        Dr. Pirie. I think that is fair, Senator. A wartime
    exclusion, while it would be welcome, if you had not been able
    to use the equipment and train on it and get the sailors
    familiar with it before the war started, you would not have a
    very effective organization employing it.
        Senator Inhofe. I am sorry, Mr. Chairman. I went way over
    my time.
        Senator Ensign. Senator Pryor.
        Senator Pryor. Yes, thank you, Mr. Chairman.
        Ms. Clark, I think you mentioned this in your statement a
    few moments ago, but in your opinion what is DOD's track record
    when it comes to environmental issues?
        Ms. Clark. DOD has been really terrific environmental
    stewards over the long haul. They have a very serious
    commitment to environmental stewardship, from everything that I
    can tell when I was an Army biologist to when I was at the FWS.
    I believe that the solutions being worked out at the local
    level, at the installation levels with the field offices of the
    FWS, demonstrate that track record.
        Senator Pryor. But even given that background, you are
    still reluctant to agree with what DOD wants at this point?
        Ms. Clark. Those are two different issues. I think that the
    installation, FWS, field office kind of local, tailored
    solutions case by case, species by species, military training
    activity, however it works out, you end up with dovetailed
    solutions that work for military readiness and species
    conservation being worked out among experts in military
    training and species conservation, and you have that
    appropriate check and balance along the way.
        To do a broad-scale national exemption that says, you have
    an INRMP you are exempt, does not lend itself to the site-
    specific evaluations that are conducted.
        The flexibility of the ESA is really unbelievably clear. If
    for some reason there was a--you know, you can work it out. You
    balance out the critical habitat through the section 4(b)(2)
    exclusion, and the Secretary of Defense always has that hole
    card. He does not have to go to the President. The Secretary of
    Defense always has that trump card of national security
    exemption as contained in section 7(j).
        So I believe that the appropriate checks and balances are
    in the law, the appropriate flexibilities are in the law, and
    the ability at the local level to work these issues out has
    been demonstrated over and over again.
        Senator Pryor. Dr. Ketten, you are a scientist. I was
    curious about the science relating to the sonar.
    Scientifically, what evidence is there that it is adversely
    affecting marine life?
        Dr. Ketten. Senator, you are referring to sonar in general,
    or mid-range?
        Senator Pryor. Well, I am talking about the LFA sonar.
        Dr. Ketten. There is no evidence related to LFA of physical
    harm to any marine mammal, to the best of my knowledge.
        Senator Pryor. Not physical harm. What about changing in
    behavioral patterns or mating habits or moving out of waters
    where it is being used? Tell the subcommittee about that.
        Dr. Ketten. The behavioral studies that were done indicated
    that at the anticipated received levels, there were no
    significant behavioral changes. Going back to the question of
    biological significance as opposed to individual impacts, which
    Senator Ensign had asked before, biological significance means
    that you impact the population, the ability of the species
    locally or more broadly to survive, to grow, or to prosper. It
    does not mean that a single individual has a temporary or
    permanent effect on it.
        The conclusion of the studies from the LFA behavioral
    trials where the sources were being used at lower than
    operational levels, but still the received level at the animal
    is the critical issue, not the source level, was that there
    were no indications of significant behavioral effects.
        Senator Pryor. So is it your opinion then that it has no
    adverse effect on marine life?
        Dr. Ketten. It is my opinion that we have no data
    indicating there would be an adverse effect if deployed as it
    has been described.
        Senator Pryor. Okay.
        Ms. Young, do you recognize the importance of detecting
    this new generation of diesel submarines? Do you recognize that
    as an important military purpose?
        Ms. Young. Yes, I do. We have not stopped the use of LFA.
    We have restricted its use. It is still being used. It is still
    being tested in an area that is restricted from what was
    originally proposed. So we have not stopped its use. We
    recognize its importance.
        But I think what we need to focus on here is the changes
    that we are talking about in this legislation and the term is
    ``biological significance'' and I have heard discussions about
    animals turning their heads. That is not what this is about. We
    are talking about sweeping changes that would modify the
    definition of harassment and incidental take to such an extent
    that many of these activities would no longer be required to
    get a permit.
        We are not talking about the agency issuing permits for
    animals that have turned their heads. There have been over 20
    permits issued to the military. What we are talking about in
    terms of permits that have been issued to them are for ship
    shock trials where thousands of pounds of explosives have been
    used and so we needed to monitor and mitigate that activity.
        We are also talking about missile firings where animals
    stampede and pups are killed or other animals are killed, when
    an entire population is flushed into the sea. What we do not
    know scientifically when we are talking about biological
    significance or insignificance--people like the Marine Mammal
    Commission acknowledge that we can not distinguish between
    activities that will have significant long-term effects and
    those that will not. We cannot really distinguish between
    biological significance and insignificance.
        To show you the problems that we have in some areas such as
    Hawaii, we have 20 species of animals in Hawaii, 8 of those
    have no population estimates whatsoever. We know virtually
    nothing about them. We do not even know what the human impacts
    or level of harassment are to those animals. So we cannot
    assess negligible impact. We cannot even begin to assess what
    the military activities, let alone other human activities, will
    have to the survival and reproduction and recovery of these
    animals.
        Senator Pryor. Dr. Pirie, I have one quick question for
    you. You mentioned the encroachment on Pendleton and later a
    witness--I believe it was Ms. Clark--said that there was
    something about the DOD claiming it was 57 percent and then now
    it is actually just 1 percent. Could you talk about that?
        Dr. Pirie. I am not really current, Senator Pryor, in this
    area. I could only repeat what I knew as of the time I left the
    Department, and that was that General Hanlon, who was then
    commander out there, felt that 57 percent of his available area
    would be impacted in one way or another by one or another of
    the critical habitat designations for various different
    endangered and threatened species.
        Mr. Siegel. Senator, may I add something about Camp
    Pendleton?
        Senator Pryor. Yes.
        Mr. Siegel. The major threat to Camp Pendleton today is
    urban sprawl. There is a proposed new city at Mission Viejo
    just on the northern boundary of the base, underlying
    significant military air space. The State of California has
    passed legislation which would require the locality to consider
    military readiness in evaluating that, but thus far the Defense
    Department has not come up with the funds that the Navy had
    asked for to implement that.
        The facility wants to buy a buffer zone there. There are
    solutions to these problems out there, and again they are not
    necessarily in the legislation proposed by the Defense
    Department. Camp Pendleton is being encroached upon, no doubt
    about it.
        Senator Pryor. Mr. Chairman, if you will indulge me just
    for another 30 seconds just to follow up on that. This is
    really for whoever wants to take it or all of you. As I
    understand, Camp Pendleton's situation is there is a lot of
    urban encroachment, suburban development all around it, but
    also there are--and certainly there are environmental issues
    related to it. But there are also cultural issues about Native
    American remains, and there is a whole range of issues.
        So from my perspective--and tell me if I am wrong--the
    environmental piece of the puzzle is an important piece to Camp
    Pendleton, but it would be misleading to say it is the only
    piece. There are a lot of different issues that relate to Camp
    Pendleton.
        Do you agree with that?
        Dr. Pirie. I certainly agree. It is part of the last green
    space in southern California and to a large degree a victim of
    its own success, because it is the habitat that is left and it
    has been very successful in protecting the species that are
    there.
        Senator Pryor. Do you agree with that?
        Ms. Clark. If I could just add one thing, Senator Pryor.
    Camp Pendleton has been in neon blinking lights for a number of
    years because of its visibility in southern California as being
    one of the last green spaces, and lots of credit to the
    military for keeping it that way for sure. It is like flying
    over the Chesapeake Bay when you see big green spots: Aberdeen
    Proving Ground and Fort Mead.
        It is just, as Mr. Siegel said, it is what is happening in
    this country today. There are two conflicting issues or
    competing stories on the Camp Pendleton issue as it relates to
    endangered species. One is the critical habitat issue. I think
    facts will show, because the final regulation of critical
    habitat demonstrates, less than 1 percent balanced out the
    military.
        The other issue that I think came up earlier had to do with
    the amphibious landing and the amount of shoreline that is
    compromised allegedly because of endangered species, when in
    effect I think Mr. Siegel's comment is really well taken here
    and that the impacts to amphibious landings comes from
    Interstate 5, they come from a railroad, they come from a
    nuclear generation plant. The only ESA conflict comes from a
    few months a year--and it does exist--where two endangered
    birds are nesting on the beach, and so there is a work-around
    for that.
        But the significant conflict on the shores of Camp
    Pendleton come from urban sprawl, not from ESA.
        Senator Ensign. I think we are going to go at least with a
    brief round of--it is a very interesting discussion that we are
    having here and so if the panel will indulge us to go at least
    with a brief round of second questioning by the Senators here.
        I want to make a couple of comments. Mr. Siegel--and I
    appreciated what you said about working together. I have
    certainly found in southern Nevada working first with Senator
    Bryan and then second with Senator Reid that we have been able
    to put together broad groups between environmentalists, the
    multi-use people, developers, everybody together, working
    together to come up with legislation that has been very good in
    southern Nevada. Nobody ever got totally what they wanted, but
    everybody agreed it was very good legislation and took a good
    balance.
        I think that that is what we are trying to achieve here, is
    balance. I think that these issues are some of the most
    difficult issues to deal with. Any time you deal with
    environmental issues--and I think Senator Inhofe mentioned it--
    we have wildly diverse testimony on the same issue. Some of
    that just comes from a different perspective that people
    address issues with.
        But Ms. Clark, when you said that the military has been--
    and you pointed out in your last a little bit of testimony with
    Senator Pryor about that the military really has done a very
    fine job in so many ways protecting the environment, especially
    I think in the last 20 years--there were mistakes made before.
    The military readily acknowledges that.
        The point is, how do we go forward here? The military is
    telling us--and they are the experts on readiness. Even Senator
    Inhofe and Senator Akaka, they have been on this subcommittee
    the longest and have probably the most expertise of any of the
    Senators sitting up here. But none of us are experts on
    military readiness and, other than Dr. Pirie, none of the rest
    of you probably are.
        But the military is telling us that there is a serious
    problem going forward, that they think that it has worked well
    using occasional exemptions, by using the INRMPs, as they call
    them. The biggest fear that they have, though, is the
    litigation, and there is a difference of opinion, Ms. Clark,
    from the current FWS on what some of this litigation has meant
    and what potentially--up in Alaska, there are some differences,
    Mr. Siegel, on some of your statements versus what the military
    is viewing.
        So I guess the challenge for us as lawmakers is to filter
    through all of what everybody is telling us, to come up with
    that delicate balance, understanding, though, that military
    readiness cannot be compromised. We are talking about lives.
    When we are talking about the low frequency radar, it is
    critical to the lives and to the defense of our country. If we
    have quiet subs that can come up into the shallow waters along
    the United States, that is not acceptable. I mean, there are
    rogue regimes out there, that we just cannot have that kind of
    thing happening, compromising the defense of the United States
    of America.
        Because the military I think has earned the respect of what
    they have done with the environment, that if they are telling
    us that the litigation going forward is going to hurt the
    readiness, I think we have to listen to them. At the same time,
    I think that the military does have to be willing to sit down
    and say: Okay, these are our proposals; are there ways that we
    can tweak them?
        You mentioned, Mr. Siegel, about the Lake Mead and the Las
    Vegas Wash and the perchlorate. The EPA testified today that
    they feel that they have all the power--and I talked to
    Administrator Whitman last night and she feels that the EPA can
    absolutely--this proposal will not affect going forward with
    the cleanup of the Las Vegas Wash in any way whatsoever. You
    seem to have a little disagreement with that. But just in case
    it does, they are going to tighten up the language on that,
    just to make sure that it does not.
        They also testified, the EPA did, that they do not feel
    that this legislation in any way is going to hurt them from
    enforcing the environmental regulations in this country
    whatsoever, that they will be able to enforce the environmental
    laws in this country.
        So there is a lot of disagreement, is the point I am
    making, between what we are hearing from some people and what
    we are hearing from other people, and there is a huge
    challenge, I guess, for us to filter through what the truth is
    or at least what the supposed truth is. I would invite your
    comments. Mr. Siegel?
        Mr. Siegel. First on the issue of perchlorate, there are
    two things. One is whether the language can be tightened so
    that properties other than operational ranges are no longer
    covered by this legislation.
        Senator Ensign. By the way, operational ranges are still
    covered. The Safe Drinking Water Act is not affected by this.
        Mr. Siegel. The Safe Drinking Water Act controls water at
    the wellhead. It is not always available as a reasonable method
    for controlling cleanup going onto ranges, characterizing it
    and protecting the ground water.
        Senator Ensign. The EPA also testified that if they think
    that there is a threat going off base--it does not even have to
    be going off base--if they think that there is a threat to
    going off base, the EPA felt--that was his testimony this
    morning by Mr. Suarez--that they can step in and stop it from
    happening.
        Mr. Siegel. There are two things. One is, without CERCLA in
    the normal way State standards, which California is developing
    for perchlorate, would not be Applicable and Appropriate
    Relevant Standards (AARS), and it would make it difficult to
    enforce State standards. We do not have a Federal standard for
    perchlorate. So it would get in the way in that point.
        You have to recall Senator, that EPA reports to the
    President. EPA officially has taken the position supporting
    this legislation. If you want to look at the technicalities,
    you are going to have to ask the EPA to supply the critiques
    that were supplied by their staff of the various aspects of
    this legislation.
        My understanding is that the staff at EPA said things very
    similar to what the attorneys general who have criticized the
    legislation. It is going to make it difficult for the States,
    who are usually the bodies who enforce these hazardous waste
    laws, to enforce them, to provide a protective standard,
    particularly for contaminants like RDX and perchlorate, where
    the military says there is no standard that they have to obey
    because there is no MCL--that is Maximum Contaminant Level--
    under the Safe Drinking Water Act.
        Now, I want to add, the question to me is not whether or
    not environmental laws--do we have an environment, do we have
    readiness? The question is can we find a middle ground between
    being allowed to do military activities anywhere, any time, in
    any fashion whatsoever, and finding a way to look at them in a
    way that still allows the military to do its job, yet protects
    the environment.
        I think it is probably possible to find a timing to use the
    Goldwater Range, yet still protect the antelope. I am not an
    expert on that. I think the people who are have to sit down and
    get that taken care of right away. But eliminating all
    restrictions are going to get us back to the place where we
    were, where the military created billions and billions of
    dollars in liabilities by messing up our country, not just in
    terms of ordnance and contamination by letting goats go wild on
    islands like Kahalava and San Clemente.
        The military is doing a good job today because we got
    together, we passed some laws, and people found solutions. Let
    us not abandon that because of the fear that somehow we are
    going to totally give up on readiness, when the real threat to
    readiness is not from the environmental laws.
        Senator Ensign. Dr. Pirie, if you could make a comment
    based on some of the things I said, and then I need to turn it
    over to Senator Akaka.
        Dr. Pirie. I think Mr. Siegel and I simply disagree as a
    matter of degree. I do not think what is proposed constitutes
    an abandonment of commitment to the protection of endangered
    species or protection of the environment. I think it is really
    an attempt to find a balance, which we, the DOD, have worked
    out with the appropriate regulators, but which keeps being
    disturbed by litigation from other parties.
        Senator Ensign. Senator Akaka, just one comment.
        I would advise this. If people want to work together--and
    Mr. Siegel, with all due respect, the last comment that you
    made about ``doing away with'' is not helpful, because we are
    not doing away with. They are trying to strike a balance here.
    I mean, certainly I do not think that anybody would say that
    INRMPs are doing away with environmental protection.
        Ms. Clark, you were a big supporter of INRMPs. INRMPs have
    been one of the hallmarks of how the Defense Department has
    protected endangered species. What the military, from what they
    are telling me is that it has worked well. What the new
    lawsuits threaten--they think that they threaten things like
    INRMPs, so that if they have to go with the exemptions,
    exemptions provide less protection than INRMPs do. I think
    everybody agrees with that.
        Everybody says, well, just go with the exemptions. The
    military even says the INRMPs provide more protections than
    going for the exceptions. The exceptions basically say they do
    not have to comply with anything. The INRMPs actually put a
    plan in place with a balance that everybody says--everybody on
    the panel has talked about balance and the INRMPs seem to be,
    at least for the endangered species, one of the places that the
    balance has occurred.
        The military is saying the courts are going to do
    basically--are afraid, and so is Fish and Wildlife. They are
    afraid that the INRMPs are going to be done away with or at
    least severely hurt as far as putting those in place and have
    to go more with the exemptions.
        I am sorry, Senator Akaka, if when you are following up
    with his, if you have time--I have taken too much time.
        Senator Akaka. Dr. Ketten and Ms. Young, 2 years ago I
    asked the National Academies to assess the state of science
    with regard to marine mammal bio-acoustics. Earlier this year,
    the National Academy's Ocean Studies Board concluded its
    survey, in which the Navy participated, as follows, and I am
    quoting: ``For 119 species of marine mammals, as well as for
    other aquatic animals, sound is the primary means of learning
    about their environment and of communicating, navigating, and
    foraging. The possibility that human-generated noise could harm
    marine mammals or significantly interfere with their normal
    activities is an issue of increasing concern. Although the
    stranding of beaked whales provides a tangible and alarming
    picture of the potential effects of high energy mid-range
    sonar, there are very limited observations concerning the
    effects of most kinds of ocean noise on marine mammals.
    ``Potential effects include changes in hearing sensitivity and
    behavioral patterns, as well as acoustically-induced stress and
    effects on other animals, such as fish, in the marine habitat.
    Most existing data are limited, short-term, nonrepeatable
    observations of marine mammal responses to human activity.''
        Would you agree that the science regarding the impact of
    ocean noise on marine mammals is still in its infancy and that
    we should proceed with caution in this area, going step by step
    and carefully monitoring the results of our actions to ensure
    that we do not make any serious mistakes, Dr. Ketten?
        Dr. Ketten. Yes. Senator, as a member of the panel and as
    an individual who assisted specifically in writing that
    paragraph, I can address the intent clearly. Further, I am the
    person who did the assessments of trauma in the beaked whales.
        Yes, I agree with that statement and that we should go
    forward with caution. But to go back to the wording, the terms
    ``balance'' and ``perspective,'' beaked whale issues have two
    very relevant cases for this committee. First of all, in terms
    of perspective, there have been an estimated 8 to 10 episodes
    in the last 60 years of strandings of beaked whales that
    involved 350 individuals, of which fewer than half of the
    animals died.
        So we are talking about approximately 175 animals that may
    have died associated with military sonar exposures in 60 years,
    compared to thousands of animals, of beaked whales
    specifically, that die each year in fisheries. How many others
    are impacted acoustically particularly?
        One of the things that the National Academy of Scientists
    (NAS) panel was concerned about is shipping, especially in our
    heaviest lanes, the North Atlantic and the North Pacific. There
    is no monitoring of that at the moment. So our perspective is
    being drawn, largely by public opinion, from dramatic, single,
    intense events.
        I would point out as the primary researcher on the beaked
    whale issues that we do not yet know the mechanism and there is
    every indication it is not a direct acoustic impact. There is
    little question, no debate really, that sonars were a
    contributory element. But again, they are relatively rare
    events involving multiple ships in particular areas with two
    species that particularly seem to be hazarded.
        The other issue was Vieques. Although Vieques was closed
    down for a variety of reasons, very complex ones, beaked whales
    entered into that. I examined every beaked whale that stranded
    in the area, particularly in the area of Vieques, for the last
    2 years and there was no animal with any indication of an
    acoustic trauma or physical trauma that could be demonstrated.
    Yet that was still brought before the Puerto Rican legislature
    as an issue for the ordnance practices in Vieques, completely
    inappropriately based on the data.
        We need to go forward with caution, but we do not need to
    stop cold. We have to look at the possibility of 175 animals
    over 60 years stopping LFA, completely inappropriately in my
    opinion.
        Senator Akaka. Ms. Young.
        Ms. Young. Thank you. I think we do need to go forward with
    caution. In many cases we have been talking today about beaked
    whales, we have been talking about acoustics. We know very
    little about beaked whales. Many of these species have not been
    described until probably the last 15, 20 years. We know
    virtually nothing about their population sizes. We know nothing
    about what the impacts of mortality associated with military
    activities, fishing activities, any of those activities, have
    on these animals.
        We are not stopping. We are moving forward. We are moving
    forward with the use of LFA, we are moving forward with ship
    shock. I think what we have here, especially when it comes to
    acoustics, is a boogeyman. We have a fear about acoustics and
    what it is going to do, and it is a fear of the unknown. Other
    than Dr. Ketten, there are very few people who understand the
    acoustic impacts to marine mammals. It has caused a breakdown
    in communication between the scientific community and the
    conservation community and that is what needs to stop.
        What we have before us is a need to distinguish between our
    experience to date with the authorization process and the fear
    of potential future litigation and what the military believes
    that litigation could potentially stop military readiness
    activities. We do not want to impede military readiness
    activities and we are not in really the position to evaluate
    the issue, but the experience that we do know shows that the
    military has been applying for permits, they have been
    receiving those permits, and that is not the problem.
        What we do need to do is enter into a dialogue with the
    military, with scientists, to understand better where the
    problems exist, to work with them within the permitting
    process, to alleviate those problems. But the bill before us
    here is not going to do that. It is going to introduce more
    interpretation ambiguity that is going to arguably result in
    greater lawsuits.
        If we just move forward with the definition of harassment
    that is before us, we have no guarantee that we are going to
    fix the process. Scientists can debate significance forever.
    But what we do need to do is get the scientists to sit down
    with the DOD and other stakeholders to decide what is the most
    sound conservation-minded way to move forward.
        Senator Akaka. Mr. Chairman, I know my time has expired.
    May I proceed with just one more question?
        Senator Ensign. Yes.
        Senator Akaka. I would like to get to Mr. Siegel. Mr.
    Siegel, when the first panel testified I asked Mr. Suarez for
    his reaction to an internal EPA memorandum recommending that
    the agency oppose DOD's proposed exemptions from the CAA and
    the cleanup statutes on the ground that the proposed exemptions
    were unnecessary and would have an adverse impact on the
    environment.
        My simple question to you is: What is your response to Mr.
    Suarez's comments on these two issues?
        Mr. Siegel. First, it is fairly clear that none of these
    statutes have interfered with military readiness activities.
    Second, they would limit the ability of regulators to regulate
    military activities as they normally do. In the case of the
    CAA, there are five provisions in the proposed legislation.
    Only one of them has a 3-year sunset clause. The other are
    permanent redefinitions of dirty air as clean air, and really
    only to allow the relocation of military air squadrons under
    base realignment or the deployment of new weapons systems, not
    an immediate readiness issue--an important issue that has to be
    addressed.
        But there is no need--basically, if the military is going
    to consider where to deploy new squadrons, where to relocate
    squadrons, I think clean air should be part of the equation
    that they look at. It is not the only factor, but it should be
    included.
        In the case of RCRA or CERCLA, I think the military, if
    they correct the language to limit it to operational ranges,
    then it appears what they are targeting is the ability of
    regulatory agencies using their normal methods, that is using
    the normal funding provided through the Defense Department, to
    control contaminants such as RDX and perchlorate from those
    operational ranges that are contaminating our drinking water
    supplies, and I think their hands would be tied.
        That is the information I am getting from people within the
    EPA at the staff and regional level who work these things on an
    ongoing basis. The military is concerned that perchlorate is
    going to cost billions and billions of dollars to clean up in
    this country, and whether it is at contractor sites or military
    sites they are worried that they are going to be footing the
    bill. That is an important question for you folks to resolve,
    as to how we should spend resources in the defense budget. But
    that to me is not a readiness issue.
        Senator Ensign. Senator Inhofe.
        Senator Inhofe. Mr. Chairman, I know we have a third panel
    and I will just make this really brief and summarize a couple
    of things.
        First of all, Dr. Ketten, I appreciate your comments about
    Vieques. Yes, there are a lot of factors that were there and
    there are a lot of phoney issues that were used. One was the
    issue on the mammals that you described. Another one was
    nonsound science having to do with anything to do with
    different types of diseases that you could get or cancers, and
    all of that has been refuted.
        It was a political problem there and we have a political
    solution that is just deplorable. As a result, as I mentioned,
    we have lost American lives.
        So the whole issue here is live-fire training. I would love
    to think that I would live long enough to see the day where it
    is not going to be necessary to do that. Unfortunately, I do
    not think that is going to happen. So right now we are losing
    our ranges. The loss of Vieques is having a rippling effect,
    not just in the Navy, Dr. Pirie, but also all the Services,
    because you go around and you go from Okinawa to Cape Wrath and
    the rest of them, we are losing the capability. In Capa de
    Lotta, we are restricted as to how we can and how many days a
    year that we can train. So it is really critical, and that is
    why this is such a significant issue.
        Just real briefly, Mr. Chairman. On this idea of using the
    national security exemption as a reason not to be doing these
    things, first of all, as far as CERCLA and RCRA are concerned,
    that takes the presidential action. You are going to have to
    have a president, and that is good for 1 year. Now, if you take
    all of the training ranges we have and present all these cases,
    that is all this guy would be doing, would be signing these
    exemptions.
        The same thing is true with the ESA. That is the Secretary
    of Defense that does that. Then there is none in the MMPA.
        Let me just make this one comment. I think it needs to go
    into the record. The administrative actions adversely affecting
    military training and other readiness activities, I was
    chairman of this subcommittee when this went into the statutes
    and this is something that is so bogged down in timing that
    this does not correct the problem. I am just going to read this
    one thing:
        ``The Secretary shall submit a written notification of the
    action and each significant adverse effect to the head of the
    executive agency taking or proposing to take the administrative
    action. At the same time, the Secretary shall transmit a copy
    of the notification to the President, to the Committee on Armed
    Services of the Senate and the Committee on Armed Services of
    the House of Representatives.``
        Now, you can see if you try to exercise that provision as
    an exemption it is just not going to work.
        Mr. Chairman, I appreciate the time that we have had for
    this particular second panel. I know we need to get to the
    third panel.
        Senator Ensign. Thank you, and I really--I have other
    questions we will submit to you, if you could get them back for
    the record. But I appreciate the discussion. I think it has
    been very healthy, and I want to thank Senator Akaka for
    suggesting that we include an airing out, I guess, of the
    issues, because they are complex, and we appreciate you, and
    excuse this panel of witnesses and call our third panel of
    witnesses, to include: Douglas H. Benevento, Executive Director
    of Colorado Department of Public Health and the Environment;
    Benedict S. Cohen, Deputy General Counsel, Environment and
    Installations, DOD; and David Mears, Senior Assistant Attorney
    General, State of Washington. [Pause.]
        If you could all summarize, once again, in under 5 minutes
    and allow some time for questions, is the time we really get
    into it. So your full statements will be made part of the
    record.
        Mr. Benevento.

    STATEMENT OF DOUGLAS H. BENEVENTO, EXECUTIVE DIRECTOR, COLORADO
              DEPARTMENT OF PUBLIC HEALTH AND ENVIRONMENT

        Mr. Benevento. Thank you very much, Mr. Chairman. My name
    is Doug Benevento and I am the Executive Director of the
    Colorado Department of Public Health and Environment. In that
    position, I am responsible for oversight of the State's air,
    water, waste, as well as the bulk of the State's health
    programs. Also I am a member of the Environmental Council of
    States (ECOS) and serve on that body's executive committee, and
    I am chair of the ECOS DOD Forum, which is designed to open
    communications with DOD for the purpose of working through
    issues such as this one. I do want to make clear today, though,
    that I am speaking for the State of Colorado and not ECOS or
    the DOD Forum.
        I am grateful that the States are being asked by this
    subcommittee for their opinions early on. I believe that, based
    upon the early outreach and the willingness that DOD and
    congressional staff have expressed to me with respect to
    working on this issue, we can craft language that meets the
    needs of all parties.
        I am here today to try and offer some suggestions that
    would be helpful in resolving some of the issues surrounding
    the proposed amendments to certain environmental laws. The
    suggestions that I offer today are based upon the principle
    that no harm to the public would be acceptable to the State of
    Colorado, DOD, or this subcommittee, and I believe the
    suggestions I will offer are consistent with this criterion.
        With some changes, in general, I think Colorado would be
    comfortable with the goal stated by the Armed Services
    Committee staff and DOD of ensuring that essential training
    activities can be accomplished and that public health is
    protected. My understanding of what DOD is proposing is certain
    exemptions and time extensions from portions of the CAA,
    exemptions from RCRA on operational ranges, and some
    clarification with respect to definition of what is a release
    under CERCLA.
        First I would like to address RCRA. I want to say at the
    outset that I do not know of any State that issues RCRA permits
    or attempts to regulate normal training activities of the
    military. Colorado has worked well with DOD on training
    activities on their sites in our State and I think that the
    proposed legislation attempts to codify a generally good
    relationship with Colorado and other States on these issues.
        I have had several conversations with DOD and Armed
    Services Committee staff on this topic and I think that I
    understand what they are attempting to accomplish and I think
    their goals in RCRA should be supportable by States. What DOD
    is seeking are protections for their training activities on a
    range. They are not, according to my conversations with them,
    seeking to exempt themselves from any impact caused by training
    off a range.
        At the outset I want to state that, like most environmental
    laws, RCRA is relatively old and almost every word in the
    statute has a meaning applied to it, either through
    adjudication, regulation, or common understanding. The current
    proposal before you seeks to change definitions in RCRA to
    exempt out certain training activities.
        The first issue I would raise with respect to the language
    as drafted is that it allows for exemptions at operational
    ranges. I cannot find a definition of an operational range in
    current law or regulation and therefore do not know to what
    ranges this section would apply.
        Second, it is also unclear from the drafting whether the
    activities exempted must be on operational ranges or whether
    certain activities can occur anywhere and still be exempted. My
    understanding from talking with DOD is that they are seeking
    exemptions from RCRA at operational ranges for legitimate DOD
    training activities. If so, this language can be clarified to
    meet that goal.
        Third, ground and surface water protection are also a
    concern in this regard and, depending upon the soil type and
    how near the ground water training would occur, there is the
    possibility of some contamination by constituents of spent or
    live ordnance. Off-site impacts could be created from these
    activities and these should be addressed. It is my
    understanding that DOD's proposal would not affect their
    obligations under the Safe Drinking Water Act and we would just
    recommend that this be stated explicitly in any legislation.
        I would like to make the following suggestions to DOD's
    language with respect to the RCRA portion of it for your
    consideration. First, do not change current definitions that
    are in current law. Instead, create an exemption under a new
    section of RCRA.
        Second, limit the exemption to active and inactive ranges
    and the munitions on those ranges. My understanding after
    talking with DOD is that they are seeking protection on active
    ranges and that they are seeking to preserve their ability to
    use inactive ranges in the future.
        Third, the exemption for inactive ranges may be
    controversial. However, the way it was explained to me by DOD
    was that these ranges are potentially useful in the future and
    the military does not want to give up their potential use
    because training sites are often difficult to find. Therefore,
    an exemption in both areas makes sense. However, from a State
    perspective it would be helpful if every few years the military
    was forced to go through a review process on these inactive
    ranges and, after seeing public input, determine whether they
    should remain inactive, go to active status, or move to cleanup
    status.
        Fourth, limit the exemption with tight language so that we
    know what we are exempting.
        Fifth, allow for some additional ground water monitoring to
    ensure that if there is some contamination and it is moving off
    site we know that and can deal with that before it does.
        Sixth, state clearly that in no way does this section
    impact cleanup responsibility of DOD once a site no longer
    meets the definition of an inactive or an active range.
        Seventh, just mandate good recordkeeping. It is much easier
    to do a cleanup when there is good recordkeeping as to what was
    shot, how many duds were fired. We have had some experience in
    Colorado where the records were not as good as we would have
    liked and it really causes a lot more expense in the future to
    go and do the survey.
        I think, with these suggestions, that you would meet the
    intent of DOD and would allow the States to be comfortable that
    we are working together with them on environmental issues.
        The next exemption in the language surrounds an exemption
    from the term ``release'' as used in CERCLA. Again, the
    suggestion I would make here is that you use active and
    inactive ranges as the operational wording, as opposed to
    operational range. This is really a limitation on Federal
    authority. Therefore, if you were to make the active-inactive
    change, it would make--I think the States should be comfortable
    with that.
        Finally, I would like to address the proposed changes in
    the CAA. Now, this is the most difficult issue to work with
    because you are dealing with potential offsite impacts. The
    legislation would exempt the military from meeting a general
    conformity test, that no Federal action will cause or
    contribute to the violation of the NACs, and would waive non-
    attainment caused by certain military readiness activities.
        There are numerous ways to handle this. My initial
    suggestion to fix this problem would be to exempt military
    readiness activities altogether, instead of for merely 3 years.
    However, you should still require that the emissions budgets be
    developed as envisioned by this proposal and then require
    offsets on other non-military readiness activities in the
    impacted areas from DOD sources. If this would not offset the
    emissions increase, then they could be required to purchase
    emissions credit from other sources in the area.
        The downside to this proposal is that it could be expensive
    and there is not often a developed trading program in a lot of
    areas.
        Another alternative would be to direct EPA to expand their
    natural events policy to include military activities. This
    allows--we use this quite a bit in the State of Colorado. This
    allows for a certain--it allows exemptions for certain
    activities, mainly natural activities. In Colorado it is a lot
    of wind-borne dust, PM-10 exceedances. It does require that
    there be some public outreach and that there be some
    restrictions on certain activities where applicable, but it
    gets you out of a non-attainment status in an area.
        The downside of this proposal, of course, would be that
    off-site impacts from training would still occur and may raise
    the concern of the community.
        I would be willing to continue to explore solutions to the
    issue brought up by DOD, but at this point I would encourage
    the subcommittee to proceed cautiously, at least with the CAA
    portion of this. I do think a lot of these issues are
    resolvable. We deal with very difficult issues in the State
    when we are regulating and this, frankly, is a difficult one,
    but it should be resolvable. We should be able to provide the
    relief to the military that they seek and we should still be
    able to protect public health and the environment.
        Thank you for asking me to testify. I will take any
    questions.
        [The prepared statement of Mr. Benevento follows:]

                    Prepared Statement by Douglas Benevento

        Good morning, my name is Doug Benevento and I am the executive
    director of the Colorado Department of Public Health and Environment.
    In that position I am responsible for the oversight of the State of
    Colorado's air, water, solid waste, and hazardous waste programs as
    well as the bulk of the State's health programs. The majority of the
    programs that I am responsible for on the environmental side are
    programs that are delegated to the State through the CAA, the Clean
    Water Act, or the Resource Conservation and Recovery Act. Also, I am a
    member of the Environmental Council of States and serve on that body's
    executive committee. Also, I am also a co-chair of ECOS' DOD forum,
    which is designed to open communications with DOD for the purpose of
    working through issues like this one. I do want to make clear though
    that today I am speaking for the State of Colorado and not ECOS or the
    DOD forum.
        It is a great honor for me to be testifying before the United
    States Senate. Prior to moving back to Colorado in June of 1999 I had
    worked for almost 10 years for Senator Allard in a variety of staff
    positions and it is truly a great honor to be testifying before a
    subcommittee he serves on. Also, I spent some time in the mid-1990s
    working for both Mr. Allard and Mr. Roberts on the House Agriculture
    Committee when Mr. Roberts chaired the full committee and Mr. Allard
    chaired a subcommittee. I am equally honored to be testifying before a
    subcommittee he serves on. Throughout the time I spent working in
    Congress I predominately worked on environmental issues and given the
    number of active and inactive military sites in Colorado, working on
    issues surrounding Federal facilities was a major issue.
        Since returning to Colorado to first run the environmental programs
    and subsequently to run the entire agency my involvement in Federal
    facilities has increased dramatically both from the standpoint of day-
    to-day cleanup and oversight of these facilities to such non-routine
    matters such as how to handle sarin nerve gas bomblets manufactured
    decades ago at the Rocky Mountain Arsenal and found in a junk pile at
    the site.
        My experience on both Capitol Hill and in State government has
    given me a unique perspective on environmental issues as they impact
    the military. Those who have a background developing environmental laws
    or those who are environmental regulators tend to automatically react
    negatively to any change in the laws that could provide more
    flexibility to the military. This conclusion is reinforced for me by
    reviewing testimony from a hearing on this issue last year where
    colleagues of mine in environmental regulation did a superb job of
    pointing out every potential and actual shortfall in a similar proposal
    without offering any suggestions for making the proposal viable.
        On the other hand, the proponents of more flexibility tend to
    develop their proposals in isolation and then spring them out at the
    last moment, professing surprise that there would be any questions that
    would arise. A good example of this was also last year when final
    language was proposed and States learned about it at about the time it
    was being considered in Congress. Last year we did not feel like our
    advice was being seriously sought or considered.
        This year is different and I am very grateful that States are being
    asked by this committee for their opinions early on. I believe that
    based upon the early outreach and the willingness that DOD and
    congressional staff have expressed to me with respect to working on
    this issue we can craft language that meets the needs of all parties.
        Much of the credit for this is due to the outreach that this
    committee and other committees are engaging in on this topic. I also
    want to thank DOD for spending a lot of time with me over the past week
    and walking through the issues they face. My experience is that these
    issues are resolvable so long as the lines of communication are open. I
    commend the subcommittee for helping open those lines of communication.
        I am here today to try and offer some suggestions that would be
    helpful in resolving some of the issues surrounding the proposed
    amendments to certain environmental laws. These amendments are called
    the Readiness and Range Preservation Initiative and seek to provide
    greater flexibility for the military so that they ensure that their
    training is done in a fashion that is timely and not hindered by
    unnecessary environmental requirements. I offer my suggestions today in
    the spirit of allowing DOD to reach that goal while at the same time
    ensuring that offsite impacts are prevented or mitigated.
        The suggestions that I offer today are based upon the principle
    that no harm to the public would be acceptable to the State of
    Colorado, DOD, or this subcommittee. I believe that the suggestions
    that I will offer are consistent with this criterion.
        Specifically, I would today like to address the proposal of DOD
    with respect to the changes they are seeking to CERCLA, RCRA, and the
    Clean Air Act (CAA). These are the environmental laws that my agency is
    either responsible for implementing through a delegation or, in the
    case of CERCLA, a law which we partner with EPA on implementing.
        With some changes in general I think Colorado would be comfortable
    with the goals stated by Armed Services Committee staff and DOD of
    ensuring essential training activities can be accomplished and that
    public health is protected.
        I would like to spend the rest of my time defining what I see as
    the issues and then offer suggestions on how those issues can be
    resolved in a fashion that ensures military training can be done
    without unnecessary delay while also ensuring that public health and
    the environment is protected. I don't have statutory language to offer
    at this time but would be happy to draft something for the subcommittee
    if it would be helpful.
        After reading the statutory language and prior testimony on this
    issue it appears as if DOD is seeking exemptions from certain portions
    of environmental laws including: the Resource Conservation and Recovery
    Act (RCRA) and the Comprehensive Environmental Response, Compensation,
    and Liability Act (CERCLA) and seeking time extensions from compliance
    with portions of the Clean Air Act. My understanding of the intent of
    the DOD in seeking these exemptions under RCRA and CERCLA is to allow
    for training at specifically identifiable sites. As I understand, DOD
    is not seeking to be excused from any cleanup obligations under RCRA or
    CERCLA for contamination it causes, nor from any off-site impacts, nor
    from obligations under the Safe Drinking Water Act. Finally, DOD is not
    seeking a permanent exemption from hazardous waste management
    requirements under RCRA at the defined sites. Under the CAA my
    understanding of the intent of the DOD is to allow for movement of
    planes and other mechanized material between bases without triggering
    immediate applicability of portions of the CAA. In short:

              1. They are seeking time extensions from portions of the
            Clean Air Act.
              2. Also, they are seeking exemptions from RCRA on operational
            ranges where the military is actively undertaking military
            training where, ``explosives, unexploded ordnance, munitions,
            munitions fragments, or constituents thereof,'' could be found.
              3. Finally, they are seeking a clarification of the
            definition of what is a release under CERCLA.

        I would like to comment on the proposed changes to RCRA, CERCLA,
    and the CAA and to offer some suggestions that from my perspective
    would make all three proposals more workable.
        First, I would like to address RCRA. I want to state at the outset
    that I don't know of any State that issues RCRA permits or attempts to
    regulate normal training activities of the military. Colorado has
    worked well with DOD on training activities on their sites in our
    State. I think the proposed legislation attempts to codify a generally
    good relationship with Colorado and other States on these issues.
        I have had several conversations with DOD and Armed Services
    Committee staff on this topic and I think that I understand what they
    are attempting to accomplish and I think their goals in RCRA should be
    supportable by States. What DOD is seeking are protections for their
    training activities on a range. They are not, according to my
    conversations with them, seeking to exempt themselves from any impact
    caused by training off of a range.
        For example, in conversations with DOD they were clear that under
    RCRA they are not seeking a change to permitting of open burning or
    open detonation (OB/OD) when used as a disposal activity. Colorado
    currently permits such activities and will continue to permit such
    activities even under their proposed concept. However, under this law
    an OB/OD activity that is a necessary part of training would be exempt.
    That is legitimate and currently the practice in Colorado and other
    States.
        At the outset I want to state that like most environmental laws
    RCRA is relatively old and almost every word in the statute has a
    meaning applied to it either through adjudication, regulation, or
    common understanding. The current proposal before you seeks to change
    definitions in RCRA to exempt out certain training activities on
    certain DOD sites.
        The first issue that I would raise is that the language as drafted
    allows for exemptions at operational ranges. I can't find a definition
    of an operational range in current law or regulation and therefore
    don't know to what ranges this section would apply. There is no
    limitation on what is an operational range and that obviously causes
    some concern.
        Second, it is also unclear from the drafting whether the activities
    exempted must be on an operational range or whether certain activities
    can occur anywhere and still be exempted. My understanding from talking
    with DOD is that they are seeking exemptions from RCRA at operational
    ranges for legitimate DOD training activities. If that is correct this
    language is too broad and should be narrowed to accomplish the end they
    are seeking--assurances that sites they operate on would not be subject
    to RCRA permitting that could interfere with their training.
        Third, ground water and surface water protection are also of
    concern in this regard. Depending upon the soil type and how near the
    ground water is to the surface there is the possibility that ground
    water could be contaminated by constituents of spent or live ordnance.
    Offsite impacts could be created from these activities and these should
    be addressed. It is my understanding that DOD's proposal would not
    affect their obligations under the Safe Drinking Water Act. It would be
    helpful if the legislation stated this explicitly.
        Therefore, I would like to suggest the following changes to the
    language that has been provided to the subcommittee. First, don't
    change current definitions or any current law; instead create an
    exemption under a new section of RCRA. Second, limit the exemption to
    active ranges and inactive ranges and the munitions on those ranges. My
    understanding after talking with DOD is that they are seeking
    protection on active ranges and that they are seeking to preserve their
    ability to use inactive ranges in the future. I would avoid creating
    new terms, such as ``operational range'' because it isn't clear what
    that means. Instead, what I would recommend is that you create an
    exemption based on current definitions. Third, the exemption for
    inactive ranges may be controversial. However, the way it was explained
    to me by DOD was that these are ranges that are potentially useful in
    the future. The military does not want to give up their potential use
    because training sites are becoming difficult to find. Therefore, an
    exemption in both these areas makes sense. However, from a State
    perspective it would be helpful if every few years the military was
    forced to go through a review process of these inactive ranges and,
    after seeking public input, determine whether they should remain
    inactive, go to active status, or move to cleanup status. Fourth, limit
    the exemption with tight language so that we all understand what we are
    exempting and what we are not exempting. Fifth, I would recommend that
    some kind of additional ground and/or surface water monitoring be
    required if conditions dictate that to be appropriate. If the monitors
    did catch contamination, then appropriate actions to prevent an
    environmental or public health concern could be required by States.
    Sixth, state clearly that in no way does this section impact cleanup
    responsibilities of DOD once the site no longer meets the definition of
    an active range. Seventh, mandate that DOD maintain good records of
    activities that take place on the range so that we know what was used
    on the site and what will be necessary for cleanup, without an
    expensive remedial investigation. Finally, it should be made clear that
    the exemptions are available only to DOD and not to contractors or
    other private parties.
        What this gets you is a solution to the expressed concern that RCRA
    could impact military training. What it does not do is expose the
    public to contaminants from ordnance. In this regard, I would also
    suggest the subcommittee strike the part of proposed
    Sec. 2019(a)(1)(A)(i)(III) that allows material that goes off-site to
    be addressed under CERCLA before States can take action under their
    authorities to protect public health and the environment. There is no
    military readiness rationale for DOD to be given this priority for off-
    range material, and States need to be able to exercise their authority
    to protect the public. We have examples in Colorado from sites like the
    Rocky Mountain Arsenal where we have found it important to have the
    ability to exercise State authority over potential off-site impacts.
        A better approach may be one that several States have already
    worked out with DOD in a collaborative effort called the ``Munitions
    Response Committee.'' In this subcommittee we have agreed with DOD to
    identify key decision points in the clean up process for which we will
    seek consensus on decisions. If that can't be achieved, there would be
    an expeditious dispute resolution process. If agreement still can't be
    achieved, each party would rely on their existing CERCLA and RCRA
    authorities for action. This approach preserves both DOD's and States'
    existing authorities while making every effort to reach agreement.
    Further, since there is some agreement on this issue currently, it
    should not require a statutory change to RCRA or CERCLA.
        Finally, there has been considerable work and thinking over the
    last several years on the role of enforceable land use controls on
    sites where contamination remains. One example is Colorado's
    environmental covenants law. Mechanisms like Colorado's law give
    communities and regulatory agencies comfort that contamination is being
    monitored and that controls to protect public health and the
    environmental are established and enforced. This kind of approach
    should be considered for munitions that remain on DOD ranges.
        With the above caveats and changes I don't think that this type of
    narrow exemption under RCRA should cause a concern for human health or
    the environment. This exemption would meet DOD's need to conduct
    readiness activities without regulatory hindrance.
        The next exemption in the language that I have seen surrounds an
    exemption from the term ``release'' as used in CERCLA for the purposes
    of triggering action under that law. The exemption from release would
    apply to explosives, ordnance, etc. on operational ranges but would not
    apply to releases offsite of an operational range.
        As with RCRA conceptually I would agree that there should be some
    middle ground that could be reached on a narrow exemption under the
    same criteria I outlined above for RCRA.
        Again I would encourage the subcommittee to abandon any rewrite of
    the body of CERCLA and instead encourage adding on an exemption to
    CERCLA.
        The change being sought by DOD is really a limitation on Federal
    power. Since Superfund is not a delegated law, this limitation would
    apply to an action by the Federal Government. The only recommendation
    we would have is that the exemption should apply, as with RCRA above,
    to active and inactive ranges and not operational ranges because as I
    noted above, there is not yet an established definition of operational
    range and therefore what that term would apply to is uncertain. There
    is a definition of active and inactive range that should have some
    common understanding amongst both the military and environmental
    regulators that should provide some certainty as to what is being
    exempted.
        Finally, I would like to address the proposed changes to the CAA.
        This portion of the proposal is the most difficult to work with
    because it involves offsite releases. As I mentioned earlier in my
    testimony the principle that I ran these proposals through was whether
    any exemption would allow for an offsite release. Within the borders of
    a training area I think that statutory flexibility is appropriate.
    However, as Colorado's top public health official I must be concerned
    about offsite releases from any activity and then I must try and ensure
    that those impacts are minimized.
        There are two applicable air quality sections of the proposed
    legislation.
        The first is conformity. There are two parts to conformity; the
    first is the concept of general conformity, and the second is
    transportation conformity.
        This legislation would exempt the military from meeting the general
    conformity test that no Federal action will cause or contribute to the
    violation of the National Ambient Air Quality Standards (NAAQS). Under
    the proposal within 3 years after starting a military readiness
    activity, DOD would have to come into compliance with the requirements
    of the applicable law. The general conformity requirements would apply
    to any non-attainment or maintenance area of a State. In Colorado for
    example, this would most likely apply to the Colorado Springs area and
    the Denver area.
        The general conformity provisions would most likely apply in
    Colorado to fog oil or fire that could lead to particulate non-
    attainment situations. An area would have to develop a full SIP showing
    that all other measures are being taken to meet attainment including
    adoption of any mandatory Federal programs prescribed for that type of
    non-attainment area.
        My concern with this language is first and foremost the offsite
    impacts of the activities and the 3-year exemption from addressing
    those offsite impacts. However, I am also slightly confused by how this
    section would be implemented. The language says that there is a 3-year
    exemption but the administrator must approve the plan. I assume that
    the administrator and the States would have to show at some point that
    within years some control of the emissions from the military readiness
    activity had occurred. Second, I would like further information as to
    when the 3-year clock would start running. Section 2018(a)(3) states
    that, ``within 3 years of the date new activities begin'' the activity
    must conform to the requirements of the CAA. I think it would be
    important to have a common understanding on when these activities begin
    to avoid confusion. For example, if planes are being brought into an
    area is that a military readiness activity that triggers this section
    or does the activity begin when the new planes start arriving or when
    they are all on site?
        Also, I think there may be an important practical problem with this
    approach. My responsibility is to protect public health and environment
    in Colorado. Therefore, if for example the Denver Metro Area were to
    fall into noncompliance with the NAAQS, my goal would be to put
    controls in place as quickly as possible to protect air quality in the
    area. Therefore, if there were a 3-year restriction on controls at any
    military readiness activity we deemed was contributing to the problem
    my response would be to make my restrictions on other sources more
    stringent to make up for what the military was not contributing. As a
    practical matter, what I would want to do in this situation is put
    control in place to ensure an area's air quality was safe. Because I
    would have to wait 3 years for certain exempted activities it would
    make sense for me to merely shift whatever burden turned out to be to
    other sources. This you can imagine would not be welcomed by those
    sources that felt they were being disproportionately controlled.
        I don't want to appear to be hypercritical of this proposal but I
    think it is important that it be fully understood prior to
    implementation so that States and EPA know fully what to expect. Also,
    it is important that DOD understand the potential impact from this
    change.
        My initial suggestion to fix this problem would be to exempt
    military readiness activities altogether instead of for merely 3 years.
    However, you should still require that the emissions budgets be
    developed as envisioned by this proposal and then require offsets on
    other non-military readiness activities in the impacted area from DOD
    sources. For example, requiring stricter controls at any power plants
    on military bases or require stricter controls for non-exempt vehicle
    fleets. If this would not offset the emissions increase then they would
    be required to purchase emissions credits from other sources in the
    area.
        This would meet the intent of DOD. However, this approach also has
    its own shortcomings that I want to be certain to point out. First, it
    could require the expenditure of significant amounts of money depending
    upon the offsets. Second, the offsets may not be available in a given
    area or may not be sufficient. Third, purchasing credits is a good
    market based approach but in many areas there is not a well-developed
    credit-trading program or credits may not be available in a given area.
        Another alternative would be to direct EPA to expand their natural
    events policy to include military activities. As you may know, EPA has
    a policy that allows States to avoid non-attainment due to natural
    events. This policy has been used by Colorado to avoid PM-10 non-
    attainment in certain areas of the State that experience significant
    windborne dust and that result in attainment problems. The purpose of
    the policy is to first recognize that there are certain uncontrollable
    events that can cause non-attainment that should not lead to non-
    attainment designation. However, this policy does have certain
    mitigation and notification requirements that could be burdensome.
    Further, the policy would likely have to be adjusted so that it would
    meet the needs of the military better.
        The downside to this proposal of course would be that offsite
    impacts from training would still occur and may raise the concern of
    the community.
        I would be willing to continue to explore solutions to the issues
    brought up by DOD but at this point I would encourage the subcommittee
    to proceed cautiously with this portion of the proposal.
        I understand that one of the motivations behind DOD's present
    proposal is concern about citizen suits potentially impacting its
    military readiness activities. Consistent with my overall comments, if
    this is a concern that Congress wishes to address, I suggest an
    exemption from citizen suits for readiness activities on active ranges
    rather than the definitional changes to the environmental laws
    proposed.
        Finally, as you are well aware, the question of sovereign immunity
    for DOD's waste management and cleanup obligations has been dealt with
    several times over the years by Congress. This has been necessary due
    to the narrow interpretation given such waivers by the courts. In the
    interest of preserving the current state of the law and just narrowly
    addressing DOD's concern, the committee may wish to affirm that any
    exemption granted not enlarge the universe of current sovereign
    immunity.
        Thank you for your time and for asking me to testify. I would like
    to finish by re-emphasizing my belief that most of the issues brought
    up by DOD are resolvable with appropriate statutory changes. However,
    the one difficult area I would encourage some caution is with changes
    to the CAA.

        Senator Ensign. Thank you.
        Mr. Cohen.

        STATEMENT OF BENEDICT S. COHEN, DEPUTY GENERAL COUNSEL,
          ENVIRONMENT AND INSTALLATIONS, DEPARTMENT OF DEFENSE

        Mr. Cohen. Thank you, Mr. Chairman. It is a privilege to be
    here to discuss the Readiness and Range Preservation
    Initiative.
        I would like at the outset to try to define what is and is
    not at issue in our legislative package. Press accounts have
    suggested that the Defense Department is broadly on the
    offensive, seeking sweeping exemptions from the environmental
    laws. It has been suggested that we seek such exemptions for
    our closed ranges, our contractors, our non-readiness
    activities, and our existing cleanup obligations concerning
    chemicals like perchlorate.
        None of these assertions accurately reflect our actual
    intent. We have already revised our proposal to clarify that it
    has no effect on closed ranges. Working with EPA, we have
    developed further language clarifying that it has no effect on
    our contractors, and we stand ready to work with this
    subcommittee or anyone else to further clarify the sole focus
    of our proposal: the Department's testing, training, and
    military operations.
        In reality, our proposals are strictly defensive in nature,
    designed to shore up existing State and Federal regulatory
    policies that are facing courtroom challenges. It is others who
    seek a sweeping change in longstanding environmental policies
    with respect to the military. They believe that military
    readiness activities have been dramatically underregulated and
    they seek through litigation to overturn existing State and
    Federal regulatory policy and to impose new and unprecedented
    burdens on our core military readiness activities.
        That, Mr. Chairman, is what is actually at issue in this
    debate. That future has arrived for the Navy through private
    litigation under the Marine Mammal Protection Act. Despite a
    volatile international situation and a serious and growing
    submarine threat to the fleet, the Navy's anti-submarine
    warfare program is being crippled through litigation.
        Last year, in the SURTASS LFA case, a court cast aside the
    expert scientific judgment of the regulatory agency. It cast
    aside as well that agency's settled interpretations of its own
    statute, interpretations validated by the National Academy of
    Sciences, and it cast aside a Navy regulatory compliance
    program 6 years in the making, based on some $10 million worth
    of cutting-edge science.
        That future is arriving very rapidly under the ESA. A wave
    of critical habitat litigation is rapidly developing. In the
    year 2000, critical habitats had been designated for just 120
    species, just over 10 percent of all those listed. Recently a
    single court order remanded the Interior Department's critical
    habitat decision for 245 species in Hawaii alone.
        One target of this wave of litigation is the Clinton
    administration policy allowing our natural resource management
    plans to serve in lieu of critical habitat. If successful, this
    challenge would fundamentally alter the way the Interior
    Department regulates our operational ranges and the way we test
    and train there. In April, just a few weeks from now, the
    Interior Department is required by court order to revisit the
    Pendleton and Miramar non-designation decisions that Ms. Clark
    referred to in her earlier testimony.
        That regulatory future is plainly visible in litigation
    seeking to reverse longstanding State and Federal regulatory
    policies under the Superfund and solid waste management
    statutes and to compel unprecedented and far more intrusive
    regulation of our test and training on operational ranges.
        We face a similar threat to readiness under the CAA.
    Although our CAA proposal is not driven by litigation, it is
    similar to the rest of our package in that it would give States
    and EPA some additional flexibility to pursue their existing
    preference to accommodate military readiness activities
    wherever possible.
        Through luck and hard work, State regulators in the past
    have been able to accommodate the basing of a new weapons
    system or the redeployment of existing systems. Our proposal
    would make it easier for them to do so, and the alternative
    could be significant delay in basing critical new weapon
    systems.
        The proposals we offer have minor environmental impacts,
    but significant benefits to readiness. They largely codify
    existing bipartisan policies that have served both readiness
    and the environment well.
        I would be pleased to take your questions.
        [The prepared statement of Mr. Cohen follows:]

                    Prepared Statement by Benedict S. Cohen

                                  INTRODUCTION

        Mr. Chairman and distinguished members of this subcommittee, I
    appreciate the opportunity to discuss with you the very important issue
    of sustaining our test and training capabilities, and the legislative
    proposal that the administration has put forward in support of that
    objective. In these remarks I would like particularly to address some
    of the comments and criticisms offered concerning these legislative
    proposals.
    Addressing Encroachment
        We have only recently begun to realize that a broad array of
    encroachment pressures at our operational ranges are increasingly
    constraining our ability to conduct the testing and training that we
    must do to maintain our technological superiority and combat readiness.
    Given world events today, we know that our forces and our weaponry must
    be more diverse and flexible than ever before. Unfortunately, this
    comes at the same time that our ranges are under escalating demands to
    sustain the diverse operations required today, and that will be
    increasingly required in the future.
        This current predicament has come about as a cumulative result of a
    slow but steady process involving many factors. Because external
    pressures are increasing, the adverse impacts to readiness are growing.
    Yet future testing and training needs will only further exacerbate
    these issues, as the speed and range of our weaponry and the number of
    training scenarios increase in response to real-world situations our
    forces will face when deployed. We must therefore begin to address
    these issues in a much more comprehensive and systematic fashion and
    understand that they will not be resolved overnight, but will require a
    sustained effort.
    Environmental Stewardship
        Before I address our comprehensive strategy, let me first emphasize
    our position concerning environmental stewardship. Congress has set
    aside 25 million acres of land--some 1.1 percent of the total land area
    in the United States. These lands were entrusted to the Department of
    Defense (DOD) to use efficiently and to care for properly. In executing
    these responsibilities we are committed to more than just compliance
    with the applicable laws and regulations. We are committed to
    protecting, preserving, and, when required, restoring, and enhancing
    the quality of the environment.

             We are investing in pollution prevention technologies
            to minimize or reduce pollution in the first place. Cleanup is
            far more costly than prevention.
             We are managing endangered and threatened species, and
            all of our natural resources, through integrated natural
            resource planning.
             We are cleaning up contamination from past practices
            on our installations and are building a whole new program to
            address unexploded ordnance on our closed, transferring, and
            transferred ranges.
        Balance
        The American people have entrusted these 25 million acres to our
    care. Yet, in many cases, these lands that were once ``in the middle of
    nowhere'' are now surrounded by homes, industrial parks, retail malls,
    and interstate highways.
        On a daily basis our installation and range managers are confronted
    with a myriad of challenges--urban sprawl, noise, air quality, air
    space, frequency spectrum, endangered species, marine mammals, and
    unexploded ordnance. Incompatible development outside our fence-lines
    is changing military flight paths for approaches and take-offs to
    patterns that are not militarily realistic--results that lead to
    negative training and potential harm to our pilots. With over 300
    threatened and endangered species on DOD lands, nearly every major
    military installation and range has one or more endangered species, and
    for many species, these DOD lands are often the last refuge. Critical
    habitat designations for an ever increasing number of threatened or
    endangered species limit our access to and use of thousands of acres at
    many of our training and test ranges. The long-term prognosis is for
    this problem to intensify as new species are continually added to the
    threatened and endangered list.
        Much too often these many encroachment challenges bring about
    unintended consequences to our readiness mission. This issue of
    encroachment is not going away. Nor is our responsibility to ``train as
    we fight.''

            2003 READINESS AND RANGE PRESERVATION INITIATIVE (RRPI)

    Overview
        DOD's primary mission is maintaining our Nation's military
    readiness, today and into the future. DOD is also fully committed to
    high-quality environmental stewardship and the protection of natural
    resources on its lands. However, expanding restrictions on training and
    test ranges are limiting realistic preparations for combat and
    therefore our ability to maintain the readiness of America's military
    forces.
        Last year, the administration submitted to Congress an eight-
    provision legislative package, the Readiness and Range Preservation
    Initiative (RRPI). Congress enacted three of those provisions as part
    of the National Defense Authorization Act for Fiscal Year 2003. Two of
    the enacted provisions allow us to cooperate more effectively with
    local and State governments, as well as private entities, to plan for
    growth surrounding our training ranges by allowing us to work toward
    preserving habitat for imperiled species and assuring development and
    land uses that are compatible with our training and testing activities
    on our installations.
        Under the third provision, Congress provided the Department a
    regulatory exemption under the Migratory Bird Treaty Act (MBTA) for the
    incidental taking of migratory birds during military readiness
    activities. We are grateful to Congress for these provisions, and
    especially for addressing the serious readiness concerns raised by
    recent judicial expansion of the prohibitions under the MBTA. I am
    pleased to inform this subcommittee that as a direct result of your
    legislation, Air Force B-1 and B-52 bombers, forward deployed to
    Anderson Air Force Base, Guam, are performing dry run training
    exercises over the Navy's Bombing Range at Farallon de Medinilla in the
    Commonwealth of the Northern Mariana Islands.
        Last year, Congress also began consideration of the other five
    elements of our RRPI. These five proposals remain essential to range
    sustainment and are as important this year as they were last year--
    maybe more so. The five provisions submitted this year reaffirm the
    principle that military lands, marine areas, and airspace exist to
    ensure military preparedness, while ensuring that the DOD remains fully
    committed to its stewardship responsibilities. These five remaining
    provisions:

             Authorize use of integrated natural resource
            management plans in appropriate circumstances as a substitute
            for critical habitat designation;
             Reform obsolete and unscientific elements of the
            Marine Mammal Protection Act, such as the definition of
            ``harassment,'' and add a national security exemption to that
            statute;
             Modestly extend the allowable time for military
            readiness activities like bed-down of new weapons systems to
            comply with Clean Air Act; and
             Limit regulation of munitions on operational ranges
            under the Comprehensive Environmental Response, Compensation,
            and Liability Act (CERCLA) and Resource Conservation and
            Recovery Act (RCRA), if and only if those munitions and their
            associated constituents remain there, and only while the range
            remains operational.

        Before discussing the specific elements of our proposal, I would
    like to address some overarching issues. A consistent theme in
    criticisms of our proposal is that it would bestow a sweeping or
    blanket exemption for the Defense Department from the Nation's
    environmental laws.\1\ No element of this allegation is accurate.
    ---------------------------------------------------------------------------
        \1\ See, e.g., The New York Times, March 22, 2003 (``[T]he Defense
    Department has asked Congress to approve a program . . . that would
    broadly exempt military bases and some operations from environmental
    regulation''); statement of Philip Clapp, President, the National
    Environmental Trust, March 5, 2003 (``The Bush administration is
    blatantly exploiting the war to exempt military bases all over the
    country from environmental laws designed to protect public health'');
    Julie Cart, Los Angeles Times, ``Military Seeks an Exemption of its
    Own'', March 19, 2003 (``[T]he Pentagon is asking Congress to exempt
    military installations . . . from environmental laws protecting marine
    mammals and endangered species and requiring the cleanup of potentially
    toxic weapons sites''); Eric Pianin, The Washington Post,
    ``Environmental Exemptions Sought'' (``[T]he Bush administration this
    week asked Congress to exempt the Defense Department from a broad array
    of environmental laws governing air pollution, toxic waste dumps,
    endangered species, and marine mammals''); John Stanton, Congress Daily
    AM, March 6, 2003 (``The Bush administration's Defense Department
    reauthorization proposal includes a raft of exemptions from
    environmental laws long sought by the Pentagon, including endangered
    species protections and air quality rules''); Natural Resources Defense
    Council website, March 12, 2003 (``[t]he Department of Defense (DOD) .
    . . seeks immunity from five fundamental Federal laws''); CQ Weekly,
    March 8, 2003, ``The Pentagon's Exemption Wish List'' (``The Defense
    Department has asked Congress to exempt military activities from a
    range of environmental laws'').
    ---------------------------------------------------------------------------
        First, our initiative would apply only to military readiness
    activities, not to closed ranges or ranges that close in the future,
    and not to ``the routine operation of installation operating support
    functions, such as administrative offices, military exchanges,
    commissaries, water treatment facilities, storage, schools, housing,
    motor pools . . . nor the operation of industrial activities, or the
    construction or demolition of such facilities.'' Our initiative thus is
    not applicable to the Defense Department activities that have
    traditionally been of greatest concern to State and Federal regulators.
    It does address only uniquely military activities--what DOD does that
    is unlike any other governmental or private activity. DOD is, and will
    remain, subject to precisely the same regulatory requirements as the
    private sector when we perform the same types of activities as the
    private sector. We seek alternative forms of regulation only for the
    things we do that have no private-sector analogue: military readiness
    activities.
        Moreover, our initiative largely affects environmental regulations
    that don't apply to the private sector or that disproportionately
    impact DOD:

             Endangered Species Act ``critical habitat''
            designation has limited regulatory consequences on private
            lands, but can have crippling legal consequences for military
            bases.
             Under the Marine Mammal Protection Act (MMPA), the
            private sector's Incidental Take Reduction Plans give
            commercial fisheries the flexibility to take significant
            numbers of marine mammals each year, but are unavailable to
            DOD--whose critical defense activities are being halted despite
            far fewer marine mammal deaths or injuries a year.
             The Clean Air Act's ``conformity'' requirement applies
            only to Federal agencies, not the private sector.

        Our proposals therefore are of the same nature as the relief
    Congress afforded us last year under the MBTA, which environmental
    groups are unable to enforce against private parties but, as a result
    of a 2000 circuit court decision were able and willing to enforce, in
    wartime, against vital military readiness activities of the DOD.
        Nor does our initiative ``exempt'' even our readiness activities
    from the environmental laws; rather, it clarifies and confirms existing
    regulatory policies that recognize the unique nature of our activities.
    It codifies and extends EPA's existing Military Munitions Rule;
    confirms the prior administration's policy on integrated natural
    resource management plans and critical habitat; codifies the prior
    administration's policy on ``harassment'' under the MMPA; ratifies
    longstanding State and Federal policy concerning regulation under RCRA
    and CERCLA of our operational ranges; and gives States and DOD
    temporary flexibility under the Clean Air Act. Our proposals are,
    again, of the same nature as the relief Congress provided us under the
    MBTA last year, which codified the prior administration's position on
    DOD's obligations under the MBTA.
        Ironically, the alternative proposed by many of our critics--
    invocation of existing statutory emergency authority--would fully
    exempt DOD from the waived statutory requirements for however long the
    exemption lasted, a more far-reaching solution than the alternative
    forms of regulation we propose.
        Accordingly, our proposals are neither sweeping nor exemptive; to
    the contrary, it is our critics who urge us to rely on wholesale,
    repeated use of emergency exemptions for routine, ongoing readiness
    activities that could easily be accommodated by minor clarifications
    and changes to existing law.
    Existing emergency authorities
        As noted above, many of our critics state that existing exemptions
    in the environmental laws and the consultative process in 10 USC 2014
    render the Defense Department's initiative unnecessary.
        Although existing exemptions are a valuable hedge against
    unexpected future emergencies, they cannot provide the legal basis for
    the Nation's everyday military readiness activities.

             The MMPA, like the MBTA, Congress amended last year,
            has no national security exemption.
             10 USC 2014, which allows a delay of at most 5 days in
            regulatory actions significantly affecting military readiness,
            is a valuable insurance policy for certain circumstances, but
            allows insufficient time to resolve disputes of any complexity.
            The Marine Corps' negotiations with the Fish and Wildlife
            Service (FWS) over excluding portions of Camp Pendleton from
            designation as critical habitat took months. More to the point,
            section 2014 merely codifies the inherent ability of cabinet
            members to consult with each other and appeal to the President.
            Since it does not address the underlying statutes giving rise
            to the dispute, it does nothing for readiness in circumstances
            where the underlying statute itself--not an agency's exercise
            of discretion--is the source of the readiness problem. This is
            particularly relevant to our RRPI proposal because none of the
            five amendments we propose have been occasioned by the actions
            of State or Federal regulators. Four of the five proposed
            amendments (RCRA, CERCLA, MMPA, and Endangered Species Act
            (ESA)), like the MBTA amendment Congress passed last year, were
            occasioned by private litigants seeking to overturn Federal
            regulatory policy and compel Federal regulators to impose
            crippling restrictions on our readiness activities. The fifth,
            our CAA amendment, was proposed because DOD and EPA concluded
            that the act's ``general conformity'' provision unnecessarily
            restricted the flexibility of DOD, State, and Federal
            regulators to accommodate military readiness activities into
            applicable air pollution control schemes. Section 2014,
            therefore, although useful in some circumstances, would be of
            no use in addressing the critical readiness issues that our
            five RRPI initiatives address.
             Most of the environmental statutes with emergency
            exemptions clearly envisage that they will be used in rare
            circumstances, as a last resort, and only for brief periods.
             Under these statutes, the decision to grant an
            exemption is vested in the President, under the highest
            possible standard: ``the paramount interest of the United
            States,'' a standard understood to involve exceptionally grave
            threats to national survival. The exemptions are also usually
            limited to renewable periods of a year (or in some cases as
            much as 3 years for certain requirements).
             The ESA's section 7(j) exemption process, which
            differs significantly from typical emergency exemptions, allows
            the Secretary of Defense to direct the Endangered Species
            Committee to exempt agency actions in the interest of national
            security. However, the Endangered Species Committee process has
            given rise to procedural litigation in the past, potentially
            limiting its usefulness--especially in exigent circumstances.
            In addition, because it applies only to agency actions rather
            than to ranges themselves, any exemption secured by the
            Department would be of limited duration and benefit: because
            military testing and training evolve continuously, such an
            exemption would lose its usefulness over time as the nature of
            DOD actions on the range evolved.
             The exemption authorities do not work well in
            addressing those degradations in readiness that result from the
            cumulative, incremental effects of many different regulatory
            requirements and actions over time (as opposed to a single
            major action).
             Moreover, readiness is maintained by thousands of
            discrete test and training activities at hundreds of locations.
            Many of these are being adversely affected by environmental
            provisions. Maintaining military readiness through use of
            emergency exemptions would therefore involve issuing and
            renewing scores or even hundreds of presidential certifications
            annually.
             Although a discrete activity (e.g., a particular
            carrier battle group exercise) might only rarely rise to the
            extraordinary level of a ``paramount national interest,'' it is
            clearly intolerable to allow all activities that do not
            individually rise to that level to be compromised or ended by
            overregulation.
             Finally, to allow continued unchecked degradation of
            readiness until an external event like Pearl Harbor or
            September 11 caused the President to invoke the exemption would
            mean that our military forces would go into battle having
            received degraded training, with weapons that had received
            degraded testing and evaluation. Only the testing and training
            that occurred after the emergency exemption was granted would
            be fully realistic and effective.

        The Defense Department believes that it is unacceptable as a matter
    of public policy for indispensable readiness activities to require
    repeated invocation of emergency authority--particularly when narrow
    clarifications of the underlying regulatory statutes would enable both
    essential readiness activities and the protection of the environment to
    continue. Congress would never tolerate a situation in which another
    activity vital to the Nation, like the practice of medicine, was only
    permitted to go forward through the repeated use of emergency
    exemptions.
        That having been said, I should make clear that the DOD is in no
    way philosophically opposed to the use of national security waivers or
    exemptions where necessary. We believe that every environmental statute
    should have a well-crafted exemption, as an insurance policy, though we
    continue to hope that we will seldom be required to have recourse to
    them. In this regard, I would like to address the March 7, 2003
    memorandum from Deputy Secretary Wolfowitz to the secretaries of the
    military departments concerning the process by which the Department
    will evaluate the use of existing exemptions under Federal
    environmental laws. As DOD has repeatedly testified, our efforts to
    address encroachment are multifaceted, and our RRPI legislative
    proposals are only one element of them. Other aspects of encroachment
    will be addressed through collaborative efforts with our State and
    Federal regulators, such as the drafting of the MBTA regulation
    mandated by Congress last year. Still others can be addressed through
    improvements in the internal policies and processes of the Defense
    Department itself.
        The Deputy Secretary's memorandum falls into this last category--
    improvements in our own internal processes. It addresses a critical
    shortcoming in our ability to efficiently and thoughtfully consider the
    use of these existing exemption authorities: the absence of an
    articulated process for developing and considering proposed exemptions.
    Accordingly, Dr. Wolfowitz directed the military departments to develop
    procedures to ensure timely evaluation of the full range of relevant
    considerations. Importantly, the Deputy Secretary required that
    proposals for exemption include, among other things, specific,
    quantified evidence of the impact of the regulation proposed for
    exemption on readiness; an explanation of the reason the readiness
    activity cannot be modified, relocated, or rescheduled to avoid
    conflict with the regulation without compromising readiness; and the
    reasonably practical efforts available to mitigate the environmental
    consequences of proceeding with the training or testing activity in
    question. These substantial evidentiary requirements are hardly an
    invitation for extensive use of exemption authority, and they certainly
    belie claims that the Defense Department has issued a call to the field
    to produce candidates for exemptions. As the memorandum states:

            ``This memorandum is not intended to signal a diminished
            commitment to the environmental programs that ensure that the
            natural resources entrusted to our care will remain healthy and
            available for use by future generations. Any decision to seek a
            statutory exemption will remain a high hurdle.''

        The memorandum itself is a direct result of the response to our
    legislative initiative last year. The most frequently heard comment on
    our RRPI proposal at that time was that the Defense Department was
    seeking new legislative flexibility without having explored the
    flexibility inherent in existing law.\2\ Although our review of our
    proposals has persuaded us that existing emergency exemptions cannot
    adequately substitute for them, for the reasons I have outlined
    previously, we did take this criticism to heart. We responded not by
    seeking a specific test case to provide an easy answer to our critics,
    but rather by attempting to articulate both a process and criteria to
    guide our use of these authorities. The memorandum has been in
    development for almost a year, and was painstakingly reviewed at every
    level of the Department. I can assure that no one in the DOD will
    lightly pursue or endorse the use of these extraordinary measures.
    ---------------------------------------------------------------------------
        \2\ See, e.g., testimony of the Hon. Jamie Rappaport Clark before
    the Senate Environment and Public Works Committee hearing on S. 2225
    and the Readiness and Range Preservation Initiative, July 9, 2002
    (``The environmental laws targeted by this administration already
    contain site-specific exemption and permitting procedures that enable
    the Defense Department to achieve its readiness objectives while still
    taking the environment into account''); Jeffrey Ruch, Public Employees
    for Environmental Responsibility, C-SPAN interview, January 16, 2003
    (``Virtually all these environmental laws have national security
    exemptions. . . These national security exemptions allow the Pentagon
    to suspend the application of environmental laws, if they can
    articulate a reason. They should actually spend some time using the
    leeway that's allowed in existing law, before suspending them.'');
    Gordon Lubold, Marine Corps Times, ``Endangered Species vs. Military
    Training'' (``National security waivers are the appropriate way for the
    Pentagon to get the flexibility it needs to do training, he said
    [quoting Michael Jasny, senior policy analyst with the Natural
    Resources Defense Council]'').
    ---------------------------------------------------------------------------
    Specific Proposals
        This year's proposals do include some clarifications and
    modifications based on events since last year. Of the five, the
    Endangered Species Act (ESA) and CAA provisions are unchanged. Let me
    address the changed provisions first.
    RCRA and CERCLA
        The legislation would codify and confirm the longstanding
    regulatory policy of EPA and every State concerning regulation of
    munitions use on operational ranges under RCRA and CERCLA. It would
    confirm that military munitions are subject to EPA's 1997 Military
    Munitions Rule while on range, and that cleanup of operational ranges
    is not required so long as material stays on the range. If such
    material moves off range, it still must be addressed promptly under
    existing environmental laws. Moreover, if munitions constituents cause
    an imminent and substantial endangerment on range, EPA will retain its
    current authority to address it on range under CERCLA section 106. (Our
    legislation explicitly reaffirms EPA's section 106 authority.) The
    legislation similarly does not modify the overlapping protections of
    the Safe Drinking Water Act, NEPA, and the ESA against environmentally
    harmful activities at operational military bases. The legislation has
    no effect whatsoever on DOD's cleanup obligations under RCRA or CERCLA
    at formerly used defense sites, closed ranges, ranges that close in the
    future, or waste management practices involving munitions even on
    operational ranges (such as so-called OB/OD activities).\3\
    ---------------------------------------------------------------------------
        \3\ In this context I should mention that for those areas, other
    than operational ranges, which require action, the Department has
    established, with representatives from the U.S. Environmental
    Protection Agency, Federal Land Managers, States, and Tribes, a
    Munitions Response Committee. The primary goal of the committee is to
    define a collaborative decisionmaking process that ensures each party's
    rights and respective responsibilities are respected. This approach
    will allow coordination and, where appropriate, integration of the
    applicable statutory and administrative authorities under Federal and
    State environmental laws. This approach ensures that action will be
    taken within an agreed upon approach when operational ranges are closed
    in the future.
    ---------------------------------------------------------------------------
        The core of our concern is to protect against litigation the
    longstanding, uniform regulatory policy that: (1) use of munitions for
    testing and training on an operational range is not a waste management
    activity or the trigger for cleanup requirements, and (2) that the
    appropriate trigger for DOD to address the environmental consequences
    of such routine test and training uses involving discharge of munitions
    is: (a) when the range closes, (b) when munitions or their elements
    migrate or threaten to migrate off-range, or (c) when munitions or
    their elements create an imminent and substantial endangerment on-
    range. The legislation clarifies and confirms the applicability of
    EPA's CERCLA section 106 authority to on-range threats to health or the
    environment, and likewise clarifies and confirms the applicability of
    both RCRA and CERCLA to migration of munitions constituents off-range.
    I should note, however, that in one respect, our RCRA and CERCLA
    proposals do extend rather than codify existing policy. Under existing
    law, in the event of off-range migration, DOD could potentially be
    subject to overlapping or even conflicting cleanup directives secured
    by different regulators or private parties under RCRA and CERCLA. To
    avoid this risk, our proposal integrates and rationalizes the
    applicability of the two statutes to off-range migration by providing
    that should such migration occur, DOD and EPA will have the opportunity
    to address it under CERCLA sections 104 and 106, respectively, but that
    should they fail to do so RCRA authorities will apply, including but
    not limited to citizen suits under section 7002 and EPA's emergency
    authority under section 7003. This provision is analogous to 40 C.F.R.
    266.202(d) of the Military Munitions Rule, which provides that a round
    that lands off-range is not a solid waste for purposes of RCRA
    corrective action or emergency authorities ``if [it] . . . is promptly
    rendered safe and/or retrieved,'' but otherwise is subject to such
    authorities.
        This legislation is needed because of RCRA's broad definition of
    ``solid waste,'' and because States possess broad authority to adopt
    more stringent RCRA regulations than EPA (enforceable both by the
    States and by environmental plaintiffs). EPA therefore has quite
    limited ability to afford DOD regulatory relief under RCRA. Similarly,
    the broad statutory definition of ``release'' under CERCLA may also
    limit EPA's ability to afford DOD regulatory relief. The President's
    site-specific, annually renewable waiver (under a paramount national
    interest standard in RCRA and a national security standard in CERCLA)
    is inapt for the reasons discussed above.
        Although its environmental impacts are negligible, the effect of
    this proposal on readiness could be profound. Environmental plaintiffs
    have filed suit at Fort Richardson, Alaska, alleging violations of
    CERCLA and Alaska anti-pollution law applicable under RCRA. If
    successful, plaintiffs could potentially force remediation of the Eagle
    River Flats impact area and preclude live-fire training at the only
    mortar and artillery impact area at Fort Richardson and dramatically
    degrading readiness of the 172nd Infantry Brigade, the largest infantry
    brigade in the Army. If successful, the Fort Richardson litigation
    could set a precedent fundamentally affecting military training and
    testing at virtually every test and training range.
        Our proposed amendments to RCRA and CERCLA have been slightly
    revised to make it absolutely unambiguous that they do not affect our
    cleanup obligations on closed ranges. Last year some misinterpreted our
    proposal to apply to closed ranges. We included new language to clarify
    that our proposals have no effect whatsoever on our legal obligations
    with respect to cleanup of closed bases, or of bases that close in the
    future. If there is a way to make this point even clearer, we would be
    delighted to do so.\4\
    ---------------------------------------------------------------------------
        \4\ In this regard, EPA and DOD have recently developed a further
    language change designed to underscore this point, which we would be
    happy to provide to the subcommittee.
    ---------------------------------------------------------------------------
        In addition, we have revised a provision in last year's bill
    designed to ensure that our proposal did not alter EPA's existing
    protective authority in section 106 of the Superfund law. This year's
    version is therefore even clearer that, notwithstanding anything in our
    proposal, EPA retains the authority to take any action necessary to
    prevent endangerment of public health or the environment in the event
    such risk arose as a result of use of munitions on an operational
    range.
        Contractor and Off-Range Liability
        Finally, I'm pleased to inform the subcommittee that EPA and DOD
    have further changes to suggest to the proposal to address concerns
    raised by some earlier testimony and comments on our proposals. The
    language DOD submitted to Congress largely tracks existing exclusions
    in the Military Munitions Rule, including 40 C.F.R. 266.202(a)(1) (i)
    and (ii), which provide that munitions used for training military
    personnel or explosives and munitions emergency response specialists,
    or for research, development, test, and evaluation (RDT&E) of military
    munitions, are not solid waste for purposes of RCRA. In the existing
    Military Munitions Rule, these exclusions are not limited to munitions
    training or RDT&E activities that occur on operational ranges; in fact,
    they apply to such activities anywhere they occur, on or off such
    ranges. Some commentators have suggested that DOD, by codifying these
    aspects of the Military Munitions Rule, was seeking to exclude itself
    and its contractors from RCRA regulation for off-range activities.
        As I have mentioned, the Military Munitions Rule adopted by EPA
    under the prior administration already fully excludes those activities
    (though not the resulting waste stream generated by them) from RCRA
    regulation; DOD supported that policy in 1997 and continues to support
    it today. Nevertheless, our Readiness and Range Preservation Initiative
    is not intended to codify all the circumstances in which munitions use
    is properly excluded from RCRA regulation. Rather, it is intended to
    address one emerging threat to our operational ranges. Accordingly, EPA
    and DOD have identified two language changes that we believe will set
    this issue to rest.
        First, in section 2019(a)(2) (A) and (B), the two provisions drawn
    from the Military Munitions Rule's exemption of munitions training and
    RDT&E, we would support the addition of the words ``on an operational
    range'' at the end of each section, thereby clarifying that these
    provisions, unlike their analogues in the Military Munitions Rule, do
    not apply to such activities outside operational ranges.\5\ Second, the
    Department submitted as a separate part of our proposed Defense
    authorization a number of general definitions, including a definition
    of ``operational range.'' In that proposed definition, it was
    explicitly stated that inactive operational ranges must be under the
    jurisdiction, custody, or control of the Department, but this was not
    explicitly stated for active operational ranges. To address any
    possible concern that as a result of this definition the Department's
    RCRA/CERCLA RRPI provision might be read to apply to ``active ranges''
    controlled by our contractors, EPA and DOD would fully support a change
    that clarified that the requirement of DOD jurisdiction, custody, or
    control applied to both active and inactive ranges.\6\
    ---------------------------------------------------------------------------
        \5\ The new provisions would thus read: ``(2) Except as set out in
    subparagraph (1), the term `solid waste,' as used in the Solid Waste
    Disposal Act, as amended, does not include explosives, unexploded
    ordnance, munitions, munitions fragments, or constituents thereof that:
    (A) are used in training military personnel or explosives and munitions
    emergency response specialists (including training in proper
    destruction of unused propellant or other munitions) on an operational
    range; (B) are used in research, development, testing, and evaluation
    of military munitions, weapons, or weapon systems on an operational
    range.''
        \6\ The provision would thus read: ``The term `operational range'
    means a range that is under the jurisdiction, custody, or control of
    the Secretary concerned and (A) is used for range activities, or (B) is
    not currently being used for range activities, but that is still
    considered by the Secretary concerned to be a range and has not been
    put to a new use that is incompatible with range activities.''
    ---------------------------------------------------------------------------
        DOD is pleased to have been able to address some of the concerns
    that we have heard concerning this proposal and stands ready to clarify
    our intent as necessary as Congress continues its consideration of
    these proposals.
        Perchlorate and RRPI
        I would also like to take the opportunity to address some other
    concerns about these provisions that in DOD's view do not warrant
    revision of the legislation. First, some observers have expressed
    concern that our RRPI legislation could intentionally or
    unintentionally affect our financial liability or cleanup
    responsibilities with respect to perchlorate. Nothing in either RRPI or
    our defense authorization as a whole would affect our financial,
    cleanup, or operational obligations with respect to perchlorate.

             As discussed above, nothing in our legislative program
            alters the financial, cleanup, or operational responsibilities
            of our contractors, or of DOD with respect to our contractors,
            either regarding perchlorate or any other chemical.
             Nothing in our legislative program alters our
            financial, cleanup, or operational responsibilities with
            respect to our closed ranges, formerly used defense sites, or
            ranges that may close in the future, either regarding
            perchlorate or any other chemical.
             Nothing in our legislative program affects the Safe
            Drinking Water Act, which provides that EPA ``upon receipt of
            information that a contaminant which is present or is likely to
            enter a public water system or an underground source of
            drinking water may present an imminent and substantial
            endangerment to the health of persons . . . may take such
            actions as [EPA] may deem necessary to protect the health of
            such persons,'' enforceable by civil penalties of up to $15,000
            a day. 42 USC 300i(a). EPA used this Safe Drinking Water order
            authority to impose a cease-fire on the Massachusetts Military
            Reservation to address groundwater contamination from
            perchlorate, and nothing in our proposal would alter the events
            that have played out there. Because this Safe Drinking Water
            Act authority is not limited to CERCLA ``releases'' or off-
            range migration, it clearly empowers EPA to issue orders to
            address endangerment either on-range or off-range, and to
            address possible contamination before it migrates off-range.
             DOD is also committed to being proactive in addressing
            perchlorate. On November 13, 2002, DOD issued a perchlorate
            assessment policy authorizing assessment ``if there is a
            reasonable basis to suspect both a potential presence of
            perchlorate and a pathway on installation[s] where it could
            threaten public health.''
        Delayed Response to Spreading Contamination
        Some commentators have expressed concern that our RRPI proposal
    would create a legal regime that barred regulators from addressing
    contamination until it reached the fence lines of our ranges, or that
    it at least reflects a DOD policy to defer any action until that point.
    As the above discussion makes clear, EPA's continuing authority under
    the Safe Drinking Water Act to prevent likely contamination clearly
    empowers the Agency to act before contamination leaves DOD ranges. In
    addition, nothing in our legislative program affects EPA's authority
    under section 106 of CERCLA to ``issu[e] such orders as may be
    necessary to protect public health and welfare and the environment''
    whenever it ``determines that there may be an imminent and substantial
    endangerment to the public health or welfare or the environment because
    of an actual or threatened release of a hazardous substance from a
    facility.'' Such orders are judicially enforceable. Because EPA's
    sweeping section 106 authority covers not only actual but ``threatened
    release,'' our proposal would therefore clearly enable EPA to address
    groundwater contamination before the contamination leaves DOD land--
    which is also the objective of DOD's existing management policies.
    Section 106 would also clearly cover on-range threats. Finally, States
    and citizens exercising RCRA authority under our RRPI RCRA provision
    addressing off-range migration could potentially use that authority to
    enforce on-range measures necessary to redress the migration where
    appropriate. Under RRPI, our range fence lines would not become Chinese
    walls excluding regulatory action either before or after off-range
    migration occurred. Finally, it is most definitely not DOD policy to
    defer action on groundwater contamination until it reaches the fence
    lines of our operational ranges, when it will be far more difficult and
    expensive to address.
        In addition, I should mention the recently completed DOD Directive
    (DODD), ``Sustainment of Ranges and Operating Areas'', which was signed
    by the Deputy Secretary of Defense for immediate implementation on
    January 10, 2003. This DODD was developed as part of our overall
    comprehensive range sustainment strategy.
        The Deputy Secretary of Defense tasked the development of this new
    directive with this guidance:

              ``. . . The Directive should assign responsibilities for
            range sustainability and require the Services to issue
            implementing directives, which specifically focus on long-term
            sustainability. Further, it should embrace `working outside the
            fence' as an overall management approach, and emphasize the
            importance of partnerships with regulators, the public, and
            land owners.''

        In fulfilling these requirements, this directive provides capstone-
    level guidance to DOD and the Services on overall policy for test and
    training range sustainment planning, management, coordination, and
    outreach. As a capstone, it is intended to serve as a guide in the
    development or revision of other directives with applicability to range
    sustainment.
        Most importantly, the directive provides that range planning and
    management will identify range requirements for both training and
    testing, identify encroachment concerns and other inhibiting factors to
    the ranges, and develop responsive plans to address conflicts. It also
    calls for functionally integrated decisionmaking--operator,
    environmental, legal and other installation/range offices or staffs.
    Coordination and outreach on sustainment issues that include off-range
    stakeholders is also directed, with a goal of promoting understanding
    of range management and use decisions and working with outside groups
    to consider their concerns and work cooperative to address shared
    concerns.
        Active vs. Inactive Ranges
        Some commentators have criticized the application of our RCRA and
    CERCLA provisions to both the active and the inactive categories of
    operational ranges, suggesting that it will motivate DOD to retain
    ranges that are never used and should be closed as nominally
    ``inactive'' ranges to defer cleanup costs. This policy question was
    addressed in section 266.201 of EPA's 1997 Military Munitions Rule,
    which established a three-part test designed to prevent such
    manipulation: ``inactive ranges'' must be ``still under military
    control and considered by the military to be potential range area, and
    . . . [must] not [have] been put to a new use that is incompatible with
    range activities.'' This test is codified in the definition of
    ``operational range'' that the Department is proposing, as discussed
    above.
        We believe that this test will appropriately limit DOD's discretion
    in characterizing ranges as ``inactive'' but still ``operational,''
    while not providing DOD with excessive incentives to close inactive
    ranges. Our range sustainment policy initiative is based on the
    recognition that DOD will not easily acquire new range lands in the
    future, even though modern precision munitions and weapons systems,
    with their longer ranges, require increasing training areas. Existing
    range lands must therefore be appropriately but not excessively
    husbanded for future needs. DOD believes that the policy embodied in
    the Military Munitions Rule and our proposed ``operational range''
    definition strikes the correct balance.
        I should also mention that DOD is taking action, in response to
    congressional direction, to make visible our range inventory. This is
    being done in two ways. First, in response to requirements in section
    311 of the National Defense Authorization Act for Fiscal Year 2002, DOD
    will make publicly available by May 31 of this year an initial
    inventory of former ranges and other areas which may require a
    munitions response action. We are now working with EPA, the Federal
    Land Managers, the States, and affected tribes to ensure this list is
    as comprehensive as possible. This list will include formerly used
    defense sites, BRAC installations, and also, most important to the
    discussion today, a list of closed ranges on active installations.
    Second, in response to the requirements of section 366 of the National
    Defense Authorization Act for Fiscal Year 2003, DOD is developing a
    list of operational ranges--which will include a delineation of active
    and inactive ranges. Together, these lists will enable an accounting of
    all areas for which we are concerned about in this discussion.
    Marine Mammal Protection Act
        This year's Marine Mammal Protection Act (MMPA) proposal includes
    new provisions as well. This year's proposal, like last year's, would
    amend the term ``harassment'' in the MMPA, which currently focuses on
    the mere ``potential'' to injure or disturb marine mammals. Our
    initiative adopts verbatim a reform proposal developed during the prior
    administration by the Commerce, Interior, and Defense Departments and
    applies it to military readiness activities. That proposal espoused a
    recommendation by the National Research Council (NRC) that the
    currently overbroad definition of ``harassment'' of marine mammals--
    which includes ``annoyance'' or ``potential to disturb''--be focused on
    biologically significant effects. As recently as 1999, the NMFS
    asserted that under the sweeping language of the existing statutory
    definition harassment ``is presumed to occur when marine mammals react
    to the generated sounds or visual cues''--in other words, whenever a
    marine mammal notices and reacts to an activity, no matter how
    transient or benign the reaction. As the NRC study found, ``If [this]
    interpretation of the law for level B harassment (detectable changes in
    behavior) were applied to shipping as strenuously as it is applied to
    scientific and naval activities, the result would be crippling
    regulation of nearly every motorized vessel operating in U.S. waters.''
        Under the prior administration, NMFS subsequently began applying
    the NRC's more scientific, effects-based definition. But environmental
    groups have challenged this regulatory construction as inconsistent
    with the statute. The Navy and the National Oceanic and Atmospheric
    Administration suffered an important setback last year involving a
    vital anti-submarine warfare sensor--SURTASS LFA, a towed array
    emitting low-frequency sonar that is critical in detecting ultra-quiet
    diesel-electric submarines while they are still at a safe distance from
    our vessels. In the SURTASS LFA litigation environmental groups
    successfully challenged the new policy as inconsistent with the
    sweeping statutory standard, putting at risk NMFS' regulatory policy,
    clearly substantiating the need to clarify the existing statutory
    definition of harassment that we identified in our legislative package
    last year.
        Second, this year's language will address new concerns resulting
    from the District Court's ruling in the SURTASS LFA case, which
    highlighted a number of structural deficiencies in application of the
    MMPA to military readiness activities that require legislative change.
    In addition to ruling against NOAA's regulatory interpretation of
    ``harassment,'' the court ruled against NOAA's longstanding application
    of the MMPA's ``small numbers'' requirement. The National Research
    Council has recommended that this provision be deleted as not
    scientifically based. Elimination of this requirement, which Congress
    has previously acknowledged is ``incapable of quantification,'' would
    instead appropriately focus impact determinations on the scientifically
    based ``negligible impacts'' standard. In addition, the litigation
    highlighted the difficulty in identifying a ``specific geographical
    region'' for permits applied to military readiness activities. Given
    the migratory nature of marine mammals, varying biological and
    bathymetric features in the environment they occupy, and the worldwide
    nature of naval operations, this requirement is extremely difficult to
    define as a legal matter. Our proposal would have no effect on NOAA's
    responsibility to satisfy itself that our activities would have
    ``negligible impacts''--a finding that necessarily entails full
    consideration of the location and timing of our readiness activities.
    It would, however, prevent critical readiness activities that have been
    validated by such scientific review from being impeded by technical
    legal issues of defining ``regions''.
        The last change we are proposing, a national security exemption
    process, also derives from feedback the Defense Department received
    from environmental advocates last year after we submitted our proposal,
    as I discussed above. Although DOD continues to believe that
    predicating essential military training, testing, and operations on
    repeated invocations of emergency authority is unacceptable as a matter
    of public policy, we do believe that every environmental statute should
    have such authority as an insurance policy. The comments we received
    last year highlighted the fact that the MMPA does not currently contain
    such emergency authority, so this year's submission does include a
    waiver mechanism. Like the Endangered Species Act, our proposal would
    allow the Secretary of Defense, after conferring with the Secretaries
    of Commerce or Interior, as appropriate, to waive MMPA provisions for
    actions or categories of actions when required by national security.
    This provision is not a substitute for the other clarifications we have
    proposed to the MMPA, but rather a failsafe mechanism in the event of
    emergency.
        The only substantive changes are those described above. The reason
    that the text is so much more extensive than last year's version is
    that last year's version was drafted as a freestanding part of title
    10--the Defense Department title--rather than an amendment to the text
    of the MMPA itself. This year, because we were making several changes,
    we concluded that as a drafting matter we should include our changes in
    the MMPA itself. That necessitated a lot more language, largely just
    reciting existing MMPA language that we are not otherwise modifying.
        The environmental impacts of our proposed reforms would be minimal.
    Although our initiative would exclude transient, biologically
    insignificant effects from regulation, the MMPA would remain in full
    effect for biologically significant effects--not only death or injury
    but also disruption of significant activities. The Defense Department
    could neither harm marine mammals nor disrupt their biologically
    significant activities without obtaining authorization from FWS or
    NMFS, as appropriate.
        Nor does our initiative depart from the precautionary premise of
    the MMPA. The precautionary principle holds that regulators should
    proceed conservatively in the face of scientific uncertainty over
    environmental effects. But our initiative embodies a conservative,
    science-based approach validated by the National Research Council. By
    defining as ``harassment'' any readiness activities that ``injure or
    have the significant potential to injure,'' or ``disturb or are likely
    to disturb,'' our initiative includes a margin of safety fully
    consistent with the precautionary principle. The alternative is the
    existing grossly overbroad, unscientific definition of harassment,
    which sweeps in any activity having the ``potential to disturb.'' As
    the National Research Council found, such sweeping overbreadth is
    unscientific and not mandated by the precautionary principle.
        Enforcement, mitigation, and monitoring, with exactly the same
    degree of transparency, will continue unchanged for naval activities
    likely to disturb biologically significant activities. Indeed, during
    the prior administration's development of our proposed language, both
    the Interior Department and the Justice Department expressed the view
    that the vagueness of the existing definition of harassment was making
    it difficult to enforce, and that the proposed language would
    facilitate prosecution of violations. The current enforcement,
    mitigation, and monitoring affected by our initiative would be that
    directed towards biologically insignificant effects--i.e., that which
    by definition does not contribute to marine mammal welfare. Nor will
    our initiative engender more debate: it will merely shift debate to
    where it should be, over biologically significant activities--not over
    the nebulous ``potential to disturb'' standard rejected by the prior
    administration, NMFS, and the National Research Council.
        The Defense Department already exercises extraordinary care in its
    maritime programs: all DOD activities worldwide result in fewer than 10
    deaths or injuries annually (as opposed to 4,800 deaths annually from
    commercial fishing activities). DOD currently funds much of the most
    significant research on marine mammals, and will continue this research
    in the future.
        Although the environmental effects of our MMPA reforms will be
    negligible, their readiness implications are profound. Application of
    the current hair-trigger definition of ``harassment'' has profoundly
    affected both vital R&D efforts and training. Navy operations are
    expeditionary in nature, which means world events often require
    planning exercises on short notice. To date, the Navy has been able to
    avoid the delay and burden of applying for a take permit only by
    curtailing and/or dumbing down training and research/testing. For 6
    years, the Navy has been working on research to develop a suite of new
    sensors and tactics (the Littoral Advanced Warfare Development Program
    (LWAD)) to reduce the threat to the fleet posed by ultraquiet diesel
    submarines operating in the littorals and shallow seas like the Persian
    Gulf, the Straits of Hormuz, the South China Sea, and the Taiwan
    Strait. These submarines are widely distributed in the world's navies,
    including ``Axis of Evil'' countries such as Iran and North Korea and
    potentially hostile great powers. In the 6 years that the program has
    operated, over 75 percent of the tests have been impacted by
    environmental considerations. In the last 3 years, 9 of 10 tests have
    been affected. One was cancelled entirely, and 17 different projects
    have been scaled back.
    Endangered Species Act
        Our Endangered Species Act provision is unchanged from last year.
    The legislation would confirm the prior administration's decision that
    an integrated natural resources management plan (INRMP) may in
    appropriate circumstances obviate the need to designate critical
    habitat on military installations. These plans for conserving natural
    resources on military property, required by the Sikes Act, are
    developed in cooperation with State wildlife agencies, the FWS, and the
    public. In most cases they offer comparable or better protection for
    the species because they consider the base's environment holistically,
    rather than using a species-by-species analysis. The prior
    administration's decision that INRMPs may adequately provide for
    appropriate endangered species habitat management is being challenged
    in court by environmental groups, who cite Ninth Circuit caselaw
    suggesting that other habitat management programs provided an
    insufficient basis for the FWS to avoid designating critical habitat.
    These groups claim that no INRMP, no matter how protective, can ever
    substitute for critical habitat designation. This legislation would
    confirm and insulate the Fish and Wildlife Service's policy from such
    challenges.
        Both the prior and current administrations have affirmed the use of
    INRMPs as a basis for possible exclusion from critical habitat. Such
    plans are required to provide for fish and wildlife management, land
    management, forest management, and fish and wildlife-oriented
    recreation; fish and wildlife habitat enhancement; wetland protection,
    enhancement, and restoration; establishment of specific natural
    resource management goals, objectives, and timeframes; and enforcement
    of natural resource laws and regulations. Unlike the process for
    designation of critical habitat, INRMPs assure a role for State
    regulators. Furthermore, INRMPs must be reviewed by the parties on a
    regular basis, but not less than every 5 years, providing a continuing
    opportunity for FWS input.
        By contrast, in 1999, the FWS stated in a notice of proposed
    rulemaking that ``we have long believed that, in most circumstances,
    the designation of `official' critical habitat is of little additional
    value for most listed species, yet it consumes large amounts of
    conservation resources. . . [W]e have long believed that separate
    protection of critical habitat is duplicative for most species.''
        Our provision does not automatically eliminate critical habitat
    designation, precisely because under the Sikes Act, the statute giving
    rise to INRMPs, the FWS is given approval authority over those elements
    of the INRMP under its jurisdiction. This authority guarantees the FWS
    the authority to make a case-by-case determination concerning the
    adequacy of our INRMPs as a substitute for critical habitat
    designation. If the FWS does not approve the INRMP, our provision will
    not apply to protect the base from critical habitat designation.
        Our legislation explicitly requires that the Defense Department
    continue to consult with the FWS and the National Marine Fisheries
    Service under section 7 of the Endangered Species Act (ESA); the other
    provisions of the ESA, as well as other environmental statutes such as
    the National Environmental Policy Act, would continue to apply, as
    well.
        The Defense Department's proposal has vital implications for
    readiness. Absent this policy, courts, based on complaints filed by
    environmental litigants, compelled the FWS to re-evaluate ``not
    prudent'' findings for many critical habitat determinations, and as a
    result FWS proposed to designate over 50 percent of the 12,000-acre
    Marine Corps Air Station (MCAS) Miramar and over 56 percent of the
    125,000-acre Marine Corps Base (MCB) Camp Pendleton. Prior to adoption
    of this policy, 72 percent of Fort Lewis and 40 percent of the
    Chocolate Mountains Aerial Gunnery Range were designated as critical
    habitat for various species, and analogous habitat restrictions were
    imposed on 33 percent of Fort Hood. These are vital installations.
        Unlike Sikes Act INRMPs, critical habitat designation can impose
    rigid limitations on military use of bases, denying commanders the
    flexibility to manage their lands for the benefit of both readiness and
    endangered species.
    Clean Air Act General Conformity Amendment
        Our CAA amendment is unchanged since last year. The legislation
    would provide more flexibility for the Defense Department in ensuring
    that emissions from its military training and testing are consistent
    with State implementation plans under the CAA by allowing DOD and the
    States a slightly longer period to accommodate or offset emissions from
    military readiness activities.
        The CAA's ``general conformity'' requirement, applicable only to
    Federal agencies, has repeatedly threatened deployment of new weapons
    systems and base closure/realignment despite the fact that relatively
    minor levels of emissions were involved.

             The planned realignment of F-14s from NAS Miramar to
            NAS Lemoore in California would only have been possible because
            of the fortuity that neighboring Castle Air Force Base in the
            same airshed had closed, thereby creating offsets.
             The same fortuity enabled the homebasing of new F/A-18
            E/Fs at NAS Lemoore.
             The realignment of F/A-18 C/Ds from Cecil Field,
            Florida, to NAS Oceana in Virginia was made possible only by
            the fortuity that Virginia was in the midst of revising its
            implementation plan and was able to accommodate the new
            emissions. The Hampton Roads area in which Oceana is located
            will likely impose more stringent limits on ozone in the
            future, thus reducing the State's flexibility.

        As these near-misses demonstrate, under the existing requirement
    there is limited flexibility to accommodate readiness needs, and DOD is
    barred from even beginning to take readiness actions until the
    requirement is satisfied.
        Our proposal does not exempt DOD from conforming to applicable
    requirements; it merely allows DOD more time--a 3-year period--to find
    offsetting reductions. This period does not apply to ``any
    activities,'' but rather to the narrow category of military readiness
    activities, which characteristically generate relatively small amounts
    of emissions--typically less than 0.5 percent of total emissions in air
    regions.
        The CAA permits the President to issue renewable 1-year waivers for
    individual Federal sources upon a paramount national interest finding,
    or to issue renewable 3-year regulations waiving the act's requirements
    for weaponry, aircraft, vehicles, or other uniquely military equipment
    upon a paramount national interest finding. Use of such time-limited
    authorities in the context of activities that are: (a) ongoing
    indefinitely, and (b) largely cumulative in effect would be difficult
    under a paramount interest standard, and would require needless
    revisiting of the issue annually or triennially.
        This provision is vitally needed to protect readiness. The more
    efficient and powerful engines that are being designed and built for
    virtually all new weapons systems will burn hotter and therefore emit
    more NOx than the legacy systems they are replacing, even though they
    will also typically emit lower levels of volatile organic compounds
    (VOCs) and carbon monoxide (CO). Without greater flexibility, the
    conformity requirement could be a significant obstacle to basing
    military aircraft in any Southern California location, as well as a
    potentially serious factor for the siting of the Joint Strike Fighter
    and the Marine Corps' Advanced Amphibious Assault Vehicle.

                         QUANTIFICATION OF ENCROACHMENT

        The final issue that I wish to raise as a part of today's hearing
    concerns our ability to better quantify how encroachment affects our
    test and training mission. This has been an ongoing criticism of our
    legislative effort as well as our broader range sustainment strategy--a
    concern raised as part of GAO's report on encroachment dated April 25,
    2002.\7\ Because of these concerns and as part of the National Defense
    Authorization Act for Fiscal Year 2003, Congress directed the Secretary
    of Defense to develop a plan to address training constraints caused by
    limitations on use of our land, sea, and air resources.
    ---------------------------------------------------------------------------
        \7\ Although some commentators have mischaracterized the GAO report
    as stating that encroachment has had no impact on military readiness,
    the report itself explicitly states that encroachment is having
    demonstrable adverse effects on readiness.
    ---------------------------------------------------------------------------
        As part of this requirement, DOD has recognized the need for better
    supporting data to substantiate our requests for encroachment relief.
    In response, the Under Secretary for Personnel and Readiness has
    recently asked the Secretary of each military department to develop and
    submit specific information to include:

             An assessment of the current and future training
            requirements of their respective Service;
             A report on implementation of a Service range
            inventory system;
             An evaluation of the adequacy of current Service
            resources to meet both current and future training requirements
            in the United States and overseas;
             A comprehensive plan to address operational
            constraints resulting in adverse training impacts caused by
            limitations on the use of, or access to, land, water, air, and
            spectrum that are available or needed in the United States and
            overseas for training; and
             A report on, or specific plans for, designation of an
            office within each of the military departments that will have
            lead responsibility for overseeing implementation of the plan.

                                   CONCLUSION

        In closing Mr. Chairman, let me emphasize that modern warfare is a
    ``come as you are'' affair. There is no time to get ready. We must be
    prepared to defend our country wherever and whenever necessary. While
    we want to train as we fight, in reality our soldiers, sailors, airmen,
    and marines fight as they train. The consequences for them, and
    therefore for all of us, could not be more momentous.
        DOD is committed to sustaining U.S. test and training capabilities
    in a manner that fully satisfies that military readiness mission while
    also continuing to provide exemplary stewardship of the lands and
    natural resources in our trust.
        Mr. Chairman, we sincerely appreciate your support on these
    important readiness issues. I look forward to working with you on our
    Readiness and Range Preservation legislation.
        Thank you.

        Senator Ensign. Thank you.
        Mr. Mears.

    STATEMENT OF DAVID K. MEARS, SENIOR ASSISTANT ATTORNEY GENERAL,
      OFFICE OF THE ATTORNEY GENERAL, ECOLOGY DIVISION, STATE OF
                               WASHINGTON

        Mr. Mears. Thank you, Mr. Chairman. I am pleased to have
    the opportunity to testify today. I appear before you with the
    testimony I present that is endorsed by the States of Colorado,
    Utah, Idaho, and my own State of Washington. We have worked
    together with the attorneys general from those States and
    developed the position that I present to you today.
        At the outset I would like to make it clear that the
    attorneys general are interested only in those statutes in
    which the States play a primary role, that is the CAA, RCRA,
    and the largely cooperative role that we play with EPA under
    CERCLA or Superfund.
        First, the attorneys general absolutely support the goal of
    maintaining the readiness of our Nation's military. As is
    highlighted by the current conflict in Iraq, our young men and
    women of our Armed Forces need to have every opportunity to be
    appropriately trained. At the same time, we have an absolute
    obligation to ensure that the public health and environment are
    protected, as is allowed the States to do under these statutes.
        We have learned from experience that military activities
    can have a significant impact on the environment and public
    health. The current statutory framework allows States to work
    together with the DOD to harmonize the readiness concerns with
    the environmental protection concerns. With that in mind, we
    would like to make three points today.
        As far as we are aware, the DOD has not identified a single
    actual instance in which these three laws that I have mentioned
    have adversely impacted readiness.
        Second, these statutes already provide sufficient
    flexibility to accommodate readiness concerns within the
    existing framework in the event that there is such a conflict.
        Third, we think that these amendments as proposed, at least
    as we have seen them to date, go far beyond the stated concerns
    and intent to deal just with readiness and could have far-
    reaching impacts beyond that.
        As I mentioned, the existing framework strikes the right
    balance. Because of the exemptions and the fact that the
    Department has never invoked these exemptions, we think that
    this aspect of the statute should be explored before making any
    changes.
        One of the strengths of the current framework is that, in
    addition to having the exemptions and the flexibility to deal
    with readiness on a site-by-site, case-by-case basis, there
    also is a requirement of the assuredness of accountability at
    all other sites, and accountability is important because
    historically the DOD and Federal agencies generally do not have
    a good history of compliance with environmental laws.
        Under our current system of governance, under which the
    States can play a significant role in ensuring that these laws
    are complied with, we are able to work and fashion site-by-
    site, case-by-case solutions when issues of readiness arise. I
    would suggest it is not luck; it is hard work and it is a high
    level of sensitivity by State officials to issues of readiness
    that have ensured that the system that exists today works.
        We would ask Congress not to turn its back on the existing
    framework and on the progress, frankly, that the DOD has made,
    significant progress over the past decade. We are making
    significant progress towards ensuring that the well-being and
    public health of our citizens does not depend on whether or not
    they live next to or adjacent to or on a military base.
        In conclusion, the States have been and remain committed to
    working with the DOD to make progress in this area. There is
    simply no evidence that State officials lack sufficient
    sensitivity to issues of military readiness. We would ask that
    Congress avoid passing any laws that preempt existing State
    authority to protect our citizens. We think that we should work
    within the current framework.
        Finally, we would ask that if this body does endeavor to
    consider these amendments, we would ask that you use the normal
    legislative process to do so and provide the opportunity for
    the committees with jurisdiction over the environmental laws to
    have the opportunity to not just hear these statutes, but to
    have a hand in crafting them.
        Thank you and I am available to answer any questions.
        [The prepared statement of Mr. Mears follows:]

                      Prepared Statement by David K. Mears

        Mr. Chairman, I am appearing today on behalf of the attorneys
    general of Colorado, Idaho, Utah, and Washington. I am also submitting
    a detailed written statement on behalf of these four and other
    attorneys general. In addition, these four Attorneys General co-
    sponsored a resolution which was passed by the National Association of
    Attorneys General at their last meeting. I will address only those
    parts of the Department of Defense's legislative proposals that would
    amend the Clean Air Act, the Resource Conservation and Recovery Act
    (RCRA) or the Comprehensive Environmental, Response, Compensation and
    Liability Act (CERCLA). The States are the primary implementers of the
    CAA and RCRA and are major partners with EPA under CERCLA.
        First, we absolutely support the goal of maintaining the readiness
    of our Nation's military. As is highlighted by the current conflict in
    Iraq, the men and women of our Armed Forces must have all appropriate
    training. At the same time, we strongly support our environmental laws
    and, we know that military activities can adversely impact human health
    and the environment. Furthering military readiness and ensuring
    environmental protection are compatible goals, not mutually exclusive
    ones. The current statutory framework allows State regulatory agencies
    to work together with the Department of Defense to harmonize military
    readiness concerns with environmental concerns.
        We would like to make three main points today.

             First, as far as we are aware, the Department of
            Defense has not identified a single instance in which these
            three laws have actually adversely impacted readiness.
            Consequently, we do not believe that the proposed amendments
            are necessary.
             Second, RCRA, CERCLA, and the CAA already provide
            sufficient flexibility to accommodate potential conflicts, in
            the unlikely event they occur.
             Third, we also think that the Department of Defense's
            amendments go far beyond its stated concerns with maintaining
            military readiness, and would likely be construed by the courts
            to provide Defense, other Federal agencies, and even private
            contractors, broad exemptions from State and EPA authority
            under RCRA, CERCLA, and the CAA.

        The existing statutory framework already strikes the right balance
    between readiness and environmental protection. The statutes of concern
    to the States already allow the President to exempt the Department of
    Defense from their requirements on a case-by-case basis. The Department
    has never invoked these exemptions for military readiness needs. In the
    unlikely event that environmental requirements imposed by States under
    these statutes conflict with military readiness, the existing
    exemptions allow sufficient flexibility to ensure readiness and still
    provide for accountability in every other case.
        Accountability is important because Federal agencies, including the
    Department of Defense, do not have a good history of compliance with
    environmental requirements. Federal agencies have consistently had a
    worse compliance record than private industry. There is one exception.
    Since 1992, when Congress authorized States to assess penalties against
    Federal agencies for hazardous waste violations, Federal agencies'
    hazardous waste compliance rates have steadily improved, and now
    surpass the private sector. We ask that Congress not turn its back on
    this progress but instead that you remain steadfast in your commitment
    to holding the Federal agencies to the same standards as everyone else.
    The well-being of our citizens should not depend on whether they happen
    to live on or near a military base.
        As an example of the problems with the Department's proposal, I
    will briefly discuss section 2019. This section defines when munitions,
    explosives, unexploded ordnance, and their constituents are solid
    wastes, and thus subject to State regulation under RCRA as hazardous
    wastes. The Department's proposed re-definition of ``solid waste'' is
    intended to, and likely does, preempt State and EPA authority over
    munitions, explosives, and the like at operational ranges.
        We disagree with the Department's position that these amendments
    simply codify EPA's existing RCRA regulations, known as the ``munitions
    rule.'' Contrary to the Department's assertions, proposed section 2019
    reaches far beyond operating ranges. This section likely also preempts
    State and EPA authority at former ranges, at Defense sites other than
    ranges, Department of Energy sites, and even at private defense
    contractor sites. In contrast, nothing in the munitions rule preempts
    State authority to require cleanup of munitions-related contamination,
    whether it be at an operating range, former range now in private
    ownership, or private defense contractor facility.
        Under section 2019, the only time munitions that have been used or
    fired on an operational range can be a solid waste is if: (1) they are
    removed from the range; (2) they are recovered and then buried; or (3)
    they migrate off range and are not addressed under CERCLA. This
    definition likely eliminates State and EPA authority over cleanup of
    munitions that were deposited on an operational range and simply remain
    there after the range closes. These residual munitions are precisely
    the problem at closed and transferred ranges. The Department of Defense
    estimates there are up to 16 million acres of former ranges
    contaminated with unexploded ordnance. Many of these ranges are now in
    private hands.
        In addition to the obvious explosive hazards, the constituents in
    many munitions and explosives have toxic or potential carcinogenic
    effects, and can contaminate groundwater. The Department of Defense's
    proposal would likely preempt or limit State and EPA authority over
    these chemical constituents. One of these chemicals is perchlorate, a
    constituent of munitions and explosives that has contaminated public
    water supply wells near the Massachusetts Military Reservation, the
    Aberdeen Proving Grounds in Maryland, and has contaminated surface and
    groundwater at hundreds of government and private defense contractor
    sites around the country.
        The States have been and remain committed to working with the
    Department of Defense to resolve issues on a case-by-case, site-by-site
    fashion under the existing framework of regulatory authority. In the
    decades since the major Federal environmental laws were passed, States
    have exercised their regulatory authority over military facilities
    responsibly. This fact is supported by the absence of efforts by the
    Department to seek exemptions. There is simply no evidence that State
    officials lack sensitivity to issues of military readiness. For these
    reasons, Congress should avoid passing laws that preempt the States'
    ability to protect our citizens. Instead, the Department should work
    with the States to develop ways to address its readiness concerns
    within the context of the environmental laws as they currently exist.
        If the Senate decides to consider these proposed amendments, we
    urge you to follow the normal legislative process for this legislation.
    The committees with jurisdiction over the environmental statutes should
    be provided the opportunity to hold public hearings and craft solutions
    to the complex issues raised by proposals to modify our system of
    environmental laws.
        Thank you and I am available to answer any questions.

     Statement by the Attorneys General of: Arizona, California, Colorado,
      Delaware, Hawaii, Idaho, Massachusetts, New Hampshire, New Mexico,
      Northern Mariana Islands, New York, Oregon, South Dakota, Utah, and
                                   Washington

                                  INTRODUCTION

        This statement is submitted on behalf of the attorneys general of
    Arizona, California Colorado, Delaware, Hawaii, Idaho, Massachusetts,
    New Hampshire, New Mexico, New York, Northern Mariana Islands, Oregon,
    South Dakota, Utah, and Washington. Our statement addresses the
    Department of Defense's recent proposed legislation to amend the Clean
    Air Act (CAA), the Resource Conservation and Recovery Act (RCRA) and
    the Comprehensive Environmental, Response, Compensation and Liability
    Act (CERCLA). The States are the primary implementers of the Clean Air
    Act and RCRA, and are major partners with EPA under CERCLA. As the
    chief law enforcement officers of our respective States, it is our duty
    to ensure compliance with our environmental laws.
        First, let us reiterate that we absolutely support the need to
    maintain military readiness, and to provide our Armed Forces with
    appropriate realistic training to minimize battlefield casualties and
    increase their combat effectiveness. There is no question of the
    importance of readiness. Historically, however, military training
    activities have caused adverse impacts on human health and the
    environment, and resulted in expensive cleanups. For example, there are
    129 DOD facilities on the Superfund National Priorities List. The
    question is whether the existing environmental laws allow the military
    to conduct these activities in a manner that maintains readiness while
    ensuring protection of human health and the environment. With respect
    to RCRA, CERCLA, and the CAA, we believe that they do. In our view,
    furthering military readiness and ensuring environmental protection are
    compatible goals, not mutually exclusive.
        We are not aware of any instance in which RCRA, CERCLA, or the CAA
    has ever caused an adverse impact on military readiness. To our
    knowledge, DOD has not cited any examples of any such conflicts. We
    note that Christine Whitman, the Administrator of the Environmental
    Protection Agency, recently testified before the Senate Environment and
    Public Works Committee that she was not aware of any training mission
    anywhere in the country that was being held up or not taking place
    because of these laws.\1\ We believe that the likelihood of a future
    conflict between these laws and military readiness is remote. In the
    unlikely event of such a conflict, these laws already provide the
    flexibility necessary to harmonize the competing concerns of military
    readiness and protection of human health and the environment.
    ---------------------------------------------------------------------------
        \1\ As reflected in the record of the Senate Environment and Public
    Works Hearings of February 26, 2003, on the President's 2004 budget for
    the Environmental Protection Agency.
    ---------------------------------------------------------------------------
        RCRA, CERCLA, and the CAA provide vital safeguards to protect the
    health of our citizens and their environment. As a general matter, we
    think that these safeguards should be maintained, not weakened.
    Certainly, any amendments that would weaken the protections these laws
    provide must be justified by important countervailing considerations
    that are supported by facts. While we certainly agree that maintaining
    readiness is necessary, the lack of any demonstrated conflict with
    RCRA, CERCLA, and CAA requirements and the inherent flexibility of
    these laws cause us to conclude that these amendments are unnecessary.
        We are concerned that DOD's proposed amendments to RCRA, CERCLA,
    and the CAA would undermine State authority and create significant
    adverse environmental impacts, with no benefit to military readiness.
    These amendments are far-reaching. The amendments to the CAA would
    allow continued violations of health-based air quality standards in
    cases where there was no impact on readiness. We disagree with DOD's
    statements that the amendments to RCRA and CERCLA only apply to
    ``operational'' ranges. As described more specifically later in this
    statement, DOD's proposed amendments to RCRA and CERCLA would likely
    have the following results:

             Section 2019 will likely be interpreted to preempt or
            impair State authority over munitions, explosives, and the like
            not only at operational ranges, but--contrary to DOD's
            assertions--also at former military ranges now in private
            ownership, DOD sites other than ranges, Department of Energy
            facilities, and even at private defense contractor sites.
             Section 2019 may preempt or impair EPA and State
            authority under RCRA and analogous State laws to require
            cleanup not only of unexploded ordnance, but also the chemical
            constituents of the ordnance such as perchlorate, TNT, or RDX--
            that may have leached out and contaminated the soil and
            groundwater. Again, this is not limited to operational ranges,
            but would likely extend to other Federal facilities, former
            military ranges now in private ownership, and defense
            contractor sites.
             Subsection 2019(a) would likely preempt States and EPA
            from using RCRA authorities to regulate the cleanup of
            unexploded ordnance and other munitions-related contamination
            at 16 million acres of land on closed, transferred, and
            transferring ranges that DOD estimates are potentially
            contaminated with unexploded ordnance. Much of this land is in
            private ownership.
             Proposed paragraph 2019(a)(2) appears to provide a
            wholesale exemption for munitions and explosives-related
            contamination that also likely extends beyond ranges to other
            Federal facilities and even to defense contractor sites. This
            exemption may encompass waste streams from the manufacture of
            explosives and munitions constituents, such as perchlorate
            contamination.
             Paragraph 2019(b)(2) arguably precludes State
            superfund authority over munitions-related contamination on
            operational ranges.
             Paragraph 2019(b)(2) also likely precludes prevents
            States from requiring cleanup of munitions-related
            contamination on 16 million acres of closed, transferred, and
            transferring ranges under State superfund-type laws.

        Finally, we are concerned with the legislative process by which
    these proposed amendments have been considered. As we understand it,
    DOD has requested that the proposed amendments be included as part of
    the Defense Authorization Bill. These amendments affect the Federal
    Government's obligations to comply with State and Federal environmental
    laws. This is an important matter of public policy, with significant
    implications for environmental protection. It deserves full hearings
    before the committees of jurisdiction, and the careful deliberation
    that regular order provides. Because Federal courts closely scrutinize
    waivers of sovereign immunity, and these proposed amendments would
    affect the waivers of immunity in RCRA and CERCLA, the need for careful
    deliberation of the proposed legislative language is even greater.
        These amendments should be subjected to regular order with hearings
    before the congressional committees with jurisdiction over the
    environmental laws, not proposed as amendments to authorization or
    appropriations bills. Last summer, the National Association of
    Attorneys General approved a resolution urging Congress to only
    consider laws that might impair State authority over Federal facilities
    through regular order.\2\
    ---------------------------------------------------------------------------
        \2\ See Exhibit 1.
    ---------------------------------------------------------------------------
    The Clean Air Act, RCRA, and CERCLA have not adversely impacted
            military readiness.
        As far as we are aware, DOD has not identified any cases in which
    RCRA or CERCLA have adversely impacted military readiness. Nor are we
    aware of any such instances. Even DOD's own background materials
    supporting the ``Readiness and Range Preservation Initiative'' for 2002
    downplay the need for amending RCRA and CERCLA, characterizing the
    impact on readiness as merely ``potentially significant''.\3\ DOD's
    justification for its proposed amendments to RCRA and CERCLA is a
    citizen suit filed in Alaska. According to DOD, this suit alleges that
    the discharge of ordnance onto an operational military range
    constitutes ``disposal'' under RCRA and a ``release'' under CERCLA.\4\
    DOD concludes that if munitions used for their intended purpose are
    considered to be statutory solid waste, the Army could be forced to
    perform corrective action or remediation of Eagle River Flats, and
    live-fire training during the remediation would be impossible.
    ---------------------------------------------------------------------------
        \3\ ``Readiness and Range Preservation Initiative Summary,'' dated
    April 18, 2002, p. 7 (atttached as Exhibit 2).
        \4\ Id.
    ---------------------------------------------------------------------------
        We disagree with DOD's conclusion. First, there are no RCRA
    imminent and substantial endangerment or illegal disposal allegations
    in the Fort Richardson citizen suit. Plaintiffs in that suit did allege
    violation of an Alaska statutory provision that prohibits pollution.\5\
    The cited provision is not part of Alaska's hazardous waste regulatory
    program; indeed, Alaska does not have a State hazardous waste program,
    much less an authorized program under RCRA. Plaintiffs in this case
    have never even alleged that used or fired munitions are a RCRA
    statutory solid waste. Thus, if this case were decided adversely to the
    Army, it would not set any precedent regarding RCRA.
    ---------------------------------------------------------------------------
        \5\ Plaintiff's Amended Complaint for Declaratory and Injunctive
    Relief, para. 29, Alaska Community Action on Toxics, et al. v. United
    States, A02-0083 CV, filed June 26, 2002 (attached as Exhibit 3).
    Plaintiffs' complaint never cites RCRA's imminent and substantial
    endangerment provision; instead, it cites 42 U.S.C. Sec. 6972(a)(1)(A),
    the RCRA citizen suit provisions authorizing suit against any person
    ``alleged to be in violation of any permit, standard, regulation,
    condition, requirement, prohibition, or order which has become
    effective pursuant to this chapter'' as a jurisdictional basis for the
    suit. See para. 3 of Exhibit 3. In paragraph 29, plaintiffs allege that
    the Army's violation of Alaska Statutes Sec. 46.03.710 constitutes a
    violation of RCRA's waiver of immunity provision, 42 U.S.C.
    Sec. 6961(a). Alaska Statutes Sec. 46.03.710 states: ``A person may not
    pollute or add to the pollution of the air land, subsurface land, or
    water of the State.''
    ---------------------------------------------------------------------------
        Even if DOD's characterization of the plaintiff's complaint were
    correct, the likelihood that cleanup requirements would preclude
    training is remote. First, remediation would only be required if the
    munitions or munitions constituents posed a risk to human health or the
    environment. Generally speaking, this would only occur in situations
    where munitions constituents were contaminating environmental media,
    such as ground or surface water. Assuming that some remediation were
    required, there is no evidence to suggest that remediation of
    environmental contamination would impact military readiness. Remedial
    approaches to contaminated sites are quite varied, and inevitably site-
    specific. Without knowing the specific details of what the problem is,
    and what the remedial alternatives are, there is simply no basis for
    assessing the impacts, if any, of cleanup on training.
        The underlying premise of DOD's position seems to be that if used
    or fired military munitions are considered statutory solid wastes under
    RCRA, or hazardous substances under CERCLA, the inevitable consequence
    will be that States will impose remedial requirements that will
    conflict with military readiness. DOD has cited no evidence to support
    this premise. States have regulated cleanup of contaminated Department
    of Energy nuclear weapons facilities and Department of Defense sites
    for decades in a responsible manner. We believe that State and EPA
    regulators have demonstrated their consistent willingness to resolve
    differences with regulated Federal officials, and to develop creative
    approaches that balance defense concerns with environmental protection.
    But if there were a case where State or EPA regulators believed that
    environmental contamination at an operation range required remediation
    to protect human health and the environment, and adverse impacts on
    readiness could not be avoided, RCRA and CERCLA already allow DOD to
    seek an exemption from such requirements on the basis of national
    security.
        Similarly, DOD has not identified any instances in which the CAA's
    conformity requirements have actually prevented the military from
    conducting the activities it believes are necessary to maintain
    readiness. Instead, it describes some ``near misses,'' and urges that
    the proposed exemption is necessary to facilitate the next round of
    base closures in 2005.\6\ These ``near misses'' are cases where, in
    fact, potentially conflicting environmental requirements and readiness
    concerns were successfully resolved through the regulatory process.
    DOD's proposed amendments to the CAA would allow continued violations
    of the health-based National Ambient Air Quality Standards without any
    demonstration that DOD could not make the necessary emissions offsets.
    ---------------------------------------------------------------------------
        \6\ Exhibit 2, p. 6.
    ---------------------------------------------------------------------------
    The environmental laws provide ample flexibility to accommodate any
            conflicts between military readiness and environmental
            protection.
        It is unlikely the CAA, RCRA, or CERCLA requirements will cause
    conflicts with military readiness. Based on experience to date, any
    such conflicts would be rare occurrences. Consequently, the case-by-
    case exemption provisions that already exist in each of these laws
    (described below) are vastly preferable to DOD's proposed across-the-
    board statutory exemption from environmental requirements. The case-by-
    case approach accommodates readiness concerns where necessary, and
    minimizes adverse environmental consequences in the vast majority of
    cases where there are no conflicts. Conversely, DOD's approach weakens
    environmental protections unnecessarily in the vast majority of cases
    where there is no adverse impact on readiness. The CAA, RCRA, and
    CERCLA already allow the President to exempt the Department of Defense
    from their statutory and regulatory requirements on a case-by-case
    basis.\7\ These are not burdensome requirements. All that is required
    is a finding that doing so is necessary for national security or is in
    the paramount interests of the United States, depending on the
    particular statute at issue. For example, President Bush recently made
    such a finding under RCRA exempting the Air Force facility ``near Groom
    Lake, Nevada, from any Federal, State, interstate, or local provision
    respecting the control and abatement of solid waste or hazardous waste
    disposal that would require the disclosure of classified information
    concerning the operating location to any authorized person.'' \8\ The
    entire finding consists of three paragraphs. President Clinton made
    similar findings annually from 1996 through 2000 regarding this same
    matter. We understand that to date, the exemption provisions of the
    CAA, RCRA, and CERCLA have never been invoked because of military
    readiness concerns.
    ---------------------------------------------------------------------------
        \7\ 42 U.S.C. Sec. Sec. 6961(a), 7418(b), and 9620(j). The RCRA
    exemption, Sec. 6961(a), provides:
          The President may exempt any solid waste management facility of
    any department, agency, or insturmentality in the executive branch from
    compliance with such a requirement if he determines it to be in the
    paramount interest of the United States to do so. No such exemption
    shall be granted due to lack of appropriation unless the President
    shall have specifically requested such appropriation as a part of the
    budgetary process and Congress shall have failed to make available such
    requested appropriation. Any exemption shall be for a period not in
    excess of 1 year, but additional exemptions may be granted for periods
    not to execeed 1 year upon the President's making a new determination.
    The President shall report each January to Congress all exemptions from
    the requirements of this section ganted during the preceding calendar
    year, together with his reason for granting each such exemption.''
        \8\ 67 Fed. Reg. 78425 (Dec. 24, 2002), attached as Exhibit 4.
    ---------------------------------------------------------------------------
        In addition to providing a case-by-case exemption, section 118(b)
    of the CAA authorizes the President to ``issue regulations exempting
    from compliance with the requirements of this section any weaponry,
    equipment, aircraft, vehicles, or other classes or categories of
    property which are owned or operated by the Armed Forces of the United
    States (including the Coast Guard) or by the National Guard of any
    State and which are uniquely military in nature.'' \9\ This provision
    allows even greater flexibility than the case-by-case exemptions in
    managing any potential conflicts between CAA requirements and readiness
    concerns. The CAA's ``general conformity'' regulations that DOD's
    amendments would override contain still more flexibility. These
    regulations allow DOD to set aside clean air requirements for up to 6
    months in response to ``emergencies,'' which, by definition, include
    responses to terrorist activities and military mobilizations. This
    exemption is renewable every 6 months through a written determination
    by DOD.\10\
    ---------------------------------------------------------------------------
        \9\ 42 U.S.C. Sec. 7418(b).
        \10\ 40 C.F.R. 93.153(e); 40 C.F.R. 152.
    ---------------------------------------------------------------------------
        Other provisions of the environmental laws provide further
    flexibility to balance environmental protection with other Federal
    priorities. For example, in 1992, Congress provided EPA authority to
    issue administrative orders under RCRA to other Federal agencies, but
    required that such agencies have the opportunity to confer with the EPA
    Administrator before any such order becomes final.\11\ Additionally,
    Congress has created a procedure that allows the Secretary of Defense
    to temporarily suspend any pending administrative action by another
    Federal agency that the Secretary determines ``affects training or any
    other readiness activity in a manner that has or would have a
    significant adverse effect on the military readiness of any of the
    Armed Forces or a critical component thereof.'' \12\ During the
    suspension, the Secretary and the head of the other Federal agency must
    consult and attempt to mitigate or eliminate the adverse impact of the
    proposed action on readiness, consistent with the purpose of the
    proposed action.\13\ If they are unable to reach agreement, the
    Secretary of Defense must notify the President, who shall resolve the
    matter.\14\
    ---------------------------------------------------------------------------
        \11\ 42 U.S.C. Sec. 6961(b)(2).
        \12\ 10 U.S.C. 2014 (a) and (d).
        \13\ 10 U.S.C. 2014(c).
        \14\ 10 U.S.C. 2014(e).
    ---------------------------------------------------------------------------
    DOD's compliance record warrants a regulatory structure that ensures
            accountability.
        A case-by-case approach to resolving any future potential conflicts
    between readiness and the requirements of RCRA, CERCLA, and the CAA is
    preferable to sweeping statutory exemptions because the case-by-case
    approach provides accountability. Experience since the 1992 Supreme
    Court decision in U.S. Department of Energy v. Ohio \15\ demonstrates
    that Federal agencies in general, and DOD in particular, are far more
    likely to comply with environmental requirements when they can be held
    accountable. In that case, the Supreme Court held that Federal agencies
    were not subject to penalties for violating State hazardous waste and
    water quality laws. In response, Congress swiftly amended RCRA to make
    Federal agencies subject to penalties for violating hazardous waste
    laws. Once Congress clarified the States' authority to hold Federal
    agencies accountable for violating hazardous waste requirements, DOD
    and other Federal agencies began steadily improving their RCRA
    compliance rates, bringing the percentage of facilities in compliance
    from a low of 55.4 percent in fiscal year 1993 to 93.6 percent in
    fiscal year 2000.\16\
    ---------------------------------------------------------------------------
        \15\ 503 U.S. 607 (1992).
        \16\ ``The State of Federal Facilities--An Overview of
    Environmental Compliance at Federal Facilities Fiscal Year 1999-2000''
    USEPA Office of Enforcement and Compliance Assurance, EPA 300-R-01-004,
    September 2001, p. 22.
    ---------------------------------------------------------------------------
        This salutary trend stands in stark contrast to Federal agency
    performance under the Clean Water Act (CWA). Unlike RCRA, Congress did
    not amend the CWA following the Ohio decision to subject Federal
    agencies to penalties for violating CWA requirements. Since the Supreme
    Court decision removed the threat that States could hold Federal
    agencies accountable for violating CWA requirements by assessing
    penalties, the percentage of Federal facilities in compliance with the
    Clean Water Act has fallen steadily from a high of 94.2 percent in
    fiscal year 1993 to a low of 61.5 percent in fiscal year 1998.\17\
    DOD's Clean Water Act compliance rates are slightly worse than the
    Federal agency totals.\18\
    ---------------------------------------------------------------------------
        \17\ Id. While Federal facilities' Clean Water Act compliance rates
    as a whole rebounded somewhat in fiscal year 1999 and 2000, the overall
    trend is still downward.
        \18\ Id. DOD's Clean Water Act compliance rates for fiscal year
    1996-2000 were slightly lower than Federal agencies as a whole. Id. at
    p. 24; ``The State of Federal Facilities--An Overview of Environmental
    Compliance at Federal Facilities, fiscal year 1997-1998,'' USEPA Office
    of Enforcement and Compliance Assurance, EPA 300-R-00-002, January
    2000, p. 26; ``The State of Federal Facilities--An Overview of
    Environmental Compliance at Federal Facilities, fiscal year 1995-1996''
    USEPA Office of Enforcement and Compliance Assurance, EPA 300-R-98-
    002a, June 1998, pp. ES-11 and ES-12. While the DOD rates also improved
    in fiscal year 1999 from fiscal year 1998's nadir, they declined again
    in fiscal year 2000.
    ---------------------------------------------------------------------------
        Compliance statistics alone, telling as they are, do not paint the
    entire picture of Federal agencies' failure to comply with
    environmental requirements. Federal agencies in general, and DOD in
    particular, have long had a history of resistance to environmental
    regulation. The history of the CAA provides a good example. Before
    1970, the CAA encouraged, but did not require, Federal agencies to
    comply with its mandates. Congress determined that this voluntary
    system was not working, and in 1970 amended the act to require Federal
    agencies to comply. Specifically, Congress added section 118 to the
    CAA. The first sentence of the section provides, in relevant part:

            Each department, agency, and instrumentality of . . . the
            Federal Government . . . shall comply with Federal, State,
            interstate, and local requirements respecting control and
            abatement of air pollution to the same extent that any person
            is subject to such requirements. 42 U.S.C. Sec. 1857f.

        The 1970 amendments also required the Environmental Protection
    Agency to establish ambient air quality standards. Each State had to
    submit plans describing how the State would meet these standards.
    Kentucky, like most States, submitted a plan that relied on permits as
    the sole mechanism to establish emissions limitations for air pollution
    sources, and to establish schedules for achieving compliance with the
    emissions limitations. Kentucky sought to require several Federal
    facilities (including the Army's Fort Knox, Fort Campbell, and others)
    to obtain permits. The Federal agencies refused, arguing that section
    118 of the CAA did not obligate them to comply with ``procedural''
    requirements, such as the need to obtain State permits. Without the
    permit, there was no way for Kentucky to control air pollution from
    these Federal facilities.
        The matter went to court, and ultimately, in Hancock v. Train,\19\
    the Supreme Court agreed with the Federal agencies. Shortly thereafter,
    Congress amended the CAA to require Federal agencies to comply with
    procedural requirements, including permit requirements.\20\ While the
    challenge to State authority under the CAA was pending, Federal
    agencies were also challenging the requirement to obtain State permits
    under the CWA's National Pollution Discharge Elimination System
    program. Interpreting a similar waiver of immunity, the Supreme Court
    again sided with the Federal agencies.\21\ Again, Congress acted
    swiftly to amend the CWA to require Federal agencies to obtain
    discharge permits.\22\ More recently, DOD spent years challenging State
    authority over cleanup of contamination at Federal facilities,
    ultimately losing in the Tenth Circuit.\23\
    ---------------------------------------------------------------------------
        \19\ 426 U.S. 167 (1976).
        \20\ Pub.L. 95-95, Sec. 116(a).
        \21\ Environmental Protection Agency v. California, 426 U.S. 200
    (1976).
        \22\ Pub.L. 95-217, Sec. Sec. 60, 61(a).
        \23\ U.S. v. Colorado, 990 F.2d 1565 (10th Cir. 1993).
    ---------------------------------------------------------------------------
        Nonetheless, DOD continues to challenge State authority over
    cleanup of contamination at its sites, and in particular to resist
    State authority over cleanup of munitions-related contamination. In
    addition, DOD is challenging a number of other environmental
    requirements:

             DOD is refusing to pay penalties for violations of
            State requirements related to underground petroleum storage
            tanks.\24\
    ---------------------------------------------------------------------------
        \24\ See exchange of letters between State of Hawaii Department of
    Health and U.S. Army Garrison Hawaii, attached hereto as Exhibit 5.
    ---------------------------------------------------------------------------
             DOD is appealing a determination by an EPA
            Administrative Law Judge that the CAA's command that penalties
            for violations of the act be calculated by considering, inter
            alia, the economic benefit of the violator's noncompliance
            applies to Federal agencies.\25\
    ---------------------------------------------------------------------------
        \25\ In the Matter of U.S. Army, Fort Wainwright Central Heating &
    Power Plant, Docket No. CAA-10-99-0121. Administrative Law Judge Susan
    L. Biro entered the order against the Air Force on April 30, 2002.
    Section 113 of the Clean Air Act, 42 U.S.C. Sec. 7413, provides, in
    relevant part, that the Administrator may ``issue an administrative
    order against any person assessing a civil administrative penalty of up
    to $25,000, per day,'' and that in calculating the penalty, the
    Administrator ``shall take into consideration . . . the economic
    benefit of noncompliance.'' 42 U.S.C. Sec. 7413 (d) and (e). Section
    302 of the Clean Air Act, 42 U.S.C. Sec. 7602, defines ``person'' to
    include ``any agency, department, or instrumentality of the United
    States.'' Finally, the waiver of Federal sovereign immunity in section
    118 of the Clean Air Act, 42 U.S.C. Sec. 7418 states that Federal
    agencies ``shall be subject to . . . all Federal . . . process and
    sanctions . . . in the same manner, and to the same extent as any
    nongovernmental entity.''
    ---------------------------------------------------------------------------
             DOD is also challenging State and EPA authority to
            require compliance with ``institutional controls.''
            ``Institutional controls'' are legal mechanisms to restrict
            land or water use, and are often employed to reduce the cost of
            cleaning up contaminated sites. DOD argues, inter alia, that
            State institutional controls do not fall within the scope of
            RCRA's waiver of Federal sovereign immunity for State
            requirements respecting the control and abatement of solid
            waste.

    The huge extent of DOD's environmental contamination also demands a
            regulatory structure that ensures accountability.
        Accountability is also important because of the environmental
    impact of military activities. DOD is responsible for far more
    contaminated sites than any other Federal agency. There are 165 Federal
    facilities currently listed on the Superfund National Priorities List;
    129 of these are DOD facilities.\26\ All together, DOD is responsible
    for addressing over 28,500 potentially contaminated sites across the
    country.\27\ Through fiscal year 2001, DOD had spent almost $25 billion
    cleaning up sites for which it is responsible.\28\ DOD recently
    estimated that it would take another $14 billion to complete the
    remediation of environmental contamination at active, realigning, and
    closing sites.\29\
    ---------------------------------------------------------------------------
        \26\ Information from EPA's Superfund website at http://
    www.epa.gov/superfund/sites/query/queryhtm/nplfin1.htm and from
    telephone conversation with EPA's Federal Facilities Restoration and
    Reuse Office.
        \27\ See ``Fiscal Year 2001 Defense Environmental Restoration
    Program Annual Report to Congress,'' p. 19. This document is available
    at the following DOD website: http://www.dtic.mil/envirodod/DERP/
    DERP.htm
        \28\ Id., p. 21.
        \29\ Id., pp. 27-28, attached as Exhibit 6. The $14 billion figure
    combines the total cost-to-complete sums given for active installations
    in Figure 8 and Base Realignment and Closure Sites in Figure 10 of
    Exhibit 6.
    ---------------------------------------------------------------------------
        But the need for cleanup of active and closing bases is only part
    of the picture. DOD is also responsible for assessing and cleaning up
    thousands of potentially contaminated formerly used defense sites
    (FUDS) in the United States and its territories and possessions.\30\
    Many FUDS are former bombing or gunnery ranges that contain unexploded
    ordnance. The GAO estimated recently that unexploded ordnance
    contamination may exist at over 1,600 FUDS.\31\ DOD estimates that
    approximately 16 million acres of land on transferred ranges are
    potentially contaminated with unexploded ordnance.\32\ There are no
    reliable data on the cost of addressing the contamination at these
    former ranges and other FUDS. DOD's recent estimates for unexploded
    ordnance cleanup vary from $14 billion to over $100 billion.\33\
    ---------------------------------------------------------------------------
        \30\ ``Environmental Contamination: Cleanup Actions at Formerly
    Used Defense Sites,'' GAO-01-557 (July 2001), p. 1. FUDS are properties
    that were formerly owned, leased, possessed, or operated by DOD or its
    components.
        \31\ Id. at 2.
        \32\ ``DOD Training Range Cleanup Cost Estimates Are Likely
    Understated,'' GAO-01-479 (April 2001), p. 11.
        \33\ Id., pp. 5 and 13.
    ---------------------------------------------------------------------------
        Despite this lack of data, we do know that the costs of detecting
    and remediating unexploded ordnance contamination are extremely high.
    For example, through fiscal year 2001, DOD had spent over $37 million
    investigating and remediating the former Lowry Bombing and Gunnery
    Range (a/k/a Buckley Field) near Aurora, Colorado, and expected to
    spend an additional $71 million to complete cleanup of this site.\34\
    At the Spring Valley site in the District of Columbia, DOD had spent
    over $24 million through fiscal year 2001, and expected to spend an
    additional $73 million.\35\ The costs for cleaning up sites like the
    Lowry Range and Spring Valley may be dwarfed by the sheer magnitude of
    the remaining FUDS, such as the 288 FUDS projects in California that
    DOD estimates may cost $2.6 billion to address.\36\ The bottom line is
    that unexploded ordnance contamination at FUDS represents an
    environmental problem of huge dimensions. As shown below, DOD's
    proposed amendments would likely be read to preempt State authority
    over cleanup of these sites. Independent State oversight is needed to
    ensure these sites are cleaned up in a manner that protects human
    health and the environment.\37\
    ---------------------------------------------------------------------------
        \34\ ``Fiscal Year 2001 Defense Environmental Restoration Program
    Annual Report to Congress,'' Table C-1, showing status of military
    installations and FUDS with estimated cleanup completion cost estimates
    exceeding $5 million at p. C-1-22.
        \35\ Id. at p. C-1-25.
        \36\ Id., pp. C-1-8 to C-1-21.
        \37\ For example, many States have found that DOD's determinations
    that specific FUDS do not require any cleanup action are frequently
    mistaken. In 1998, the Association of State and Territorial Solid Waste
    Management Officials (ASTSWMO) conducted a survey of its members
    regarding ``no further action'' determinations made by the Army Corps
    of Engineers. Nearly half of the responding States (19 out of 39) said
    that they had reason to believe that the Corps had not made sound
    environmental decisions in making some ``no further action''
    determinations. Six States had conducted their own environmental or
    health assessments at 66 of the sites the Corps had designated ``no
    further action.'' These States determined that 32 of the 66 did require
    cleanup. Contamination at the 32 sites included high levels of PCBs,
    unexploded ordnance, leaking underground storage tanks, asbestos, and
    groundwater contamination. ``No Further Action Survey,'' Association of
    State and Territorial Solid Waste Management Officials, December 1998.
    Several of the States that responded they did not have any reason to
    doubt the Corps' determinations commented that they had not assessed
    the sites themselves. The complete survey is available on ASTSWMO's
    website at http://www.astswmo.org/Publications/bookshelf.htm by
    clicking on ``Federal Facilities'' and then on ``No Further Action
    Review Efforts at Formerly Used Defense Sites (NOFA FUDS) December
    1998.''
    ---------------------------------------------------------------------------
        In addition to the obvious explosive hazards of unexploded
    ordnance, some constituents of explosives and munitions contamination
    have toxic or potential carcinogenic effects,\38\ and can cause
    groundwater contamination. For example, perchlorate is a chemical
    widely used in solid rocket fuel and munitions. It interferes with
    iodide uptake into the thyroid gland, and disrupts the thyroid
    function. The Wall Street Journal has reported that EPA is concerned
    that fetuses and newborn babies may be particularly sensitive to
    exposure to perchlorate.\39\ Live-fire training at the Massachusetts
    Military Reservation (MMR) over several decades has contaminated large
    amounts of groundwater in the sole source drinking water aquifer for
    the Cape Cod area. Recently, the Town of Bourne closed half of its
    drinking water supply wells due to contamination by perchlorate that
    migrated from MMR. Subsequently, DOD spent approximately $2 million to
    hook the town up to an alternate water supply.\40\ Reportedly,
    explosives contaminants have been detected in about 100 groundwater
    monitoring wells on MMR, and exceed EPA health advisory limits at 53 of
    those wells.\41\ Similarly, military training activities at the
    Aberdeen Proving Ground have contaminated groundwater there with
    perchlorate, again prompting closure of a municipal water supply well
    that had been contaminated.\42\
    ---------------------------------------------------------------------------
        \38\ Fact sheets or public health statements, all published by the
    Agency for Toxic Substances and Disease Registry, for four common
    explosives or munitions constituents (DNT, RDX, TNT, and white
    phosphorous), are attached as Exhibit 7. Also included in Exhibit 7 are
    two EPA documents regarding perchlorate, another common munitions
    constituent.
        \39\ ``A Fuel of Cold War Defenses Now Ignites Health
    Controversy,'' 12/16/2002 article by Peter Waldman, reported on page 1
    of the Wall Street Journal, attached as Exhibit 8.
        \40\ ``Military Cash Flows for New Water Supply,'' story by Kevin
    Dennehy, Cape Cod Times, April 24, 2002, attached as Exhibit 9.
        \41\ ``Work to Clean Cape Cod Continues as Pentagon Seeks
    Environmental Exemptions,'' 5/27/2002 story by Melissa Robinson,
    reported in Boston Globe Online, 5/29/2002, attached as Exhibit 10.
        \42\ ``Group calling for cleanup of perchlorate in Aberdeen,'' 10/
    3/2002 article by Lane Harvey Brown in the Baltimore Sun, attached as
    Exhibit 11.
    ---------------------------------------------------------------------------
        Indeed, perchlorate contamination from military training, research,
    and production activities has caused widespread groundwater
    contamination in at least 22 States, according to the Wall Street
    Journal.\43\ DOD's proposed legislation would likely be read to preempt
    or impair State authority to address many of these sites, including
    some privately-owned defense contractor sites, under RCRA, CERCLA, and
    analogous State laws.
    ---------------------------------------------------------------------------
        \43\ See Exhibit 8.
    ---------------------------------------------------------------------------
    DOD's proposed amendments to RCRA, CERCLA, and the CAA are far-
            reaching, and go far beyond DOD's stated concerns with
            readiness.
        DOD has repeatedly stated that its proposed amendments are very
    narrowly focused.\44\ We disagree. As described above, neither the CAA,
    RCRA, nor CERCLA has had any adverse impacts on readiness. All three
    laws have provisions allowing for waivers of their requirements
    sufficient to address any potential readiness concerns. Considering the
    magnitude of the munitions contamination problem at FUDS and other DOD
    sites, and the groundwater contamination at sites such as the
    Massachusetts Military Reservation and the Aberdeen Proving Grounds,
    any change in DOD's obligation to comply with cleanup requirements has
    the potential for large impacts. But the bottom line is that DOD's
    proposed amendments likely create broad exemptions that jeopardize the
    States' ability to protect their citizens' health and environment,
    without any corresponding benefit to readiness.
    ---------------------------------------------------------------------------
        \44\ See, e.g., Exhibit 2.
    ---------------------------------------------------------------------------
    DOD's amendment to RCRA would likely be read to preempt or impair State
            and EPA authority over munitions-related and explosives-related
            wastes at active military bases, closing bases, FUDS, and
            private contractor sites.
        Proposed section 2019 would define when munitions, explosives,
    unexploded ordnance, and constituents thereof are ``solid wastes''
    under RCRA, and thus potentially subject to regulation as hazardous
    wastes.\45\ By narrowing this definition, DOD's amendments limit the
    scope of EPA's authority under RCRA, as well as State authority under
    State hazardous waste laws. The change in the definition of ``solid
    waste'' would affect State authority because the term appears in RCRA's
    waiver of Federal sovereign immunity--the provision of the law that
    makes DOD subject to State hazardous waste laws. The RCRA waiver of
    immunity applies to State ``requirements respecting the control and
    abatement of solid waste or hazardous waste disposal and management.''
    \46\ Thus, the scope of the RCRA sovereign immunity waiver will likely
    be affected by amendments to RCRA's definition of solid waste. Because
    waivers of immunity are construed extremely narrowly, any ambiguity in
    the definition of solid waste will likely be construed in the way that
    results in the narrowest waiver.\47\ By re-defining ``solid waste'' in
    a very limited fashion, DOD's proposed amendment will likely preempt or
    impair State authority over munitions, explosives, and the like not
    only at operational ranges, but--contrary to DOD's assertions--also at
    FUDS, DOD sites other than ranges, DOE facilities, and even at private
    defense contractor sites.
    ---------------------------------------------------------------------------
        \45\ See 42 U.S.C. Sec. 6903 (5) and (27). Section 6903(5) defines
    ``hazardous waste'' as ``a solid waste, or combination of solid
    wastes,'' that exhibits certain characteristics. Section 6903(27)
    defines ``solid waste.'' Therefore, hazardous wastes are a subset of
    solid wastes.
        \46\ 42 U.S.C. Sec. 6961(a).
        \47\ Department of Energy v. Ohio, 503 U.S. 607 (1992). See also
    the discussion of Hancock v. Train, supra.
    ---------------------------------------------------------------------------
        DOD's proposed amendment to the definition of solid waste provides:

    ``2019. RANGE MANAGEMENT AND RESTORATION

    ``(a) Definition of Solid Waste. (1)(A) The term `solid waste,' as used
    in the Solid Waste Disposal Act, as amended (42 U.S.C. 6901 et seq.),
    includes explosives, unexploded ordnance, munitions, munition
    fragments, or constituents thereof that;
                      ``(i) are or have been deposited, incident to their
                    normal and expected use, on an operational range, and;
                              ``(I) are removed from the operational range
                            for reclamation, treatment, disposal, treatment
                            prior to disposal, or storage prior to or in
                            lieu of reclamation, treatment, disposal, or
                            treatment prior to disposal;
                              ``(II) are recovered, collected, and then
                            disposed of by burial or landfilling; or
                              ``(III) migrate off an operational range and
                            are not addressed under the Comprehensive
                            Environmental Response, Compensation, and
                            Liability Act of 1980, as amended (42 U.S.C.
                            9601 et seq.); or
                      ``(ii) are deposited, incident to their normal and
                    expected use, off an operational range, and are not
                    promptly rendered safe or retrieved.
              ``(B) The explosives, unexploded ordnance, munitions,
            munitions fragments, or constituents thereof defined as solid
            waste in subparagraph (a)(1)(A) shall be subject to the
            provisions of the Solid Waste Disposal Act, as amended,
            including but not limited to sections 7002 and 7003, where
            applicable.
        ``(2) Except as set out in subparagraph (1), the term `solid
    waste,' as used in the Solid Waste Disposal Act, as amended, does not
    include explosives, unexploded ordnance, munitions, munitions
    fragments, or constituents thereof that:
        ``(A) are used in training military personnel or explosives and
    munitions emergency response specialists (including training in proper
    destruction of unused propellant or other munitions);
              ``(B) are used in research, development, testing, and
            evaluation of military munitions, weapons, or weapon systems;
              ``(C) are or have been deposited, incident to their normal
            and expected use, and remain on an operational range, except as
            provided in subparagraph (a)(1)(A);
              ``(D) are deposited, incident to their normal and expected
            use, off an operational range, and are promptly rendered safe
            or retrieved; or
              ``(E) are recovered, collected, and destroyed on-range during
            range clearance activities at operational ranges, but not
            including the on-range burial of unexploded ordnance and
            contaminants when the burial is not a result of product use.
    ``Nothing in subparagraphs (2) (A), (B), (C), (D), or (E) hereof
    affects the legal requirements applicable to explosives, unexploded
    ordnance, munitions, munitions fragments, or constituents thereof that
    have been deposited on an operational range once the range ceases to be
    an operational range.''
    (Italics indicate substantive changes from the 2002 version of DOD's
    proposal.)

        As an initial matter, paragraph 2019(a)(1) applies to an extremely
    broad range of items. It does not just cover munitions, munitions
    fragments, explosives, ordnance, and unexploded ordnance, but also
    constituents of any of those items. That means it applies not just to
    unexploded ordnance that may contaminate an area, but also to the
    chemical constituents of the ordnance such as perchlorate, TNT, or
    RDX--that may have leached out and contaminated the soil and
    groundwater. For convenience, we will generally refer only to munitions
    when describing the scope of section 2019, but it is well to remember
    that it actually covers many more items.
        Paragraph 2019(a)(1) sets forth the circumstances under which
    munitions are solid wastes. Again, because the term ``solid waste'' is
    used in RCRA's waiver of immunity, it will be construed narrowly. Thus,
    under paragraph 2019(a)(1), the only circumstances under which
    munitions will be considered solid wastes are if: (1) they are or have
    been deposited, incident to their normal and expected use, on an
    operational range, and then one of three things happens: they are
    removed from the range; or are recovered and then buried; or migrate
    off range and are not addressed under CERCLA; or (2) they are
    deposited, incident to their normal and expected use, off an
    operational range, and are not promptly rendered safe or retrieved.
        Subparagraph 2019(a)(2)(C) compels the same conclusion, because it
    expressly limits the instances in which munitions-related materials
    that ``are or have been deposited, incident to their normal and
    intended use, on operational ranges,'' to the circumstances set forth
    in 2019(a)(1). This year, DOD has added a sentence to the end of
    section 2019 that it says limits the scope of this section to only
    ``operational'' ranges.
        We disagree that the new language limits the reach of section 2019.
    First, it only limits the impact of paragraph 2019(a)(2), not paragraph
    2019(a)(1). As noted above, because of the narrow construction courts
    placed on waivers of immunity, even absent the language of
    2019(a)(2)(C), paragraph 2019(a)(1) likely will be read as defining the
    exclusive universe of circumstances under which States may regulate
    munitions pursuant to the RCRA waiver. Paragraph 2019(a)(1) excludes
    from the definition of solid waste munitions that were deposited on an
    operational range while it was operational and remain there after it
    closed.
        Second, the new language is ambiguous. It can be read to mean that
    nothing in paragraph 2019(a)(2) affects the legal requirements
    applicable to munitions that were deposited on a range after the range
    ceased to be operational. This would result in a narrower waiver of
    immunity than the interpretation DOD has proffered, and consequently
    would likely be the interpretation a Federal court would adopt.
        Third, in 1997, EPA deferred promulgation of a rule that would have
    codified EPA's interpretation that munitions left in place at the time
    a range closed or was transferred out of military control are solid
    wastes as defined in RCRA.\48\ In light of EPA's regulatory inaction,
    DOD may argue that there currently are no legal requirements applicable
    to munitions that were deposited on a range while it was operational,
    and remain there after it has closed.\49\ It could then argue that
    subparagraph 2019(a)(2)(C) precludes EPA from promulgating any such
    regulation in the future, because the munitions are not a solid waste
    as defined in RCRA.
    ---------------------------------------------------------------------------
        \48\ ``Military Munitions Rule,'' 62 Fed. Reg. 6622, 6632 (2/12/
    97). Under this interpretation, such munitions would have been
    statutory solid wastes, but not ``regulatory'' solid wastes. (EPA's
    regulatory definition of solid waste is narrower than the statutory
    definition. See 40 CFR 261.2.) Both regulatory and statutory solid
    wastes may be subject to RCRA's imminent and substantial endangerment
    provisions (42 U.S.C. Sec. Sec. 6972 and 6973) and, if located at a
    facility subject to RCRA permitting requirements, its corrective action
    authorities (see 42 U.S.C. Sec. Sec. 6924 (u) and (v) and 6928(h)).
    However, only regulatory solid wastes are subject to the full panoply
    of RCRA permit and management requirements. See 42 U.S.C.
    Sec. 6903(27); Military Toxics Project v. EPA, 146 F.3d 948, 950-51
    (D.C. Cir. 1998).
          EPA also proposed that its interpretation of munitions on closed
    ranges as solid wastes would ``sunset'' if and when DOD promulgated a
    rule allowing for public involvement in the cleanup of closed and
    transferred ranges. EPA decided to postpone action on this rule in part
    because many commenters argued that DOD had no authority to promulgate
    such a rule, and that such deferral would be contrary to the Federal
    Facility Compliance Act. When Congress passed the Federal Facility
    Compliance Act, it rejected a Senate proposal that would have allowed
    DOD to regulate waste munitions, in favor of State and EPA regulation
    under RCRA. See House Conf. Rep. No. 102-886 (Sept. 22, 1992), pp. 28-
    29.
        \49\ EPA's final munitions rule--including its decision to postpone
    promulgation of the provision defining certain munitions as statutory
    solid wastes--does not mean that discharged munitions on ranges cannot
    be statutory solid wastes. Under the Federal Facility Compliance Act,
    if such munitions meet the statutory definition of ``discarded,'' they
    are statutory solid wastes. The Department of Justice took this
    position in recent litigation concerning the Navy's facilities in
    Vieques, Puerto Rico. See Water Keeper Alliance v. U.S. Department of
    Defense, 152 F. Supp.2d 163, 176, n. 3 (``Defendants [the United
    States] point out that they `do not seek dismissal of any claim that
    ordnance debris and unexploded ordnance left to accumulate on the [Live
    Impact Area] constitute solid waste.' [citation omitted] Consequently,
    the Court will not dismiss this claim.'')
    ---------------------------------------------------------------------------
        Even with DOD's revision to proposed section 2019, munitions that
    were deposited on an operational range and simply remain there after
    the range closed or was transferred are not solid wastes under RCRA,
    and thus cannot be hazardous wastes. Such residual unexploded ordnance
    and explosives contamination is precisely the problem at closed,
    transferring, and transferred ranges. Contrary to DOD's assertions that
    this amendment only affects operating ranges, this amendment would also
    likely be read to preempt States and EPA from regulating the cleanup of
    unexploded ordnance and related materials at the 16 million acres of
    land on closed, transferred, and transferring ranges (i.e., FUDS) that
    are potentially contaminated with unexploded ordnance. In many cases,
    this ordnance was deposited on these ranges decades ago.
        In addition, paragraph 2019(a)(1) is not limited to ranges on
    military bases. Under EPA's ``Military Munitions Rule'' (see
    below),\50\ a range may include land owned by an entity under contract
    with DOD or DOE that is set aside for researching, developing, testing,
    and evaluating military munitions and explosives. In other words, a
    military range may include defense contractor facilities.\51\ Paragraph
    2019(a)(1) may thus preempt State and EPA authority under RCRA and
    analogous State laws to address groundwater contaminated with
    perchlorate or other munitions constituents at defense contractor sites
    that may be considered ranges, potentially including some of those
    described in the Wall Street Journal article.\52\
    ---------------------------------------------------------------------------
        \50\ 40 CFR Sec. 266.201.
        \51\ We understand that DOD may be offering a similar definition
    for codification in Title 10 of the U.S. Code. This proposed definition
    would then apply to proposed section 2019.
        \52\ See Exhibit 8.
    ---------------------------------------------------------------------------
        Proposed subsection 2019(a) may well override State and EPA
    authority to address munitions-related environmental contamination that
    is not on a range at all. To cite just one example, in the normal
    course of maintaining artillery shells, DOD generates a waste stream
    from ammunition washout known commonly as ``pink water.'' The water is
    pink due to the presence of trinitrotoluene (TNT), a constituent of
    both explosives and munitions (and a possible human carcinogen,
    according to EPA),\53\ in the water. Ammunition washout is not
    conducted on operational ranges, but has in at least one case led to
    environmental contamination. At Pueblo Chemical Depot in Colorado,
    ammunition washout created a plume of TNT-contaminated groundwater that
    has traveled over 2 miles, and has gone off the depot to contaminate
    drinking water wells nearby. Under subparagraph 2019(a)(1)(A), this
    plume of TNT-contaminated groundwater would not be considered a solid
    waste (and thus excluded from the scope of the RCRA waiver of
    immunity), because the explosives constituents have not been deposited
    on an operational range, nor have they been deposited ``incident to
    their normal and expected use,'' off an operational range. A similar
    result would obtain at the Los Alamos National Laboratory (a Department
    of Energy facility), where explosives constituents have contaminated
    groundwater approximately 1,000 feet below the ground surface.
    ---------------------------------------------------------------------------
        \53\ See Exhibit 7.
    ---------------------------------------------------------------------------
        Proposed paragraph 2019(a)(2) provides a broad exemption that may
    also encompass munitions-related contamination at defense contractor
    sites. This paragraph exempts from the definition of solid waste
    explosives and munitions that are used in training or in research,
    development, testing, and evaluation of military munitions, weapons, or
    weapon systems. This provision appears to create a wholesale exemption
    for explosives and munitions. It is not limited to ranges at all, but
    instead applies to any facility with such wastes, such as facilities
    owned and operated by defense contractors who produce munitions
    constituents, including perchlorate, TNT, or RDX, or who produce
    munitions, weapons, or weapons systems. Because this exemption includes
    munitions and explosives constituents, it may extend to waste streams
    from the production of munitions or explosives. Thus, under paragraph
    2019(a)(2), the perchlorate contamination from the Aerojet-General
    corporation's plant near Rancho Cordova, California, or from the Kerr-
    McGee ammonium perchlorate production facility in Henderson, Nevada,
    that are described in the Wall Street Journal article \54\ likely would
    not be subject to regulation as a solid or hazardous waste under RCRA.
    ---------------------------------------------------------------------------
        \54\ See Exhibit 8.
    ---------------------------------------------------------------------------
        Proposed subsection 2019(a)(2) may even extend to the chemical
    munitions scheduled for destruction at various military installations
    around the country. If DOD conducts or has conducted research or
    evaluation of chemical munitions constituents (such as mustard agent)--
    even for defensive purposes--under subparagraph 2019(a)(2)(A), these
    materials could be considered exempt from the definition of solid
    waste. Currently, States have the authority to regulate the scheduled
    destruction of chemical agent stockpiles around the United States under
    RCRA. For example, Colorado is planning to issue a permit for the
    destruction of 780,000 rounds of mustard agent at the Pueblo Chemical
    Depot. DOD's proposed amendments may call into question Colorado's and
    other States' authority over the destruction of these chemical weapons.
    dod's amendments do not simply codify epa's ``military munitions rule''
        DOD states that its proposed amendments would ``clarify and
    confirm'' EPA's ``Military Munitions Rule.'' We disagree. DOD's
    proposal differs from the munitions rule in at least four significant
    ways. First, DOD's proposal narrows RCRA's statutory definition of
    solid waste, while the munitions rule does not affect RCRA's statutory
    definition of solid waste. Thus, unlike the munitions rule, this
    statutory change precludes States and EPA from using RCRA's imminent
    and substantial endangerment authorities to address most munitions-
    related contamination. In addition, changing the statute's definition
    of solid waste likely narrows RCRA's waiver of immunity and likely
    limits EPA's authority to regulate munitions under RCRA, as described
    below.
        Second, by narrowing the statutory definition of solid waste, a
    term used in RCRA's waiver of sovereign immunity, DOD's amendments
    likely narrow the waiver of immunity. The amendments may thus preempt
    State authority to require the cleanup of most munitions-related
    contamination, including unexploded ordnance and perchlorate
    contamination, under RCRA. In contrast, the munitions rule does not
    preempt State authority at all. When it first proposed the munitions
    rule, EPA solicited comment on a regulatory approach that would preempt
    States from enforcing broader or more stringent requirements respecting
    military munitions.\55\ In the final rule, EPA determined not to adopt
    such an approach, and expressly acknowledged that under RCRA sections
    3006 and 3009, ``States may adopt requirements with respect to military
    munitions that are more stringent or broader in scope than the Federal
    requirements.'' \56\
    ---------------------------------------------------------------------------
        \55\ 60 Fed. Reg. 56488 (Nov. 8, 1995).
        \56\ 62 Fed. Reg. 6625 (Feb. 12, 1997).
    ---------------------------------------------------------------------------
        Third, as described above, DOD's proposal likely prevents EPA from
    promulgating additional regulations under RCRA governing the cleanup of
    munitions on nonoperational ranges, because they are excluded from the
    statute's definition of solid waste. Under the munitions rule, EPA
    expressly reserved promulgation of such regulations for future
    decision.\57\
    ---------------------------------------------------------------------------
        \57\ ``Military Munitions Rule,'' 62 Fed. Reg. 6622, 6632. See note
    48, supra.
    ---------------------------------------------------------------------------
        Fourth, by including the phrase ``or constituents thereof,'' in
    paragraphs 2019 (a)(1) and (a)(2), DOD's proposal may well preempt
    State and EPA authority over munitions-related and explosives-related
    constituents that have leached from the munitions and are contaminating
    the environment. These include chemicals such as perchlorate, RDX, TNT,
    DNT, and white phosphorous. The munitions rule does not address
    munitions constituents at all, and does not prevent EPA or the States
    from requiring cleanup of these chemicals when they leach from
    munitions into the soil or groundwater.\58\
    ---------------------------------------------------------------------------
        \58\ 62 Fed. Reg. 6631.
    ---------------------------------------------------------------------------
    DOD's proposed amendments to CERCLA go far beyond DOD's stated concerns
            with readiness.
        Proposed subsection 2019(b) has similarly broad consequences for
    CERCLA. This provision states:

        ``(b) Definition of Release.
        --(1) The term `release,' as used in the Comprehensive
    Environmental Response, Compensation, and Liability Act of 1980, as
    amended (42 U.S.C. 9601 et seq.), includes the deposit off an
    operational range, or the migration off an operational range, of any
    explosives, unexploded ordnance, munitions, munitions fragments, or
    constituents thereof.
        ``(2) The term `release,' as used in the Comprehensive
    Environmental Response, Compensation, and Liability Act of 1980, as
    amended (42 U.S.C. 9601 et seq.), does not include the deposit or
    presence on an operational range of any explosives, unexploded
    ordnance, munitions, munitions fragments, or constituents thereof that
    are or have been deposited thereon incident to their normal and
    expected use and remain thereon.
        ``(3) Notwithstanding the provisions of paragraph (2), the
    authority of the President under section 106(a) of the Comprehensive
    Environmental Response, Compensation, and Liability Act of 1980, as
    amended (42 U.S.C. 9606(a)), to take action because there may be an
    imminent and substantial endangerment to the public health or welfare
    or the environment because of an actual or threatened release of a
    hazardous substance includes the authority to take action because of
    the deposit or presence on an operational range of any explosives,
    unexploded ordnance, munitions, munitions fragments, or constituents
    thereof that are or have been deposited thereon incident to their
    normal and expected use and remain thereon.
        ``(4) Nothing in this section affects the authority of the
    Department to protect the environment, safety, and health on
    operational ranges.''

        DOD's proposed change to the definition of ``release'' may narrow
    the scope of State authority under State Superfund-type laws, because
    it may narrow CERCLA's waiver of immunity. CERCLA's waiver of immunity
    includes State laws ``concerning removal and remedial action.'' \59\
    CERCLA's definitions of ``removal'' and ``remedial action'' are limited
    by the definition of ``release.'' \60\ Thus, by excluding the ``deposit
    or presence on an operational range of any explosives, unexploded
    ordnance, munitions, munitions fragments, or constituents thereof that
    are or have been deposited thereon incident to their normal and
    expected use'' from the definition of ``release,'' paragraph 2019(b)(2)
    arguably precludes State Superfund authority over munitions-related
    contamination on operational ranges.
    ---------------------------------------------------------------------------
        \59\ 42 U.S.C. Sec. 9620(a)(4).
        \60\ 42 U.S.C. Sec. 9601 (23) and (24).
    ---------------------------------------------------------------------------
        Read in conjunction with proposed paragraph 2019(b)(1), paragraph
    2019(b)(2) also may be read to preclude prevents States from requiring
    cleanup of munitions-related contamination on closed, transferred, and
    transferring ranges (i.e., FUDS) under State Superfund-type laws. This
    statutory construction follows from the fact that paragraph 2019(b)(2)
    excludes the both the deposit and the presence of munitions-related
    contamination on an operational range from the definition of release.
    Consequently, the presence on a closed, transferring, or transferred
    range of munitions- or explosives-related contamination that was
    deposited when the range was operational could only be considered a
    ``release'' if paragraph 2019(b)(1) specifically included the presence
    of munitions-related contamination on a nonoperational range in its
    definition of release.
        However, paragraph 2019(b)(1) only says that the deposit or
    migration of munitions-related contaminants off an operational range
    constitutes a release under CERCLA. Thus, under subsection 2019(b),
    munitions-related contamination on a former military range that arises
    from the deposit of such materials on the range while it was still
    operational may not be considered a ``release'' under CERCLA, and would
    not fall within the scope of CERCLA's waiver of immunity. States may
    thus be precluded from using their State Superfund-type laws to require
    DOD to address munitions-related contamination, including residual
    unexploded ordnance or soil or groundwater contaminated with munitions
    constituents such as perchlorate, RDX, or TNT at former military
    ranges. Additionally, there are several States whose Superfund-type
    laws are tied to definitions in CERCLA. Amending CERCLA's definition of
    ``release'' may limit these States' ability to require parties other
    than DOD to clean up such contamination at former ranges.
        Subsection 2019(b)'s overall impact on EPA's CERCLA authority to
    clean up munitions-related contamination on operational ranges is far
    from clear. While preserving the President's authority under CERCLA
    section 106, this provision appears to eliminate section 104 removal
    and remedial authority for munitions-related and explosives-related
    contamination. It also appears to remove the cleanup of such
    contamination from the scope of CERCLA section 120 interagency
    agreements for sites on the National Priorities List. This means that
    EPA will no longer have authority to select (or concur in) remedies for
    munitions- and explosives-related contamination at NPL sites. This
    provision may also be read to eliminate the requirement that
    investigation and cleanup of these contaminants be conducted according
    to standards that apply to all other CERCLA cleanups. By removing these
    public involvement, procedural, substantive, and technical safeguards,
    section 2019(b) may undermine the goal of achieving cleanups that
    adequately protect human health and the environment.
        Finally, section 2019 may limit State and Federal authority to
    pursue natural resource damage actions for contamination caused by
    munitions and explosives constituents. Natural resource damages are
    only available for releases of hazardous substances that cause injury
    to, loss of, or destruction of natural resources.\61\ By restricting
    the definition of solid waste to exclude munitions and explosives
    constituents, subsection 2019(a) may exclude some such constituents
    from being ``hazardous substances'' under CERCLA.\62\ By restricting
    the definition of ``release'' under CERCLA, subsection 2019(b)
    restricts the number of sites where natural resource damage claims may
    be pursued.
    ---------------------------------------------------------------------------
        \61\ 42 U.S.C. Sec. 9607(a)(4)(C).
        \62\ See 42 U.S.C. Sec. 9601(14).
    ---------------------------------------------------------------------------
                                   CONCLUSION

        DOD's far-reaching amendments to RCRA, CERCLA, or the CAA are not
    warranted. These laws have not impacted readiness, and are not likely
    to do so. As shown in the preceding portions of our testimony, DOD's
    proposed amendments to RCRA, CERCLA, and the CAA have little to do with
    maintaining readiness. They would, however, provide substantial
    exemptions from environmental requirements. The activities that DOD
    would exempt from the environmental laws can have significant adverse
    impacts on human health and the environment. States have historically
    worked cooperatively with DOD to find solutions to environmental
    problems at military installations that minimize regulatory burdens
    while protecting human health and the environment. We would be glad to
    continue this work with DOD to develop ways to address its readiness
    concerns within the context of the existing environmental laws.
        We would also urge that any proposed legislation on this issue go
    through a normal legislative process with public hearings before the
    committees with jurisdiction over the environmental laws. The normal
    legislative process allows interested parties, including the States--
    which are the primary implementers and enforcers of the Nation's
    environmental laws--an opportunity to present their views on these
    matters. Such hearings would allow deliberate consideration of any
    proposed amendments. As we have shown above, seemingly small amendments
    to the environmental laws can have large effects, particularly when
    State authority over Federal agencies is at stake.

        Senator Ensign. Thank you for your testimony.
        Just very quickly, Mr. Benevento, could you clear up
    whether the official position of the State of Colorado and the
    Governor of the State of Colorado is to endorse the position
    Mr. Mears just took?
        Mr. Benevento. The executive branch position is consistent
    with my testimony.
        Senator Ensign. Thank you.
        First I do want to say, Mr. Benevento, it is not like you
    came here and just parroted what the military said. I thought
    you had some very interesting suggestions and I think that this
    subcommittee has to look at that as well as the military and
    try to work it with those. That is the kind of what I was
    talking to the last panel about, the types of things that we
    need to look at. We need to look at--you were not coming here
    just attacking. You were not saying that what they are trying
    to do is just roll back environmental legislation. You were
    trying to say here, we support readiness and here are some
    positive suggestions to go forward.
        I think that that is what we need to be looking at, and I
    know that that is what the DOD is looking for and certainly
    what this subcommittee is looking for.
        I want to start with Mr. Cohen. The Readiness and Range
    Preservation Initiative addresses issues related to endangered
    species, marine mammals, cleanup of operational ranges, and air
    pollution. Can you briefly describe the rationale and need for
    the legislative relief? There has been a lot of back and forth
    whether just use exemptions, just current law. Mr. Mears just
    talked about it is working, why try to ``roll back''
    environmental laws?
        Mr. Cohen. Yes, sir. Thanks very much. I would like to
    clarify that our essential problem is not with the existing
    regulatory policy or existing State regulators or existing
    Federal regulators. To the contrary, they have worked hard and
    have been very sensitive to the needs of military readiness.
    Our basic problem is that these regulatory policies are under
    threat from litigation policies and that litigation outcomes
    are what would reverse these regulatory policies and produce
    unacceptable outcomes for military readiness.
        In terms of the exemptions available to us, I would like to
    address what the prior panel----
        Senator Ensign. Let me just stop you right there.
        Mr. Cohen. Yes, sir.
        Senator Ensign. Correct this statement if I miss, if I am
    stating it wrongly. What the military is looking to do is not
    roll back, but to maintain virtually the status quo of what has
    been.
        Mr. Cohen. Yes, sir.
        Senator Ensign. That the courts are, I guess, putting on
    extra burdens to stop you from doing the environmental balance
    that you have been doing. Is that a correct statement?
        Mr. Cohen. Yes, sir.
        Senator Ensign. Thank you. Go ahead.
        Mr. Cohen. In terms of the availability of exemptions as an
    alternative, or the absence of a ``train wreck,'' so to speak,
    of a disastrous injunction or a hostile court ruling that would
    really stop readiness cold, first with respect to the
    exemptions. The exemption that the witness referred to in the
    previous panel in the Armed Forces Code, 10 U.S.C. Section
    2014, affords us at most a 5-day ability to suspend an activity
    by an executive branch regulator. It has no effect with respect
    to States. Again to return to the point that I first made, our
    problem is not with Federal regulators or State regulators. Our
    problem is with litigation and section 2014 does not apply to
    court decisions.
        Thus, for example, there is no adverse regulatory decision
    in the SURTASS LFA case that we could apply section 2014 to.
    The adverse problem that we face is a litigation which has
    resulted in an injunction. Section 2014 is useless for that.
        With respect to using exemptions more generally as a means
    of enabling everyday readiness activities, it seems to the
    Defense Department unacceptable as a matter of public policy
    that a systemic problem, which we believe we have documented
    over years of testimony, is affecting across the country.
        Basic military activities that have gone on as long as we
    have had Armed Forces and will have to go on in the future as
    long as we have them as well, should not be forced to proceed
    by virtue of emergency exemptions that were intended to be of
    short duration and to apply to quite limited geographic
    locales.
        So we have a philosophical disagreement that we should
    proceed by exemptions rather than trying to adjust the
    underlying statutory structure in ways that make sense. The
    analogy we like to use is that, just as every car ought to have
    an emergency road repair kit, every statute ought to have an
    emergency exemption (as the MMPA does not). But if the only way
    you get to work every morning is by using your emergency repair
    kit, there is something wrong with your car and it needs to be
    repaired. That is what our proposals seek to do.
        With respect to the justification for each of our specific
    provisions, I can state that very briefly. With the ESA, what
    we are trying to do is reaffirm the legality of what Ms. Clark
    did back in the Clinton administration, which was to take a
    case-by-case look at our INRMPs, our management plans, at each
    installation, and decide which ones were sufficiently
    protective of the habitat of endangered or threatened species
    to say, ``this is functionally good enough that we do not need
    to designate critical habitat at this installation.''
        That was a perfectly reasonable decision. It is not a
    blanket or sweeping determination that says wherever we have an
    INRMP there is no critical habitat designation. It is a case-
    by-case, site-specific determination that has been made in the
    last two administrations. But that policy is under threat from
    litigation.
        As I mentioned, in just a few days the Interior Department
    will be required to revisit the decisions that Ms. Clark was
    referring to in her earlier testimony, and we are quite
    concerned, as Interior testified earlier, that a recent
    district court decision has placed an even larger cloud over
    the legality of that.
        Our opponents in that litigation are saying, not that the
    specific Miramar and Pendleton INRMPs are bad, but that no
    INRMP, no matter how good it is, can ever substitute for
    critical habitat designation as a matter of law. All that our
    amendment would do is remove that legal argument. They would
    still be in a position to say that any particular INRMP is not
    good enough to justify nondesignation of critical habitat.
        With the Marine Mammal Protection Act, again what we are
    trying to do is to safeguard regulatory policies that NOAA has
    already in place, but that were significantly destabilized by
    the SURTASS LFA decision, among others. In the SURTASS LFA
    decision, the regulatory definition of harassment, which
    closely tracks the definition that we are trying to propose as
    a matter of legislation, was held to be contrary to law by the
    district court, and so too was the agency's 20-year-old
    regulatory understanding of what was meant by the so-called
    ``small numbers'' requirement.
        Again we are trying to rehabilitate and revive those
    regulatory interpretations, which are longstanding. Again, we
    think that a regulatory structure which focuses on biologically
    significant behaviors is not an exemptive structure at all. To
    say that someone is not going to be regulated for biologically
    insignificant activities--I do not think that you could find
    one person in a hundred who would call that an exemption of any
    kind, much less a sweeping one. It is like saying that someone
    who rides a bicycle enjoys a sweeping exemption from auto
    emissions standards.
        With respect to our RCRA and CERCLA provisions, again this
    is an attempt to codify the prevailing regulatory policy that
    EPA and the States have in force with respect to our
    operational ranges since those two statutes were passed. As Mr.
    Benevento has testified, no one tries to regulate our
    operational ranges on a day-to-day basis under RCRA or CERCLA.
    But there is ongoing litigation and the threat of further
    litigation.
        Senator Ensign. What did you think about his suggestion
    about the definitions on operational ranges, active-inactive,
    to make the States have more of a comfort level?
        Mr. Cohen. Yes, sir. Actually, we are proposing in another
    part of our defense authorization a definition of operational
    ranges, both active and inactive, which tracks the definition
    of active and inactive ranges in the Military Munitions Rule.
    We have already agreed with EPA and have language at OMB on
    language that would tighten up the definition of operational
    ranges to make clear that both active and inactive ranges have
    to be under the jurisdiction, custody, or control of the
    Defense Department, not operated or owned by a contractor.
        I thought many of his suggestions were very well taken.
        Senator Ensign. I would like to get some of the suggestions
    that he has taken and get us, not only get Mr. Benevento a
    response, but also get this subcommittee a response to his
    suggestions, because they seemed, at least some of them--if
    some of them are not reasonable, then maybe we can get that.
        [The information referred to follows:]

        The Department has taken very seriously the comments and
    suggestions made by Mr. Benevento and we have revised the language for
    our RCRA/CERCLA legislative requests accordingly. In that vein we have
    been in constant contact, not only with Mr. Benevento, but with a
    variety of State representatives. I have personally met with a number
    of State Attorneys General, and we have had discussions with the
    National Governors Association, the Environmental Council of the
    States, the National Conference of State Legislators and the
    Association of State and Territorial Solid Waste Management Officials
    and numerous States individually. The result of this consultation, I
    believe, is new language that clearly addresses the issues raised by
    Mr. Benevento, who now strongly supports the proposals as revised with
    his input.

        I will come back for a second round, but let me turn it
    over to Senator Akaka.
        Senator Akaka. Thank you very much, Mr. Chairman.
        Mr. Benevento and Mr. Mears, last fall our committee
    received a letter signed by 33 State attorneys general opposing
    proposals to exempt the DOD from the CAA and the cleanup
    statutes. With regard to RCRA and CERCLA, the letter stated,
    and I am quoting:

            ``The amendments to RCRA and CERCLA would preempt State
            and EPA authority over munitions-related and
            explosives-related wastes at a broad range of sites,
            including up to 16 million acres of former ranges that
            may be contaminated with unexploded ordnance,
            Department of Energy facilities, and even private
            sites, as well as current military bases. Ignoring the
            environmental consequences of military training will
            benefit neither the environment, public health, nor
            military readiness, as the experience at the
            Massachusetts Military Reservation demonstrates. There,
            decades of military activities contaminated a sole
            source aquifer with explosives contaminants, causing
            closure of several municipal drinking water supply
            wells and prompting EPA to order cessation of live-fire
            training. While the military environmental regulators
            have subsequently reached agreement on how to balance
            military training and environmental protection at MMR,
            it is certainly not a model for sustainable range
            use.''

        Mr. Benevento and Mr. Mears, do you agree or, my question
    is, why do you agree or disagree with the concerns raised in
    the letter from the 33 State attorneys general?
        Mr. Benevento. I think the concerns raised by the State
    attorney generals were based upon some earlier language that
    DOD had proposed. Frankly, I talked with Mr. Cohen and I have
    talked with the Armed Services staff about what exactly--what
    do you want to do here? What exactly are you trying to get at?
    My understanding of what they are trying to get at under RCRA
    is not to protect any off-site release. I think we would have
    concerns if they did.
        Explicitly what they are trying to do is protect the
    ability to use active and inactive ranges without any potential
    interference from environmental statutes. I think we can craft
    something that limits it to a piece of property. I really think
    what we are talking about here is looking at a piece of
    property and saying, okay, this piece of property is going to
    have a limited exemption, limited to the time that they are
    using it or potentially could use it, and then afterwards all
    of the full force and weight of the laws will come back once it
    is taken off of active or inactive status.
        A lot of these environmental laws have much more sweeping
    exemptions in them already. I think if you look at RCRA, you
    can go down a list of everything from in situ mining to
    anything you place into a domestic treatment, a domestic waste
    water system, is exempt from RCRA.
        This is a much more limited exemption. Really what it does
    under RCRA--really what it does is it says, okay, you have this
    piece of property for the time that they are using it for
    military preparedness, military readiness activities--and I am
    no expert on what that is, so I have to assume that the experts
    know what they need and when they need it--we, the regulators,
    are not going to, as long as there is no off-site migration,
    are not going to be in there regulating it.
        Second, I think that they are willing--it has to be a
    readiness activity on an active range, for example, under RCRA.
    So in conversations I have had with DOD, if it is an open
    burning, open disposal of waste through open burning, open
    detonation (OBOD), they would still come to us and seek a RCRA
    permit. However, if they are doing OBOD for training purposes
    we currently do not permit that, and this would merely codify
    what we do not do.
        Everybody keeps asking us for specific examples. I think
    what we are trying to do here is avoid having a specific
    example by codifying what we already do.
        Senator Akaka. Mr. Mears?
        Mr. Mears. Thank you for the question, Senator. Yes, we do
    agree with that letter, had a hand in drafting it. The reasons
    why we support it in summary actually have been captured by Mr.
    Benevento in his testimony. The way the legislation is
    currently crafted, particularly as it relates to RCRA and
    CERCLA, it plays with the fundamental waiver of sovereign
    immunity. It plays with some very fundamental definitions:
    solid waste in the RCRA statute, the definition of ``release''
    under Superfund.
        Amending these provisions of those statutes has far-
    ranging, sweeping effect. Mr. Benevento's suggestions may be
    ways to narrow this legislation that get to the DOD's proposal.
    However, they are fundamentally different than the legislation
    that has been proposed to date.
        Senator Akaka. Mr. Benevento and Mr. Mears. Earlier this
    year the State and Territorial Air Pollution Program
    Administrators (STAPPA) and the Association of Local Air
    Pollution Control Officials (ALAPCO) wrote a letter to the
    Chairman of the House Armed Services Committee stating their
    opposition to proposals to exempt certain DOD activities from
    requirements of the CAA. The letter states, and I am quoting:
    ``STAPPA and ALAPCO believe that the proposed CAA exemptions
    are unwarranted and will impede local, State, and Federal
    efforts to attain and maintain health-based national ambient
    air quality standards and deliver healthful air to our
    citizens. Such exemptions would also interfere with our efforts
    to protect air quality in national parks and other important
    ecosystems.
        ``The proposed exemptions would allow military readiness
    activities, alone among air pollution activities that our
    members regulate, to cause or contribute to violations of
    health-based NAAQs, increase the frequency or severity of such
    violations, or delay timely attainment of the standards or
    interim milestones. Moreover, this approach would impose
    inequitable burdens on the industries we regulate, as well as
    on the public. State and local air pollution control officials
    will still feel the responsibility to deliver truly healthful
    air to the public we serve and therefore we will have no choice
    but to call upon other sectors in order to obtain the emission
    reductions we can no longer secure from military facilities.''
        Mr. Benevento and Mr. Mears, again, why do you agree or
    disagree with the concerns raised by the STAPPA and ALAPCO
    letter?
        Mr. Benevento. The letter really says two things. It said
    it will make air quality worse and it will not make air quality
    worse because what will happen is we will go after and get the
    emissions reductions from other sectors. I think that this one
    requires a lot of thought and a lot of work because you are
    dealing with off-site impacts.
        In Colorado, if you look at a major metropolitan area,
    which is where you are going to have most of your NAAQs
    concerns, if you look at Colorado, if you look at Denver and
    Colorado Springs, which are really the two areas this would
    impact, and you look at the proportion of--you look at the
    emissions budget and the military's contribution for the
    defined activities, not the entire contribution but really the
    readiness activities that are spoken about in the bill, you
    would find them to be an extraordinarily small amount.
        Now, I am just speaking for Denver and Colorado Springs. I
    am not speaking for the Nation, of course. But you would find
    they are an extraordinary small amount. They are something that
    normally, unless there is going to be a big change at these
    bases, that normally we would not even consider. Denver,
    Colorado is lucky. We have no areas that are in nonattainment
    for any air quality standard.
        So I think you have to do a few things with this one. I do
    not think it is unresolvable. I think it is resolvable. I think
    I disagree with the tone of that letter in that it just points
    out every single problem that could potentially arise, some of
    which I think are actually contradictory to each other, but it
    does not point out any solutions.
        I think there are solutions that are possible by requiring
    offsets of other base activities that are not military
    readiness activities. I mentioned trading programs. I mentioned
    something like the natural events policy which we use in
    Colorado, which I think you still get into a little bit of off-
    site impacts there, but could at least provide part of a
    solution to the issue.
        Senator Akaka. Mr. Mears?
        Mr. Mears. Thank you, Senator. I really have to defer to
    those air authorities for their expertise in the area of air
    quality. But I can say that the concern about the breadth of
    the provisions as they relate to the CAA are significant
    concerns, and the language could have broader-reaching impacts
    than have been stated the intent of the DOD to achieve.
        It creates in a sense a legal fiction, in the sense that it
    suggests that a region--a State would not necessarily have to
    find that a region was in nonattainment with the air quality
    standards by virtue of the fact that there was, even though the
    emissions levels might be above the actual standard, if the
    reason for that is the emissions from the DOD.
        These standards are set based on public health. The public
    health, the effects on folks, on kids that get asthma, the
    various kinds of public health impacts of air quality, will not
    go away as a consequence of this statute. It will put the State
    air administrators and folks like Mr. Benevento in the awkward
    position of having to find other ways to meet that standard,
    because they are accountable to the citizens of their States to
    ensure that they do have a regulatory program that achieves
    those standards.
        Senator Akaka. My time has expired, Mr. Chairman. Thank
    you.
        Senator Ensign. Mr. Cohen, I had this question briefly for
    EPA earlier and I want to ask it to you, about perchlorate,
    especially as it relates to Lake Mead. Will the
    administration's proposals in any way affect the cleanup
    efforts related to drinking water sources such as Lake Mead?
        Mr. Cohen. No, sir, not at all, for multiple reasons
    actually. The Lake Mead perchlorate situation as I understand
    it was largely caused by the residue of industrial processes,
    disposal practices from a manufacturing facility, and a
    catastrophic accident that occurred in 1988. None of those are
    remotely affected by our Readiness and Range Preservation
    Initiative, which only affects--certainly is only intended to
    affect and we are trying to clarify would only affect--our
    operational ranges.
        Senator Ensign. We have your commitment that that language
    will be clarified so that it does not affect at all in any way
    the Defense Department's responsibility in helping the cleanup
    with perchlorate going into Lake Mead?
        Mr. Cohen. Yes, sir.
        Senator Ensign. Thank you.
        Also, we were just talking about air impact. How much of an
    air impact is involved with the DOD conformity typically? In
    other words, I do not know if you can quantify it, and also
    maybe relate it to the ability in the future to locate the F-22
    and the Joint Strike Fighter.
        Mr. Cohen. Sir, you have put your finger exactly on the
    concern that we have and what is really motivating us. In the
    past we have had a number of near misses where it was only by
    fortuitous circumstances that we were able to relocate existing
    weapons systems. There was one instance in California, for
    example, where we were only able to relocate a weapons system
    to the LaMoore Naval Air Station because of the coincidence
    that there was a nearby bomber base that was closing.
        Those are the sorts of near misses that we want to avoid by
    building a bit of extra flexibility into the act. That
    flexibility, the 3-year window that we would have to come into
    compliance, would give us the opportunity and the time to
    actually do the things that Mr. Benevento was discussing, try
    to adjust our nonreadiness activities, to try and make offsets
    on-base, or to purchase offsets, or to work with the State to
    revise the State Implementation Plan. Any of those are
    possibilities, but they do take time, and under the current
    statutory regime there is no flexibility. We cannot even begin
    to implement the activity. We could not begin to base a new
    weapons system unless we could demonstrate conformity from the
    get-go.
        So what we are trying to do is build in a window of time
    where we could both begin the readiness activity, but at the
    same time take that opportunity to try to find the offsets that
    would permanently bring us into conformity.
        With respect to your question about weapons systems, we are
    trying right now--and we will get back to you, sir, for the
    record--to come up with some examples, characteristic examples
    of some of the emissions outcomes that we would expect from a
    normal-sized deployment of a new weapon system. That is
    currently being prepared. We had hoped to have it available by
    today.
        [The information referred to follows:]

        Please see Mr. Cohen's response to QFR #3 for this information.

        But characteristically, even our largest military readiness
    activities at a base would generate only some hundreds of tons
    of emissions in air basins whose emissions budgets can run into
    the thousands and tens of thousands of tons. To that end, I
    would like to quote actually a letter that was sent by former
    EPA Administrator Carol Browner to then-Secretary of Defense
    Cohen. The letter was specifically about PM-2.5, but I think
    the closing paragraph is very telling:
        ``In summary, defense sources are a small part of the air
    quality problem and provide a unique and critical need for the
    Nation's security. I look forward to continuing to work with
    you and DOD on issues related to environmental compliance by
    military facilities.''
        So that is the Administrator's imprimatur, not only for our
    readiness activities, but for all DOD activities, that they are
    only a small part of the air quality problem. We would not be
    here, sir, asking for this added flexibility if we thought that
    there would be serious health impacts on the surrounding
    communities in the air basins where we have our bases.
        Senator Ensign. Thank you.
        I want to talk along these lines. It is my understanding
    that the administration's proposal for management of munitions
    on operational ranges is consistent with EPA's military
    munitions rule. I believe this proposal also preserves the
    authority to address imminent and substantial endangerment on
    the range. Mr. Cohen, why is it necessary to codify existing
    regulatory policy and how will communities be assured that
    human health and the environment will be protected on
    operational ranges?
        Mr. Cohen. The reason again, sir, for having to codify
    existing practices and existing policy is that they are under
    threat from litigation. There is a case at Fort Richardson in
    Alaska, in which there is an ongoing effort to attempt to
    characterize our training activities at that base as the
    creation of solid waste for purposes of RCRA and a release for
    purposes of CERCLA, both of which are regulatory triggering
    events. They require regulatory responses.
        While that is only one litigation, it is certainly
    indicative of a trend that we are concerned about, because the
    groups that brought that litigation at the time that they
    brought it did, I believe, express a desire to take that
    litigation on the road. In fact, if a court were to establish
    that precedent, it would be very difficult for the Defense
    Department to distinguish the live-fire training that we do at
    Fort Richardson from the training we do at basically all of our
    operational ranges.
        Senator Ensign. So why not just use exemptions?
        Mr. Cohen. Sir, then it would be necessary for us to do it
    at all of our operational ranges, certainly all of our active
    ranges, for routine test and training activities, which seems
    to us to be very different than the intention of Congress in
    providing for time-limited and site-specific exemptions.
        In terms of what we are doing to try to foster range
    sustainment and also to build the confidence of communities in
    our efforts, there are a whole suite of policy directives that
    we have prepared or are preparing. The DOD directive on
    sustainment of ranges and operating areas was signed by the
    Deputy Secretary on January 10 and is now in effect. It is
    designed to establish capstone-level guidance to DOD and the
    Services on an overall policy for test and training, range
    sustainment planning, management, coordination, and outreach,
    and as a capstone directive it is intended to serve as a guide
    for the development or revision of all the other directives of
    the Department applicable to range sustainment.
        It requires that range planning and management must
    identify range requirements for training and testing, identify
    encroachment concerns and other inhibiting factors to the
    ranges, and develop responsive plans to address any conflicts.
    Coordination and outreach on sustainment issues that include
    off-range stakeholders is also directed, with a goal of
    promoting understanding of range management and use decisions
    and working with outside groups to consider their concerns and
    work cooperatively to address shared concerns.
        In addition, sir, other related policies on noise, active
    range clearance, air installation compatibility, use zones, and
    outreach are in formal staffing now and should be published
    later this year. We are also dramatically expanding our
    outreach efforts to communities with respect to range
    sustainment. That includes not only the discussions that we
    have been having with Mr. Benevento and some of the other State
    groups, but much more decentralized, locally based discussions
    with communities, private parties, and nongovernmental
    organizations.
        Last year we signed the Munitions Action Plan in
    coordination with EPA, which is again designed to promote
    sustainable use of our ranges and promote public confidence in
    our range management activities. We have a green munitions
    program that we are working on, again cooperatively with the
    regulators.
        In short, a whole series of programs, policies, and
    resources are being brought to bear on this, because we realize
    that we cannot justifiably ask for this regulatory treatment of
    our operational ranges, unless we can make a case both to
    Congress and to the communities that we have valid sustainment
    policies in place.
        Senator Ensign. It is Senator Akaka's, but I think he would
    probably like to hear from both of you on what Mr. Cohen has
    just talked about. So I will start with Mr. Mears and then we
    will go to Mr. Benevento.
        Mr. Mears. Sure. There was a number of points that Mr.
    Cohen just addressed. One that jumps out at me is the concern
    about the threat of litigation by citizens groups, and that may
    ultimately prove to be a concern. It should not be a concern
    now. I have had the chance to review the pleadings in that case
    and they have not proceeded to any decisions in that court. I
    think it is premature to assume that there is actually a
    likelihood that, for instance, in the arena of RCRA there will
    be precedent-setting law set that will impede the DOD at other
    sites around the country.
        In fact, the pleadings are fairly light on the RCRA end.
    The State of Alaska is not actually delegated to implement the
    RCRA statute and there is not--the definition of solid waste is
    not, at least at present, at issue in that case. So I think it
    is premature to presume based on that litigation that there is
    a need to change the statute.
        Mr. Benevento. I think what we want to avoid, whether it is
    RCRA, CAA, or any other law, is a district-by-district
    decisionmaking process, district court-by-district court, or
    appeals-by-appeals, that could lend to different implementation
    throughout the country. I think it is a legitimate policy call
    for Congress to say there are certain military readiness
    activities in certain active and inactive ranges that while
    they are in use deserve to be exempted from environmental
    regulations, and then if there is a cleanup necessary we can
    follow on with a cleanup afterward.
        So I think if what you are seeking to do is avoid a
    different application based upon court decisions, it would make
    sense for Congress to just make a call and step in and broadly
    do what the intent of the legislation is. I think what you want
    to avoid is what has happened with wetlands policy in the
    country, where you have different district courts making
    decisions and you basically have a different wetlands law
    depending upon where you live in the country.
        Senator Ensign. Senator Akaka.
        Senator Akaka. Thank you, Mr. Chairman.
        Mr. Mears, Mr. Cohen has characterized the DOD proposal as
    codifying the munitions rule. Would you like to comment on
    that?
        Mr. Mears. Thank you, sir. Yes, the munitions--actually,
    the statutory provisions that have been suggested, the
    amendments, go further than the munitions rule. The munitions
    rule, of course, because it is a regulation, cannot amend the
    statutory definition of solid waste, which this legislation
    does. That has, as a practical matter, the impact of
    potentially--of clearly impeding the State's ability to bring
    imminent and substantial endangerment claims.
        The fact that EPA retains some authority to bring those
    claims is of small comfort to the States. We, over the past few
    decades, have become the primary implementers of these
    statutes. We have invested significant resources and developed
    significant expertise in the application of these laws to these
    sites in these States, and as a consequence, EPA has withdrawn
    its investment in large part in those States like Washington
    that has a very strong and effective program.
        We cannot rely on EPA to be the ones that step in and
    identify problems and work with these defense installations to
    solve those problems. So again, there are other ways in which
    the munitions rule is more narrow than this legislative
    proposal, but it is not exactly accurate. It may be the
    intention to try to achieve simply what is in the munitions
    rule, but the statutory language as proposed is much broader.
        Senator Akaka. I want to say thank you very much for your
    responses, and I want to take the time to thank the chairman
    for calling this hearing. I also want to thank the chairman and
    his staff for calling such three great panels today. Without
    question, this will be very helpful to the committee.
        Thank you very much.
        Senator Ensign. Thank you, Senator Akaka, and for working
    with us.
        I want to thank the panel for your excellent testimony,
    really all three panels today. I think it was a very helpful
    discussion and we got some good testimony on the record, and
    hopefully we can now go forward and improve the legislation,
    address some of the concerns that were brought up today, and
    come out with something that everybody I talked about, and that
    is the need for balance.
        We are at war. I think it now comes into focus of how
    important readiness is and training, and for us to be able to
    go forward, protecting the environment, protecting human health
    and safety, but at the same time making sure that our Armed
    Forces have the training and readiness that they need to fight
    a war when they are called upon to fight that war.
        Also, just very briefly, Senator Allard, Mr. Benevento,
    wanted to be here today, but unfortunately he was unable to
    attend because he is on the floor helping a judicial nominee
    from Colorado. So he wanted to be here and welcome you, but he
    was unable to do that.
        Senator Akaka. Mr. Chairman, I would like to take the time
    to thank my staff also.
        Senator Ensign. Ours as well. I think both staffs did a
    great job preparing. Once again, it is just terrific to work
    with this subcommittee staff. They are very professional in the
    way they work with all the witnesses and get us ready for these
    hearings.
        So thank you all very much, and this hearing is adjourned.
        [Questions for the record with answers supplied follow:]

                   Questions Submitted by Senator John Ensign

               ADMINISTRATION ENVIRONMENTAL LEGISLATIVE PROPOSAL

        1. Senator Ensign. Mr. Cohen and Mr. Suarez, during the hearing on
    April 1, 2003, Doug Benevento, Executive Director of the Colorado
    Department of Public Health and Environment, testified that he wanted
    to offer some suggestions on the administration's legislative proposal
    on the Resource Conservation and Recovery Act (RCRA), the Comprehensive
    Environmental Response, Compensation, and Liability Act (CERCLA), and
    the Clean Air Act (CAA). Could you provide responses to suggestions
    proposed by Mr. Benevento in his testimony at the April 1, 2003,
    hearing before the Subcommittee on Readiness and Management Support?
        Mr. Cohen. The Defense Department has worked very extensively with
    Mr. Benevento since the hearing to refine our RRPI RCRA/CERCLA
    proposal. As a result of these very cooperative, informative
    discussions, the Defense Department has recently submitted to EPA a
    modified version of the Department's current RCRA/CERCLA proposal that
    would narrow the circumstances in which the Department's RCRA provision
    would apply in the event of off-range migration. (Attached) EPA is
    currently reviewing this proposal.

        Mr. Suarez. EPA appreciates the thoughtful suggestions Mr.
    Benevento proposed in his testimony. Since the April 1, 2003 hearing,
    EPA and DOD agreed on new proposed legislative language that would
    address Mr. Benevento's concern regarding the applicability of the
    proposed exemptions under RCRA and CERCLA: the Agencies jointly agreed
    on a revised definition of ``operational range'' that clarifies that
    the exemptions would apply to active and inactive ranges under the
    jurisdiction, custody or control of a the military services.
        EPA and DOD have pledged to work together to refine the legislative
    proposals to address concerns raised by the States, communities, and
    other stakeholders. These concerns include monitoring and reporting of
    environmental impacts of military readiness activities and protecting
    ground and surface water--two of the concerns Mr. Benevento raised in
    his testimony. In addition, EPA and DOD appear to be nearing agreement
    on the use of land use controls to prevent the migration of
    contamination at Superfund sites, and we continue to work together
    through the Munitions Response Committee to address a number of
    environmental issues related to ordnance and explosives (OE) and
    unexploded ordnance (UXO).
        Finally, EPA continues to believe that proposed changes to the
    Clean Air Act appropriately addresses two important national
    priorities--military readiness and the protection of human health and
    the environment--while holding the States harmless for any
    nonattainment of ambient air quality standards resulting from military
    readiness activities.

        2. Senator Ensign. Mr. Cohen and Mr. Suarez, how does the
    administration propose to work with States and communities to address
    concerns related to these proposals?
        Mr. Cohen. The Services and DOD are working intensively with all
    stakeholders to ensure range sustainability and environmental
    protection. It is an essential military mission to protect the natural
    resources of the U.S. and to maintain the lands entrusted to us for
    training purposes. In order to achieve this goal, DOD has partnered
    with the Nature Conservancy and other land trust and conservation
    groups, and works closely with the Fish and Wildlife Service and the
    National Oceanic and Atmospheric Administration, to preserve sensitive
    habitat throughout the U.S.
        DOD is partnering with land trust organizations and State and local
    governments to find ways to create buffer zones and acquire sensitive
    habitat for threatened and endangered species adjoining our test and
    training ranges.
        With respect to concerns expressed by some State and local
    regulators over our RRPI proposals, the Department is engaging in
    vigorous outreach to a broad range of officials and organizations,
    including National Association of Attorneys General, Conference of
    Western Attorneys General, National Conference of State Legislators,
    Association of State and Territorial Solid Waste Management Officials,
    Environmental Council of States, International City/County Management
    Association, National Association of Counties, and the National
    Governors Association. I personally have met with dozens of State
    regulatory officials on this issue.
        In addition, EPA and DOD have carefully assessed the concerns
    expressed, and have completely revised our RCRA/CERCLA proposal in an
    attempt to meet these concerns. We continue to work intensively with
    State and local officials across the country on these issues.
        DOD continues to work with local communities on current cleanup
    initiatives underway at military sites across the United States. DOD
    intends to meet its obligations to clean up contamination from past
    practices and continue our strong pollution prevention and
    environmental compliance programs. In this fiscal year alone, the
    environmental budget for DOD will be $4 billion.
        Finally, as I noted in my testimony, for areas other than
    operational ranges that require cleanup, the Department has established
    a Munitions Response Committee that includes partners from the U.S.
    Environmental Protection Agency, Federal Land Managers, States, and
    Tribes. The primary goal of the committee is to define a collaborative
    decisionmaking process that ensures each party's rights and respective
    responsibilities are respected. This approach will allow coordination
    and, where appropriate, integration of the applicable statutory and
    administrative authorities under Federal and State environmental laws.
    This approach ensures that action will be taken within an agreed upon
    approach when operational ranges are closed in the future.
        Mr. Suarez. EPA values and actively solicits input and advice from
    our State partners and community members. We continue to work closely
    with the States through organizations like the Environmental Council of
    the States (ECOS) and the Association of State and Territorial Solid
    Waste Management Officials (ASTSWMO).

        3. Senator Ensign. Mr. Cohen, you testified that the DOD was in the
    process of preparing some estimates and/or assumptions regarding the
    air emission impacts of new weapon systems. Could you provide that
    information?
        Mr. Cohen. Although we have made initial efforts preparing
    estimates, such estimates must be used with great caution. In some
    cases, aircraft operational data have not yet been fully defined and
    published--a prerequisite for a reliable estimate. Further, to arrive
    at estimates, the number and type of operations are generalized as
    landings and takeoffs (LTOs), whereas basing documents will consider
    the full range, location, and frequency of operations. Finally, since
    final basing decisions have not been made with respect to each weapon
    system, the estimates are difficult to place in meaningful context
    regarding the significance of any increases or decreases in emissions
    from newly based weapon systems. In the process of making basing
    decisions, air impacts are considered in detail in environmental
    analysis documents.

        4. Senator Ensign. Mr. Cohen, if estimates are provided, what were
    the underlying assumptions?
        Mr. Cohen. The assumptions to arrive at a comparative net emissions
    delta between a new weapons system and the system it will replace
    appear below the comparative emissions table in the previous answer.
    The LTO operational assumptions provide a generic glimpse of the
    potential emissions differential. Any actual emissions differential
    between a new weapons system and the system it will replace will be
    determined by various site-specific data, involving a calculation that
    is typically much more complex.

        5. Senator Ensign. Mr. Cohen and Mr. Suarez, it is my understanding
    that the administration's proposal for management of munitions on
    operational ranges is consistent with the EPA's Military Munitions
    Rule. I believe this proposal also preserves the authority to address
    imminent and substantial endangerment on the range. Why is it necessary
    to codify existing regulatory policy?
        Mr. Cohen. It has been the uniform policy of the States not to
    issue RCRA permits for test and training activities on operational
    ranges, reflecting widespread, longstanding consensus that test and
    training with munitions on operational ranges is not a waste management
    activity. This policy is reflected in the 1997 EPA Military Munitions
    Rule, which has been adopted by a majority of the States. However,
    litigants are now asserting that notwithstanding EPA's and the States'
    regulatory policy and practice, the more ambiguous statutory language
    allows them to claim that such test and training with munitions is in
    fact waste management. Our amendment would confirm existing State and
    Federal policy and conclusively close the door to such litigation.
        Mr. Suarez. Your understanding is correct in both respects. The
    proposed legislation would largely codify and confirm EPA regulatory
    policy, including the Military Munitions Rule. Moreover, EPA would
    retain authority under CERCLA section 106 to address an imminent and
    substantial endangerment from munitions on an operational range. As DOD
    has testified, the purpose of codifying this policy is to protect
    against litigation the regulatory policy that the use of munitions for
    testing and training on an operational range is not a waste management
    activity, and that DOD must address the environmental consequences of
    such testing and training use involving the discharges of munitions
    when the range closes, when munitions or their constituents migrate or
    threaten to migrate off-range, or when munitions or their constituents
    may present an imminent and substantial endangerment to public health
    or the environment.

        6. Senator Ensign. Mr. Cohen and Mr. Suarez, how might communities
    be assured that human health and the environment will be protected on
    operational ranges if the RCRA and CERCLA proposals were enacted?
        Mr. Cohen. The RRPI initiative expressly preserves the authority of
    EPA under section 106 of CERCLA to ``issu[e] such orders as may be
    necessary to protect public health and welfare and the environment''
    whenever it ``determines that there may be an imminent and substantial
    endangerment to the public health, welfare, or the environment because
    of an actual or threatened release of a hazardous substance from a
    facility.'' Such orders are judicially enforceable. Because EPA's
    sweeping section 106 authority covers not only actual but ``threatened
    release,'' our proposal would clearly enable EPA to address groundwater
    contamination before the contamination leaves DOD land--which is also
    the objective of DOD's existing management policies.
        In addition, States and citizens exercising RCRA authority under
    our RRPI RCRA provision addressing off-range migration could
    potentially use that authority to enforce on-range measures necessary
    to redress the migration where appropriate.
        Furthermore, the RRPI has no effect whatever on the authorities of
    EPA or the States to respond to threats under the Safe Drinking Water
    Act. EPA's continuing authority under the Safe Drinking Water Act to
    prevent likely contamination clearly empowers the Agency to act before
    contamination leaves DOD ranges.
        Mr. Suarez. The bill specifically maintains the ability of States
    and citizens to take actions against the military in the event that
    munitions or their constituents migrate off-range and may pose an
    imminent and substantial endangerment to human health or the
    environment, if such materials are not addressed under CERCLA. States
    and citizens also have authority to take action under State law or
    bring citizen suits under RCRA if munitions pose a threat after a range
    is closed. They would no longer have imminent hazard authority under
    RCRA or State hazardous waste laws over environmental contamination
    caused by explosives, ordnance, munitions, or unexploded ordnance (UXO)
    on operational ranges used for their intended purpose and which remain
    on the range.

        7. Senator Ensign. Mr. Cohen and Mr. Suarez, on January 10, 2003,
    the Secretary of Defense signed a DOD directive for Sustainment of
    Ranges and Operating Areas. The directive provides the military
    departments with policy guidance for test and training range
    sustainment planning, management, coordination, and outreach. How do
    such efforts contribute to environmental protection?
        Mr. Cohen. The DOD directive, ``Sustainment of Ranges and Operating
    Areas'' was developed as part of our overall comprehensive range
    sustainment strategy. As I noted in my testimony, this directive
    provides capstone-level guidance to DOD and the Services on overall
    policy for test and training range sustainment planning, management,
    coordination, and outreach. As a capstone document, it is intended to
    serve as a guide in the development or revision of other directives
    with applicability to range sustainment. Subordinate directives and
    guidance documents will be developed to execute the policy contained in
    the DOD directive. Several of the key policies of the directive will
    contribute directly to environmental protection. First, the directive
    requires DOD components to identify environmental concerns that are
    implicated in range and operating area activities. Second, management
    programs must be developed using a functionally integrated
    decisionmaking process that includes all relevant staffs, including
    those specializing in environmental compliance, protection, and
    restoration. Finally, sustainment programs and management plans
    developed by the DOD components must provide for multi-tiered
    (national, regional, and local) coordination and outreach programs that
    ensure consideration of all stakeholder interests in DOD range-related
    decisions.
        Mr. Suarez. I believe that the DOD is in a better position to
    address the impacts of this directive.

        8. Senator Ensign. Mr. Cohen and Mr. Suarez, critics of the
    proposed legislative changes pertaining to management and cleanup of
    munitions on active ranges complain that such changes would allow the
    military to shirk responsibilities in cleanup and shift the burden to
    private industry. Others have stated that the proposals would exempt
    DOD open burning, open detonation pits, and other chemicals from
    environmental regulation. Do you agree with this characterization? If
    not, why?
        Mr. Cohen. Both of these concerns do not reflect DOD's intention in
    this legislation. EPA and DOD have completely redrafted the RCRA and
    CERCLA proposals to make unambiguously clear that they apply only to
    munitions test and training on operational ranges, not to munitions
    waste management activities either on operational ranges or elsewhere,
    such as open burn/open detonation or landfilling of munitions.
        Similarly, although our provision would confirm existing State and
    Federal policy that munitions test and training on operational ranges
    are not waste management requiring cleanup, they have no impact on our
    existing cleanup obligations on closed ranges, or for nonreadiness
    activities, or for our contractors' activities. Accordingly, it cannot
    result in shifting of burdens to the public or private industry.
        Mr. Suarez. No. The proposed legislation, in our view, strikes an
    appropriate balance between ensuring military readiness and
    environmental protection. The legislation, if enacted, would preserve
    essential authorities for EPA to protect human health and the
    environment. The bill explicitly preserves EPA's Superfund authority
    under CERCLA Sec. 106 to order an abatement of any imminent and
    substantial endangerment created by munitions used for their intended
    purpose on an operational range. For munitions that migrate off-range
    or munitions not used for their intended purpose--or, indeed, for
    releases of other hazardous substances, pollutants, and contaminants--
    EPA retains its full panoply of CERCLA response authorities. The same
    is true for munitions on closed ranges. Similarly, the bill provides a
    limited RCRA exemption only for military munitions used for their
    intended purpose on an operational range. Nevertheless, such munitions
    will be subject to the full panoply of RCRA authorities, if they are
    recovered, collected, and then disposed of by burial or landfilling or
    if they migrate off the operational range and are not addressed by a
    Superfund response action. The same is true for waste munitions on
    closed ranges. All other waste handling activities will be subject to
    the usual RCRA requirements.

        9. Senator Ensign. Mr. Cohen and Ms. MacDonald, as a result of a
    recent ruling by the Federal District Court in Arizona, the Fish and
    Wildlife Service has asserted that the words ``special management
    considerations or protection'' should be removed from the
    administration's proposal under the Endangered Species Act. What is the
    administration's position?
        Mr. Cohen. The Department of Defense and the Department of the
    Interior have been cooperatively working to develop revised language
    that will address the Interior Department's concern that retention of
    the phrase ``special management considerations or protections'' may
    generate litigation risks.
        Ms. MacDonald. The suggestion that the committee remove the words
    ``special management considerations or protection'' from the
    legislative proposal was included in my written statement presented to
    the subcommittee. The statement was cleared throughout the
    administration, and therefore represents the administration's position.
        As noted in my statement, the recent U.S. District Court ruling in
    Arizona has called into question one of the methods the Fish and
    Wildlife Service utilizes to exclude military lands with an approved
    integrated natural resource management plan (INRMP) from a critical
    habitat designation. The method in question (based on section 3(5)(A)
    of the ESA) is the exclusion of military lands covered by an INRMP
    because those lands do not need ``special management considerations or
    protection'' due to the fact that this is provided in the INRMP.
    However, the District Court has ruled, in a case relating to Forest
    Service lands, that the Fish and Wildlife Service could not exclude
    lands from critical habitat if those lands needed ``special management
    considerations or protection.''
        This court ruling could remove the option of excluding those lands
    under section 3(5)(A). Because the ruling was based on the ``may need
    special management considerations or protection'' provisions of the
    act, using that term in subsequent statutory language could well
    confuse the issue.
        Therefore, removing the language referring to ``special management
    considerations or protection'' would avoid a possible adverse linkage
    between the administration's proposal and the court's ruling. This
    language is not needed to accomplish the objective of the proposal.

        10. Senator Ensign. Mr. Cohen and Dr. Lent, Dr. Lent testified that
    some notice and comment language was inadvertently omitted from the
    administration's proposal on Marine Mammal Protection Act. What is the
    administration's position?
        Mr. Cohen. It is correct that provisions requiring notice in the
    Federal Register and an opportunity for public comment were
    inadvertently left out of the RRPI provision dealing with the Marine
    Mammal Protection Act. The DOD supports such notice and comment
    opportunities for DOD incidental take requests.
        Dr. Lent. The statement in question refers to the National Defense
    Authorization Act (NDAA) for Fiscal Year 2004, not the administration's
    Marine Mammal Protection Act (MMPA) reauthorization bill. The
    provisions that this question refers to are not in the administration's
    MMPA bill.
        Proposed section 101(A)(b)(2) of the NDAA excluded a requirement,
    currently contained in the MMPA, for the Secretary of Commerce to
    provide public notice and opportunity for comment on requested
    incidental take authorizations by the DOD.
        NOAA Fisheries believes in the importance of public review and
    participation. These amendments in the NDAA would require regulations
    to be promulgated for taking marine mammals incidental to certain
    activities and thus would follow the notice and comment procedures for
    rulemaking under the Administrative Procedure Act. Furthermore, these
    provisions would not prohibit NOAA Fisheries from announcing the
    proposed rule in media other than the Federal Register.

        [Whereupon, at 12:27 p.m., the subcommittee adjourned.]

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2004

                                  ----------

                            WEDNESDAY, APRIL 9, 2003

                               U.S. Senate,
                      Subcommittee on Readiness
                                and Management Support,
                                   Committee on Armed Services,
                                                        Washington, DC.

     READINESS OF THE MILITARY SERVICES TO CONDUCT CURRENT OPERATIONS AND
                           EXECUTE CONTINGENCY PLANS

        The subcommittee met, pursuant to notice, at 2:33 p.m. in
    room SR-222, Russell Senate Office Building, Senator John
    Ensign (chairman of the subcommittee) presiding.
        Committee members present: Senators Ensign and Akaka.
        Majority staff members present: William C. Greenwalt,
    professional staff member; Gregory T. Kiley, professional staff
    member; and Joseph T. Sixeas, professional staff member.
        Minority staff member present: Maren R. Leed, professional
    staff member.
        Staff assistants present: Andrew W. Florell and Sara R.
    Mareno.
        Committee members' assistants present: John A. Bonsell,
    assistant to Senator Inhofe; Arch Galloway II, assistant to
    Senator Sessions; D'Arcy Grisier, assistant to Senator Ensign;
    Clyde A. Taylor IV, assistant to Senator Chambliss; Davelyn
    Noelani Kalipi, assistant to Senator Akaka; William K. Sutey,
    assistant to Senator Bill Nelson; Andrew Shapiro, assistant to
    Senator Clinton; and Terri Glaze and Andy York, assistants to
    Senator Pryor.

           OPENING STATEMENT OF SENATOR JOHN ENSIGN, CHAIRMAN

        Senator Ensign. Good afternoon. I would like to welcome
    both of our panels today and our ranking member on the
    subcommittee, Senator Akaka. This is the fifth hearing that we
    have held in this subcommittee and it will be the last one
    before the markup. I think we have had a great set of hearings
    and been very productive. We have learned a lot and I am
    looking forward to today's testimony to learn a lot more for
    the markup.
        We are in critical times right now and, instead of reading
    my opening statement, I am just going to summarize a few things
    and submit the rest of it for the record and, without
    objection, any opening statements will be part of the record,
    as well as all of your full statements will be made part of the
    record.
        I just want to share a few observations. First of all, I
    have not been able to tear myself away from the television
    today, even more than most days. The events that are unfolding
    before us are just absolutely spectacular. I think of the
    bravery and the celebrations that are going on today in
    celebration of that bravery that has brought freedom to the
    Iraqi people.
        But I also harken back to the sacrifices by those who have
    either been injured or who have given the ultimate and paid the
    ultimate price for that freedom, and we certainly owe them a
    debt of gratitude as far as the Nation is concerned.
        But I want to tell you members of the armed services and
    those who represent the armed services today how as a Nation,
    how proud we are of the job that you are doing. I think that
    you have shown the rest of the world what the United States is
    about, not only in the effectiveness of the way that you
    fought, but in the way that the military conducted itself in
    trying to minimize civilian casualties, in trying to do the
    targeting.
        I think the one story that was unfolded on television, I
    cannot remember his rank, whether it was captain or colonel. We
    talked about this yesterday, General, about going up before
    that mosque. We had just had the suicide bomber the day before
    and that young soldier asked his people to take a knee in the
    face of what could have been a very dangerous situation, and
    yet he calmly handled it and backed down what could have blown
    up, would have looked very bad on international television.
        It just could have really been a very negative point during
    the war and instead, because of the way that you put them
    through training, the kind of training that they had, I think
    ended up being a situation that we all looked in awe of, and I
    certainly did.
        I also think back to the story that we heard with the
    marines who had the opportunity to talk on the telephone and
    each one of them was offered, and they turned down that
    opportunity so that the first phone call could go to the
    parents of the marine who was killed in action, just to see how
    they were doing. The journalist said, at the end of that, where
    do you find such people?
        On Monday, I went down to Parris Island and had a great
    privilege there, as well as I know it would be the same at each
    one of our training bases, just to see some of the recruits.
    That is where we get those kind of people. It is amazing to see
    what you put them through, that they are voluntarily signing up
    to put themselves through that.
        Then every time I have heard either a family member or an
    active duty, actually the person themselves in uniform, when
    they talk about it, they want to be there. They know what they
    are up against. They know the dangers, and yet they say they
    are doing what they love. Not that they love killing people,
    but they love the idea that we are liberating a country and
    protecting our own citizens at the same time.
        So I just wanted to start with that opening. I am looking
    forward to your testimony. We have some serious business to
    conduct today, but in the light of the events that are
    unfolding before us, there is a great deal of celebration ahead
    of us. I cannot wait to welcome a lot of those troops when they
    come home.
        Senator Akaka.
        [The prepared statement of Senator Ensign follows:]

                   Prepared Statement by Senator John Ensign

        Good afternoon. The Subcommittee on Readiness and Management
    Support is meeting today to review several issues related to the
    current and future readiness of our Armed Forces. We have a lot of
    ground to cover this afternoon. I don't know that we'll be nearly as
    successful in covering our ground here as our young men and women in
    uniform have been in spearheading over Iraqi ground on the drive to
    Baghdad these last couple of weeks, but we will endeavor to do our
    best.
        This is the fifth hearing that Senator Akaka and I will have
    conducted with the Readiness Subcommittee in review of the President's
    fiscal year 2004 budget request for the Department of Defense. Over the
    last 6 weeks, I think that he and I have developed a solid, well-
    documented record of the critical challenges facing the readiness of
    the military Services today. Senator Akaka and I, and the other members
    of this subcommittee, have enjoyed positive, thoughtful, candid
    discussions with our many witnesses to date. I am confident that our
    discussion with the witnesses today will further add to this important
    record.
        I want to take a moment to thank Senator Akaka for his continuing
    commitment to the work of this subcommittee. In my opinion, Senator
    Akaka's insight and perspective have been instrumental, not only in
    helping shape these absolutely necessary hearings, but also in
    developing thought-provoking dialogue with our witnesses. My
    understanding of the many challenges facing the readiness of our
    Services today has certainly benefited from Senator Akaka's
    contributions. Again, thank you, Senator Akaka.
        Let me first begin by welcoming our witnesses. Senator Akaka and I
    have asked you to meet with us today because each of you are focal
    points--in the Office of the Secretary of Defense (OSD), on the Joint
    Staff, and for your services--for military readiness. The civilian and
    military leadership in the Defense Department and, in fact, other
    federal departments and agencies look to you for your analysis of what
    operations and contingencies our soldiers, sailors, airmen, and marines
    are prepared to do--and how they will accomplish those tasks. Your
    understanding of the readiness of the Services must be second-to-none.
        Having had the privilege of visiting with several of you earlier
    and also having read all of your prepared testimonies, I am convinced
    that this is the case. Without objection, your prepared statements will
    be made part of the record and we look forward to your personal
    presentations here today.
        Before proceeding, I have to note that this hearing is being
    conducted at the unclassified level. I believe that it is important
    that the American public be fully aware of how well their military is
    prepared--prepared not only to conduct current military operations, but
    also for future challenges. There is much that can be discussed in an
    open setting and I believe that it is important that we do so. I do,
    however, appreciate the fact there are certain security sensitivities
    that we must recognize. I would ask each of you to discern whether an
    answer to a particular question might more appropriately be submitted
    for the record.
        Like most Americans, I am fascinated--and inspired--by the success
    with which coalition forces swept across sea, air, and land to Baghdad.
    I read one column last week that paralleled Operation Iraqi Freedom
    with the Pacific island-hoping campaign devised by General MacArthur
    and Admiral Nimitz in World War II. There is no question in my mind
    that the brilliant strategy behind Operation Iraqi Freedom, like that
    of MacArthur and Nimitz, was well-thought, that our Armed Forces were
    ready for the mission, and that this operation is being conducted
    successfully. I know that challenges remain, but, as the commander in
    chief observed last week, ``The vise is closing''--Hussein's regime of
    tyranny is coming to an end.
        On Monday, I had the privilege of visiting one of the foundries for
    one component of the vise--the Marine Corps Recruit Depot at Parris
    Island. What a truly amazing place--and I have to believe that this is
    representative of the recruit training sites for each of the Services.
    Young men and women with purpose, with focus, with commitment--eager to
    commit themselves to something larger, to defend the Nation, the
    Constitution, and our American way-of-life. It is our duty to ensure
    that those recruits have the training, the equipment, and the
    leadership critical for their success in future operations. Readiness
    truly begins there.
        What was also compelling for me at Parris Island was the sense of
    camaraderie that flourishes among the recruits. When I saw this, I
    couldn't help but recall an account forwarded to me by email last week
    that described an experience of an embedded reporter with the First
    Battalion-First Marines during their drive up the Euphrates Valley. The
    reporter offered to allow a few of the marines with whom he had been
    traveling--none of whom had spoken to their loved ones for weeks--to
    use his video phone to call home. One by one, each of the marines
    offered `a call' asked that `their call' be made by someone else--by a
    fellow marine who's wife was pregnant, for example--or not to call
    their loved ones, but instead to call the family of a marine who would
    not be coming home, a marine who had made the ultimate sacrifice in
    defense of our Nation. The reporter, rightfully humbled by these
    generous offers, had to ask, ``Where do they get young men like this?''
    I would suggest the reporter might want to file his next story from
    Parris Island, or Fort Jackson, or Great Lakes, or Lackland.
        Our witnesses today will testify in two panels. Dr. Paul Mayberry,
    the Deputy Under Secretary of Defense for Readiness, and Lieutenant
    General Norton Schwartz, the Director of Operations on the Joint Staff,
    will comprise the first panel. On the second panel are the directors of
    operations for each of the service chiefs: Lieutenant General Richard
    Cody, United States Army; Vice Admiral Kevin Green, United States Navy;
    Lieutenant General Emil Bedard, United States Marine Corps; and Major
    General Randall Schmidt, United States Air Force.
        Before we proceed with the testimonies of the witnesses on the
    first panel, the chair now welcomes any opening remarks from the
    ranking member.

                  STATEMENT OF SENATOR DANIEL K. AKAKA

        Senator Akaka. Thank you very much, Mr. Chairman.
        Before I welcome our witnesses today, I just want to say,
    Mr. Chairman, thank you for arranging this hearing and I want
    to thank your staff as well as mine for the work that they have
    done.
        I want to let all of you know how much we appreciate what
    you and the brave men and women who are putting their lives on
    the line for America are doing. You are all in our thoughts and
    in our prayers and you and your soldiers, sailors, airmen, and
    marines all have our sincere gratitude. We are truly proud of
    what men and women are doing for our country in the military.
        I want to welcome back Dr. Mayberry and General Bedard in
    particular, who both testified on these same issues last March.
    Welcome also to our other witnesses as well. We hope that you
    will also be willing to come back in the future to share your
    thoughts and expertise with the Readiness Subcommittee.
        While I expect that most of what we will be discussing this
    afternoon will address current operations and its effect on
    readiness, our first panel will also address other important
    key issues. While our forces are engaged all over the globe,
    DOD continues to move forward on improving both joint training
    and readiness assessment. I applaud these efforts, particularly
    in light of pressing distractions, and I am looking forward to
    hearing more about DOD's ongoing initiatives.
        I also welcome the opportunity to get more deeply into
    specific readiness issues. During our hearing last year, our
    witnesses universally stated that, while our forces were ready
    for the demands of the global war on terrorism, they were
    strained, and if the pace of operations remained high,
    readiness problems could emerge. A little over a year later,
    our global war on terrorism (GWOT) demands have not diminished
    and the addition of a major conflict is absorbing a huge
    percentage of our military capability.
        While I have every confidence in our U.S. Armed Forces and
    their ability to excel at whatever we might ask of them, I am
    worried about what comes next. It seems to me that as current
    demands on our forces rise, meeting them means we have to tap
    resources we would otherwise use to sustain these forces and
    our need to reconstitute those forces also increases. General
    Hagee, the Commander of the Marine Corps, testified before
    another subcommittee last week that he was more concerned about
    reconstitution than he was about the current fight, which in my
    mind is a pretty significant statement.
        At the same time that operational demands are higher than
    they have ever been, we are considering a budget request that
    seems disconnected in many senses from our current reality.
    Because DOD does not budget for contingencies and because of
    the long budgeting cycle, there is little or no reflection of
    the strains we can already anticipate in the fiscal year 2004
    budget request.
        As we consider that request, therefore, it seems to me that
    we should do our best to ensure that what moves forward out of
    this committee and for the rest of the authorization process is
    as strong as it can be in support of the readiness of our
    forces.
        Hopefully, our discussions today will shed some light on
    how we can best accomplish this goal. Again, I want to say that
    we are proud of what you are doing, we are proud of our troops,
    and I thank God for the kind of support we are able to give our
    troops, to give all of you, and I look forward and welcome all
    of you to this hearing, Mr. Chairman.
        Senator Ensign. Thank you, Senator.
        Our witnesses today will testify in two panels. Dr. Paul
    Mayberry, the Deputy Under Secretary of Defense for Readiness;
    and Lieutenant General Norton Schwartz, the Director of
    Operations on the Joint Staff, will comprise the first panel.
    On the second panel are the Directors of Operations for each of
    the service chiefs: Lieutenant General Richard Cody, United
    States Army; Vice Admiral Kevin Green, United States Navy;
    Lieutenant General Buck Bedard, United States Marine Corps; and
    Major General Randall Schmidt, United States Air Force.
        I call on Dr. Mayberry to start and I look forward to your
    testimony.

     STATEMENT OF DR. PAUL W. MAYBERRY, DEPUTY UNDER SECRETARY OF
                         DEFENSE FOR READINESS

        Dr. Mayberry. Thank you very much, Mr. Chairman, Senator
    Akaka. It is a privilege to be here this afternoon to address
    you on the military readiness of the Department of Defense.
    With me this afternoon is the Director of Operations for the
    Joint Staff, Lieutenant General Norton Schwartz of the Air
    Force. It certainly is an honor to work with such a
    professional as he.
        Today we are a Nation at war. As you said, sir, on an
    hourly basis we can observe and witness the results of your
    past support and investments in the people, in the equipment,
    and also in the realistic training of our Armed Forces. Our
    forces remain strong, agile, and ready to meet the threats
    facing this Nation, whether that is from the sands of Iraq or
    to the mountains of Afghanistan.
        The uniformed men and women of this Nation, reinforced by
    our Department's civilian staff, stand ready for missions
    assigned to them by our Commander in Chief. We appreciate your
    commitment and your oversight of the resources entrusted to our
    Department.
        I would like to address briefly three important readiness
    issues in my statement today before going forward to answer
    your questions: first, the readiness of our military forces to
    conduct current operations, as well as the contingency plans,
    and also the adequacy of our budget request to be able to
    continue that high state of readiness; second, to speak about
    the Department's effort to develop a joint national training
    capability; and finally, our plans for addressing shortfalls in
    current readiness reporting by developing a defense readiness
    reporting system.
        I do not know a better measure, as both of you have spoken
    to, of our current force readiness than the performance that we
    see daily on the battlefield. What our forces have accomplished
    in Operation Iraqi Freedom truly is remarkable. Our air crews
    have flown thousands of sorties, striking leadership and
    Republican Guard targets both at day and certainly at night.
    Our ground forces have raced across more than 200 miles worth
    of Iraqi territory, through enemy fire and hostile terrain, to
    now occupy the capital city of Baghdad.
        Working with our coalition forces, which are an extremely
    important part of this operation, we have established the
    foundation for considerable humanitarian aid and medical care
    that can be provided to the Iraqi people. We have accomplished
    all of these goals with minimal U.S. military and Iraqi
    civilian casualties.
        Even as current operations are ongoing, our active Army
    divisions still maintain at high readiness levels and Air Force
    mission capable rates have improved over the last 7 months.
    Naval forces continue to meet readiness goals for both deployed
    and non-deployed segments of the force and the Marine Corps
    reports that they are ready to meet the demands of both current
    and potential operations.
        You have asked about the adequacy of the fiscal year 2003
    budget and the fiscal year 2004 budget request in keeping our
    forces ready. First I want to assure you that maintaining the
    readiness of our Armed Forces is the highest priority in the
    Department of Defense. Even as efforts continue in Iraq, we are
    working to ensure that our forces can be reconstituted and
    ready for other missions. Much of this work lies ahead of us,
    but the fiscal year 2003 supplemental budget request will
    provide the critical funding needed to start the reconstitution
    effort.
        Although we do not know exactly when the war in Iraq will
    end, we have proposed a supplemental budget of $63 billion to
    cover the most critical needs of the Department. These
    supplemental funds will go towards reimbursing the Services and
    the defense agencies for the costs associated with preparation
    for the war as well as covering the costs attributed to the
    military operations in Iraq, as well as the global war on
    terrorism.
        We have also worked very carefully to craft the President's
    2004 budget. This proposal allows us to continue to wage an
    aggressive global campaign against terrorism while supporting
    transformation of our Nation's military capabilities. It
    provides for unparalleled training and equipment for our forces
    and troops and funds the intelligence programs that are really
    necessary to enhance both our country's and military
    intelligence needs.
        The proposal also enhances the quality of life for our
    military personnel and their families. Finally, the budget
    proposal advances transformational efforts to ensure that our
    forces remain agile and effective.
        Secretary Rumsfeld has noted that in the 21st century that
    we will fight wars jointly. Yet our forces are still too often
    trained and prepared for war as individual Services. That needs
    to change. We plan to make the Joint National Training
    Capability that instrument of change. We can no longer simply
    deconflict our unique service warfighting skills, but rather
    must integrate them into a single, focused joint capability.
        I am pleased to report that the Department and its senior
    leadership, not just within the Office of the Secretary of
    Defense, but also with the leadership of the Services and Joint
    Forces Command, are committed to the concept of the Joint
    National Training Capability. Secretary Rumsfeld has stated
    that, ``Among the more important transformational investments
    that we propose is our request for funds to establish a Joint
    National Training Capability.'' It is our plan to establish
    this initial capability by October of next year under the
    direction of Joint Forces Command.
        The success of our training and readiness depends in no
    small part to our continued access to high quality and
    realistic training space. As I am sure you are aware, the
    Department is working hard on a number of fronts to counteract
    the effects of encroachment on readiness. In fact, you had a
    hearing on this just a week ago.
        Several legislative initiatives, changes, and
    clarifications, part of our Readiness and Range Preservation
    Initiative, have been submitted for congressional consideration
    in this year's defense authorization bill. The sustainment of
    our ranges and operating areas for training and testing
    purposes is a critical issue, not only for near-term readiness
    but also for our transformed forces of the future.
        Finally, let me discuss the status of our ongoing efforts
    to enhance the Department's readiness assessment and reporting
    system. I would like to highlight that one of the most
    essential elements of our reporting process is the active
    involvement of senior DOD leadership in resolving these
    readiness issues. The Department's Senior Readiness Oversight
    Council, which is chaired by the Deputy Secretary of Defense,
    meets routinely to review and discuss the most pressing
    readiness issues. Recently, the Council met to focus on issues
    related to chemical and biological defense preparedness of our
    Armed Forces.
        We are also improving the tools and the systems that we use
    to report and assess readiness and are implementing a new
    capabilities-based approach. This system, called the Defense
    Readiness Reporting System, or DRRS, will provide timely and
    accurate information on the readiness of our forces as well as
    the supporting infrastructure for use in a deliberate planning
    process as well as responding to emerging crises.
        The Defense Readiness Reporting System will transform our
    readiness assessment by focusing on unit current capabilities
    to execute mission-essential tasks in support of combatant
    commanders' war plans. These tools will provide visibility not
    only into the readiness of assigned and allocated forces, but
    also into the ability of supporting commands, agencies, and
    other services to execute their respective war plan
    responsibilities.
        The core element of this system will allow the Department
    to maintain almost a near-real-time visibility on all global
    status of resources and training system inputs, as well as to
    expand to include other critical information that is not
    presently captured in the system, such as ammunition, supplies,
    and infrastructure.
        Given the uncertainties in the strategic environment that
    we currently face, we need this flexibility and adaptive
    readiness reporting system to reduce the likelihood that the
    Department may be surprised by unforeseen readiness challenges
    in the early stages of crisis planning. Our plan is to field an
    initial spiral of these readiness tools for use next year, with
    full operational capabilities 3 years after that.
        In conclusion, I want to emphasize that our forces, our
    total force, our active and Reserve components, are ready to
    meet the challenges facing our Nation today. We continue to
    robustly fund the readiness of our forces as well as transform
    to meet future challenges. We are improving the ways that we
    measure our readiness and also transforming our training to
    meet new military strategy.
        We appreciate this subcommittee's continued support of our
    Armed Forces and of the programs that ensure that they remain
    the best manned, the best equipped, and the best trained forces
    in the world. I thank you, each of you, for your continuing
    support of America's most precious treasure, that is our men
    and women in uniform. Sir, I appreciate your comments and the
    passion that you spoke with earlier.
        I look forward to addressing your questions that you may
    have. Thank you very much.
        [The prepared statement of Dr. Mayberry follows:]

                   Prepared Statement by Dr. Paul W. Mayberry

        Good afternoon Chairman Ensign, Senator Akaka, and distinguished
    members of this subcommittee. On behalf of the Under Secretary of
    Defense for Personnel and Readiness, Dr. David S. C. Chu, I am
    privileged to speak before this subcommittee on the state of military
    readiness in the Department of Defense. With me today is the Director
    of Operations for the Joint Staff, Lieutenant General Norton Schwartz
    of the United States Air Force.
        Let me begin by saying that your Armed Forces remain strong, agile,
    and ready to meet any threat facing this Nation. With the most precise,
    most versatile, and best-led forces on earth, our Armed Forces are
    prepared to decisively win. From the sands of Iraq to the mountains of
    Afghanistan, the uniformed men and women of this Nation, reinforced by
    the Department's civilian staff, stand ready for the missions assigned
    to them by our commander in chief. This readiness would not be possible
    without the continued support of this committee for our critical
    defense needs.
        For this testimony, you asked about the readiness of our military
    forces to conduct current operations and contingency plans. I do not
    know of a better measure of force readiness than performance on the
    battlefield. What our forces have accomplished in Operation Iraqi
    Freedom is quite remarkable: our aircrews have flown thousands of
    sorties, striking leadership and Republican Guard targets day and
    night; our ground forces have raced across more than 200 miles of Iraqi
    territory--through enemy fire and inhospitable terrain--to reach a
    point just south of Baghdad in less than a week; we and our coalition
    partners have secured Iraq's southern oil fields, preventing an
    environmental disaster; we have launched devastating attacks on
    terrorist targets and have prevented an Iraqi advance on the Kurds in
    the north; and we have greatly diminished Iraq's ability to threaten
    neighboring countries from the western region. We have established the
    foundation so that considerable humanitarian aid and medical care can
    be provided to the Iraqi people. Furthermore, we have accomplished all
    this with minimal U.S. military and Iraqi civilian casualties. We have
    proven ourselves ready in this operation, and I can assure you we are
    ready if called to do much more.
        Even with the current operations, our active Army divisions still
    maintain high readiness levels, and Air Force aircraft mission capable
    rates have improved over the past 7 months. Navy forces continue to
    meet readiness goals for both the deployed and non-deployed segments of
    the force, and the Marine Corps reports they are ready to meet the
    demands of current and potential operations.
        Our strategic mobility triad of airlift, sealift, and pre-
    positioned materiel provides us the capability to swiftly move forces
    around the world. Such mobility maintains the U.S. as the only nation
    who can routinely move units and materiel globally with confidence and
    speed.
        Our materiel readiness has improved substantially due to the
    tremendous support of Congress. One example is munitions, where past
    supplemental measures have allowed combatant commanders to increase
    stockpiles of key all-weather and advanced precision-guided munitions.
    In short, we are ready for both current and future contingency
    operations.
        You have also asked about the adequacy of our fiscal year 2003
    budget and fiscal year 2004 budget request in keeping our forces ready.
    First, I want to assure you that maintaining the readiness of our Armed
    Forces is the highest priority of the Department of Defense. We have
    the best-trained, best-equipped, and most effective military force in
    the world, and we intend to keep them that way.
        Even as our mission in Iraq continues, we are working to ensure
    that our forces can be reconstituted and ready for other missions. Much
    of this work lies ahead of us, but the fiscal year 2003 supplemental
    budget request will provide critical funding to start the
    reconstitution effort. Although we do not know exactly when the war in
    Iraq will end and how much funding will be needed, we have proposed a
    supplemental budget of $63 billion to cover the most critical needs of
    the Department of Defense. These supplemental funds will go toward
    reimbursing the Services and Defense agencies for costs associated with
    preparing for war as well as covering the costs attributed to military
    operations in Iraq and the global war on terrorism.
        The supplemental funding includes:

             At least $53.4 billion for military operations in
            Iraq. This amount would cover the costs associated with: the
            mobilization to Active Duty of Reserve and National Guard
            personnel to support military operations on a full-time basis,
            including pay, travel, per diem, and health care; personnel
            necessary to maintain critical manning at authorized levels and
            special pays, such as Imminent Danger Pay, Family Separation
            Allowance, and Foreign Duty Pay; support for active duty
            military personnel; and, operations, such as incremental flying
            hours, ship steaming days, ground operations, special airlift
            missions, increased associated ship and aircraft maintenance,
            associated logistics support, fuel purchases, base support, and
            reconstruction. These funds also will reimburse accounts used
            for projects completed or underway that were necessary to
            prepare for military action in Iraq.
             Up to $3.7 billion for munitions replenishment. These
            funds could be used to replace precision munitions, ammunition,
            and other conventional munitions, expended during military
            operations in Iraq and in the global war on terrorism, to pre-
            conflict levels.
             At least $1.7 billion for classified activities. These
            funds would cover the costs associated with classified
            activities undertaken in Iraq and in the global war on
            terrorism.
             Up to $1.1 billion for equipment procurement and
            research and development. These funds would be used to develop,
            procure, and upgrade systems necessary to prosecute the global
            war on terrorism, including operations in Iraq. These systems
            include command, control, communications, computer and
            intelligence equipment, chemical and biological detection and
            decontamination gear, targeting devices, and spare and repair
            parts.

        We have also worked to carefully craft the President's fiscal year
    2004 budget. This budget proposal allows us to continue to wage an
    aggressive and global war on terrorism while supporting transformation
    of our Nation's military capabilities. It provides for unparalleled
    training and equipment for the troops, and funds the intelligence
    programs necessary to protect the country and support military needs.
    The budget proposal enhances the quality of life for military personnel
    and their families, and incorporates innovative management practices
    that increase efficiency. Finally, the budget proposal advances our
    transformation efforts to ensure our forces remain agile and effective.
        The President's fiscal year 2004 budget assures military readiness
    by increasing key defense programs, and increase in the defense top
    line of $15.3 billion over fiscal year 2003 levels. The budget requests
    over $98 billion for military personnel, including a range of pay
    increases from 2.0 to 6.3 percent, targeted by rank and years of
    service. It improves military housing and puts the Department on track
    to eliminate 163,000 inadequate housing units by 2007--years sooner
    than previously planned. The request also lowers the average out-of-
    pocket housing costs for those living off-base from over 7.5 percent to
    3.5 percent in 2004--putting us on track to eliminate all out-of-pocket
    housing costs for the average person in uniform by 2005. The budget
    also includes nearly $27 billion to cover the most realistic cost
    estimates of military healthcare.
        The fiscal year 2004 budget will improve the training of our
    forces, and requests $133 billion for the operations and maintenance
    accounts. This includes substantial funding for our unit training,
    equipment maintenance, and operations. The Department has also
    requested resources in the fiscal year 2004 budget to address other
    pressing readiness issues, such as our ability to protect our forces
    against chemical, biological, and missile attacks. Finally, the budget
    request will improve the maintenance and sustainment of equipment,
    facilities, and the availability of spare parts and engines.
        You had also asked that I specifically address the Joint National
    Training Capability and the Defense Readiness Reporting System. Let me
    first start with the Joint National Training Capability, commonly
    referred to as the JNTC, and later discuss the Department's readiness
    reporting system.

                                 JOINT TRAINING

        In recent testimony to this Congress on the progress of the
    Department of Defense transformation efforts, Secretary Rumsfeld stated
    that ``transforming is about more than developing new strategies and
    structures--it is about changing culture, about encouraging new ways of
    thinking so that we can develop new ways of fighting and provide our
    Armed Forces the tools they need to defend our way of life.'' The path
    to this cultural change will be through a transformation of DOD
    training that includes establishing a Joint National Training
    Capability.
        Our ability to successfully defend our Nation's interests relies
    heavily upon a military capable of adapting to rapidly changing
    situations, ill-defined threats, and a growing need to operate across a
    broad mission spectrum. The military departments have garnered combat
    successes over the years by superbly preparing our soldiers, sailors,
    airmen, and marines, giving the United States a training superiority
    over potential adversaries. We intend to maintain that critical edge by
    continuing to move our training methods and capabilities beyond those
    of the Cold War. We will no longer simply deconflict or synchronize
    unique Service warfighting instruments, but rather integrate them into
    a single, fused joint capability. Each of our four Military Services
    has achieved an extraordinary integration of the various elements of
    their forces to create unprecedented combat power. Now, we need to go
    beyond and achieve this same integration of force elements across the
    Services to create a truly joint force--a force that is capable of
    dominant combat power whenever called upon. In addition, this joint
    capability will extend beyond today's meaning of ``jointness'', beyond
    the Services and into full integration of intergovernmental,
    interagency, and coalition elements to build a force that is ready and
    capable of winning any complex 21st century conflict. Secretary
    Rumsfeld has stated that, ``in the 21st century, we will fight wars
    jointly. Yet our forces still too often train and prepare for war as
    individual Services. That needs to change.'' We plan to make the Joint
    National Training Capability, as part of the overall T2 initiative,
    that instrument of change.
        Transformed training is a key enabler to transforming this fighting
    force. We are committed to meeting joint mission requirements of the
    combatant commanders across the joint strategic, operational, and
    tactical levels. As we have witnessed on the ground and in the skies
    over Afghanistan during Operation Enduring Freedom, it is not easy to
    plan complex combat operations or execute joint tactical tasks, such as
    joint close air support, when the Services have not had opportunities
    to train to accomplish joint tasks to a joint standard. We are finding
    that although the core functions of the Services are conducted
    superbly, there are weaknesses among the gaps and seams between the
    Services, the joint force command structure and the Service component
    elements in the theater. Today in Operation Iraqi Freedom our forces
    and headquarters are distributed throughout Southwest Asia, at many
    disparate locations, and operate over great distances. This coalition
    force is conducting unified action in a distributed manner yet their
    preparatory joint training was lacking what a Joint National Training
    Capability would provide. U.S. forces are operating under British
    Command for the first time since World War II. Our forces are filling
    gaps in humanitarian aid missions. We should not encounter, learn, or
    practice a joint task nor conduct joint and combined operations for the
    first time in combat.
        I am pleased to report that the Department and its senior
    leadership, not just within the Office of the Secretary of Defense but
    the leadership, military and civilian, of all the Services and the U.S.
    Joint Forces Command, are committed to transforming training in order
    to meet emerging 21st century needs. Secretary Rumsfeld has stated
    that, ``among the more important transformational investments we
    propose is our request for funds to establish a new Joint National
    Training Capability.'' The Secretary's planning and programming
    guidance establishes training transformation as the highest priority,
    second only to fighting the global war on terrorism. Overarching
    guidance, direction, roles, responsibilities, and resources have been
    aligned within the Defense Planning Guidance, Unified Command Plan, the
    DOD Strategic Plan for Transforming Training, and a Training
    Transformation Implementation Plan now in development. A key readiness
    component that will carry our transformation efforts forward is the
    establishment of an initial Joint National Training Capability by
    October 2004 under the direction of U.S. Joint Forces Command.
        Although JNTC will emphasize the use of simulations and
    stimulators, realistic, live training remains the key to transforming
    the way units operate. The success of our training readiness will also
    depend in no small part on continued access to high-quality, realistic
    training space. As I am sure you are aware, the Department is working
    hard on a number of fronts to counteract the effects of encroachment on
    readiness. Several legislative changes and clarifications, part of our
    Readiness and Ranges Preservation Initiative, have been submitted for
    congressional consideration in this year's proposed Defense
    Authorization bill. The sustainment of our ranges and operating areas
    for training purposes is a critical issue, not only for the individual
    Services as they prepare their forces for combat in the near term, but
    also for our transformed forces who will fight jointly on the
    battlefields of tomorrow.
        The last training transformation occurred in the 1970s with the
    establishment of major Service training centers or range complexes. The
    Joint National Training Capability comprises the ``second''
    transformation and will be the cornerstone for building on previous
    transformational pillars that made the major Service training centers
    and range complexes so successful. We will use realistic combat
    training according to joint doctrine, professional opposing forces, a
    means of determining ground truth, and a process for identifying,
    measuring, reporting jointness, and then correcting joint weaknesses
    and exporting joint lessons learned. The U.S. Joint Forces Command is
    working with the Military Services to achieve this realistic, network-
    centric, distributed global combat joint training and mission rehearsal
    capability that builds on and incorporates all of the major ranges and
    training centers of the Military Services. The Secretary has charged me
    to rapidly implement the JNTC. The Commander, U.S. Joint Forces
    Command, in accordance with Section 924 of the Bob Stump National
    Defense Authorization Act for Fiscal Year 2003, is also preparing a
    report to the Secretary on the establishment of a ``Joint National
    Training Complex and Joint Opposing Forces.'' The Secretary will
    forward the report to Congress with his and the Chairman of the Joint
    Chiefs of Staff's comments.
        Although we are ready to lean forward in our efforts to make this
    capability a reality in the near term, our plans for JNTC events in May
    and June of this year have been impacted by current real world
    operations. However, we still plan to conduct simulated technology
    linking events throughout the summer and fall in order to better
    prepare and test stand up procedures and processes so that, when our
    deployed forces return to the training environment, we will have a
    joint training environment that they can successfully plug into
    quickly.
        As Secretary Rumsfeld has said, ``We are working hard to push joint
    operational concepts throughout the Department, so we train and prepare
    for war the way we will fight it--jointly. We are taking steps to
    better measure and track performance.'' We need and welcome your
    support and involvement in our continuing transformational efforts.

                              READINESS REPORTING

        Let me now discuss the status of our ongoing efforts to enhance the
    Department's readiness assessment and reporting system. I would first
    like to highlight that one of the most essential elements of our
    readiness reporting system is the active involvement of the senior DOD
    leaders in resolving readiness issues. We have that involvement and
    commitment. The Department's Senior Readiness Oversight Council, which
    is chaired by the Deputy Secretary of Defense, meets routinely to
    review and discuss the most pressing readiness issues. Recently, the
    Council met to focus on actions addressing preparedness issues related
    to chemical and biological defense capabilities of our Armed Forces for
    operations in Southwest Asia. The review highlighted several areas
    where chemical and biological defense capabilities could be enhanced.
    These areas include biological early warning and point detection;
    medical surveillance and protection; fixed site collective protection;
    and decontamination systems. As a result of the council's meeting,
    actions were taken to enhance the preparedness of our military for
    operations in Iraq.
        We are also improving the tools and systems we use to report and
    assess readiness, and are implementing a new ``capabilities-based''
    readiness reporting system. This system, called the Defense Readiness
    Reporting System (DRRS), will provide timely and accurate information
    on the readiness of our forces and supporting infrastructure for use in
    deliberate planning, responding to emerging crises, and decisionmaking
    during hostilities.
        DRRS will transform our readiness assessment by focusing on a
    unit's current capability to execute mission essential tasks in support
    of the combatant commander's war plans. For the first time, the
    readiness reporting system will provide commanders--at all levels
    leading to the Secretary--specific information on the current readiness
    of units within the Department to meet mission essential tasks for the
    war plans. Not only will the combatant commanders be able to
    immediately assess the readiness of assigned and allocated forces, but
    they will also be able to assess the ability of the supporting
    commands, agencies, and the other Services in executing the war plan.
        The core elements of the system will allow the Department to
    maintain almost near real time visibility on all current global status
    of resources and training system resource inputs and will be expanded
    to include additional critical information such as ammunition,
    supplies, and infrastructure. This expanded view of readiness will
    allow leadership to quickly answer the primary question, ``ready for
    what?'' Given the uncertainties in the strategic environment, we need
    this flexible and adaptive readiness reporting system to reduce the
    likelihood of the Department being surprised by unforeseen readiness
    challenges in the early stages of crisis planning.
        We believe that this improved reporting and assessment can be
    achieved by using existing personnel, training, and logistics
    databases. By incorporating information from existing transactional
    databases, we can reduce or even eliminate workload and errors
    associated with manual, multiple inputs of data. This will further aid
    our goals of reducing the reporting burden and responding more quickly
    to requests for readiness information.
        Our plan is to field the initial spiral of tools for use in fiscal
    year 2004, with the full operational capability achieved by fiscal year
    2007.
        In conclusion, I want to emphasize that our forces--our total
    forces--are ready to meet the challenges facing this Nation. We
    continue to robustly fund the readiness of forces and transform to meet
    future challenges. We are improving the ways we measure our readiness
    and transforming our training to meet the new strategy. We appreciate
    this committee's continued support of our Armed Forces, and of the
    programs that ensure they remain the best-manned, equipped, and trained
    forces in the world. I thank the honorable members for your continuing
    support of America's treasure--her men and women in uniform. This
    concludes my statement. I look forward to discussion and any questions
    you may have.

        Senator Ensign. Thank you.
        General Schwartz.

     STATEMENT OF LT. GEN. NORTON A. SCHWARTZ, USAF, DIRECTOR FOR
                      OPERATIONS, THE JOINT STAFF

        General Schwartz. Mr. Chairman, it is an honor to join
    Secretary Mayberry here before your subcommittee today. With
    your permission, I would like to make some brief remarks and
    then submit a more comprehensive statement for the record.
        Mr. Chairman, Senator Akaka, it is a delight to provide
    comments on the readiness of the military Services to conduct
    current operations and execute contingency plans. I must first
    acknowledge and thank Congress for its sustained and very
    significant support to the men and women in our Armed Forces.
    Your efforts were critical to arresting and reversing the
    declining readiness trends that we experienced in the late
    1990s. These improvements are manifesting themselves today in
    remarkable fashion, not only on the battlefield in Iraq, but
    also worldwide.
        While we conduct decisive combat operations in Operation
    Iraqi Freedom, a significant portion of our forces remain
    deployed worldwide, serving our Nation's vital interests in
    numerous, differing roles. Our men and women of the Armed
    Forces continue to enhance homeland security, prosecute the
    global war on terrorism, keep the peace in the Balkans, deter
    adversaries on the Korean Peninsula, and conduct a host of
    other smaller-scale but nonetheless important operations.
        In every instance, our forces have performed superbly,
    validating the capability, flexibility, and readiness of our
    force. Maintaining this level of effort obviously presents
    challenges. We face challenges in several areas, including the
    traditional issues voiced by our Services and those joint
    issues voiced by the combatant commanders.
        While our ability to generate major forces such as
    divisions, air expeditionary wings, and carrier battle groups
    to support other combat operations is quite robust, force
    enablers, such as sea and air lift, intelligence, surveillance,
    and reconnaissance capability, battle management, and
    munitions, will continue to require close management and
    prioritization. As a result, we must clearly formulate and
    implement our strategic priorities and make informed,
    deliberate decisions regarding the future disposition of our
    force.
        Prosecuting a major combat operation impacts the readiness
    of the overall force and a period of reconstitution following
    combat operations in Iraq will be necessary. The Joint Staff,
    in conjunction with the Services and the combatant commanders
    and the Office of the Secretary of Defense, have developed a
    framework for joint force reconstitution. However, until we
    have entered the post-conflict phase of operations in Iraq we
    will not be able to determine specific Service reconstitution
    time lines, combatant commander requirements for force
    availability, or the costs associated with reconstitution.
        Regardless of the specifics of the joint force
    reconstitution plan, a key element and perhaps the key element
    will be the timely approval of supporting resources. The fiscal
    year 2003 budget and the fiscal year 2004 President's budget
    support our normal readiness requirements. It is clear that as
    we expend Service readiness executing Operation Iraqi Freedom
    and other global operations the fiscal year 2003 budget alone
    will not fully support all of our readiness requirements.
        Our Services simply cannot absorb the cost of Operation
    Iraqi Freedom, the global war on terrorism, and other ongoing
    operations without a supplemental. Therefore, timely approval
    of supplemental funding is absolutely crucial to the continued
    preparedness of our joint force.
        In closing, sir, I would like to emphasize that our
    previous wartime experiences have proven that readiness is a
    fragile commodity. When expended in combat operations, it is
    important to reestablish readiness levels or they can quickly
    erode further. Congress' support over the past year has made a
    dramatic and positive difference in the readiness of our joint
    force and our ability collectively to meet the call.
        Post-Operation Iraqi Freedom readiness will require your
    continuing support so that we may rapidly reconstitute
    preparedness to meet the demands of the global war on terrorism
    and mitigate potential risk to the overall defense strategy.
        Again, sir, I am grateful for having the opportunity to
    represent those wonderful soldiers, sailors, airmen, marines,
    and coastguardsmen you mentioned earlier, who truly represent
    the product of your work in Operation Iraqi Freedom and in the
    global war on terrorism, and I too look forward to your
    questions. Thank you.
        [The prepared statement of General Schwartz follows:]

            Prepared Statement by Lt. Gen. Norton A. Schwartz, USAF

        Members of the Senate Armed Services Committee, Readiness and
    Management Support Subcommittee, I am pleased to provide this written
    statement on the readiness of the military Services to conduct current
    operations and execute contingency plans.
        I must first acknowledge and thank Congress for its sustained and
    significant support to the men and women of our Armed Forces. Your
    efforts were critical to arresting and reversing the declining
    readiness trends we experienced in the late 1990s. Quality of life
    initiatives, housing improvements, and pay increases demonstrate your
    continued commitment to our dedicated soldiers, sailors, airmen, and
    marines. Our improved warfighting readiness is also reflected in good
    recruiting and retention rates, improved equipment mission capable
    rates, and enhancements across a wide range of warfighting capabilities
    including logistics, intelligence/surveillance/reconnaissance (ISR),
    munitions (particularly precision munitions), and command and control.
        These improvements are manifesting themselves today in remarkable
    fashion on the battlefields of Iraq. While we conduct decisive combat
    operations in Operation Iraqi Freedom (OIF), our other forces remain
    deployed worldwide, serving our Nation's vital interests in numerous
    areas in many differing roles. For instance, our forces continue to
    enhance homeland security, prosecute the global war on terrorism (GWOT)
    to include highly effective and ongoing Enduring Freedom operations in
    Afghanistan, Horn of Africa, and the Philippines; keep the peace in the
    Balkans, deter adversaries on the Korean peninsula, and conduct a host
    of other smaller-scale but important endeavors. In every instance, our
    forces have performed well, validating the capability, flexibility, and
    readiness of our force.
        Our readiness to prosecute a major combat operation is evident and
    demonstrated every day in Iraq. Our forces are highly trained,
    professional, motivated, and smart. Our equipment--ships, aircraft,
    ground forces, and command and control capabilities are ready and
    second to none. Our military leaders' ability to integrate and
    synchronize the effects of these capabilities to achieve our national
    objectives is well exercised. We stand prepared to meet the full
    demands of OIF and to continue to fulfill our global commitments in the
    war on terror.
        Maintaining this level of effort obviously presents challenges. We
    face challenges in several areas, including traditional readiness
    issues voiced by the Services, and joint readiness issues voiced by the
    combatant commanders. While our ability to generate major forces such
    as divisions, air expeditionary wings, and carrier battle groups to
    support another combat operation is robust, force enablers such as air
    and sea lift, ISR, battle management, and munitions will require close
    management and prioritization. As a result, we must clearly formulate
    and implement our strategic priorities and make informed, deliberate
    decisions regarding the future disposition of our forces.
        The nature of conflict precludes setting a precise date for
    cessation of OIF hostilities. However, it is certain that prosecuting a
    major combat operation impacts the readiness of the overall force, and
    a period of reconstitution following combat operations in Iraq will be
    necessary. For now, the breadth, depth, and duration of any
    reconstitution plan following OIF are not clear. The Joint Staff, in
    conjunction with the Services and combatant commanders, has developed a
    framework for Joint Force reconstitution that will provide a foundation
    for the accomplishment of Service and USSOCOM reconstitution goals.
    However, until we have entered the post-conflict phase of operations in
    Iraq, determining specific Service reconstitution timelines and
    combatant commander requirements for forces availability is informed
    speculation at best.
        Additionally, to meet the demands of OIF, Reserve component forces
    have assumed, understandably, a significant role. To reconstitute the
    force while meeting existing force presence requirements, a continued
    reliance on the Reserve component may be necessary for the foreseeable
    future. What is certain, though, is that we can't reconstitute the
    total joint force at the expense of not satisfying our global military
    demands. I assure you, we will determine the best way to accomplish
    this with the least risk to the execution of the overall defense
    strategy.
        Regardless of the specifics of a joint force reconstitution plan, a
    key element . . . perhaps the key element . . . will be the timely
    approval of supporting resources. The fiscal year 2003 budget and
    fiscal year 2004 request support our readiness requirements and
    unquestionably enabled the impressive performance we've witnessed thus
    far. Over the last several years, operations and maintenance funding
    has been increased to curb declining readiness trends, and the fiscal
    year 2004 budget ensures our forward deployed and ``first to fight''
    forces continue to be ready to conduct their combat missions. It is
    clear that as we expend Service readiness executing OIF and other
    global operations, the fiscal year 2003 budget alone will not fully
    support our readiness requirements. Our Services simply can't absorb
    the cost of OIF, the global war on terrorism, and other ongoing
    operations without a supplemental. The negative impact on force
    readiness, troop morale, and ongoing transformation efforts would be
    manifested across all Services. Therefore, timely approval of
    supplemental funding is absolutely crucial to the continued
    preparedness of the joint force.
        Briefly, I'd like to provide you with my assessment of two
    readiness initiatives . . . the Joint National Training Capability
    (JNTC) program and the Defense Readiness Reporting System (DRRS).
    First--the JNTC program holds great promise as a means to create a true
    joint training venue. It will provide a much-needed construct to
    enhance and standardize joint training and exercise events across all
    Services and combatant commands. Ultimately, the JNTC program will
    enable us to better exercise and measure the performance of the joint
    force, and further enhance the joint readiness that is so evident in
    our forces deployed throughout the world.
        Second--Secretary Mayberry and his team in the OSD/Personnel and
    Readiness office are leading the Defense Readiness Reporting System
    effort, with support from the Joint Staff. I have been briefed on
    several aspects of DRRS, and I think it has great potential. Elements
    of the DRRS concept call for streamlined readiness data input/
    gathering, rapid assessment of multiple scenarios, identification of
    noncommitted forces, and their readiness for conducting additional
    missions.
        In closing, I would like to emphasize that our wartime experiences
    have proven that readiness is a fragile commodity. When expended in
    combat operations, it is important to re-establish readiness levels or
    they can quickly erode further. Congress' support over the past years
    has made a dramatic, positive impact on the readiness of the joint
    force, and our ability to `meet the call'. Post-OIF readiness will
    require your continuing support so that we rapidly reconstitute
    preparedness to meet the demands of the global war on terrorism and
    mitigate potential risk to the overall defense strategy. Again, I am
    grateful for having the opportunity to testify today on behalf of the
    270,000 soldiers, sailors, airmen, and marines who represent the
    product of your work in Operation Iraqi Freedom. I look forward to your
    questions.

        Senator Ensign. We thank both of you.
        I will start with Dr. Mayberry. The Department's timeline
    for implementation of the Joint National Training Capability
    was established before Operation Iraqi Freedom. We talked a
    little bit about this in my office yesterday, but for the
    record, what are the immediate and long-term implications for
    the Joint National Training Capability given the ongoing
    operations?
        Dr. Mayberry. Certainly. The basic premise for the Joint
    National Training Capability is one that we fight as a joint
    team and therefore we must train within a joint context. Let
    there be no question, the Services are world-class trainers,
    but they tend to focus on their respective core competencies
    and therefore there are some gaps and seams between the
    Services, and this area of joint training between the gaps and
    seams at a tactical and an operational level is truly where the
    Joint National Training Capability is intended to go.
        Under the leadership of Joint Forces Command and the
    involvement of the Services and OSD and the Joint Staff, the
    Joint National Training Capability is truly a forcing function
    to correct this gaps and seams issue. The Department has really
    committed a tremendous amount of resources to the effort. It is
    a top priority. The amount--approximately $1.3 billion over the
    fiscal year 2003 to 2009 time period.
        As you mentioned, as a result of current real world
    operations, we had had plans within the May time frame to bring
    together the western range complex that would be in conjunction
    with the National Training Center at Fort Irwin, Nellis Air
    Force Base, and the forces flying out of there, Twentynine
    Palms for the Marine Forces, and San Diego's naval and maritime
    components participating in a virtual sense. Those have since
    been pushed back.
        We always knew in the developmental process here that 2003
    was going to be a tough year because we are going to seek most
    of the funding for this in the omnibus reprogramming request. I
    do not know the timing for that omnibus request, but certainly
    would appreciate your support for this specific item of the
    Joint National Training Capability.
        Senator Ensign. Okay, very good.
        General Schwartz, the Joint Staff Mobility Requirements
    Study for Fiscal Year 2005 identified about a 20 percent
    shortfall in strategic airlift. This analysis, however,
    measured the planned airlift force structure in 2005 against
    the previous national military strategy, the two major theater
    war scenario.
        With the new capabilities-based strategy and with the
    ongoing global war on terrorism and Operations Enduring Freedom
    and Iraqi Freedom, do you believe that the current procurement
    plans for airlift and their operational readiness rates are
    sufficient to address the requirements of military planners for
    airlift?
        General Schwartz. Sir, it seems to me there are a number of
    aspects to that question and it is not just the military
    capability to transport our forces. First of all, one of the
    strong suits of the American Armed Forces and this Nation is
    the ability to project forces. That is true both in the air and
    on the sea. We have both Government-owned and commercial
    capabilities in both areas that continue to need attention.
        But in order to deliver the shooters to the fight in such a
    way, in a compelling way that gets them there with the right
    equipment at the right time to perform the missions that are
    required, requires the kind of lift which you have supported in
    recent years, both fast sealift, for example, mobility for the
    amphibious forces, and the airlift that is reflected in the C-
    17 program.
        Our Service counterparts will be able to better address the
    specifics, but in general, sir, we are using that capability to
    its maximum extent as we speak, and the recommendations would
    be to continue the procurement of those assets to their
    objective states which the Services specify.
        Senator Ensign. Dr. Mayberry, one of the concerns regarding
    the process the Department has undertaken to develop the
    Defense Readiness Reporting System is whether a plan exists to
    pull this concept together. Does the Department have a plan?
    How much funding has the Department obligated for fiscal year
    2003 for the Defense Readiness Reporting System and how much is
    requested in the President's budget request for the system?
        For the record, can you provide the status of the Readiness
    Reporting System's implementation and the summary of the
    implementation approach to the committee?
        Dr. Mayberry. Certainly. Considerable improvements have
    been made to readiness reporting in the last few years, but we
    have a ways to go. The congressionally-mandated review that
    came out a year or so ago noted several specific deficiencies,
    and the most fundamental of this was really the transition to
    measure readiness against a new military strategy.
        That most basic shift in the underlying principles against
    which we are to assess readiness is analogous to shifting from
    steam propulsion to nuclear power, and we have yet to fully
    harness the capabilities of the new concept. That is where we
    are at today.
        The Defense Readiness Reporting System is going to be an
    ongoing iterative process, a spiral development process, using
    state-of-the-art technologies to developing a near real-time
    comprehensive system capable of rapid assessments against
    multiple scenarios. Each one of those particular components or
    functions of this new Defense Readiness Reporting System will
    take some time.
        But our focus is on putting tools in the hands of the users
    as soon as possible. We really need to have the feedback, as
    opposed to trying to create the objective end state from the
    very beginning and succeed in failure. There is already a lot
    of efforts going on by each of the individual Services, and to
    capitalize on those efforts and to move this project forward.
        You asked specifically about funding in the fiscal year
    2003 time period. We are looking in the range of $8 million to
    $9 million for this current year, and as we go forward and
    build upon the spiral development process for the tools that
    will assist us, not only in readiness assessment, but near-term
    data collection and integration, the effort would increase to
    approximately $20 million on an annual basis after that.
        I believe that the President's budget has about $90 million
    over the FYDP for this particular developmental effort.
        I appreciate and the Department knows that there is a lot
    of work ahead, but I certainly am pleased with the efforts and
    the progress that we have made to date. We do have plans in
    place. I believe the GAO study said that there were not
    specific plans. That was correct at that particular point in
    time. We have put together milestones, objectives, this
    particular funding profile that I mentioned, as well as
    expectations and responsibilities.
        This has all been encapsulated as well in the first ever
    published DOD directive on readiness. It really lays out the
    responsibilities between the Services, the Joint Staff, the
    combatant commanders, and OSD.
        Senator Ensign. When you talk about the spiral development
    of this process, my concept of spiral development is within a
    certain timeframe you are trying to be about 80 percent
    perfected and then from there you make your other improvements
    as you deploy and test. What is the timeline to get to that 80
    percent and then go from there?
        Dr. Mayberry. Certainly. The initial effort here in the
    near term is to build upon what we already do well. That is,
    that we have over 10,000 units reporting in terms of readiness
    within the system. The problem is we are missing some specific
    information. Joint organizations do not necessarily report.
    Many of the defense agencies have yet to participate.
        So we have some low-hanging fruit that will get us along
    that path that we need to make. The Services have predictive
    readiness models that they are improving upon, strategic
    readiness systems that they are building. The issue is how do
    we bring common data. I think all of us need to get at the data
    issue. We lag in terms of much of the information there.
        One of the essential components that is going to take some
    time within the Defense Readiness Reporting System is the
    notion of being able to report against mission-essential tasks.
    Previous readiness reports ratings have been against the two
    major theater wars. As we transition to the combatant
    commanders' mission-essential tasks, what is our ability to
    perform to standard in each of those tasks is going to be truly
    a fundamental shift here, and I suspect that that is going to
    be the long pole as we work to refine the conditions and
    standards to those mission-essential tasks and to measure, to
    assess readiness against those.
        Senator Ensign. My time has expired. Just one quick comment
    before I turn it over to Senator Akaka. I would imagine that
    the current conflict and how it is being waged may give you a
    little bit of a model how to measure some things when you are
    going forward and give you a lot of ideas on what can be
    effective measures.
        Senator Akaka.
        Senator Akaka. Thank you.
        General Schwartz, can you please give a brief description
    of how the Joint Staff used readiness data in its
    decisionmaking process for planning and executing Operation
    Iraqi Freedom and what information from Global Status of
    Resources and Training System (GSORTS) was useful, and what
    readiness information would you have liked to have had, to have
    known, but did not?
        General Schwartz. Certainly, sir. The way the process
    worked is that General Franks requested forces to use in his
    war plan and that request for forces came to Washington, and we
    in the Pentagon with our Service counterparts then looked at
    the menu of potential units that could provide the capability
    that General Franks requested.
        In that process, in addition to assessing whether this
    particular unit could accomplish the mission assigned, there
    was also an assessment of whether it was sufficiently ready to
    deploy to go forward into theater. That is where the readiness
    assessment mechanism played in that whole process of developing
    the force structure which is now operating in the battlefield
    in Iraq as we speak.
        It is important to note that there are a couple aspects
    that were looked at. Certainly, overall training was assessed.
    The training metric, if you will, and likewise the equipment
    metric were very important in assessing whether the units were
    truly prepared to go to do the mission in support of General
    Franks in Operation Iraqi Freedom.
        Now, in terms, sir, of the things that perhaps we did not
    have, we are very good at the moment at measuring things we
    understand. We can measure boxes on the shelf, we can measure
    how many personnel are trained to a certain level, and so on.
    The thing that we are not so good at, as Dr. Mayberry referred
    to earlier, is this sense of really understanding what the
    capability of all of those individual metrics produce.
        It is our hope that the new reporting system would enable
    the application of information technology, of modern
    information technology, to give us better insight into those
    kinds of capabilities.
        Senator Akaka. Thank you.
        Dr. Mayberry, there has obviously been a lot of concern
    over the past few years about protecting DOD's training ranges
    and making sure that they remain viable into the future. Our
    subcommittee and other committees in the Senate have been
    looking hard at some of DOD's legislative proposals to help
    address this issue.
        But I wanted to ask you about it from a slightly different
    perspective. As I understand it, DOD's testing ranges are
    operated largely independently of training ranges for some very
    legitimate reasons. Most of the testing ranges also operate on
    a revolving fund basis, which requires them to recover some, if
    not all, of their direct operating costs. On the other hand,
    training ranges are funded through direct appropriations by the
    Services, which will now be further enhanced with funds to
    build up their joint capabilities.
        One of the implications of this arrangement is that test
    range managers, even if they have the space available, cannot
    afford to support very much training because they cannot earn
    enough money from training exercises. My question is, is DOD
    looking at a more comprehensive system of managing testing and
    training ranges together along with a funding structure that
    would optimize the use of scarce resources? If not, can you
    explain why a more coordinated approach is not a good idea?
        Dr. Mayberry. Sir, you have hit on a very important issue,
    why are there barriers in the past? It comes down to the issue
    that you specifically mentioned, basically the funding
    requirements. The capabilities within many of our testing
    ranges are the exact types of capabilities that we need to
    bring to bear in terms of our Joint National Training
    Capability--threat emitters, instrumentation--maybe not
    necessarily to the level of detail or fidelity required within
    a testing scenario, but there are a tremendous amount of assets
    in the testing area that could be brought to bear in terms of
    the training areas.
        Also, as we think about future transformed platforms and
    capabilities of each of the Services' weapons systems, many of
    those are going to expand beyond the limits, literally, the
    real estate, of what our current training ranges are. So we are
    going to have to specifically address the cross-functional use
    of training and testing at ranges in a more positive sense.
        The Deputy Secretary created the Range Sustainment Group,
    of which I am one of the co-chairs--it also includes the Deputy
    Under Secretary of Defense for Installations and Environment,
    and it also includes the Director of Operational Test and
    Evaluation--to get at this exact issue of how can we make
    better cross-functional use of our capabilities.
        One of the tough issues that we are going to have to face,
    and I will be candid, we do not have a strategy in place
    specifically at this time to address the funding structure
    piece of this. But within the context of our Joint National
    Training Capability, we are hopeful that we will have funding
    streams to be able to allow us to build upon what the Navy is
    doing now in terms of their training resource strategy in the
    use of Eglin Air Force Base, for example, for training
    purposes; and that the issue of who funds joint we will seek
    to, at least in the near term, try to address within the
    context of our Joint National Training Capability.
        Senator Akaka. Thank you.
        My time has expired, Mr. Chairman.
        Senator Ensign. General Schwartz, earlier this month, the
    Washington Post printed an article that highlighted the role of
    commercial contractors in support of current military
    operations. The article noted that a number of commercial firms
    have employees, in one case as many as a thousand, in Southwest
    Asia. General, in the context of the development of an
    operational plan such as for Operation Iraqi Freedom or for
    Operation Allied Force, how is the requirement for contract
    support, if any, identified and developed, and are the risks of
    relying on contractors captured in the operational planning
    process?
        To what extent do military planners develop alternatives to
    the use of private contractors to mitigate any risks associated
    with relying solely on commercial firms?
        General Schwartz. Sir, one thing it is important to note,
    that the planning was sufficiently detailed to ensure that the
    commercial contractors were as well-equipped and in many cases
    inoculated for the conditions that they might experience in the
    theater of operations as were their uniformed counterparts.
        So the truth of the matter is, sir, they are part of the
    team, and in many cases they are indispensable. They have skill
    sets and experience and so on that their uniformed counterparts
    do not share.
        The short answer is that that is carefully considered. They
    are part of the warfighting team. In many cases, some of these
    individuals are former military members and they definitely are
    an asset and one that we should not diminish the importance of,
    one that truly contributes to the war fight in a very
    significant way.
        Senator Ensign. Actually, this was just handed to me. An
    American pilot was killed today when his single-engine plane
    crashed while spraying drug crops in southern Colombia. The
    pilot was the fifth United States Government contractor killed
    in Colombia in 2 months.
        What are the rules of engagement that apply to the use of
    the contractors? Are they combatants and can they become POWs?
        General Schwartz. Sir, in fact that happened a few days
    ago, and that was an aircraft in the southwest corner of
    Colombia near the Ecuadorean border. This particular individual
    was a Dyncorp Corporation contractor and he was on contract to
    the State Department, not to the Department of Defense.
        So the question about whether these people are prisoners of
    war, in this particular instance, of course, the individual was
    killed in the crash. But they are certainly detainees and by
    direction we consider them in the same category as other
    detained Americans. That certainly is the case of the two folks
    that were taken by the Revolutionary Armed Forces of Colombia
    (FARC) some months ago.
        Bottom line is that they are part of the family as
    contractors and we treat them as such.
        Senator Ensign. Thank you.
        Senator Akaka, do you have anything else?
        Senator Akaka. Dr. Mayberry, your prepared testimony stated
    that the fiscal year 2003 supplemental bill will--and I am
    quoting, ``provide critical funding to start the reconstitution
    effort.'' Yet, as I understand it a very small portion of the
    supplemental request is dedicated to reconstituting the force,
    and I also understand that this is mostly for munitions.
        What reconstitution activities are we referring to here
    and, given that there are no funds for reconstitution in the
    fiscal year 2004 budget request, will we need a fiscal year
    2004 supplemental to help pay--how will we pay the additional
    bills in this area? Do you have even a ballpark estimate of how
    much it might require?
        Dr. Mayberry. The issue of reconstitution is a very complex
    task and it requires that we really balance many factors.
    Presently there are many unknowns here, but I think that there
    are a variety of considerations that the Department is going to
    have to address in terms of the reconstitution issue, although
    these are guiding principles as opposed to specifics.
        I think first and foremost we need to take care of our
    military service members, allowing them and their families time
    to decompress. This is true for not only the active component,
    but for the Reserve component as well.
        I think that we need to return our training pipelines back
    to their normal production levels. That will not be an easy
    process as many of those instructors and equipments were part
    of the support for Operation Iraqi Freedom. That is the portion
    that I am getting at in terms of that statement within my
    written testimony, is that there are assets now, particularly
    in terms of the training pipelines, that have gone forward.
        I think we are also going to have to regenerate our aging
    fleet that has had substantial program maintenance actions
    delayed. Finally, I think we are going to have to rebuild our
    logistics backbone, everything from the spare parts issues to
    precision guided munitions.
        So this is going to be a very complex task, and at the same
    time the rest of the world goes on. So there are going to be
    post-war operations in Iraq in terms of reconstruction. There
    are also going to be the continuing global war on terror. We
    are going to have to be attentive to issues on the Korean
    Peninsula, and we also have to continue our operations in other
    theaters.
        So although there are a lot of uncertainties here, I
    believe that we are beginning a process, the Services, the
    Joint Staff, and OSD, of thinking through what those
    reconstitution requirements are going to be, and I would say
    that these four principles are the guiding guidelines as to how
    those analyses will go forward, but there are still quite a few
    unknowns.
        Senator Akaka. Dr. Mayberry, in your written testimony you
    stated that there are weaknesses among the gaps and seams
    between the Services, the joint force command structure, and
    the service component elements in the theater. Can you give us
    some specific examples of those weaknesses and how they have
    made themselves manifest in current operations?
        Dr. Mayberry. Certainly. Let me just, before I get into
    that, reiterate that the Services are true world-class
    trainers, as illustrated in terms of their performance levels
    on a daily basis now in Iraq, in Afghanistan, and in many of
    the forward-deployed operations that are ongoing.
        But there are specific joint issues that the Joint National
    Training Capability must address. Joint close air support, for
    example; this is a joint tactical task that is trained at the
    National Training Center and Nellis in the context of air
    warrior exercises. But the issue here is bringing together,
    making sure that the appropriate joint context and the planning
    that goes into the conduct of that tremendously complex task is
    fully brought to bear.
        We have a combined arms operations center at Nellis. How
    does that participate? How do we train those staffs within the
    context of these complementary exercises? How do we get at
    instrumentation on the ground against which air forces would
    fly against? How do we solve very complex problems of close air
    support impacting the ground battle, yet still being able to
    maintain the training objectives for both the air and ground
    forces, yet being able to coordinate the joint component of
    this?
        These are all very complex issues that we seek to bring
    together and to use the Joint National Training Capability also
    as a vehicle for transformation, because there are many areas
    that we do not have standing joint doctrine or techniques,
    tactics, and procedures developed in. Joint urban operations is
    a good example there. How are we going to address the
    complexities of time-sensitive targeting, the interfacing of
    maneuver units, of bringing together combined arms in a very
    close urban situation while trying to limit collateral damage?
        It is these types of gaps and seams issues, as well as
    evolving joint capabilities, that I think will need to be
    addressed by such a concept as the Joint National Training
    Capability.
        Senator Akaka. Mr. Chairman, I want to thank Dr. Mayberry
    and General Schwartz for their responses. Thank you very much.
        Senator Ensign. I also want to thank you and I know you all
    have a lot to be doing these days. We also want to try to get
    the Deputy Chiefs up here and the Deputy Commandant and get
    their testimony and get them on their way as well. So thank you
    both very much. I would call the next panel to the table.
        General Schwartz. Thank you, Mr. Chairman.
        Dr. Mayberry. Thank you, Mr. Chairman, Senator Akaka. I
    appreciate it. [Pause.]
        Senator Ensign. Just while they are getting all situated, I
    know you probably cannot sit down without name tags in front of
    you, so just to tell you which order we will go in, Lieutenant
    General Cody, you will start off, followed by Vice Admiral
    Green, Lieutenant General Bedard, and Major General Schmidt, in
    that order. General Cody.

      STATEMENT OF LT. GEN. RICHARD A. CODY, USA, DEPUTY CHIEF OF
                   STAFF, G-3, DEPARTMENT OF THE ARMY

        General Cody. Thank you, Mr. Chairman. I would ask that my
    formal statement be entered into the record and I just have a
    few opening comments I would like to make, with your
    permission.
        Senator Ensign. Just as a reminder, if you want to
    summarize, your entire statements will be entered and made part
    of the record.
        General Cody. Thank you. Mr. Chairman, Senator Akaka, good
    afternoon. Thanks for the opportunity to address your questions
    relating to the readiness of our United States Army. I am
    pleased to be here with my counterparts from the Navy, Air
    Force, and Marines. Just as we sit before you here today as a
    joint team, our soldiers, sailors, airmen, and marines are
    serving side by side around the world in defense of freedom and
    our way of life.
        The ongoing efforts in Operation Iraqi Freedom are an
    excellent example of the jointness that the founders of the
    Goldwater-Nichols Act had envisioned. The Army, Navy, Air
    Force, and Marines, along with our coalition partners, are
    fighting in a seamless effort to bring the brutal Iraqi regime
    to a close.
        Twelve years ago when I was an Apache battalion commander
    during Operation Desert Storm, our joint team fought in a
    battle space deconflicted by time, space, and distance. Today
    we are truly joint. The superb rescue last week of Private
    First Class Jessica Lynch reflects the gains that we have made
    in joint interoperability as Army, Navy, Special Operations
    Forces, Rangers, and Marines all brought that young lady home
    to safety.
        Our Army is strong, it is trained, and it is ready. We have
    a non-negotiable contract with the American people to fight and
    win our Nation's wars. As of today, we have over 284,000
    soldiers, including 148,000 soldiers from the Reserve
    components, deployed across the homeland and in 120 different
    countries around the world. Our soldiers are serving proudly
    and are executing their assigned tasks with the vigor and
    enthusiasm we have come to expect from these great young
    Americans.
        As some of you know, I have two sons on active duty in the
    Army as pilots. My son Clint is today flying Apaches with the
    101st Airborne Division inside Iraq. I am proud of him and what
    he is doing. But I am also proud of his great leaders and the
    superb young troops he is serving with, who enlisted to serve
    their Nation in our global war on terrorism.
        We are a Nation at war, we are an Army at war, and,
    although these are difficult times, let there be no doubt that
    our Armed Forces are trained and ready and they will prevail.
        I look forward to the session and answering whatever
    questions you may have.
        [The prepared statement of General Cody follows:]

              Prepared Statement by Lt. Gen. Richard A. Cody, USA

        Mr. Chairman, and distinguished members of the subcommittee, I
    thank you for this opportunity to report on the readiness of the United
    States Army and our ability to provide for our Nation's security today,
    and in the future.
        I would like to begin by thanking this subcommittee, and Congress
    as a whole, for your tremendous support of Defense issues in the fiscal
    year 2003 budget. At the time of its submission, this budget sent a
    strong signal to the men and women serving around the world in our
    Armed Forces, and provided the resources to sustain Army readiness
    under ordinary circumstances. We are living in extraordinary times. The
    war in Iraq and the ongoing global war on terrorism create additional
    requirements. To pay these bills we have had to spend money initially
    intended for the third and fourth quarters. Therefore, rapid passage of
    the 2003 supplemental currently under review is critical to the
    continued readiness of our forces.
        The fiscal year 2004 budget reinforces the positive message of
    support to our soldiers and provides adequate funding for Army
    readiness in a peacetime environment. The Army chose to manage risk in
    the modernization of its Legacy Force and the associated mid-term
    warfighting readiness. This risk takes the form of more selective
    modernization and recapitalization efforts for the Legacy Force, while
    still retaining sufficient efforts to ensure essential readiness
    requirements. The immediate readiness impacts of this strategy are
    minimal. The Army's primary metric for resourcing future years'
    readiness is ground and air operating tempo (OPTEMPO). For fiscal year
    2004, ground and air OPTEMPO accounts are funded to sustain Army
    readiness. I greatly appreciate your support of our critical Defense
    needs at a time when our Nation is facing so many challenges. Your
    leadership does not go unnoticed and is deeply appreciated by our
    soldiers and their families.
        We have the most powerful Army in the world . . . resourced with
    outstanding equipment and enhanced with cutting edge technologies. But
    equipment, organizations, and precision-guided munitions don't fight
    and win wars . . . our people do. Our most valuable resource--the
    single thing that makes our Army the best in the world--is the men and
    women who serve in our ranks. The greatest moments in the Army's
    history have always revolved around our people--and it will remain that
    way in the future. Soldiers are the centerpiece of our formations and
    the engine behind our numerous accomplishments. Our soldiers are
    professionals in every respect of the word . . . intelligent,
    disciplined, highly trained, and extremely motivated. By far, this is
    the best Army I've seen in my 31 years of service.
        Let me put into perspective what this Army is doing in comparison
    to the Army I joined in 1972. In the 40 years preceding the end of the
    Cold War, the Army was involved in 10 significant deployments on the
    spectrum of conflict. During this same period, the Army went from 64
    Active and Reserve divisions in 1950, to 40 divisions in 1968, and to
    28 divisions by 1989. Over the past 14 years--from 1989 to present--our
    Army has been deployed 56 times while simultaneously reducing force
    structure from 28 Active and Reserve divisions to our current strength
    of 18 divisions.
        As of today, we have 270,650 soldiers deployed in 120 different
    countries--either forward stationed, forward deployed, or defending the
    homeland here in the United States. The Army, which consists of Active
    and Reserve component soldiers, and Department of the Army civilians,
    is involved in a wide variety of tasks at home and abroad covering
    nearly the entire spectrum of conflict in support of our National
    Security and Defense Strategies. We are decisively engaged with our
    joint and coalition partners in removing a brutal regime in Iraq;
    fighting the war on terrorism in Afghanistan, Yemen, Djibouti and the
    Philippines; deterring aggression in Korea; guarding detainees at
    Guantanamo Bay; engaged across Europe; keeping the peace in the Sinai,
    Bosnia, and Kosovo; helping to secure the homeland and bases overseas;
    and training our friends and allies around the world in places like
    Colombia, Honduras, and the Republic of Georgia. In the homeland, we
    are engaged in missions in every State across the Nation, from
    providing air defense for the National Capital Region to assisting in
    the Columbia recovery mission.
        None of this would be possible without the outstanding performance
    of our Reserve component soldiers. We currently have Reserve and
    National Guard soldiers mobilized in support of every mission that our
    Army is conducting. From the sands of Iraq, to here in the homeland,
    our Reserve component soldiers are absolutely indispensable to the
    execution of our assigned missions. Immediately following the attacks
    of September 11, our National Guard soldiers joined first responders
    across the Nation to provide critically needed support. In the days and
    months following the attacks they filled the vast majority of airport
    and sensitive site security, as well as the security requirements at
    the Olympics in Salt Lake City. In 2000 they responded when our Nation
    called during one of the worst wild fire seasons on record. Today, they
    are conducting the multinational force and observers (MFO) mission in
    the Sinai, the SFOR mission in Bosnia, and will soon be taking over the
    KFOR mission in Kosovo. Our Reserve components are carrying the flag in
    Iraq, Afghanistan, Guantanamo Bay, and indeed, in every location you
    find an Army presence. But, as well as our Reserve components have
    performed, their service comes with a significant cost. Some of our
    National Guard soldiers are on their second deployment since September
    11. Our steady-state mobilization, from September 11 until the recent
    build-up for Iraq, was nearly 41,000 soldiers. As of today, we have
    150,071 Reserve component soldiers mobilized in support of ongoing
    operations.
        We are thankful for the support Congress has provided to build the
    readiness of the Army. In every case, our soldiers have performed
    magnificently and their equipment, in many cases, exceeded our
    expectations. During Operation Anaconda in Afghanistan, our helicopters
    operated at altitudes and with weights we previously didn't think were
    possible. In Iraq, our tanks, infantry fighting vehicles, and aircraft
    are living up to their reputations as being the best in the world. But
    the extreme conditions and continued use will require us to undertake a
    significant effort to reconstitute our formations. We will be repairing
    our damaged and broken equipment, replacing material that has been
    destroyed, replenishing our stores of ammunition and spare parts, and
    refurbishing our pre-positioned stocks. This will be a costly and time-
    consuming process, and we are hard at work assessing our current and
    future requirements. With your support, we will get our force back to
    pre-war condition as rapidly as possible and prepare for the next
    fight, whenever and wherever it may occur.
        The Army must train the way it intends to fight, because our
    soldiers will certainly fight the way that they have trained. This is
    why the subject of encroachment is so important to the Army. The Army
    has endeavored to take care of the 16.5 million acres America has
    entrusted to us. But America also entrusts us with an even more
    precious resource--her sons and daughters. We are committed to
    providing our soldiers with the most realistic training possible.
    Recent trends limiting our access to quality training conditions give
    us cause for great concern. As the Army continues to improve our
    weapons systems and transforms our organizations, the combat training
    footprint will be greater than that currently required to train
    existing units. We appreciate the legislation Congress has already
    passed in this area, particularly in the National Defense Authorization
    Act for Fiscal Year 2003, but there is still more work to be done. The
    legislative proposals within the Defense Department's Fiscal Year 2004
    Readiness and Range Preservation Initiative will be a major step toward
    establishing the legislative clarification we require to conduct
    flexible, realistic training, while simultaneously protecting the
    environment.
        While executing these numerous missions and planning for future
    contingencies, the Army is also simultaneously transforming itself to
    meet future challenges. There will not be an operational pause that
    allows us to transform while out of contact, and we cannot afford to
    wait. These demanding commitments mean we must nurture a balance
    between current and near-term readiness and our transformation
    objectives. The Army has accepted reasonable operational risk in the
    mid-term in order to fund our transformation to the Objective Force. To
    mitigate risk we structured transformation to occur along three
    mutually supporting axes for change. On the first axis, we preserved
    the readiness of our Legacy Force--the force that's fighting our
    battles around the world today. Over the past year we have
    significantly increased our investment in Army Special Operations
    Forces (SOF) including the accelerated fielding of several key pieces
    of communications, mobility and intelligence support equipment. The
    Army has also resourced significant increases in SOF manpower and we
    are aggressively working to expand our Special Operations Aviation
    capability. To avoid unacceptable risk, we are closely monitoring the
    current operational situation as we support the combatant commanders in
    the global war against terrorism, conduct homeland defense, and
    prosecute the long-term effort to defeat transnational threats. We
    developed and implemented the Strategic Readiness System (SRS) as a
    comprehensive strategic management and readiness system. SRS also
    provides a predictive tool with which to monitor the Army and to
    provided senior leadership a decisionmaking tool to make appropriate
    adjustments to preserve current readiness. On the second axis, we are
    bridging the operational gap we discovered about 10 years ago--the gap
    between our heavy and light forces--with Stryker Brigade Combat Teams.
    We fully expect our first Stryker Brigade to be certified and part of
    the operational force by the 4th quarter of this year. On the third
    axis, we are developing a capabilities-based and strategically
    responsive Objective Force optimized for the emerging and future
    strategic environment. The Objective Force will consist of modular,
    scalable, and flexible organizations that will be more lethal, more
    agile, and more rapidly deployable than our current formations. We are
    committed in the transformation effort to become a more joint,
    strategically responsive, and full-spectrum dominant force to support
    the combatant commanders' warfighting needs.
        As we transform we are also in the process of reviewing our Reserve
    component force structure in the form of the Army Guard Restructuring
    Initiative. This concept restructures the Army Guard to meet emerging
    requirements in line with the ``1-4-2-1'' Defense Strategy's force-
    sizing construct. It will convert existing combat structure to new
    designs that better support combatant commanders, including Northern
    Command. Conversion to these new organizations, combined with efforts
    already under way as part of the Army National Guard Division Redesign
    Study, will result in a decrease in the current number of tracked
    vehicles in Army Guard combat divisions and brigades. The end-state
    will be organizations enhanced with systems that provide commanders
    with more versatile capabilities over current divisional brigades to
    meet the Nation's requirements.
        With the soldier as our centerpiece, we are well aware that our
    leaders must be grown from the ground up. The second lieutenants
    entering active duty this year will be our colonels commanding
    Objective Force units of action in 2025. Given today's complex
    operational environment, and the infusion of new technologies at
    increasingly lower levels of command, our leader development process
    has never been more important. Over the past 2 years, we have undergone
    a series of reviews, beginning in June 2000, with the Army Training and
    Leader Development Panel. The purpose of this panel was to review,
    assess, and provide recommendations for the development of 21st century
    leaders for a transforming Army. We followed this initial panel, which
    focused on the officer corps, with a series of studies to look at our
    warrant officers, noncommissioned officers, and our civilian workforce.
    We then developed implementation plans to address the panel's
    recommendations. We are in various stages of refinement in each of
    these categories, but I am confident that the end-state will ensure our
    Army continues to be the best-trained and best-led military force in
    the world.
        Another initiative to ensure the future success of our men and
    women serving in uniform is the Joint National Training Capability.
    Although we've successfully integrated our sister Services at the
    Army's existing combat training centers, the Joint National Training
    Capability will take this concept to new heights. This new capability
    builds on the Army (and other Services') training successes and adds a
    coherent joint focus for the way ahead on joint and Service-
    interoperability training. It is focused on four pillars: realistic
    combat training, an adaptive and credible opposing force, common ground
    truth, and high quality feedback. Our Army Title 10 training remains a
    vital prerequisite to the important joint and Service-interoperability
    training issues that this capability will address. The Office of the
    Secretary of Defense has programmed approximately $1.34 billion over
    the fiscal years 2003-2009 for the development of the Joint National
    Training Center Capability.
        For 227 years our Army has stood in defense of freedom and our way
    of life. We have a non-negotiable contract with the people of the
    United States to fight and win our Nation's wars. Whatever the
    mission--whether defending the homeland, prosecuting the global war on
    terrorism, or fighting a conventional war to destroy weapons of mass
    destruction--your Army is ready. In peace and in war, the soldiers of
    the United States Army will continue to serve our Nation with the
    professionalism, tremendous courage, and indomitable spirit that we
    have all come to expect. I am blessed to be an American, I am proud to
    be the father of two soldiers serving on active duty today, and I'm
    honored to have the opportunity to work together with the men and women
    in our United States Army.

        Senator Ensign. Thank you.
        Admiral Green.

      STATEMENT OF VICE ADM. KEVIN P. GREEN, USN, DEPUTY CHIEF OF
           NAVAL OPERATIONS FOR PLANS, POLICY, AND OPERATIONS

        Admiral Green. Good afternoon and thank you, Mr. Chairman,
    Senator Akaka. It is truly an honor and a pleasure for me to be
    here with you this afternoon. I am pleased to report that our
    Navy is performing superbly in Operation Iraqi Freedom and in
    our other commitments and operations around the world.
        As we meet here this afternoon, 64 percent of our 302 ships
    are under way. The majority of them are forward deployed. Seven
    aircraft carrier battle groups and 9 of our 12 amphibious ready
    groups are forward deployed to such areas as the Mediterranean,
    the Arabian Gulf, and the western Pacific. This level of effort
    is a remarkable testament to the superb amount of work and
    leadership and wise counsel that has been done, particularly by
    this committee.
        Your steadfast support of the $6 billion readiness
    improvement over the past 2 years made the Chief of Naval
    Operations' culture of readiness vision a reality and has
    produced the most ready naval force in our history. These
    investments were vital to sustaining the war on terrorism,
    assuring friends and allies, and leading the Nation's global
    response to crisis.
        Today one of the biggest challenges in sustaining this
    level of readiness following the completion of our current
    mission in Iraq will be facing the readiness that we are
    required to sustain in the future. We look forward to working
    with you to meet this challenge.
        Mr. Chairman, I have provided my written statement which I
    would like to have entered in the record and I stand ready and
    pleased to answer your questions. Again, thank you very much.
        [The prepared statement of Admiral Green follows:]

              Prepared Statement by Vice Adm. Kevin P. Green, USN

                                  INTRODUCTION

        Chairman Ensign, Senator Akaka, and distinguished members of this
    subcommittee, I appreciate the opportunity to be with you today. It is
    an honor to report to you on the operational status and readiness of
    this great Navy during these exceedingly challenging times, as we are
    engaged in OIF, while continuing to prosecute the global war on
    terrorism (GWOT). Your generous support has been instrumental in our
    efforts to improve the combat readiness of our Navy. The results are
    evident in the strong forward deployed posture and readiness for combat
    of our people and units.
        I'll begin my statement today by briefly reviewing the past year,
    including our support of Operation Enduring Freedom and homeland
    defense. Next, I'll address our operations today and how we got here,
    focusing on the sailors, training, maintenance, platforms, and
    munitions which are the key enablers of our current high forward
    deployed state of readiness. I will then discuss the challenges we face
    in maintaining this readiness level and in reconstituting the fleet
    once the war in Iraq comes to a close. Finally, I will outline how we
    will leverage technology and business practices within the Chief of
    Naval Operations' Sea Power 21 vision to position the Navy for future
    readiness.

                           THIS TIME LAST YEAR . . .

        At this time last year, 103 Navy ships and 48,000 sailors were
    deployed around the world supporting the global war on terrorism and
    other operational commitments. We were in the process of scaling back
    the Navy's participation as a joint and coalition partner in the
    campaign in Afghanistan. The Navy had surged to support the overall
    military effort, and the persistence, precision, and operational
    flexibility of our naval forces provided major contributions to the
    campaign. Three carrier battle groups, supported by Air Force tanker
    crews, provided continuous 24-hour tactical aircraft presence over 700
    miles inland. Two amphibious ready groups fully supported marines
    deployed deep into Afghanistan and Pakistan. Navy Special Forces
    (SEALs) provided key elements of the special operations effort on the
    ground while an aircraft carrier employed on short notice as an
    innovative afloat forward staging base (AFSB) hosted Army Special
    Forces units. Specially configured P-3 aircraft flew extensive missions
    overland providing direct reconnaissance support for forces on the
    ground. The Navy also participated in a host of operations intended to
    interdict terrorists and contraband material moving over the oceans.
    Meanwhile, our naval coastal patrol craft teamed with the Coast Guard
    for port security in support of homeland defense.
        Nearly every ship in the Navy has deployed over the past year in
    support of combat operations, some twice. U.S.S. Carl Vinson, which was
    on station for the opening salvos in Afghanistan, deployed again last
    month. Nine of 12 Navy aircraft carriers deployed at some point in the
    past year, and all but one has participated in forward deployed
    operations since 11 September 2001.

                            WHERE WE ARE TODAY . . .

        The Navy is underway on an even larger scale today, supporting
    Operation Iraqi Freedom, executing other missions in the global war on
    terrorism, and maintaining our Nation's commitments to our allies. One
    year ago, in support of Operation Enduring Freedom, the Navy was called
    upon to provide a moderate surge force; today we are surging near
    maximum capacity. Indeed, 210 of our 305 ships--representing 69 percent
    of our force--are underway, including 7 of 12 carrier battle groups, 9
    of 12 amphibious ready groups, and 25 of 54 attack submarines. The Navy
    and Marine Corps alone have nearly 600 aircraft forward deployed in
    support of operations against Iraq and other potential contingencies.
    SEALs, construction battalions, explosive ordnance disposal teams, port
    operations support units, maritime patrol squadrons, medical teams, and
    naval coastal warfare units also are overseas--all are performing
    magnificently in combat or in support of other theaters of operation.
    Maritime prepositioning ships and ships of an amphibious task force
    offloaded equipment in support of marines in Kuwait, and 135 ships
    under the control of the Military Sealift Command are transporting
    forces to the theater. We have deployed U.S.N.S. Comfort, a hospital
    ship with a 1,000 bed capacity, and three field hospitals as well as
    our High Speed Vessel (HSV), which serves as a test bed for the
    Littoral Combat Ship. One of our command ships, U.S.S. Mount Whitney,
    is deployed as the flagship for Commander, Joint Task Force Horn of
    Africa. In all, nearly 77,000 Navy men and women are deployed today
    worldwide, 50,000 of whom are devoted to Operation Iraqi Freedom.
        Over the past weeks, our sailors have performed superbly in
    Operation Iraqi Freedom. By any measure, today's Navy is the most
    capable force we have ever put to sea, maintaining a persistent and
    capable forward presence, and we've demonstrated our ability to surge
    significant combat power quickly, wherever required, using the largest
    maneuver space on the planet. Moreover, in an era of growing anti-
    access threats--whether political or threat-based--the inherent ability
    of naval forces to project offensive and defensive power in an
    unconstrained manner from the sovereign sea base is growing in
    importance. As we confront and defeat the threat posed by the current
    Iraqi regime and continue the worldwide fight against terrorist
    organizations, we do not neglect our other global responsibilities. In
    the western pacific, the U.S.S. Carl Vinson Battle Group is deployed in
    support of the Pacific theater commander, and the ESSEX Amphibious
    Ready Group, permanently forward based in Japan, is conducting routine
    operations and exercises in this important area of the world.
        We are trained and ready on arrival, able to climb into the ring
    with the enemy and project power in ways we could only imagine a few
    years ago. Thanks to the support of this committee, we are presently
    experiencing the highest state of overall readiness I've ever witnessed
    in my 32 years of naval service.

                             HOW WE GOT HERE . . .

        Realizing several years ago that we needed to balance, more
    effectively, current readiness against the requirement to recapitalize
    our fleet, we invested an additional $6 billion in readiness accounts
    from fiscal year 2002 to fiscal year 2004, including the Flying Hour
    Program, Ship Depot Maintenance, Ship Operations, and Sustainment,
    Restoration, and Modernization. We made some tough budget choices to
    fix critical personnel and readiness issues. With this committee's
    support, we made these investments in a timely and fortuitous manner,
    and are now reaping the resultant personnel, material, and training
    benefits in the success of our ongoing operations.
        We continue to make difficult, but prudent, choices in the fiscal
    year 2004 budget. For instance, you will notice a decline in ship depot
    maintenance funding. Despite the reduction, our budget achieves the
    CNO's readiness goals: funding 96.2 percent of validated requirements--
    the same as fiscal year 2003. This is a function of the return on the
    readiness investment made over the past two budgets and the
    supplemental funding that allowed us to reduce the maintenance backlog,
    improve business practices and maintenance processes, and accelerate
    the retirement of older, maintenance-intensive ships.
        Beginning with the personnel side of readiness, the Navy is
    retaining sailors at the highest rates in decades. During fiscal year
    2001 and fiscal year 2002, first term reenlistments averaged over 67
    percent. In a phenomenal increase, our deploying battle group manning,
    measured at the 6 month point prior to the start of a deployment, has
    improved from 91 percent in fiscal year 2000 to 99 percent for the last
    five battle groups. Pay raises and enhancements to special pays
    (especially career sea pay) enacted over the past 2 years are yielding
    impressive results. Moreover, our efforts to reduce out-of-pocket
    housing expenses, authorization for our sailors to participate in the
    Thrift Savings Plan, improvements in medical care, and retirement
    reforms approved by Congress are among the significant factors that
    have helped us retain the sailors we need today. On the recruiting
    front, we have now met our accession planning goals for 4 straight
    years and for 19 straight months. Our Delayed Entry Program posture
    (which measures the percentage of the year's recruiting goal that is
    already accommodated at the beginning of the year) was 54 percent for
    fiscal year 2003, near the highest level ever. We are encouraged by the
    fact that we have garnered higher quality recruits than in previous
    years, with over 92 percent of the fiscal year 2002 recruits being high
    school graduates.
        Anti-Terrorism/Force Protection (AT/FP) personnel requirements
    continue to stress our ashore and afloat manpower planning. As much of
    our surge capability in the AT/FP mission area resides in the Reserve
    component, this essential element of our total force has been
    fulfilling a crucial role in the global war on terrorism. Additionally,
    for the first time since the Korean War, we have activated a Reserve
    carrier based fighter-attack squadron, which presently is flying F/A-
    18A aircraft deployed aboard U.S.S. Theodore Roosevelt in the Eastern
    Mediterranean. It was necessary to activate this squadron to deconflict
    the transition timeline for one of our active F/A-18E/F Super Hornet
    squadrons that would have been required to deploy early in support of
    then possible operations in Iraq. We are very pleased with the
    responsiveness and performance of VFA-201 in this important role.
        More than 87,800 Naval reservists make up nearly 23 percent of the
    Navy's total force. With a total of over 11,000 reservists recalled to
    active duty today, the effective integration of Reserve elements into
    active components is indispensable to readiness and management of our
    personnel tempo in the global war on terrorism. We face three
    challenges with this Reserve activation. First, several of our key
    Reserve capabilities, such as Inshore Boat Squadrons providing
    worldwide port security, soon will be close to the 2-year involuntary
    activation limit. We are examining ways to migrate some of this
    important capability to our Active Force while expanding Reserve
    capability in this area. Second, with over 3,600 medical personnel
    deployed aboard U.S.N.S. Comfort, in fleet hospitals, and to other
    forward locations above our normal posture, we are maintaining
    continuity of medical care for CONUS-based forces, their dependents,
    and retirees by combining selected medical reservist backfills with an
    outsourcing strategy. Finally, we continually revalidate the billets
    filled by Reserves with an eye toward demobilizing those who are not
    essential to the war effort in order to achieve optimum manning
    efficiency. However, the cost to mobilize reservists to active duty is
    an unplanned resource challenge.
        Two years ago, the Navy reported to you significant concerns with
    the material aspect of our current readiness. As one of the CNO's top
    five priorities, Navy current readiness received significant attention
    within our budget submissions. With focused effort, careful planning
    and congressional resource support, we have made tremendous gains in
    aviation material readiness, ship material readiness, and preferred
    munitions.
        In aviation material readiness, 1 year ago there were 44 bare
    firewalls in the EA-6B Prowler fleet--a critical support aircraft that
    we place in the category of ``low density-high demand'' assets. Today
    there are zero bare Prowler firewalls, although we now need to purchase
    new outer wing panels for a number of these aircraft to ensure their
    continued viability until replaced by the EA-18G. I also report to you
    that we have made significant progress in reducing aircraft
    cannibalization, the practice of taking parts from one aircraft to make
    another operational. Despite the increased operational tempo (OPTEMPO)
    associated with executing the global war on terrorism, we've continued
    to make progress in this area, reducing cannibalization by an
    additional 5 percent.
        The Navy also has made significant progress in shifting our weapon
    system logistics support strategy from one of buying parts and managing
    inventory to one of buying performance and managing results. The
    vehicles to accomplish this transition are performance based logistics
    (PBL) contracts. These contracts are usually long term in nature and
    both empower and incentivize the provider to improve product support
    while reducing the total cost of ownership. The primary goal of the PBL
    approach is to enhance warfighter logistics support via improved supply
    availability, decreased cycle time, increased reliability and reduced
    obsolescence. The PBL methodology is structured to accomplish these
    goals by capitalizing on industry best practices and reengineering
    logistics support to perform more like a commercial system.
        Currently, the Navy has approximately 25 percent of its active
    inventory managed under a PBL agreement. This approach has achieved
    unparalleled success across both aviation and ship programs and is
    equally effective when applied to a single item of supply or an entire
    weapons platform. A sampling of PBL successes may be found in the
    following examples.

             F/A-18 E/F: The F/A-18 E/F Integrated Readiness
            Support Teaming (FIRST) contract encompasses support for the
            entire aircraft. Supply availability is 85 percent versus 62
            percent for F/A-18C/D aircraft. Projected savings are $52
            million over 5 years.
             Close-In Weapon System (CIWS): This contract is
            achieving 89 percent supply availability versus a previous
            performance level of 60 percent. Projected savings are $5
            million over 5 years.
             Aviation Tires: This innovative 5-year contract has
            virtually taken the Navy out of the business of buying and
            warehousing tires in support of 17 different aircraft. Supply
            availability is 98 percent versus a previous performance level
            of 81 percent, with projected savings of $46 million over 15
            years.
             AEGIS Weapons System: This contract is achieving 95
            percent availability versus a previous performance level of 85
            percent. Projected cost savings is $6 million over 4 years.

        Early retirement of some aircraft models enabled the Navy to avoid
    costly maintenance requirements and reinvest those savings across other
    readiness accounts. For example, the F/A-18E/F Super Hornet--the first
    three squadrons of which are deployed today to the Arabian Gulf--
    operates at one third the cost of the aging and maintenance-intensive
    F-14s it is replacing. Moreover, the Super Hornet provides significant
    readiness improvements while simultaneously providing a 40 percent
    increase in combat radius and greater payload capability than the F/A-
    18C/D.
        The addition of precision-guided munitions (PGM) capability to
    every strike aircraft means we now measure air wing capability in
    targets per sortie instead of sorties per target. Accordingly, early
    attention to the Navy's preferred munitions requirements was another
    key enabler of today's readiness gains. At the onset of Operation
    Enduring Freedom, the Navy and Marine Corps did not possess the desired
    inventory of PGMs. This inventory was further depleted by operations in
    Afghanistan. However, our increased investment in the PGM industrial
    base and procurements continues to move us in the right direction.
    Laser guided bomb (LGB) production is currently at the maximum rate,
    and Joint Direct Attack Munition (JDAM) production is forecast to reach
    the maximum rate by August 2003. In anticipation of combat operations
    in Iraq, the Navy initiated cross leveling of LGB and JDAM inventories
    with the Air Force to mitigate the delay in production ramp-up and to
    replenish the Navy's JDAM inventory shortfalls. Maximum procurement of
    PGMs continues to be a high priority for the CNO and Navy Fleet
    Commanders.
        We have made similar gains in ship material readiness. Supplemental
    funding; cost avoidance through the accelerated retirement of older,
    high maintenance frigates and destroyers; the expanded use of multi-
    ship/multi-option, maintenance contracts with private industry; and
    innovative scheduling enabled us to reduce deferred ship maintenance by
    45 percent (from $356 million in fiscal year 2001 to $197 million in
    fiscal year 2002). Meanwhile, the consolidated shipyard activity in
    Pearl Harbor continues to demonstrate the flexibility and effectiveness
    of integrating depot and intermediate ship maintenance under a mission
    funding financial system. Mission funding enabled Pearl Harbor Naval
    Shipyard and Intermediate Maintenance Facility to begin immediately
    repairing damage resulting from U.S.S. Denver and U.S.S. Greeneville
    collisions and to provide recent unscheduled drydock repairs on U.S.S.
    Paul Hamilton and U.S.S. Reuben James. Based on this success, our
    fiscal year 2004 budget includes the transition of Puget Sound Naval
    Shipyard from a Navy Working Capital Fund activity to a mission funded
    activity.
        Recognizing that naval forces at sea are less vulnerable than
    ground forces to chemical, biological, or radiological (CBR) attack,
    one of our concerns as we prepared for a possible contingency in Iraq
    was the adequacy of our sailors' protection against such attack. We
    determined that our current quantity of equipment was adequate for
    rotational force operations but not for large surge force operations.
    Considering the volume of forces identified for this campaign, we
    fundamentally changed scheduled deployment priorities due to the
    requirement to surge such a large force structure outside of the normal
    deployment cycle. The Commander, Fleet Forces Command (CFFC) validated
    and requested additional emergent funding to improve chemical,
    biological, radiological, and nuclear defense (CBRND) readiness for the
    increased force requirements. The CFFC study concluded that afloat
    forces possessed the requisite gear but that expeditionary forces most
    vulnerable to CBR attack needed additional equipment and training. We
    expedited procuring additional CBRND equipment stocks and accelerated a
    ``pilot'' Naval Sea Systems Command CBRND Readiness Improvement Program
    (RIP) to improve ashore forces' readiness and training. We also fielded
    an interim presumptive and confirmatory biological warfare threat
    identification capability. These actions resulted in a significant
    improvement in CBRND capabilities for the fleet.
        In total, the Navy has expended over $160 million to improve its
    ability to fight and win in a CBR contaminated battle space. Today, all
    of our forward deployed sailors, including those who are or could be
    based ashore, are equipped with adequate supplies of the most
    appropriate CBRND equipment available. Meanwhile, we are committed to
    an aggressive anthrax and smallpox vaccination program, which is
    proceeding apace. To the maximum extent possible, we will look to deter
    and avoid direct CBRN threats to our forces. Finally, we maintain
    efforts to field additional capability, and continue to analyze our
    prospects for sustained operations in a CBRND environment and our
    ability to reconstitute for additional future tasking.
        Training readiness is another success story. We continue to place
    greater emphasis on use of simulation and other means of finding
    efficiencies that can be captured and diverted into other readiness
    accounts. Inherent in our employment shift to a rotational force that
    is surge-capable, we have found innovative ways to achieve an
    acceptable level of surge readiness earlier in a battle group's
    deployment cycle. Adjustments to key training and scheduling events
    during the inter-deployment training cycle are resulting in ships and
    squadrons being capable of accelerating to a deployable status sooner.
    This has been manifested during the current crisis in that the last
    three carrier battle groups we sent forward were all deployed early at
    acceptable levels of readiness.

         SUSTAINING THE SURGE . . . AND RESTORING READINESS POST-CRISIS

        While we have invested wisely in order to gain the highest
    available readiness, today's surge has put a significant strain on
    every Navy resource. Our military forces are deployed far beyond normal
    peacetime Global Naval Force Presence Posture (GNFPP) training and
    deployment cycles. It is likely that the Abraham Lincoln Battle Group
    and the NASSAU Amphibious Ready Group will have been deployed for over
    9 months, upon their return from the Arabian Gulf. Such deployments
    bear significant, unprogrammed costs in fuel and parts that we will
    need to recover if we are to continue to operate at this tempo.
    Moreover, once we complete our mission in Operation Iraqi Freedom, we
    will need to reconstitute our forces quickly in order to sustain the
    readiness required to continue the global war on terrorism. Returning
    to and stabilizing a rotational, forward deployed/surge capable naval
    force will require careful analysis and balancing of ship maintenance
    schedules, deployment durations (including some battle group
    deployments in excess of our 6 month goal), aircraft modification and
    transition schedules, resupply of parts inventories, and possible
    relaxation of overseas commitments. At the same time, our most precious
    asset--our sailors and their families--will need time to recover from
    the personal cost of these long deployments.
        Innovative planning already is underway to maximize on-station time
    of our ships while mitigating the impact of longer deployment schedules
    on our sailors. One such effort, the Navy's Sea Swap initiative, is
    experimenting with exchanging forward deployed crews, the first of
    which occurred aboard U.S.S. Fletcher in the Western Australian port of
    Fremantle. We will continue this initiative with another crew change
    this summer and we intend to examine other pilot programs in optimal
    manning, rotational crewing, and assignment incentive pay designed to
    make more optimum use of our capital assets.
        Current operations have severely disrupted planned maintenance
    schedules for our ships and aircraft. Schedule ``churn'' challenges a
    maintenance infrastructure sized and culturally inclined to support
    peacetime sustained operations instead of a large, post-surge ship and
    aircraft workload. This, in turn, results in greater cost for the same
    amount of maintenance performed. Accordingly, we are focusing on the
    maintenance strategies and processes we will use to restore our ships
    and aircraft to deployment-ready status. We are already working hard to
    reorganize priorities and resolve competing maintenance requirements in
    order to return to a full readiness posture capable of surging in
    support of future joint operations. Finally, we are examining ways of
    incorporating the lessons learned from this surge into a new approach
    to maintenance that will be more capable of handling future surge
    operations.
        Replacing units which have been deployed for many months will
    likely require the same type of shortened training cycles we have been
    using for our surging units. This is sustainable in the near term, but
    we will need to work toward more normal training cycles in order to
    retain our critical warfighting skills in all areas (especially those
    which might not be required during the conflict with Iraq, such as
    anti-submarine warfare).
        Despite increases in production, the conflict with Iraq has reduced
    the Naval PGM inventory, including the Tomahawk Land Attack Missile
    (TLAM). Consequently, and depending on the duration of the conflict, it
    will be necessary to continue PGM production at maximum capacity.

                  CHALLENGES AND TRANSFORMATIONAL INITIATIVES

        The Navy is committed to extending our culture of readiness into
    the future, to include support for an operational concept that will
    maintain a substantial portion of the fleet in a readiness condition
    that would permit a rapid surge of significant combat power to augment
    the normal rotational force posture maintained under the Global Naval
    Force Presence Policy. This construct also includes the ability to
    reconstitute rapidly following a contingency.
        To date, the Navy has conducted significant analysis and has
    established a ready surge force construct of six carrier battle groups
    (soon to be transitioned to carrier strike groups, or CSGs, in line
    with the CNO's Sea Power 21 vision) and six amphibious ready groups
    (soon to be transitioned to expeditionary strike groups, or ESGs). We
    are currently defining our surge requirement across the full spectrum
    of Navy combat power and reshaping our readiness processes, including
    the inter-deployment training cycle, to institutionalize this surge
    capability. We also will seek to do a better job of balancing our
    resources to support this re-alignment. Elements of the CNO's Sea Power
    21 vision will complement these initiatives while enhancing the key
    enablers of people and processes.
        One of the biggest challenges we face as a surge capable rotational
    force is in maintenance workload predictability and stability.
    Implementing this new surge concept will require innovative approaches
    to maintaining our ships and aircraft. In fiscal year 2004, we will
    integrate Puget Sound Naval Shipyard and the Pacific Northwest
    Intermediate Maintenance Facility. Converting these activities to
    mission funding is a vital part of this integration and will deliver
    increased responsiveness to the warfighter and more efficient use of
    resources. Mission funding provides the flexibility to match workforce
    to the highest priority work requirements without delays or
    administrative funding constraints. It will allow for the most
    effective use of all maintenance resources in the region, unconstrained
    by organizational boundaries, and will eliminate redundant overhead
    functions. In short, mission funding is essential to provide fleet
    commanders with the inherent flexibility to execute their highest
    priority requirements in this surge environment, where ship maintenance
    availabilities and operational schedules will be flexing to support the
    GWOT, Southwest Asia, and future contingencies.
        Ensuring that an increasing number of deployed ships sustain high
    readiness is critical and not easily attainable given the restrictions
    on the use of overseas depot facilities. Acquisition restrictions
    forced us to send U.S. shipyard workers overseas to do routine
    maintenance work on U.S.S. Fletcher, our Sea Swap experiment test ship.
    This is not good stewardship of taxpayer dollars. We need a common
    sense approach to afford better, more cost-effective maintenance
    support to our forward deployed forces.
        Public/private partnerships are a key enabler to improve our
    maintenance capability. For example, our naval aviation depots (NADEPs)
    are world-class organizations, replete with examples of novel
    approaches to the aircraft maintenance business. The NADEPs currently
    are executing 15 public/private agreements valued at over $182 million.
    These partnerships are primarily long-term contracting initiatives or
    memoranda of agreement that establish a joint venture between private
    industry and the public yards. Often this involves one party providing
    technical expertise and direct labor, with the other providing the
    actual facilities or support equipments required to execute the work.
    There are approximately 16 additional agreements in the approval and
    negotiation phases valued at over $492 million for the base period of
    their contracts. With the agreements that are in place, we have seen
    the most common inhibitors to maintenance depot production (material,
    carcass, and engineering constraints) become exceptions rather than the
    rule. By removing the barriers that inhibit government/industry
    teaming, we can encourage greater use of these partnerships as a
    primary means of improving depot support. Congress' support for
    ``Centers of Industrial and Technical Excellence'' has been a very
    positive development in this regard.
        The Secretary of Defense has cited public/private partnerships as a
    key initiative under the Future Logistics Enterprise, which is intended
    to transform logistics support to the warfighter in the areas of
    supply, maintenance, and transportation. In addition, the CNO has cited
    public/private partnerships as one of the key facets of Sea Enterprise,
    the sweeping initiative to capture efficiencies in order to
    recapitalize the Navy. Along with the NADEP examples mentioned above,
    other partnerships include aircraft carrier and submarine maintenance
    work and resource sharing, propeller repair facilities, and SSGN design
    and conversion.
        Enterprise Resource Planning (ERP) is a critical part of any
    discussion about modernizing our organizations and improving their
    efficiency. Navy ERP is comprised of four distinct efforts covering
    program management, financial management, regional maintenance, and
    supply management. ERP is the tool which enables a significant
    reduction of costly legacy systems; it facilitates an economic,
    standardization of business and administrative processes, and will
    provide much greater resource and cost visibility to decisionmakers at
    all organizational levels. We must sustain our ERP investment and
    implementation to continue to harvest efficiencies that can be
    redirected to warfighting priorities.
        The high quality of training we provide to our sailors is largely
    unseen by the public and often taken for granted, yet it is an
    essential element of their impressive combat readiness. Accordingly,
    you will note a significant investment in training within the
    President's budget. The Navy has trained its last battle group at
    Vieques Island, Puerto Rico and will cease operations there next month.
    The loss of this valuable asset will be offset by upgrades in certain
    range capabilities, cooperative use of other service ranges and
    integration of new technologies such as virtual at sea training (VAST),
    which together will provide fleet training superior to that currently
    being conducted by deploying battle groups. The developing Joint
    National Training Capability (JNTC) has tremendous potential in terms
    of expanding the interoperability and technological facets of our
    training syllabus. The JNTC concept, as envisioned, will provide a
    global, integrated network of live-fire training ranges and a linked
    network of simulation capabilities focused on better preparing U.S.
    forces from all Services for joint operations.
        We intend to use the Training Resource Strategy (TRS) as a key
    resourcing framework to support continued transformation of fleet
    training. Beginning in the Atlantic Fleet, TRS will move us to a 21st
    century training environment. These transformational training
    initiatives were needed to replace a legacy training regimen that did
    not fully train to the increasingly joint, interoperable, and
    geographically dispersed nature of today's combat operations. With this
    initiative, our Navy is aligning its training methodology to flex naval
    forces in shifting operational and tactical training environments
    through a mix of live and virtual training environments.
        Battle groups soon will be able to conduct combat exercises in port
    with netted combat system trainers that enable crews and staffs to
    train under tactically stressful scenarios prior to at-sea training
    events. Our carrier air wings will use simulation more effectively and
    will conduct long and short-range strike missions against a variety of
    challenging fixed and mobile targets. These initiatives, together with
    new range instrumentation being developed cooperatively with the Air
    Force, also position Navy ranges to support fully the developing Joint
    National Training Capability. This program will be expanded in future
    years to support the Pacific Fleet and will serve as the vehicle for
    continued transformation of fleet training in the Navy.
        The new DOD Readiness Reporting System (DRRS) concepts will further
    augment joint training initiatives. In particular, Navy is currently
    developing an enhanced reporting system to fulfill all of the mandated
    requirements set forth for the Services. With prototype completion
    expected this year, this system will link Navy reporting metrics to
    joint mission essential tasks (JMETs), provide near real-time
    reporting, roll-up readiness assessments, and provide drill-down
    assessment capability.
        No readiness challenge is greater than that of encroachment on our
    training ranges. We rely on full use of our ranges; facilities and
    advanced technology to ensure our forces have a decisive advantage in
    combat. Unfortunately, training areas that were originally located in
    isolated areas are today surrounded by recreational facilities and
    urban and suburban sprawl. Increasing regulation, permitting processes,
    and litigation have cumulatively diminished the Department of the
    Navy's ability to effectively train our personnel and test our weapon
    systems. We actively seek to be good stewards of the environment, and
    the record shows we have been successful in this area. However, we also
    are asking for the legislative relief we need in the form of the
    Readiness and Range Preservation Initiative in order to bring the twin
    requirements of national security and environmental conservation into
    better balance.
        We believe it is important that our facilities sustainment,
    restoration, and modernization (FSRM) program remains robust enough to
    maintain our shore facilities and infrastructure. While our fiscal year
    2004 military construction and sustainment program reflects difficult
    but necessary trade-offs between shore infrastructure and fleet
    recapitalization, the majority of the SRM trends are very good.
    Sustainment funding has increased from 84 percent to 93 percent of the
    requirement in fiscal year 2004. Our fiscal year 2004 budget request
    puts us on a course to achieve the DOD goal of a 67 year
    recapitalization rate by fiscal year 2008. (Note: DOD goal is fiscal
    year 2007, but the budget reflects fiscal year 2008). In pursuing that
    goal we will explore innovative solutions to provide safe, efficient
    installations for our service members, including design-build
    improvements, more efficient facilities, and Base Realignment and
    Closure (BRAC) land sales via the General Services Administration (GSA)
    Internet.

                                   CONCLUSION

        Again, I would like to thank the members of this subcommittee for
    all you have done for our Navy. The first war of the 21st century
    promises to be a challenging struggle. Over the past year, the United
    States Navy has excelled in a very dynamic and dangerous environment in
    support of this vital effort because we are well trained and equipped
    to go in harm's way. Every day, your volunteer sailors are dedicated to
    providing flexible, forward deployed, combat ready power on a moment's
    notice anywhere in the world to ensure the safety and vital interests
    of the American people. We are this way because of the tremendous
    support we have received from the American people and from Congress--
    support we must be able to count on if we are to remain prepared to
    conduct the global war on terrorism and respond to any other
    contingencies that arise in this dangerous world.
        Budgets always present difficult choices, and this budget is no
    exception. I believe the President's 2004 budget request firmly
    supports the priorities needed to allow the Navy to continue delivering
    precise, persistent, and responsive combat capability at sea. It builds
    upon previous submissions and will help continue to translate the
    Navy's vision into tomorrow's warships, aircraft, weapons, information
    networks, and, ultimately, sailors. On behalf of our sailors and their
    families who proudly serve our Nation, I thank you for your continued
    commitment to the readiness of the finest Navy in the world.

        Senator Ensign. Thank you.
        General Bedard.

     STATEMENT OF LT. GEN. EMIL R. BEDARD, USMC, DEPUTY COMMANDANT
                   FOR PLANS, POLICY, AND OPERATIONS

        General Bedard. Mr. Chairman, Senator Akaka, it is an honor
    for me to be here to represent your Marine Corps today. I would
    like to thank you very much and certainly this subcommittee's
    strong support for the issues and programs that are of such
    vital importance to the readiness of the Marine Corps and to
    all our Services.
        Today some 70 percent of the Marine Corps' operational
    forces are forward deployed and the Marine Corps' operations
    throughout this past year have highlighted the versatility in
    deployment of our expeditionary forces and its contribution to
    the joint force.
        This year has been filled with challenges in terms of
    operational requirements, participation in the global war on
    terrorism, Operation Enduring Freedom, and Operation Iraqi
    Freedom, all of which I believe attest to the training, the
    readiness, and the capability of not only the Marine Corps, but
    of our forces.
        I do believe that we have some definite challenges ahead
    for all of us. In my mind I see these challenges in terms of
    those close at hand, such as conflict resolution and subsequent
    reconstitution of the force. On the horizon, we need to stay
    the course relative to modernization and transformation.
        I want to thank you for your assistance in the ongoing
    effort with respect to the supplemental. It will be critical to
    rapidly rebuilding the force capability. We must ensure maximum
    future readiness with minimum degradation. The global war on
    terrorism and other potential adversaries cannot be given a
    time out.
        We are doing what we were trained to do and we are ready to
    support our Nation through whatever challenges may lie ahead
    worldwide. We remain the only sea-based rotational, truly
    expeditionary combined arms force, ready to answer the call, as
    part of the highly integrated joint force.
        I thank you again for your continued support for the Corps,
    our marines, and their families, as well as for the soldiers,
    sailors, and airmen, and my colleagues who sit with me today. I
    look forward to your questions. Thank you.
        [The prepared statement of General Bedard follows:]

              Prepared Statement by Lt. Gen. Emil R. Bedard, USMC

                                  INTRODUCTION

        Chairman Ensign, Senator Akaka, and distinguished members of the
    subcommittee, it is my privilege to report on the state of readiness of
    America's Marine Corps.
        I am deeply honored to report on the readiness of your Marine Corps
    at a time when the heroic sacrifices of our men and women actively
    engaged in combating terrorism are being broadcast nightly into every
    household across America. The Marine Corps' first priority is, and will
    continue to be, readiness. Our sequence of priorities is ``Mission
    First, Marines Always''. Our service in Afghanistan, Iraq, and many
    other places attests to the state of our readiness better than mere
    words alone.

                                   OPERATIONS

        As recent events have proven, the world remains uncertain and
    dangerous. Our Nation is a superpower with national interests that
    extend well beyond our geographic borders. We are participants in a
    global economy that has brought peace, prosperity, and stability to
    remote parts of the world, while improving the quality of lives of
    millions worldwide. Whenever or wherever our national interests were
    threatened, the Marine Corps has distinguished itself as a certain
    force in an uncertain world. Being ready when the Nation is least
    prepared requires focus, dedication, and flexibility. Our national
    interests face threats ranging from conventional forces to rogue para-
    militiary organizations masquerading as civilians using unconventional
    weaponry and bent on self-destruction. Being ready across the full
    range of conflict requires organizational scalability. In each
    instance, we must be able to provide a measured response, to surgically
    eliminate the threat with minimal collateral damage, while protecting
    our national interests and goodwill, on a battlefield not of our
    choosing. Providing a full range of capabilities to the combatant
    commander has tremendous utility in today's world. I know that the
    distinguished members of this committee understand the value of ready
    forces, as you have always demonstrated your understanding through the
    strong support you've provided.
        The Marine Corps maintains a global, expeditionary perspective, and
    we posture our forces accordingly. Marine Forces serve as a strategic
    deterrent, as an instrument of diplomacy, and as a demonstration of our
    national resolve to protect freedom wherever it is threatened and if
    required, the Marine Corps can rapidly commit combat forces to resolve
    the conflict. We are a transformational force that is affordable,
    scalable, sustainable, and prepared to respond across the spectrum of
    operations, from humanitarian assistance and disaster relief to major
    conflict. As you have seen in Iraq and elsewhere, your marines are
    trained and prepared to be first on the scene, first to help, first to
    fight, first to serve, and to serve as an enabler and nucleus for the
    follow-on joint forces. Our Marine Air Ground Tasks Forces (MAGTF) with
    their organic logistics and versatility may be task organized as the
    ideal model of how effective, efficient, well integrated joint
    operations will execute.
        In the global war on terrorism, we are exploiting the capabilities
    and talents of our most sophisticated state-of-the-art weapon--a United
    States Marine. When the President called, our marines proved themselves
    to be well trained, adequately equipped, and up to any challenge. Our
    equipment, though aging, is well maintained and is accomplishing the
    task at hand. Marine Corps doctrine of maneuvering from the sea to
    objectives deep inland has proven itself to be extraordinarily
    effective. As we speak today, the Nation's premier Expeditionary Force
    in Readiness is deployed across the globe in support of Operations
    Enduring Freedom (OEF), Noble Eagle (ONE), and Iraqi Freedom (OIF).
        The Marine Corps has deployed more than 60,000 marines in support
    of Iraqi Freedom. Our Navy-Marine Corps team deployed and massed two of
    our forward deployed Marine Expeditionary Units, Special Operations
    Capable (MEU (SOC)) in the Central Command area of responsibility, to
    establish a presence, and provide a capability to protect our sea
    passageways and ports of arrival at our intended staging areas. MEU
    (SOC)s are routinely forward deployed and positioned for global
    coverage to establish goodwill, maintain a national presence, preserve
    order, and protect our national interests abroad. Their forward
    presence protects our homeland from threats well outside our borders.
    The MEU (SOC)s provided a strategic reserve for Central Command, during
    the arrival and subsequent off-load of two squadrons of our Maritime
    Prepositioning Force (MPF) in Kuwait. We rapidly offloaded two
    squadrons of our MPF--11 ships within 18 days. The equipment coming off
    Maritime Prepositioning Ships Squadrons 1 and 2 had equipment readiness
    ratings of 98 percent and 99 percent respectively. MPF equipment is
    modern and 100 percent compatible with our Active Force. Once
    offloaded, it is immediately available for integration into a Marine
    Expeditionary Brigade (MEB) force consisting of approximately 15,000
    marines and sailors. The success of our preparation for combat
    operations in Iraq was made possible because of the readiness of our
    MPF program as their collective efforts served as a foundation for a
    Marine Expeditionary Force (MEF). The MEF's efforts were augmented by
    two amphibious task forces, which sailed from the east and west coasts
    of the United States. Upon arrival the East Coast Amphibious Task Force
    (2d MEB) executed various combat missions. The West Coast Amphibious
    Task Force was composited with the First Marine Expeditionary Force and
    augmented with follow-on forces arriving by strategic lift.
        Our successes in these global operations and exercises have not
    been achieved alone. We have worked closely alongside the Navy, our
    sister Services, and Federal agencies to realize the true potential of
    joint, interoperable forces in the new environment of 21st century
    warfare. The superior operational and personnel readiness levels we
    have been able to maintain directly reflect the strong, sustained
    support of Congress in last year's National Defense Authorization and
    Appropriations Acts. In fiscal year 2004, we seek your continued
    support for the President's budget so we can consolidate the gains made
    to date, improve those areas where shortfalls remain, and continue
    transforming the way the Navy-Marine Corps team will fight in the 21st
    century.

                        MARINE CORPS OF THE 21ST CENTURY

        The Marine Corps is grateful for the congressional support in
    recent budgets; support that has been essential in improving our
    readiness, while enabling your Marine Corps to fight the global war on
    terrorism. As we continue to execute missions in the defense of our
    Nation, we are also ready for other missions the President may direct.
    The fiscal year 2004 budget funds our most pressing near term readiness
    requirements and continues the progress toward addressing future
    readiness.
        We have partially funded our efforts to support the global war on
    terrorism by leveraging our modernization efforts and placing some of
    them at risk. This experience has validated many of our doctrinal
    precepts and mandated a review of our current and future procurement
    programs. We have provided supporting documentation to support the
    President's request for supplement funding to cover the costs
    associated with the ongoing global war on terrorism. The Marine Corps'
    future readiness is less certain with significant elements of risk. I
    would like to share some of my concerns as they relate to readiness
    indicators and to provide a glimpse of how we foresee the
    reconstitution and regeneration of our forces once the current war is
    over.

            PERSONNEL--TAKING CARE OF OUR MARINES AND THEIR FAMILIES

        The Marine Corps believes the deadliest weapon on the battlefield
    is a well-trained, well-led, and motivated U.S. marine. ``Every marine
    a rifleman'' remains more than an institutional belief. We remain
    committed to ``equipping the marine'' not manning the equipment.
    Achieving and maintaining our current level of readiness is
    accomplished through extensive maintenance of our legacy equipment and
    on the backs of the dedicated marines who maintain them.
        The greatest contributor to our continued success is the motivation
    and desire of our young marines to be the very best in the world. We
    have 214,600 marines today, 175,000 in the Active Forces and 39,600 in
    the Selected Marine Corps Reserve. With your help, we have made
    significant progress in taking care of these young men and women and
    their families. Increases in military pay and benefits, especially
    basic allowance for housing increases, improvements in health care, and
    improvements in on-base housing are key enhancements you have made
    reality.
        While we recruit marines, we retain families. The young men and
    women we don't retain in our Corps return to society as solid American
    citizens. Our marines care for their families with the same level of
    commitment as they serve our Corps. Medical care for sick children,
    good schools, and a chance to save for a child's college education are
    as vital to ensuring our marines' readiness as ensuring there is
    adequate ammunition. A focused marine gets the most from his or her
    training, and knowing that their family is well taken care of allows a
    marine to focus.
    Reserve Integration
        It is important to note that the Marine Corps operates as a total
    force, including elements of both Active and Reserve components. We
    depend on the readiness of our total force. Our Reserve component is
    organized on the same lines as our Active Force; we have not
    transferred a horizontal capability from the active to the Reserve
    Forces. Our posture as forward deployed, forces in readiness does not
    allow us to have combat support or combat service support functions
    primarily in the Reserve structure. Accordingly, we strive to ensure
    our Reserve Forces are as well trained and as ready as our Active
    Force. We integrate the Marine Corps Reserve Forces into ongoing
    exercises and training. Two combined arms exercises per year are
    conducted entirely by Reserve Forces. In support of the global war on
    terrorism and current operations, we have activated more than 20,000
    Reserve Marines in units and as staff augmentees. I would personally
    like to express my gratitude and appreciation to the employers,
    families, business owners, companies, and government offices at all
    levels who have made it possible for our Reserve Marines to train and
    to mobilize in support of our efforts against terrorism.
    Safety
        We are committed to preserving our most precious asset--the
    individual marine. We do this by ensuring a safe command climate and
    working environment remains a critical concern for every operation. The
    work settings and the missions our marines complete are inherently
    dangerous. Effective command climates continually mitigate those
    dangers through planning, leadership, and education. Our safety
    programs are integral to force protection and operational readiness.
    Leadership, operational risk management, and programming in safety
    awareness and standards are vital to providing marines and their
    families with a meaningful quality of life and service. Our leadership
    at all levels is deeply concerned and actively working to improve
    readiness and save our most precious assets--marines and equipment.

                 TRAINING--ENSURING SUCCESS ON THE BATTLEFIELD

        The key to the Marine Corps' success is no secret, it's our marines
    and their level of readiness and training. They are fit, smart, well
    trained and motivated. They are devoted to their training, their
    country, and their Corps.
        Ensuring these marines' skills are honed to a razor's edge is an
    enduring mission of the Marine Corps. We train hard at every
    opportunity, trying to achieve as much combat training as possible at
    home station in order to be efficient with our time and money. Marine
    units train in their core competencies at their home stations. Time
    spent in transit to distant training areas is lost training time. A
    lost training minute is never regained. With our forward deployed
    posture, there is no time, nor are there training areas, to retrain and
    refresh marines prior to committing them to either contingency or
    combat operations. They leave their home stations ready, and we seek to
    ensure they maintain that readiness during their forward deployments
    through an aggressive exercise schedule. These exercises, conducted
    while forward deployed, hone coalition team building and enhance
    interoperability with our allied partners.
        There are few things regarding battle of which I'm certain, but I
    know that combat is chaotic and confusing. This has never been clearer
    to Americans than right now. I'm also confident that the weapons
    systems and equipment you provide are the best and most lethal in the
    history of warfare. It is essential that we conduct rigorous, realistic
    training to ensure the safety of our marines and ensure we can impose
    our will on our enemies. Rigorous training demands we place our
    marines, as closely as possible, under the same stresses, chaos, and
    confusion we envision they will face in combat.
        Rigorous, realistic training can be accomplished in a variety of
    ways, but the best method we've found replicates the way we fight, and
    combines live fire and maneuver. We accomplish this service combat
    training most effectively at the MAGTF Training Center at Twenty-nine
    Palms, California. Ongoing initiatives will expand the role of the
    Combat Training Center and transform it into a ``Center of Excellence''
    that will focus the training efforts across our operating forces. The
    Combat Training Center facilitates and supports the development of new
    concepts and capabilities, thereby reinforcing our combat
    effectiveness, enhancing joint interoperability, and supporting DOD
    transformation efforts.
        The future role of the Combat Training Center will grow beyond its
    current emphasis on battalion-level integrated live fire, combined arms
    training to support expanded training opportunities for all elements
    (ground, air, combat service support, and command) of Marine Air-Ground
    Task Forces up to and including a Marine Expeditionary Brigade. This
    will include enabling multi-site, distributed training evolutions that
    tie together units from various bases; and investing in technology that
    simultaneously links live, virtual, and constructive training. We must
    retain the areas where we train, particularly those where we train in
    combined arms in conjunction with our sister Service teammates. If we
    can't retain the areas we currently use, we must replace them with like
    or better facilities.
        Realistic, challenging joint exercises are equally important to
    ensure Marine Forces are fully capable of contributing to integrated
    joint operations. As a combined arms force of both ground and air
    forces, and with our close relationship to the U.S. Navy, the Marine
    Corps fully appreciates the synergy inherent in the joint force concept
    and is an active participant in these challenging exercise programs.
    Providing well-trained, Service unique capabilities is the foundation
    for providing forces for joint warfighting and is our Nation's truly
    asymmetric advantage.
        One of the most important things we can provide our forward
    deployed Navy-Marine Corps teams is confidence in their ability to
    employ all weapons systems at their disposal. Confidence that the
    forward air controller is going to coordinate an effective and safe
    mission, that the ground forces will suppress enemy air defenses and
    direct the trajectories of their projectiles in directions which do not
    hazard the aircraft and that the strike aircraft will hit the target.
    We can learn the elements of this training in parts, and in multiple
    sites, but separate training only works on the skills and techniques in
    piecemeal fashion, and does not necessarily engender the critical level
    of integration essential for combat readiness. It is absolutely
    critical that the Navy and Marine Corps maintain areas where they can
    combine naval gunfire, artillery, air and ground maneuver forces
    simultaneously which is the topic of my next point.
    Training at Eglin Air Force Base
        With cessation of training at Vieques, Puerto Rico, the established
    training ranges, quality of training support, and proximity to the
    ocean available at Eglin Air Force Base, Florida can provide Naval
    Expeditionary Forces with an alternative training capability. Eglin's
    capabilities, location, and tenant commands provide the opportunity to
    facilitate joint training between Air Force, Navy, Marine Corps, Army,
    and Special Operations Forces. Development of an expeditionary force
    training capability at Eglin can support the Secretary of Defense's
    vision and direction for training transformation and the development of
    a Joint National Training Capability. This type of training area will
    be critical to naval expeditionary combat-readiness.
        The Marine Corps proposes to execute two 10-day training exercises
    with a Marine Expeditionary Unit at Eglin each year. These exercises
    include a variety of scenarios such as amphibious landings, raids,
    mechanized operations, helicopter operations, and live fire and
    maneuver exercises. No final decision on training activities can be
    made until an environmental assessment currently underway is completed.
    The Navy and Marine Corps are actively working to develop and sustain
    cooperative relationships with the local community and the State of
    Florida to support our training at Eglin AFB.
        The Marine Corps strongly supports the development of a Joint
    National Training Capability that exercises the horizontal and vertical
    elements of the joint force. The Marine Corps also strongly believes
    that this capability can, and should, be developed in a manner that
    minimizes increases in OPTEMPO, preserves Service-training
    opportunities, and improves both Service and joint training areas,
    ranges, and facilities. The regional approach presented offers the best
    and most viable option in terms of training opportunities, training
    value, and maximization of the training audience while minimizing the
    impact on OPTEMPO and preserving and enhancing Service training.
        Development of a live-virtual-constructive Joint National Training
    Center strongly supports the Marine Corps training vision centered on
    development of a live-virtual-constructive training environment at all
    major Marine Corps bases and ranges. This training environment will
    integrate live training (enhanced by a range instrumentation system)
    with the full range of existing and emerging Marine Corps virtual
    capabilities into a virtual/constructive command and control training
    system called CACCTUS.
        Encroachment is a serious threat to the operational readiness of
    the Corps as it impacts our ability to train. Urban and residential
    areas now surround many Marine installations that were originally
    remotely located. The Marine Corps is proactively engaged with Federal,
    State, and local agencies and governments, as well as nongovernmental
    organizations, to provide win-win solutions to encroachment pressures.
    Unimpeded access to our installations and ranges is critical to the
    Marine Corps remaining America's ``Force in Readiness.''
        Our Nation has crafted a strong environmental code of conduct
    structured on a wide range of Federal, State, and local laws and
    regulations. Vague or inflexible environmental requirements, however,
    can present significant challenges for marines training to perform
    their missions. The Marine Corps supports ongoing efforts to seek
    clarity and flexibility in environmental laws, so that we may more
    effectively balance our training requirements with our long-term
    environmental stewardship responsibilities. The impact of encroachment
    on the Corps' ability to fully utilize its installations are varied and
    require constant vigilance and attention to ensure that operational
    readiness is not diminished.
        Additionally, we support the development of the Department of
    Defense Readiness Reporting System (DRRS). Our efforts to implement our
    own training and requirement manuals with performance standards
    throughout the Corps will support the DRRS concept. The Marine Corps
    continually strives to increase the accuracy of our readiness
    reporting. We readily endorse the concepts and programs that support
    readiness. The Marine Corps is working with the Department of Defense
    to develop a system that would automate our reporting requirements,
    reducing the burden of administrative reporting, while reflecting an
    accurate portrayal of the status of available resources.

                  CONCEPTS AND PROGRAMS THAT SUPPORT READINESS

        The amount of wear and tear we are putting on our aging equipment,
    and the manpower required to maintain them is tied directly to
    readiness. Thanks to your efforts, the fiscal year 2004 budget allows
    the Marine Corps to adequately fund our top priority ground and
    aviation programs vital to future readiness. Our plan will allow us to
    make more robust investments in transformation and modernization of
    equipment. However, until this new equipment is fielded, we will
    continue to maintain the readiness of our legacy systems. We will
    continue to take maximum advantage of service life extension programs
    (SLEPs) that enable us to improve the reliability and availability of
    our legacy systems, as we will be forced to continue to invest
    increasing levels of resources--manpower and dollars--in the
    maintenance of our aging equipment. The fiscal year 2004 budget request
    will, with your help, allow us to invest in modernization of
    expeditionary capabilities, equipping the marine, warfighting, tactical
    mobilitiy, fires, and command and control such as:
    Expeditionary Capabilities
        The Marine Expeditionary Brigade (MEB) is the Nation's premier,
    medium weight, combat credible, sustainable, forcible entry capability.
    No combat force in the world, either on-call today or envisioned for
    the future, has the ability to prevail in an anti-access environment
    with a forcible entry and then conduct high tempo full spectrum
    operations in support of U.S. national policy better than a MEB. The
    Marine Corps maintains a 6.0 MEB lift requirement; 3.0 MEB amphibious
    lift, and 3.0 MEB-Maritime Pre-positioned Force.
        Seabasing
        Seabasing is the concept of how we will use the sea as maneuver
    space. Seabasing includes the command and control capability, maneuver
    from and through, combat support from, as well as combat service
    support from afloat to support operations to defeat the enemy ashore.
    The seabase is the platforms and connectivity that support the
    seabasing concept. Seabasing provides a sustainable global projection
    of American power from the high seas. Seabasing offers the potential
    for secure, sovereign, and mobile assembly areas and sanctuaries for
    key elements of the joint force, allowing our forces to most
    effectively utilize the international domain of the sea as maneuver
    space. Fully networked, forward-deployed Naval Forces and platforms
    that are integrated into our seabasing capability will provide naval
    power projection for Joint Force Commanders. Seabasing will enable a
    broad range of joint campaign operations. Sea-based operations
    incorporate, integrate, protect, and sustain all aspects of naval power
    projection, from space to the ocean floor, from blue water to the
    littorals and inland--without dependence on land bases within the joint
    operating area. Seabasing will provide enhanced capabilities to the
    Naval Force, such as rapid force closure, phased arrival and assembly
    at sea, selective offload of equipment tailored for individual
    missions, and force reconstitution for follow-on employment. The
    traditional naval qualities of persistence and sustainment--enhanced by
    advanced force-wide networks--underpin the staying power and
    flexibility of the sea base. Naval platforms can stay on-station, where
    they are needed, for extended periods of time. The at-sea
    maneuverability of the seabase, coupled with advanced underway
    replenishment technologies and techniques, will ensure force readiness
    over time.
        Amphibious Shipping
        Our amphibious lift requirement has been consistently validated at
    3.0 MEB assault echelons. In terms of today's capabilities, that
    equates to approximately 45 amphibious ships. We understand the fiscal
    realities we operate within, and have thus adapted to a fiscally
    constrained amphibious lift capability of 2.5 MEB assault echelon
    equivalents. We will be able to achieve our 2.5 MEB lift requirement
    with an all-Active Force upon delivery of the 12th LPD-17 amphibious
    ship in 2014. Ultimately, we envision the amphibious fleet consisting
    of 12 LHDs/LHAs or their replacements, 12 LSDs, and 12 LPD-17s in the
    2014 time frame. While currently short of the 3.0 MEB AE goal, this is
    a force that will provide us, at some risk, the necessary capability to
    project power in an anti-access environment in the near- and mid-term.
        We are also concerned with replacing the LHA-1 Tarawa class ships.
    They will begin to reach the end of their 35-year service life in 2011,
    and considering the time to design and build a replacement ship, we
    need to begin the process now. The Marine Corps supports a modified
    LHD-8 (``Plug Plus'') ship design in fiscal year 2007 to replace
    existing LHA class ships. We will through analysis of alternatives and
    ongoing studies, evaluate the adequacy of the R&D and SCN funding for
    the development of ships for the LHA follow-on replacements. The
    overall age of the amphibious fleet is also a concern as it is 25
    percent older than the average of all other Navy ships.
        Expeditionary Strike Groups
        The Marine Corps and Navy are engaged in a series of experiments
    that will explore the Expeditionary Strike Group concept. This concept
    will combine the existing capabilities of surface action groups,
    submarines, and maritime patrol aircraft with those of Amphibious Ready
    Groups and Marine Expeditionary Units (Special Operations Capable), to
    provide greater combat capabilities to combatant commanders. These
    experiments will provide critical information to support the future
    implementation of the concept and highlight any needed changes in
    service doctrine, organization, training, and personnel.
        Maritime Prepositioning Force (MPF)
        Our 3.0 MPF-MEB is loaded aboard leased commercial shipping that is
    strategically positioned in ports around the world. Prepositioning
    minimizes the requirement for strategic lift and saves thousands of
    sorties of strategic lift during the most time sensitive portion of the
    force deployment. The Department of the Navy has programmed a buy out
    of the 13 leased vessels by the end of fiscal year 2006 before their
    leases expire in fiscal years 2009, 2010, and 2011.
        Maritime Prepositioning Force (Future) (MPF (F))
        When it becomes operational, the MPF (F) role will expand beyond
    that of today, and will provide a true seabasing capability. It is
    envisioned that MPF (F) will provide four new capabilities currently
    unavailable: (1) Phased at-sea arrival and assembly of units; (2)
    Selective offload of equipment and cargo; (3) Long-term, sea-based
    sustainment of forces; and (4) At-sea reconstitution and redeployment
    of the force. The naval services are exploring several new technology
    areas during the development of Maritime Pre-positioning Force
    (Future). Currently, the Maritime Pre-positioning Force (Future)
    Program is conducting an analysis of alternatives to support an
    acquisition decision by the Office of the Secretary of Defense and the
    program of record is funding one ship in fiscal year 2008 and two in
    fiscal year 2009.
        Blount Island Acquisition
        We are committed to undertake the wisest possible course to
    conserve our real property and, when necessary, to acquire any
    additional property that is mission critical. The Blount Island
    facility in Jacksonville, Florida is a national asset that must be
    acquired to ensure its availability for long-term use. Blount Island's
    peacetime mission of supporting the Maritime Prepositioning Force is
    vitally important, while its wartime capability of supporting large-
    scale logistics sustainment from the continental United States gives it
    strategic significance. The facility will play a vital role in the
    National Military Strategy as the site for maintenance operations of
    the Maritime Prepositioning Force for years to come. The Marine Corps
    began the acquisition of Blount Island with Phase 1, funded in fiscal
    year 2000 and fiscal year 2001 to acquire interests in approximately
    311 acres of land for the primary purpose of ensuring public safety on
    parcels adjacent to the leased central management operational area.
    Phase 2, planned for fiscal year 2004, involves acquisition of the
    central maintenance operational area consisting of over 1,000 acres.
    The Phase 1 purchase remains ongoing.
    Warfighting--Skill Enhancements
        Mine Countermeasures
        The proliferation of cheap but effective mines employable in
    critical waters, beaches, ports, roads, and other key areas precludes
    us from simply detecting and avoiding them. We have significant
    capability gaps in shallow water, the surf zone, on the beach, and
    inland. Navy-Marine Corps programs such as the far-term Assault
    Breaching System, the Joint Direct Attack Munition (JDAM) Assault
    Breaching System, the Assault Breacher Vehicle, the Advanced Mine
    Detector, and the Coastal Battlefield Reconnaissance and Analysis
    Sensor System are addressing significant aspects of the capability gap.
    Continued support is required to close the gaps in our mine
    countermeasures capability.
        Chemical, Biological Defense (CBD)
        In regards to our current CBD capabilities, our marines are
    trained, ready, and equipped to operate in a chemically or biologically
    contaminated environment. We have sufficient stocks to give three Joint
    Service Lightweight Integrated Suit Technology (JSLIST) equivalent
    suits and gas mask canisters to the marines who need them. Our forces
    are augmented by 14 specially equipped ``Fox'' vehicles, which are able
    to detect chemicals in the atmosphere or in the ground. When required,
    our forces can prevail in a contaminated combat environment. However,
    mass decontamination of men and equipment remains a significant
    challenge for our marines and the joint force. It will also be critical
    to reconstitute our CBD capabilities after hostilities cease in OIF.
    Increased Tactical Mobility
        The ability to engage the enemy and maneuver with greater speed,
    range, and depth of battlespace.
        MV-22 Osprey--Our Top Aviation Priority
        The MV-22 Osprey remains the Marine Corps' number one aviation
    acquisition priority. While fulfilling the critical Marine Corps medium
    lift requirement, the MV-22's increased range, speed, payload, and
    survivability will generate truly transformational tactical and
    operational capabilities. With the Osprey, Marine Forces operating from
    the sea will be able to extend their range of maneuver providing an
    element of strategic surprise while providing a sustainable forcible-
    entry capability. Ospreys will replace our aging fleets of CH-46E Sea
    Knight and CH-53D Sea Stallion helicopters--both aircraft have an
    average age of in excess of 30 years.
        Internally Transportable Vehicle (ITV)
        A vehicle being developed jointly with US SOCOM, that can be air
    lifted inside a CH-53 helicopter and MV-22 aircraft. This vehicle will
    be a high-mobility weapons platform that supports a variety of
    operations, especially light-strike raids. The secondary purpose of
    this vehicle is to provide reconnaissance units equal or greater
    mobility than the maneuver elements they support, thereby enhancing
    their mission performance and survivability. The speed, agility, and
    mobility of the ITV will allow the MAGTF commanders to maximize the
    versatility and range offered by the MV-22 and CH-53 by deploying
    ground units equipped with light-strike vehicles armed with a heavy or
    medium machine gun.
        Advanced Amphibious Assault Vehicle (AAAV)
        In addition to the previously mentioned MV-22, the AAAV is the
    Marine Corps' only acquisition category 1D program. AAAV will combine
    never before realized high-speed land and deep water maneuver, day/
    night fighting capabilities, and active and passive countermeasures
    including advanced armor and nuclear-biological-chemical protection and
    a remarkably lethal 30mm turreted gun. The AAAV will exploit the sea as
    a maneuver plane and seamlessly maneuver from the sea at 25+ knot
    speeds and ashore to the objective at 45 mph. This vehicle will provide
    us with the speed, agility, and firepower and combat force protection
    needed for the next century, and operationally complements the
    capabilities of the MV-22.
        KC-130J
        The KC-130J will bring increased capability and mission flexibility
    to the planning table with its satellite communications system,
    survivability enhancements, night systems, enhanced rapid ground
    refueling, and improved aircraft systems. The KC-130J has 21 percent
    increased speed and 35 percent increased range over current versions of
    the KC-130. The KC-130J will replace our aging fleet of KC-130Fs, Rs
    and Ts.
    Fires
        Supporting the marine on the ground with combat power, when he
    needs it most. It is all about timing, priorities, and effects on the
    enemy.
        The Marine Corps places great emphasis on the power of close air
    support (CAS). CAS is more than mere air strikes conducted in close
    proximity to ground forces. It is an integral part of our combined arms
    capability. CAS provides the MAGTF commander the ability to maneuver
    and respond quickly to targets of opportunity, vice mere air strikes
    conducted in close proximity to ground forces. Because of our
    familiarity with close air support, we also understand what it cannot
    do. Surface based, indirect fires, whether from the land or the sea,
    are irreplaceable when forces are joined in close combat, particularly
    in the early phases of a seabased operation. Nothing else is as
    responsive to the Commander's needs, or as reliable. They are not
    weather or facility dependent. They are a key component in continuing
    to extend the reach and lethality of our ground forces. These new
    ground based systems, and the seabased fires under development by the
    Navy in combination with STOVL JSF and the upgraded Cobra and Huey
    helicopter provide the Marine Corps a complete family of integrated
    sea, air, and land based fires.
        Joint Strike Fighter (JSF)
        The Joint Strike Fighter is the next-generation strikefighter for
    the Marine Corps, Air Force, and Navy and will replace the Marine
    Corps' AV-8B and F/A-18A/C/Ds. The JSF family of aircraft will include
    a short takeoff and vertical landing (STOVL) variant, a conventional
    take-off and landing (CTOL) variant, and an aircraft carrier-capable
    variant. Commonality between the variants will reduce both development
    and life cycle costs and will result in significant savings when
    compared to the development of three separate aircraft. The Marine
    Corps requires that its STOVL variant be able to operate from large-
    deck amphibious ships, austere sites, and forward operating bases. The
    STOVL Joint Strike Fighter version will be able to operate from three
    to five times as many airfields around the world than our existing
    conventional take-off and landing aircraft. Moreover, because the STOVL
    variant can operate from both conventional carriers and amphibious
    assault ship decks, it doubles the number of platforms available for
    seabased operations. The advantages of a stealthy STOVL strike
    fighter--capable of taking off from an expeditionary base on land or at
    sea, flying at supersonic cruise, accomplishing its mission with
    advanced sensors and weapons, and then returning to its expeditionary
    site--are dramatic. The STOVL Joint Strike Fighter will provide the
    reliability, survivability, and lethality that marines will need in the
    years ahead, and transform the very foundations of naval tactical air
    power for the 21st century.
        High Mobility Artillery Rocket System (HIMARS)
        High on our priority list is the capability to marry precision
    maneuver with precision fires. We require ground based fire support
    which is lethal, mobile, and with long range. HIMARS fills this need.
    The HIMARS will provide ground-based, responsive, general support and
    general support reinforcing indirect fires that accurately engage
    targets at long range, with high volumes of lethal fire, under all
    weather conditions and throughout all phases of combat operations
    ashore. It will fire both precision and area munitions and has a
    maximum range of 60 kilometers. The Ground Weapon Locating Radar will
    be introduced into the fleet to protect our forces from our
    adversaries' counter-battery fires. The Ground Weapon Locating Radar
    can be used in conjunction with the HIMARS and the Lightweight 155mm
    howitzer.
        Lightweight 155mm (LW 155)
        LW 155 towed howitzer is required to replace the M-198 howitzer
    that is at the end of its service life. This is a joint USMC/U.S. Army
    system that will meet or exceed all the requirements of the current
    M198 system while reducing the weight from 16,000 to 9,500 pounds. The
    maximum range using unassisted projectiles is 15 miles and 18 miles
    using assisted projectiles.
        Naval Surface Fire Support
        Expeditionary maneuver warfare places unprecedented requirements
    for long-range, accurate, timely fires in support of the maneuver
    force. Systems such as the Extended Range Guided Munition (ERGM) will
    ensure the continuous availability of surface based fires firing during
    an expeditionary operation. ERGM is a guided projectile fired from
    cruisers and destroyers out to a maximum range of 63 nautical miles.
    Development of land attack missile technologies will provide supersonic
    surface-to-surface missiles that will have a range far in excess of
    naval guns. Combined, the systems will provide a highly responsive,
    accurate, all-weather means of attacking critical targets and providing
    support to deployed marines beyond the range of naval guns.
        The Marine Corps strongly supports the development and fielding of
    DD(X), armed with two 155mm advanced gun systems and an advanced land
    attack missile, to fully meet our naval surface fire support
    requirements. Our ability to wage expeditionary warfare will remain at
    considerable risk for want of suitable sea-based fire support until
    DD(X) joins the fleet in strength.
        Reestablishment of Air-Naval Gunfire Liaison Companies
        We have validated the requirement to reestablish our Air-Naval
    Gunfire Liaison Companies (ANGLICO). These companies will provide our
    commanders a liaison capability with foreign area expertise to plan,
    coordinate, and employ terminal control of fires in support of joint,
    combined, and coalition forces. ANGLICO will be reestablished with a
    company on each coast, and a separate company (-) in Okinawa. The
    companies on the East and West coasts will have a habitual relationship
    with the Reserves. Full operational capability is expected by late
    summer 2004.
        Marine Corps--U.S. Special Operations Command (USSOCOM) Initiatives
        Today, more than a hundred marines are filling Special Forces
    billets around the world. In addition to providing the current Chief of
    Staff to USSOCOM, the Marine Corps provides support to and ensures
    interoperability with Special Forces through the actions of the SOCOM-
    Marine Corps Board. One of the initiatives is a marine detachment to
    conduct special reconnaissance, direct action, coalition support,
    foreign internal defense, and other special operations missions. They
    will report to USSOCOM during October 2003, and deploy in the spring of
    2004 as augmentation to a Naval Special Warfare Squadron.
    Equipping the Marine
        New rifle
        We are seeking to upgrade our service rifle to better ensure
    ``Every Marine a Rifleman'' remains more than an institutional belief.
    The Modular Weapon System (MWS) consists of the M16A4 service rifle--a
    newer version of the M16A2 now in service--modified with a military
    standard 1913 rail adapter system. The rail adapter system and modified
    hand guards allow for the mounting of various accessories such as a
    modified M203 grenade launching system, high-intensity flashlights,
    night-vision devices, scopes, and infra-red laser target designators.
    We will also purchase a quantity of M4 carbines for personnel who
    require a lighter, more compact weapon. Use of the MWS will result in a
    significant improvement in the ability to mount various accessories and
    will improve the accuracy, target detection, day and night engagement
    capability, and maintainability of the M16 family of rifles. The M16A4
    is in production and we will take delivery of its first weapons in
    fiscal year 2003. The M4 is undergoing final reliability and endurance
    tests and will be fielded in selected units in the first quarter of
    fiscal year 2004.
        Marine Corps Combat Utilities and Combat boot
        The Marine Corps has recently introduced a new and improved combat
    utility uniform made of a durable permanent press fabric with a
    permanent press crease. The combat utilities have a camouflage pattern
    that is more effective either wet or dry. The Marine Corps issues them
    in both woodland and desert patterns for readiness. The Marine Corps
    has also fielded a new Marine Corps combat boot that is designed to be
    low maintenance and worn with the new combat utilities. Our initial
    issue stocks must be continually re-vitalized to sustain our new
    recruits and officers. The new uniforms have been very well received in
    the fleet and are extremely popular. The demand for both the new
    utilities and boot has kept supply stocks lower than expected and
    ultimately not widely available throughout the fleet.
        Improved Load Bearing Equipment (ILBE)
        The Marine Corps is testing and evaluating commercially available
    packs to replace its current service pack. The new pack will be
    designated the improved load bearing equipment (ILBE) pack. Rugged
    field testing is being conducted in garrison and in actual combat field
    conditions. Packs will be evaluated against the current field pack the
    Modular Lightweight Load Carry Equipment (MOLLE) II, down to the fire
    team level. Final selection is projected for mid-fiscal year 2003 and
    full rate production to commence in fiscal year 2004.
    Command and Control
        Exploiting the capabilities offered by long-range aircraft, long-
    range fires, and operating from a seabase with full connectivity to our
    joint and coalition partners poses enormous command and control
    challenges.
        Common Aviation Command and Control System (CAC2S)
        The CAC2S modernizes our legacy mix of aviation C2 systems,
    enabling MAGTFs to seamlessly integrate aviation with ground combat
    operations. CAC2S will condense the applications of six separate
    aviation combat element (command and control) systems into one combined
    and coordinated operational system. It will provide a common hardware
    platform, with similar software, and equipment.
        Unit Operations Center (UOC)
        The UOC improves command and control coordination for the elements
    of the MAGTF. The UOC is comprised of Combat Centers and Combat
    Operation Centers (CoCs), providing a centralized facility to host
    command and control functionality. The UOC will create an integrated
    package with expeditionary shelters, power sourcing, cabling, software
    integration, local area networking, and processing systems and is
    scalable to support command echelons for battalion level or above.
        Interoperability
        Interoperability is the key to improving naval expeditionary
    command and control effectiveness, especially as we integrate
    battlespace sensors in our future manned and unmanned aerial, space,
    sea surface and subsurface, and ground vehicles. The command, control,
    communication, and computer (C4) end-to-end interoperability of the
    global information grid will enhance our ability to conduct joint,
    combined, multi-department, and multi-agency operations through the use
    of technology, standards, architectures, and tools. These
    transformational C4 initiatives, in concert with the fielding of a
    Deployable Joint Command and Control (DJC2) capability, will vastly
    improve our joint force interoperability.
    Reconstitution and Regeneration
        The Marine Corps will be faced with many competing requirements as
    Operation Iraqi Freedom de-escalates and a transitional form of
    government is installed. These competing priorities are expected to
    include Reserve Forces returning to demobilize, redeployment of forces
    required to assume a forward presence mission, ongoing global war on
    terrorism requirements, preparation for follow-on missions, and
    returning the Marine Corps to its pre-conflict state of readiness,
    while transforming the Marine Corps into a greater force than we have
    today. Our pre-positioned stocks must be cleaned and preserved after
    extensive use in order to be ready for the next mission. The critical
    aspect is our ability to fund all that will be required. It is
    anticipated that our deployment tempo could remain at higher levels
    than those experienced before the global war on terrorism began, for
    sometime to come after the hostilities in Iraq have long since ceased.

                                   CONCLUSION

        Your marines stand ready to be the ``First To Fight.'' We will
    continue to be so with whatever is on hand--with older well-maintained
    equipment or the newest equipment. However, our equipment while well-
    maintained, is old and aging fast due to the higher usage rates caused
    by the ongoing war. We are able to defeat our enemies in Afghanistan
    and Iraq because we were ready when called. Answering the call remains
    our focus, and our number one mission. We need your help in maintaining
    our old gear, modernizing where we can, and taking care of our marines
    and their families.
        What you saw in Afghanistan and see in Iraq is just the beginning
    of what America and the world will see from a fully modernized and
    transformed Marine Corps. Our marines are ready, our doctrine works,
    and with the new equipment ready to come on line, you're going to get a
    Marine Corps that's leaner, more lethal, and even more ready just like
    you've expected for 227 years. Only then, it will come with a thousand
    mile reach. We know that we're really just beginning the hard work of
    the global war on terrorism; the tough targets are in our windshield,
    not our rearview mirror. We need your help to be ready for the tough
    fights ahead. We believe we have proven worthy of your support and ask
    that you continue to support your Marine Corps as you always have.
    Thank you for giving me the opportunity to address readiness--an issue
    critical to marines and our Nation.

        Senator Ensign. General Schmidt.

      STATEMENT OF MAJ. GEN. RANDALL M. SCHMIDT, USAF, ASSISTANT
    DEPUTY CHIEF OF STAFF, OFFICE OF THE DEPUTY CHIEF OF STAFF FOR
                        AIR AND SPACE OPERATIONS

        General Schmidt. Good afternoon, Chairman Ensign and
    Senator Akaka. I too would like to make a brief oral statement
    and submit a written testimony for the record.
        It is my pleasure to be here representing over 700,000
    total force members of your Air Force, 55,000 of whom are
    currently deployed and many of whom are serving in harm's way
    in close unison with our fellow soldiers, sailors, marines, and
    coalition comrades as we speak.
        Like you, the leadership of the Air Force is focused on
    continuing to provide our airmen with a blend of the best
    training, equipment, and organization possible. Clearly, our
    asymmetric edge is in our people, our training, and our
    technology. Every day we make the hard choices to ensure we
    continue to pursue proper readiness in several key areas:

             In presenting a balanced force, the correct
            combination of the right faces in the right places with
            the improved development and organization to be
            successfully prepared to face our future joint
            challenges;
             In leveraged integration, building an
            expeditionary force better capable to plug and play
            across the spectrum of conflict. To plug and play
            requires adapting individual legacy systems with clever
            new ideas or hooking old things together in new ways.
            This requires us to pursue the common interactive
            architectures to enable a seamless joint force; and
             In technology, as our adversaries turn to
            asymmetric strategies and terrorist tactics, we must
            continue to leverage our lead in space, air, and
            information technology to both preserve and to forge
            new asymmetric strengths of our own, whether these
            advantages are manned, unmanned, airborne, landborne,
            or spaceborne.

        Readiness is a continuous state of preparation to meet our
    Nation's security challenges and deals with tough issues
    balanced against available resources. You can be assured that
    we are engaged and will remain engaged as we work together with
    our sister Services, our leadership, and our Congress in
    continuing to forge the most professional and powerful Air
    Force in the world.
        I would be remiss if I did not echo what has been said
    earlier about the support you have given us. The results of our
    investments are seen daily in the battle space over Iraq and
    Afghanistan.
        Thank you for the opportunity to provide this statement and
    I am ready to answer your questions.
        [The prepared statement of General Schmidt follows:]
            Prepared Statement by Maj. Gen. Randall M. Schmidt, USAF
        Mr. Chairman, members of the subcommittee, thank you for this
    opportunity to provide you with the status of Air Force readiness. As
    the Air Force's Assistant Deputy Chief of Staff, Air and Space
    Operations, I want to thank you for your continued focus on the
    readiness challenges facing our airmen today. The Air Force is
    committed to maintaining a ready force while controlling cost growth,
    modernizing systems, and recapitalizing physical assets.
        As we celebrate 100 years of powered flight this year, we are
    firmly focused on the future of air and space power. We are in the
    midst of more than a decade of unparalleled and unmatched air and space
    dominance across the full spectrum of operations--humanitarian to
    warfighting. We are proud of our record of success but will not rest on
    our past accomplishments. We have embraced the opportunities afforded
    by the information revolution and have marshaled the full resources of
    our service to leverage these technologies in the battlespace. Our
    airmen have met the challenges of the changed security environment, and
    they stand ready for the next challenge at home and abroad. Born as an
    expeditionary service, we remain true to those roots today, presenting
    our forces and capabilities through our Air and Space Expeditionary
    Force (AEF) construct.
        Your Air Force highlights three air and space core competencies as
    our service source of strength: developing airmen, technology-to-
    warfighting, and integrating operations. Together these core
    competencies form the basis by which we organize, train, and equip our
    forces as part of our military power to achieve national security
    objectives.
        Developing airmen is the heart of combat capability. A ready force
    is founded on its people. Developing the competence of our airmen from
    accessions through retirement (quality), and producing the correct
    numbers of skill sets (quantity) continues to evolve as our Air and
    Space Expeditionary Force (AEF) continues to mature. The men and women
    that comprise our total Air Force--active duty, Guard, and Reserve--are
    the best America has to offer. They are officers, enlisted, civilians,
    and contractors from every corner of the country and every walk of
    life. These world-class airmen are the key ingredients to sustaining
    our record of success and we are dedicated to recruiting, training, and
    retaining professional airmen. We can make no greater investment in and
    have no greater resource than our people. They are our #1 priority.
        The Air Force requires sophisticated airmen who are trained to
    leverage technology and ready to perform in a dynamic environment. They
    will become our future air and space leaders for the 21st century. This
    will require targeted investments in the next generation of airmen,
    from the ground up and throughout their careers. To that end, the Air
    Force has introduced a coordinated effort to address all aspects of an
    airman's career development, professional education, and assignments in
    sum rather than individually. This deliberate force development effort
    generates policies tailored to achieve Air Force requirements and
    address the needs of the individual airman throughout his or her
    career. The Air Force needs both expert specialists and broadly
    competent generalists; our force development program overhaul provides
    both opportunities for our airmen.
        Comprehensive in scope, our training is doctrinally based and
    focused on three levels of development: tactical, operational, and
    strategic. Tactical development focuses on the individual's functional
    or mission skills. The AF tactical development is what we accomplish
    best due to our maturity as a service. Getting the correct mix of
    people and defining job skills are areas for future refinement.
        We refer to the next echelon of development as operational. It is
    at the operational level where our airmen must seamlessly integrate the
    employment of our joint capabilities. To accomplish this development,
    AF senior leadership has instituted numerous efforts for the road
    ahead. For example, the Secretary of the Air Force has initiated a
    program to modify our professional military education (PME). This plan
    has many aspects. First, it improves the intermediate service school in
    summer of 2003 to provide a greater depth of education for the
    operational level of warfare and more time to prepare students for the
    next assignment. It also increases advanced academic degree
    opportunities for officers, with special emphasis in science,
    engineering, and politico-military affairs. In conjunction with our
    standardization of the baseline configuration for the Air and Space
    Operations Centers (AOC), we will standup an AOC Formal Training Unit
    (FTU) this summer.
        At the strategic level, our development focuses on the integration
    and interaction between other government departments as well as other
    governments to achieve our national security objectives. The USAF
    supports establishment of the Joint National Training Center (JNTC).
    When implemented, JNTC will create a cooperative collection of
    interoperable training locations, nodes, and exercises that synthesizes
    the combatant commander and service requirements to improve our
    training aligned with the way we intend to fight. AF training
    transformation builds upon past successes and focuses on three training
    requirements: First, to connect our high-fidelity simulators and
    training devices to enable warfighters to train together practicing the
    integration of multiple joint missions to achieve designated
    operational objectives; second, to enhance existing service
    interoperability training by synchronizing events at major training
    centers to produce airmen well versed in joint operations; third, to
    develop a robust ability to fully measure joint training effectiveness.
    The accurate assessment of planning and execution will capture lessons
    learned and provide the cornerstone of our future improvement and
    innovation. JNTC, as a pillar of DOD training transformation efforts,
    will support the joint warfighter and ensure our airmen are properly
    prepared, and developed as competent leaders in confronting the
    challenges of the 21st century.
        Our number one personnel challenge is adapting to the new Air and
    Space Expeditionary (AEF) steady state, based on a higher tempo of
    operations and defining the correct total force balance and a shifting
    skill mix requirement. With a 30 percent reduction in manpower since
    1990 and a significant increase in worldwide taskings over that same
    period, the Air Force has experienced a dramatic jump in operations and
    personnel tempo. We have discovered that while the number of airmen is
    adequate, we must adjust the mix of skill sets and the military/
    civilian/contractor ratio to reflect new realities.
        Recognizing the new demands placed on us by the Operations Enduring
    Freedom (OEF), Noble Eagle (ONE), and Iraqi Freedom (OIF) war on
    terrorism, we have initiated a comprehensive manpower review to
    determine relative stress amongst career fields and to explore options
    to alleviate that stress. We have identified nearly 26,000 military or
    civilian positions that potentially could be converted to civilian or
    contractor positions, with the goal of redirecting uniformed airmen
    into those positions that reflect our distinctive capabilities.
    Furthermore, we have realigned some new recruits into our stressed
    career fields and are exploring technologies to reduce the workload. We
    have several human capital initiatives underway to address this skill
    mix problem, but it will take focus, time, and funding to solve.
        Technology-to-warfighting are the tools of combat capability and
    the second AF core competency. Moving technology from the drawing board
    to the hands of the warfighter is essential to maintaining a ready
    force. When America sends its men and women into combat, they deserve
    the resources and support to guarantee victory over any adversary they
    face. We are determined to give them those cutting-edge tools.
        The Air Force was born out of innovation, and it remains our
    hallmark today. With a pioneering spirit, we are dedicated to pushing
    technology's boundaries. We are rapidly applying recent advances to
    dramatic effect, translating our technological vision into required
    warfighting requirements seen in our unmanned aerial vehicles (UAVs),
    integrated architectures, and revolutionary capabilities.
        There is no greater example than the Predator UAV. It combines the
    dynamics of manned aviation with the remote operations techniques of
    unmanned satellites and information connectivity into a single system
    capable not only of collecting and disseminating information, but of
    producing combat effects. In the midst of combat, we accelerated the
    Predator program to increase production and to retrofit existing
    airframes with improved capabilities. The use of streaming video during
    recent operations was critical, and we are adding Hellfire missiles to
    the entire Predator fleet.
        Global Hawk builds on the success of the Predator system by
    incorporating a robust reachback capability that reduces our forward
    operating footprint, lowers costs, and improves personnel tempo. This
    long endurance, multi-role platform gives us the persistence we need to
    keep the Joint Force Commander (JFC) informed up-to-the-minute.
        We are aggressively developing additional unmanned platforms and
    are exploring their appropriate future role in combat. We are eager to
    field these systems because of their persistence capability and
    capabilities in very high-risk missions. They are responsive to dynamic
    tasking and afford us the ability to swarm the battlespace and
    overwhelm enemy defenses.
        The integration of these unmanned platforms seamlessly into a
    network of manned, unmanned, and space-based systems will dramatically
    shorten the find, fix, track, target, engage, and assess (F2T2EA) cycle
    allowing us to anticipate our enemy's moves and to defeat him on our
    terms. To that end, we are transitioning from a collection of
    independent, stovepipe systems to a horizontally integrated system of
    systems capable of machine-to-machine conversations.
        The Multi-Sensor Command and Control Constellation (MC2C) will
    provide the JFC with real-time, enhanced battlespace awareness and will
    help alleviate the high stress on our Low Density/High Demand (LD/HD)
    assets such as the Rivet Joint, AWACS, Global Hawk, JSTARS, and space-
    based systems. In the future, the Multi-sensor Command and Control
    Aircraft (MC2A), the E-10A, a new wide-body platform, will complement
    our existing, independent C\4\ISR platforms. It will be a core element
    of the future Joint Cruise Missile Defense architecture by fielding the
    Multi-Platform Radar Technology Insertion Program (MP-RTIP) sensor.
    This next-generation sensor is capable of wide-area surface
    surveillance and tracking to find, fix, and track ground targets and
    airborne cruise missiles. Its enhanced Battle Management/Command and
    Control (BM/C2) will enable dynamic execution against time sensitive
    targets, dramatically shortening the kill chain.
        We are also partnering with the National Reconnaissance Office on
    an innovative, creative, technology-pushing initiative known as the
    Transformational Communications Architecture (TCA). TCA will combine
    upcoming satellite communications systems such as Advanced EHF and
    Wideband Gapfiller with future technology-leveraging capabilities such
    as laser communications and internet-based protocols to remove
    bandwidth and access as constraints on the warfighter.
        The Space-Based Radar (SBR) program will give warfighters the
    ability to survey as well as reconnoiter deep into denied areas. SBR
    will be part of a larger mix of air, space, and ground-based
    intelligence, surveillance, reconnaissance (ISR) assets; all of which,
    integrated together have the potential synergy to revolutionize our
    capability to find, fix, target, track, engage, and assess.
        Because we recognize the Air Force never fights alone, we are
    coordinating closely with our sister Services to ensure full
    interoperability of these future acquisitions and to eliminate seams
    between existing systems.
        We are identifying interaction and connectivity requirements of our
    C2, ISR, and operational programs to integrate properly for joint
    employment. For example, we are working to integrate AF sensor
    information with ground units. We are also researching the capability
    to integrate SIGINT collection from all Services into a common joint
    working stations.
        The F/A-22 Raptor is the cornerstone of the Air Force's ongoing
    transformation. America needs the F/A-22 for 21st century air
    dominance. It is the only aircraft capable of countering anti-access
    threats from Day 1 of any conflict, allowing joint and coalition forces
    to operate with impunity inside enemy territory. The F/A-22 brings
    stealth into the daytime for the first time, enabling persistent 24-
    hour operations. Its revolutionary capabilities are designed to defeat
    future air defense systems for decades to come. The Air Force will
    continue executive oversight of the F/A-22 acquisition to ensure
    program success.
        The F-35 Joint Strike Fighter (JSF) also represents a revolutionary
    leap in technology and will complement the F/A-22. This versatile
    multi-role fighter is optimized for all-weather, precision air-to-
    ground operations and provides the persistent force required for
    around-the-clock operations. With a commitment to affordability, the
    Air Force is using the ``Cost As an Independent Variable'' approach to
    help ensure the JSF is not cost-prohibitive.
        Integrating operations is the AF third core competency and primary
    means to maximize AF capabilities with our sister Services to create
    the effects, which achieve the joint commander's objectives. The Air
    Force effectively focuses the power of its people and the strength of
    its technology into a synergistic whole to generate immediate effects
    in the battlespace. We are developing effects-based capabilities rather
    than individual systems. We are exploring and employing innovative
    operational concepts to maximize our combat capabilities. Integration
    of effects-based capabilities is the key to success. Success in this
    new century requires a modern, ready force with the integrated air-
    space-information systems, infrastructure, and capabilities necessary
    to achieve the desired effects.
    Capabilities-Based Force
        Our emerging Air Force Concepts of Operations (AF CONOPs) are
    lending focus to our continuing transformation. The AF CONOPs provide
    focus on effects and mission vice threat. Each AF CONOPs describes
    capability requirements and will transition us from a platform-based
    garrison force to a capabilities-based expeditionary force. AF CONOPs
    define how we fight and drives our efforts to identify, prioritize, and
    define our air and space capabilities. The AF CONOPs are then assessed
    for system interoperability in order to integrate with other CONOPs,
    our joint, allied, and coalition forces, and in the case of homeland
    security, with other government agencies. AF CONOPs helps to define
    efficiencies, eliminate waste, and prioritize resources for the
    warfighter. All defined AF CONOPs capabilities are then assessed for
    risk and reviewed for any program development disconnects and required
    end-user capabilities.
    Recapitalization and Modernization
        Dedicated airmen employing innovative concepts are mitigating the
    impact of old systems and technology. However, aging systems pose a
    real threat to our continued air dominance. The average Air Force
    aircraft has about 23 years in service. With some manufactured as early
    as 1955, our KC-135 fleet averages 42 years in service. We have never
    dealt with a force this old. Our aging aircraft are vulnerable to
    myriad problems, including technical surprise, vanishing vendors, and
    increased operational costs. We have enjoyed a down payment on our
    recapitalization but require sustained funding to maintain the force
    capable of supporting the National Security Strategy and JV2020.
    Eventually, new acquisitions will have to replace these legacy systems.
    In the interim, we are finding innovative means to keep current systems
    operational in the near term and are taking advantage of new
    opportunities to employ old systems in new ways.
        Current projections show all three Air Force bombers should be
    structurally sound for the next four decades. Through our planned
    bomber modernization programs, we can meet current AF requirements
    through the foreseeable future. The Air Force is committed to SOF
    modernization through fielding the CV-22 and air combat modernization
    through upgrades to precision employment and data link. The approved
    multi-year procurement of 180 C-17s will support mobility requirements
    to move 54.5 million ton-miles per day, with six additional bases
    receiving C-17s starting in fiscal year 2004.(start)
    Precision Munitions
        With the advent of precision munitions, the Air Force has
    effectively improved the employment capability from ``many sorties for
    one target'' to ``one sortie for many targets.'' Today, we employ
    precision weapons as the preferred weapon of choice to maximize our
    combat capability while limiting the threat of collateral damage in any
    weather, day or night--they are critical to our success. Our current
    efforts in OIF are consuming our precision munitions at a high rate and
    our reconstitution plan will address weapons replenish. The Air Force
    will increase its production requirement for laser-guided bombs and the
    Joint Directed Attack Munitions (JDAM).
    Budget
        Today and tomorrow, our airmen deserve the resources, training, and
    cutting-edge weaponry to overwhelm our enemy's capabilities. This and
    next year's budgets look to build on the fiscal year 2002 foundation,
    to accelerate modernization while maintaining gains in readiness and
    people. We are investing short-term and long-term across all of our
    CONOPs capabilities, balancing modifications of existing systems with
    the development of new systems. Air Force modernization efforts are
    supporting our transformation goals while continuing to develop and
    field needed systems, with nearly half of our investment in RDT&E.
        The fiscal year 2004 Air Force budget is a peacetime request. Much
    of the increased OPTEMPO we see today is for wartime operations. The
    only major wartime costs in this request are for Combat Air Patrols
    flying over the continental United States. In this peacetime request,
    we have tried to balance the competing demands of supporting current
    readiness levels, as we face aging aircraft and personnel challenges,
    with the necessity of developing and fielding new weapon systems to
    keep our Air Force relevant today and into the future. If enacted, this
    request would continue the positive momentum we are making for people,
    address increased operating costs, fund peacetime flight operations,
    continue critical modernization programs, and increase funding for
    infrastructure improvements above our fiscal year 2003 request. Still,
    there are more things we could do to strengthen our efforts. While we
    have added funds over fiscal year 2003 levels, much of this is required
    to cover higher costs such as utilities and increased maintenance and
    flying operations costs driven by an aging fleet and higher fuel costs.
    Near term readiness is more than spare parts, and equipment
    modifications or iron on the ramp--it's the experienced men and women,
    military, civilians, and contractors who operate and maintain front
    line warfighting equipment, support equipment, and infrastructure. Most
    of the funds we have added for maintenance are eaten up by increased
    costs of aging weapon systems.
        The fiscal year 2003 supplemental request for the GWOT and
    operations in Iraq supports the Department's best aggregate estimate of
    total defense requirements in this fiscal year. Each Service's portion
    of the supplemental are not knowable because the nature of OIF is too
    dynamic to adequated quantify at this time, predominately for personnel
    and operating costs. Without it, we go broke in our operation and
    maintenance accounts around 1 June 2003 and 15 July 2003 for military
    personnel. The expeditious manner that Congress has taken up
    consideration of this supplemental request will allow us to continue
    the task at hand--defeating the enemies of peace and freedom.
    Readiness
        AF readiness trends have been increasing for the past few years;
    however, recent commitments in Operations Enduring Freedom, Noble
    Eagle, and now Iraqi Freedom have caused our readiness trends to level
    off to a current steady state. From 1996 to 1999, readiness rates for
    our major combat units dropped from 91 percent to a low of 65 percent.
    Since then, they have climbed and remained at roughly 70 percent.
    Shortages of personnel, higher tempo, and aging aircraft are keeping
    readiness below our targeted levels, which is a cause for concern.
    However, we have been able to hold steady in the face of increased
    operational demands on our force.
        Our aircraft readiness has improved and will continue due to the
    robust support for spare parts. This is a testament to a dedicated
    workforce, fleet modernization efforts, and process improvements from
    depots to the field. In fiscal year 2002, we enjoyed our highest
    overall readiness rates in 6 years--the largest improvements since the
    mid-1980s. Sixteen of 20 systems improved mission capable rates, at a
    time when all of our systems were flying more hours.
        In June 2002, the DOD directive 7730.65 established the DOD
    Readiness Reporting System (DRRS) in accordance with the National
    Defense Authorization Act of 1999. This directive established a
    capability-based adaptive, near real-time readiness reporting system.
    Current AF readiness metrics and supporting data will be captured in
    the DRRS compatible Enhanced Status of Resource and Training System
    (ESORTS). The Air Force, in addition to measuring current readiness, is
    also developing a compatible and Predictive Readiness Assessment System
    (PRAS) to provide senior leadership with a decision tool to forecast
    the readiness implications on the force as it responds to taskings and
    absorbs changes in key input variables of funding, equipment and
    logistics, personnel, infrastructure, training, SORTS indicators, and
    the strategic environment.
        Our engine readiness rates have reflected impressive gains as
    recent investments continued to pay dividends throughout fiscal year
    2002. Our U-2s sustained their mission capable rate while flying their
    most hours since the Gulf War, 35 percent higher than fiscal year 2001.
    Our Predator fleet posted its best readiness rates ever while averaging
    almost 200 hours per month. Our C-5s posted their best readiness rates
    since fiscal year 1996 while flying the most hours since the Gulf War.
    The B-1 consolidation is paying dividends, as our B-1s posted dramatic
    gains in readiness, with current rates at historical highs. All of our
    fighters are experiencing a steady decline in parts cannibalization,
    which is good. We have made great strides in reducing the number of
    aircraft in depot for maintenance, putting over 25 percent more
    aircraft on the ramps for the warfighter since 2000.
        Space launch readiness is an area where we are moving forward. Last
    year was an important year for space launch. Both of our new Evolved
    Expendable Launch Vehicles (EELV), the Atlas V and the Delta IV,
    successfully reached orbit on their maiden launches. We are encouraged
    by their success, but each of our launch providers is suffering due to
    a downturn in the commercial launch market. Since maintaining two
    launch providers is critical to assuring access to space for our
    national security programs, we will continue to grow EELV capability
    for near-term assured access, while evaluating longer-term alternatives
    such as the Operationally Responsive Spacelift (ORS) concept.
        Of concern, we are at greater risk for losing ground to rising
    costs of aging systems. This will translate into deferred depot
    maintenance on engines and aircraft and ultimately affect our
    readiness. While maintenance readiness challenges remain, we are
    confident the dramatic gains we experienced last year provide the
    momentum the Air Force needs for continued improvements.
        Our people are ready. We are sustaining our personnel readiness
    rates in the face of higher OPTEMPO, manning shortages, and reduced
    training opportunities. Operations Noble Eagle alerts, Enduring Freedom
    and Iraqi Freedom deployments deplete operational unit capability and
    the opportunity to train. Fortunately, our pilots are flying adequate
    hours. Despite uncertainty in taskings and mission profiles, the Air
    Force fully funded the flying program in fiscal year 2002 and fiscal
    year 2003 and will continue to fly 100 percent of the flying program.
    For the past 3 years, the Air Force has executed its budgeted O&M
    flying hours without requesting additional funding for contingency
    flying hours. Our airmen are gaining real-world experience you cannot
    create in a training environment. Today, over 70 percent of our rated
    aircrews are combat experienced!
        However, many of our aircrew instructors have been pulled to
    fulfill priority operational requirements, making it difficult to train
    new aircrew to relieve the combat stress. This is especially true of
    our LD/HD assets which have been working at ``surge'' capacity. We
    recognize that some of the most significant detractors to unit
    readiness are lengthy, frequent deployments. Once airmen return from
    deployments they require up to a 90-day reconstitution period,
    primarily for personnel training. Maintaining our AEF rotation schedule
    helps stability and predictability, but most of our stressed career
    fields are exceeding the 90-day goal. While the Air Force has taken
    steps to mitigate the impact of lost training, sustained operations
    will remain a challenge. As long as the current OPTEMPO persists, we
    expect Air Force training to remain at current levels, if not decline,
    as training currencies and continuation training are harder to achieve.
    Retention
        We have found our high operations tempo and uneven workload are
    major determinants in an airman's decision to leave the Air Force. It
    was difficult to accurately determine last year's retention rates due
    to Air Force implementation of stop loss. Nonetheless, we will continue
    to use an array of funding tools, to include bonuses, mentoring, and
    re-recruiting efforts to sustain our record of retention success. Air
    Force quality of life initiatives will ensure a suitable standard of
    living for our world-class airmen and are essential retention tools.
    While our increased accession levels and improved retention have
    created a unique over strength problem, we remain committed meeting
    total end strength goals.
        Retention of pilots, navigators, and air battle managers is of
    major concern. Though pilot retention is the highest in 4 years, we
    still suffer from a long-term shortage of pilots. We have increased the
    output of our pilot training courses, but training new pilots does not
    immediately solve the problem--you cannot replace the lost experience.
    The resulting experience shortage has detrimental effects on force
    management leaving us with undermanned staffs, less experienced formal
    flying training instructors, stressed test programs, and less mentoring
    opportunities.
        Our flexible Aviation Continuation Pay (ACP) program is an
    important part of our broad-based plan to retain pilots, and we
    extended the program this year to include navigators and air battle
    managers. Encouragingly, the ACP long-term initial take rate rose
    sharply to 49 percent in fiscal year 2002 from 30 percent in fiscal
    year 2001.
        Retention for high tech specialties is also a concern as the pull
    from industry is strong. This draw is exacerbated by long, frequent
    deployments in many of our high tech career fields. In response, the
    Air Force this year introduced the critical skills retention bonus for
    highly stressed and highly skilled career fields.
        The Air Force has reduced its civilian workforce by nearly 100,000
    since 1990, leaving only 10 percent of today's Air Force civilians with
    less than 10 years in service and over 40 percent eligible to retire in
    5 years. We must revitalize our professional occupations with new hires
    while minimizing the impact on the existing civilian employees.
        Recent pay increases are making a difference and have reminded our
    airmen that we value their service. Targeted pay increases that reflect
    the realities of the marketplace are critical to meeting our toughest
    retention challenges. We must retain the flexibility to put more pay
    where it is needed while ensuring that entry-level pay is very
    competitive.
        Another concern is mid-grade officer and enlisted manning levels.
    We have a skill level mismatch: too many new apprentices and not enough
    experienced journeymen. The resulting imbalance means higher
    expectations for our less experienced airmen and greater stresses on
    the remaining mid-level leaders, managers, and trainers. We cannot
    afford to lose this experience; it will translate into lower readiness.
        While there is clearly room for improvement, we are pleased with
    our recent gains in equipment readiness and are proud to have
    maintained overall steady state readiness despite the increased
    operational challenge.
        Reconstituting of our expeditionary forces following Operation
    Iraqi Freedom will be the key to our future Air Force readiness
    capability. The Air Force, along with our sister Services are working
    closely to create the most effective way to reconstitute our forces
    without compromising our military capabilities and readiness. The Air
    Force is focusing its reconstitution effort towards a few main goals.
    First, is to establish a total force steady state battle-rhythm. This
    will involve the demobilization of our Air National Guard and AF
    Reserve Forces, the cessation of our current `stop-loss' programs, and
    re-deployment of our Active-Duty Forces to resume our AEF scheduling
    cycle. Second, we will need to replenish our weapons expenditures with
    the correct quantities and qualitative mix of current and future
    weapons. A final major goal is to replenish our consumed war reserve
    materials (WRM). The AF reconstitution effort is only a part of whole
    military reconstitution effort and the proper implementation will
    determine the quality of our future force capabilities.
    Future Total Force
        Like never before in the history of the Air Force, we are a total
    force. Mission success demands the interdependence of Active Duty, Air
    Reserve component (ARC), civilian workforce, and contractors. ARC
    forces are essential to our success; they comprise nearly half of the
    forces assigned to AEFs and contribute the majority of forces in some
    mission areas, such as global strike and homeland security. We have
    begun to consolidate, when practicable, two or more components into a
    single wing with a single commander. We stood up our first ``blended''
    wing, the 116th Air Control Wing, in October at Robins AFB, GA. This
    and future blended wings will leverage each component's comparative
    strengths to increase efficiencies, synergies, and capabilities. We are
    also placing Reserve airmen directly into Active-Duty flying
    organizations, giving us a new degree of experience and stability in
    these units.
        Under our new steady state, the ARC will continue to assume more
    and more of an active duty role. As such, they need compensation,
    benefits, and entitlements commensurate with these increased
    responsibilities. We are working to facilitate seamless movement
    between the components by minimizing appointment and accounting
    burdens. We are exploring options to relieve surge stressors such as
    the use of civilian contractors. We are committed to using ARC
    volunteers versus mobilization whenever possible to allow the units and
    members the flexibility they need.
        We are also closely monitoring ARC recruitment. Historically the
    ANG and AFRC gain nearly 25 percent of separating Active-Duty members.
    Continued high OPTEMPO may threaten this source of recruiting and force
    the ARC to explore alternative options to make up the loss.
    Summary
        The greatest testament to Air Force readiness is our continued
    success in ongoing operations to protect America from its enemies. We
    have the finest airmen in the world and are the most respected Air
    Force in history. We enjoy the confidence of the American people and
    are committed to maintaining their trust. This record of success and
    promising future would not be possible without your support. For that,
    you have our deepest thanks. Our recruiting and retention success,
    dramatically improved maintenance rates, infrastructure improvements,
    and weapon system modernization are a direct result of your recent
    investments. We are especially grateful for your continued support for
    pay raises for our people. You share our conviction that adequate
    compensation is not a luxury but a necessity. Together, we have laid
    the foundation for continued dramatic improvements and further
    transformation. Let me assure you, your United States Air Force stands
    ready, whenever and wherever we are called.

        Senator Ensign. We thank all of you for your testimony.
        Staff has written a beautiful question here. I am going to
    try to summarize it for you. It basically has to do with
    comparing this with some kind of a sporting event. You train
    for the sporting event and then you have the sporting event and
    then you have afterward, and all of this in relation to
    readiness for the next sporting event.
        The training has been remarkable up to this point. A lot of
    these people are going to need rest. During a game or during
    the operation, whether it is Afghanistan or whether it is what
    we have going on in Iraq right now, to some degree it is just
    like during a game, that sort of training, but it is executing
    your training. You are keeping your skills up, but other skills
    probably are diminishing, and that you are not practicing some
    fundamentals that you do when you are out there.
        So the question is, if each one of you could just take a
    minute or so to discuss that and how you are going to, as part
    of reconstitution, get your forces back ready to go. God forbid
    we have to be in another conflict someplace, but that is what
    we have to be ready to do.
        General Cody. Thank you, Senator. Our staffs hand us stuff
    too, but they did not hand me that one.
        Senator Ensign. They might have handed you the one that I
    got.
        General Cody. We fully appreciate the fact that we are
    right now in a major fight. As we speak, we are in Kosovo, the
    Balkans, and Afghanistan. What we have learned from those
    deployments as well as what we learned the last war in Iraq was
    that we have to maintain the crown jewels of the Army training
    base and that is our combat training centers.
        I just reviewed the training at the National Training
    Center, the Joint Readiness Training Center, as well as the
    Combat Maneuver Training Center in Germany. We are maintaining
    those rotations. It is hard to do, but we must have the force
    that is not in combat. So we are maintaining those rotations.
    We are adapting them based upon some quick lessons learned that
    we are seeing during the fight.
        We are a full-spectrum force and you are correct, as soon
    as we bring this force back we have to rest them, reconstitute
    them, but turn right around and put them back in, because we
    have to make sure they are well-trained on the full spectrum of
    operations. So we have plans to do all that.
        I will give you one vignette. Third Brigade Combat Team,
    101st Airborne Division, the same brigade that went into the
    Shalikot Valley some 8 months ago, that brigade is now back in
    Iraq. When they came back to Fort Campbell and we gave them the
    time off and started going, we put them right back into a
    training center and now they are back in the fight.
        So those are our plans. But the reconstitution dollars are
    not just for our weapons systems, because our most important
    weapon systems are our soldiers and their training and we have
    plans to do that.
        Senator Ensign. Thank you.
        Admiral Green. Senator, I think it is a terrific question
    that really goes to the very core of what we are about and what
    we do. I think from our perspective one of the big differences
    between what we do and what a sporting team might be involved
    in is that, first of all, we do not know what the schedule is
    going to be, when our next game is going to come up, and we are
    not quite sure whether it is going to be hockey or football or
    baseball or tennis.
        Quite frankly, the Abraham Lincoln Battle Group, which
    thought it was on its way home from a routine scheduled
    deployment earlier this year, found that we had other work for
    them to do and in fact is on their way home right now.
        What we are compelled to do as we go through each of our
    engagements, campaigns, or wars is to ensure that we just do
    not go back to the old pattern of training and development. We
    need to ensure that we incorporate the lessons learned from not
    just our own experience, but particularly within the context of
    this joint force that is winning the war right now. We need to
    ensure that, while we reconstitute, we are also recapitalizing
    and we are transforming our force.
        As Dr. Mayberry said, I think very well, putting all of
    that together and making the right decisions is the only
    approach that makes sense to us. We are deeply engaged, as are
    the other Services and as are the Office of the Secretary of
    Defense and the Joint Staff, in ensuring that we are doing the
    right thing in this reconstitution program and approach that we
    are taking.
        I am very confident that at the end of the day we are going
    to be ready, whatever that game is and whatever the schedule
    calls on us to do.
        Senator Ensign. Thank you.
        General Bedard. Senator, I am a former college wrestling
    coach and I could well talk about----
        Senator Ensign. You do not look like a wrestler.
    [Laughter.]
        General Bedard. But, sir, I will tell you we have been
    actively involved in, as we take a look at the reconstitution.
    We look at the aspect of ensuring the readiness of those forces
    we have that are not committed today and how do we stand up and
    ensure that training is an integral part of everything we do as
    we bring the force back.
        Dr. Mayberry, although, mentioned it briefly. We have a
    large training center at Twenty-Nine Palms, California. We will
    not only bring forces back and start that train up very
    rapidly, but we have also used that for forces that we are
    continuing to deploy and are being prepared to deploy over
    there.
        I think the aspect of the lessons learned--we have had a
    team on the ground since almost the time that we started to
    deploy forces over there, and providing that almost daily
    feedback of lessons that are being learned so they can be
    incorporated in the remainder of the force is a very critical
    part of what we do as we prepare for the future.
        Senator Ensign. Thank you.
        General Schmidt, when you are addressing, I was just out at
    Nellis a couple of weeks ago and they were talking about--and I
    probably should have started before I asked the question, but
    General Wood out there was saying they have called off several
    during these last couple of months, several of the planned
    operations, training operations that they had going on. So how
    does that all fit in?
        General Schmidt. Sir, that is a good additive to what I
    think Team Air Force needs to do to reconstitute. Obviously,
    the devil is in the details. But in some of the more obvious
    things, such as before we get in another game, obviously we
    want to reload our guns, make sure we have the right kind of
    guns and the right kind of ammunition. Obviously, we want to
    reestablish our training cycle and we want to make sure we
    train for the next war, not the last war, so that we are not
    looking backwards, we are looking forwards.
        But we do want to get our battle rhythm back and that is
    probably the biggest thing. If you have a team and you just
    played a big game and you have another one coming up, obviously
    you want to get your primary players back in shape and you want
    to reestablish your bench. I would probably focus on a couple
    things that are additive to what my colleagues have already
    said.
        We do want to get our bench repositioned, the Guard and
    Reserve for the Air Force. They are on mobilized orders right
    now. The Air Force normally uses large amounts of our Guard and
    Reserve, but we use them in a voluntary capacity. It does not
    take very long to call them up and it does not take very much
    to spin them up to combat-ready status. So stop loss and
    demobilization, it is very important to us that we get our
    bench reestablished.
        But the heart and soul of what the Air Force needs to do,
    because our deployable population within our Air Force
    population is a little over 200,000 people divided into 10
    relatively equal Air Expeditionary Forces--and we know the
    amount of those forces that can be out any time sustained 24-7
    indefinitely. We also know that when we go above that level
    that we go into a declining mode as far as readiness. We also
    know that at a certain level we begin to break.
        We want to get back down to the level where we can sustain
    operations, and that is at about 20 percent of our deployable
    force at any one time, in increments of about 60 to 90 days,
    are out there around the world. That would be the number one
    priority, reestablish that battle rhythm for our Air
    Expeditionary Forces.
        At Nellis, I am sorry, sir, to answer the rest of your
    question, what General Wood was referring to are our training
    exercises. Those assets, those people, and those aircraft, the
    iron, they are forward. Now, they are getting some training out
    there, but not against a near-peer adversary.
        Senator Ensign. That was the point I was making. By the
    way, just one comment. The British were telling us that they
    have 60 percent of their force deployed right now, so I guess
    they have some big challenges ahead of them as well.
        Senator Akaka.
        Senator Akaka. Thank you very much, Mr. Chairman.
        Generals, Admiral, in my opening statement I alluded to a
    disconnect between current operations and how we here in
    Congress do budgeting. I know that each of your Services has
    been cash-flowing funds to pay for our many ongoing missions.
    Hopefully, we will approve a final supplemental bill shortly
    that will restore some of those funds.
        But I wanted to ask each of you specifically about the
    readiness impact of doing business in this way. My first
    question is whether the Services in your view tend to get fully
    paid back for what they pay out once supplemental funds are
    approved? If not, what impact does this have on readiness?
        My second question is about opportunity costs. Are there
    certain things that you put off because of this cash flowing
    that can never be bought back, as it were, even if the money
    does get restored later? If so, can you give me some examples
    and tell me what impact you think those loss opportunities
    have? General Cody?
        General Cody. Thank you, Senator, for that question. First
    off, there is a readiness impact to the operational tempo and
    deployment tempo that we have had on our forces, not just for
    Operation Iraqi Freedom, but for Afghanistan as well.
        Also, for the Army, if you remember, we started out with
    just a battalion task force in Kuwait after the war and we kept
    ramping that up, so now we are rotating a brigade. So over time
    we have had a lot more what I would call deployed tempo and
    operational tempo on heavy systems in probably the worst
    conditions you would want to put them in, and that has taken a
    wear and tear on those systems.
        The question about cash flowing. We have cash flowed in the
    Army about $2 billion out of our 2003 accounts, and with the
    supplemental coming it will prevent us from stopping operations
    in May. We run out of money at the end of May. Will we get
    fully paid back? This is the first time I have gone through it,
    Senator. I will see.
        I do know that we have a very solid tracking system with
    OSD on all the preparatory tasks that they approved, that
    General Franks had asked for, and there was a very strict
    regimen in the auditing of what we cash flowed, make sure it
    was all approved and everything else. We will just have to wait
    and see when the dollars cash flow down.
        In terms of opportunity costs, we were very careful this
    year to make sure that we did not lose the opportunity to field
    the Stryker Brigade. So all the decisions we made to cash flow,
    the Stryker Brigade is still on target to be certified in May,
    and we did not break any programs yet. But the timely receipt
    of the supplemental in terms of dollar for dollar will ensure
    us that those things you just mentioned will stay on track.
        Senator Akaka. Admiral.
        Admiral Green. Thank you for your questions, Senator. Our
    experience is similar to that of the Army. We have been
    compelled to forward some cash from the latter part of the year
    in order to operate in the light of the current contingency and
    are counting on the supplemental to allow us to continue
    operations. Should we not receive that supplemental, we will be
    compelled to cease operations in June.
        That said, we have been very well-supported in our
    readiness accounts this year and that comes on top of a couple
    of very good years for readiness based on the wisdom of this
    subcommittee and the great support of the Senate and the House
    as well. We watch that carefully. We cannot predict what
    contingencies we might be compelled to answer, but that is why
    we have this relationship, after all.
        In terms of opportunity costs, that will be driven, I
    suspect, in terms of timing and how quickly we can move to
    solve whatever the questions are with regard to being able to
    sustain the operations. But at this point we have great
    optimism that we are going to be able to continue and get the
    job done as you expect and require of us.
        Senator Akaka. General Bedard.
        General Bedard. Sir, in terms of cash flow, based on
    requirements and those things to ensure the capability of the
    force, we have gone in and probably spent a little over a
    billion dollars in various programs. We certainly, as I said in
    my opening remarks, are very much looking forward to the
    supplemental both in terms of amount and timeliness of it.
        I would hope that those dollars that we have spent in the
    war effort are refunded to the Service. If not, just as General
    Cody said, we have been very careful to ensure that we have not
    broken any of our programs in the cash flow business. But we
    have taken some risks in maintenance and a couple of other
    areas, which we hope that we will be able to rebuild rapidly as
    we get the supplemental moneys.
        Senator Akaka. General Schmidt.
        General Schmidt. Senator, like my colleagues, our crystal
    ball when we put the budget together for 2004 did not include a
    lot of things that are now occurring, such as Operation Noble
    Eagle, where we are over the homeland, where we fly at levels
    varying from level 3 to level 5, which means the difference
    between having 15 or 16 fighters on a call to support that
    operation up to where it is today with about 68 or so, not to
    mention the tankers, the C-130 airlift, and the early warning
    aircraft. That is quite expensive and it has taken its toll on
    the Air National Guard primarily.
        The global war on terrorism and operations in Iraq are
    represented. We are not looking for a replacement necessarily
    approach to what we get from the supplemental. It is the cost
    of war. Like my colleagues, we do appreciate that. We do need
    it. We have taken risk in numerous areas, and we appreciate
    your support.
        Senator Akaka. Thank you, Mr. Chairman.
        Senator Ensign. I believe that the end of Hussein's tyranny
    in southwest Asia will have an impact of historical
    proportions, I think that all of us feel, and profound
    implications, especially on that region, in terms of stability.
    What are your thoughts of the implications of a post-Saddam
    Middle East basically as far as stability and the rest of it,
    looking at your crystal balls?
        General Cody. I will go first, I guess, sir, because no one
    else will pipe up on that one. Not being a policy guy, I think
    from what I have seen, one, we cannot underestimate----
        Senator Ensign. I am not just asking policywise, by the
    way. I am asking you to take a guess what the potential
    military implications, stability are. You all are in charge of
    our armed services to go and win wars, to keep the peace,
    sometimes humanitarian aid and all that. So you have to make
    judgments what you think is going to be out there to have to
    respond to, and that is really more the line of the question.
        General Cody. Thanks for reframing it for me, sir. That
    makes it a lot easier. The ice is a little thicker on that end
    of the pond.
        I think that for the Army we are looking at some sizable
    footprint post-hostilities and that footprint will be
    determined by General Franks, General McKiernan, as well as
    their staffs. It will depend upon a level of stability that is
    in that country, as well as the assessment of the level of
    stability on those bordering countries, and also the amount and
    how quickly we can secure the WMD sites and the sensitive site
    exploitations.
        That takes boots on the ground. That is a large country, a
    little bit larger than California, and I do not know how long
    that will last. The Department, as well as OSD, is looking at
    several options about how large that force will be. What we are
    doing in the Army is looking at each one of those courses of
    actions and trying to set up a rotation that will work with
    those types of boots on the ground numbers as well as get the
    reconstitution of the other parts of the force so that we will
    be ready for the next contingency.
        It is a little premature for me to even harbor whether it
    is going to be two divisions, one division, one brigade or
    whatever, because General Franks and his combatant commanders
    have not come back in and said what the numbers are. It will
    not be measured just in combat divisions or combat brigades. A
    lot of the post-phase 4, post-hostility operations, will be in
    the combat service support arena and civil affairs and
    psychological operations (PSYOPS) arena, and those are small
    numbers in terms of formations, but usually those are our high
    demand, low density outfits, and that is where we are watching
    it very carefully.
        Senator Ensign. Part of the other question is, for the rest
    of you, and if you want to take a stab at it do. If you want to
    avoid it I do not mind you avoiding it. As I am looking out
    there and I am one of the other tyrants in some of these other
    countries, I guess you have to look into their mindset and, as
    quickly and as overwhelmingly as you all moved through Iraq, if
    I am a Syria or a North Korea, certainly that is part of what I
    am talking about implication-wise as well, what does that do?
        Part of this is a guess. Some of these are going to be bad
    guesses, some are good guesses. If you want to take a stab at
    it, go right ahead.
        Admiral Green. Yes, sir. I was never very good at dodgeball
    as a kid, so let me jump right into this. It is our
    expectation, and I think yours as well, that as we go through
    the process of reconstitution, this question will be central to
    not just the way that we reconstitute, but the way we position
    our forces, which will drive other issues as well.
        Our hope, of course, is that upon completion of this
    campaign that the environment will be much improved in that
    part of the world. That said, we, the joint force, are
    compelled to ensure that we have the forces in theater that can
    persuade those who might wish us ill and might wish to take
    advantage of a potentially unstable situation that that is not
    in their best interests and that we are ready to do whatever is
    needed to defend United States' interests should they make that
    miscalculation.
        There are other regions of the world as well that will
    require our presence, and we are all global Services. We have
    the ability to move quickly, to carry out campaigns if
    necessary, but to assure our friends and allies and to deter
    those who would wish us ill. That is exactly, in fact, at the
    very core, the center, of our considerations now as we look at
    the post-war, the post-Operation Iraqi Freedom world.
        General Bedard. Sir, without repeating what has already
    been said, I think first of all as we take a look at Iraq
    itself probably one of the most dangerous times is when we
    transition from conflict to stability operations. I think
    ensuring that we have the right force and the right
    organizations in the theater to do that are critical.
        I think this is a very clear wake-up call to Syria, Iran,
    North Korea. Which way they decide to go based on what they
    have seen and so on probably remains to be seen, but there
    certainly is a very clear blueprint to them of what can happen.
        I would also say and echo Admiral Green that being out
    there and being forward deployed is a tremendous deterrence in
    itself, and I think we need to continue to do that probably in
    a greater effort in the future. Part of my rationale for that,
    I think we are going to squirt a lot of terrorism out to a lot
    of different parts of the world that are probably going to
    leave from where they are at right now. Those that have been
    harbored in Iraq or in other countries in that part of the
    region, we will probably see them in greater numbers and
    quantities throughout the world in other places, and that I
    think will be the challenge for us and for our forces.
        General Schmidt. Mr. Chairman, I think--and I agree with
    General Bedard--as we look around at the landscape post-Saddam,
    there are still a few standing large military forces, to
    include North Korea, that will be looked at for the kind of
    strategies that we have used traditionally. But I also think
    that a large piece of the remaining threat out there is more
    probably a stateless, uniformless, do-or-die ideologist.
        We are now adapting our capabilities using technology and
    other things to deal with this. Our intelligence, surveillance,
    reconnaissance investments are adapting quickly and we are
    showing that, while the Services do have in a smaller context
    our special operators, I think we will spend a lot more
    resources and investment in building their capabilities and
    maybe even their size in proportion to the rest of the Service.
        Our ability to find, fix, and target that kind of enemy and
    maybe kill that kind of enemy is going to get called on more
    and more, I think, in the future. Our force structure, which is
    people, equipment, and our training, would be more and more
    tailored I think in the future to do that.
        Senator Ensign. Thank you all.
        My time is up.
        Senator Akaka. Generals and Admiral, Dr. Mayberry testified
    during the first panel about training transformation and the
    Joint National Training Capability, and there is no question
    that future readiness will certainly have a capital ``J'' on
    it. I am pleased to see that DOD is focusing a lot of attention
    on improving joint training in particular. But I wonder also
    about where the line is between jointness and allowing the
    military Services to fulfill their Title 10 responsibilities to
    organize, train, and equip their own forces.
        Can each of you comment briefly on your perspectives on
    this issue and even where you think the line is and, if it is,
    then why is it? General Cody?
        General Cody. Yes, sir. We have talked about this in
    several of the meetings that we have had with Dr. Mayberry and
    all of us have been part of the Joint National Training Center
    concept and training transformation. We are the greatest
    military power in the world today because we have the best
    Navy, we have the best Marine Corps, we have the best Air
    Force, we have the best Army and Coast Guard, and we do not
    want to sacrifice that for a higher level of joint piece.
        What we are going to do with the training transformation is
    ensure that we do not jeopardize the core competencies of each
    one of our Services. What we bring to the table is five
    different ways for an enemy to die and we have to synchronize
    that, and I think that will be the context and how you will see
    the joint readiness and the Joint National Training Center
    brought to bear.
        We see it--I will give you an example. The National
    Training Center brigade combat teams. You can wrap on top of
    those brigade combat teams the joint piece of it so that the
    standing joint task force headquarters knows how to orchestrate
    an Army brigade, a MEF, Marine Expeditionary Force, Navy air
    power, air power from the Air Force, and synchronize all of
    that in a joint construct and still not jeopardize that brigade
    on the ground or that marine battalion on the ground or the
    fighter piece.
        That means we have to do some changes to the enemy set we
    put at our training centers, we have to make some changes to
    some of the scenarios so we can get all those parts and pieces
    in there. But we are not going to sacrifice the core
    competencies of our different Services to do it.
        Senator Akaka. Admiral.
        Admiral Green. Thank you, Senator. In fact, from an
    operator's perspective that is the big question for us. There
    was a time when we might have defined the cut line being
    somewhere at about the unit level and I think that no longer
    pertains, for many of the same reasons that General Cody just
    described. When we look at mission-essential task lists, we
    look at the required operational capabilities for units and for
    formations of units and combinations of joint units in
    particular, we need to ensure that not only the equipment and
    not only the unit training, but the combined and joint training
    satisfies the requirements of the combatant commanders.
        They are the ones who really define the requirement on us
    and under the guidance of the commander of the Joint Forces
    Command and the Services themselves we are pushing forward to
    do just exactly what you suggest and require of us.
        Speaking as someone who is a member of a Service that has
    been a joint Service ever since 1775 along with the Marine
    Corps, this is central to our combat effectiveness and to what
    we give the country. There is not a fight that I can imagine
    today that is not a joint fight. There is training that has to
    follow that model as well, and that is the direction we are
    going within the Navy through the training resource strategy,
    but also in continuation and in deepening and broadening the
    joint task force exercises and the other new exercises that are
    coming up with the other Services as well.
        I think you are absolutely on the mark and we get that
    message very clearly.
        Senator Akaka. General Bedard.
        General Bedard. Senator, I think first and foremost what
    each Service probably best contributes to the joint fight is
    bringing their own competencies of their Services to a level
    that can be used in the joint effort. From a standpoint of the
    Marine Corps, I guess we are somewhat unique in that our basic
    organization of the marine air-ground task force with its
    aviation and maneuver and a command element and logistics and
    operating from naval ships gives us a very unique joint
    perspective at a very early age in our careers in how our force
    is organized.
        But I think too often there is a bill put around our necks
    that says we are not joint enough. I will tell you, I think,
    and my colleagues sitting at this table today would agree, the
    level and degree of jointness that goes on every day, not just
    over in Iraq, although that is certainly a great testimony to
    what we do, the training level of jointness has only increased
    over the last several years in my opinion, and we will continue
    to make that effort to ensure that we understand how to operate
    on the battlefield together as a joint force.
        Senator Akaka. General Schmidt.
        General Schmidt. At the risk of sounding like a parrot that
    I agree with my colleagues, I do. The core competency the
    Services have is gained through the training that we do within
    our own Service, and then we bring that capability to the joint
    fight. I think the Joint National Training Capability is
    additive to that.
        I think it is a perfect opportunity to horizontally
    integrate the best of what we bring, and if those systems that
    we produce, procure, and implement among the Services do not
    work in our training environment, they are not going to work in
    our combat environment. Those habit patterns, those reflexes
    that we develop in the training environment, need to be
    automatic in the combat environment.
        The last comment I think I would add to this conversation
    is that the future of training really is also migrating to what
    we call a distributed training. It is not all geographically
    located in the same place. The concept that we all come to the
    same range, pound the same dirt, talk on the same line of sight
    communication systems, is not there any more.
        This Joint National Training Capability offers the
    opportunity to integrate those systems that allow the fighter
    pilot in South Carolina to work the same fight as the Army in
    California or the Navy in the Gulf of Mexico. That is the same
    fight virtually. The training derived from that for everyone to
    be involved in a large scale is almost inestimable.
        Senator Akaka. Thank you, Mr. Chairman.
        Senator Ensign. Thank you.
        Unfortunately, I have been notified I had something that
    started at 4 o'clock. We are still working on this budget
    thing. So I appreciate all of you. I do have other questions
    and I am sure you do, Senator Akaka, that we will have to
    submit for the record.
        Just in conclusion, I want to thank all of you for your
    great testimony today. We are really looking forward to working
    with you on this whole reauthorization bill and providing you
    what you need to make sure to continue to provide those people
    who are on the front lines what they need.
        I also want to compliment the Services for breaking the
    whole idea of turf battles. It has been commonly known that
    each Service takes so much pride in what they do that the idea
    of this joint training 20 years ago was really almost a foreign
    concept. I want to compliment you. Part of it out of necessity,
    but it seems to be that the Services--and I am hearing this all
    the way down, up and down through the Services, that it is
    being embraced. That is really, that is a compliment to each
    and every one of you, because it is absolutely critical that we
    do it.
        It becomes obvious in our operations, but it does not mean
    that it would be embraced as well as it is being embraced. I
    would compliment you and encourage you to keep that up, because
    I think the more that you embrace that while maintaining your
    core competencies, the better off our military is going to be
    in the future.
        Once again, thanks, Senator Akaka. We have had five
    terrific hearings now and I think that it will go a long way
    toward our ability to get you a good markup and provide you
    what you need. So thank you, each one of you, for being here
    today.
        This hearing is concluded.
        [Questions for the record with answers supplied follow:]
                 Questions Submitted by Senator Daniel K. Akaka

                                TROOP DEPLOYMENT

        1. Senator Akaka. General Schwartz, since we started deploying
    large numbers of forces to the Persian Gulf, there have been occasional
    articles in the press about ``hiccups'' in the mobilization and
    deployment process. While it's generally acknowledged that things have
    gone much more smoothly this time than they did during the Gulf War,
    there appear to be some challenges that remain. Could you give your
    take on the mobilization and deployment process for Operation Iraqi
    Freedom thus far? What has gone well, and what, in your view, needs
    improvement?
        General Schwartz. Overall, the mobilization and deployment
    processes for OIF has been very successful to date. We have been
    effective in providing General Franks with the right forces in the
    right place at the right time. The Department of Defense (DOD) is
    currently compiling lessons learned from OIF and developing
    recommendations to improve our processes for mobilizing and deploying
    forces. In addition, we intend to conduct a study based on current and
    anticipated events in the global war on terrorism to determine if we
    have the correct mix between Active and Reserve Forces.
        One area that we are currently evaluating is the mobilization time
    period. We are attempting to balance the needs of the combatant
    commander for rapidly deployable forces versus the need for Services to
    train, equip, and prepare Reserve Forces for deployment. The Reserve
    component is a major contributor to OIF forces in the areas of combat
    support and combat service support. DOD instruction recommends 30 days
    between receipt of mobilization orders and the requirement to report
    for mobilization, and providing the full 30-day time period remains the
    intent of DOD. For OIF, reservists averaged from 10 to 15 days between
    receipt of mobilization orders and actually reporting for mobilization.
    Our goal is to establish procedures that will increase the deployment
    readiness of the Reserve Force and reduce the time between a combatant
    commander's request for forces and deployment of those forces.
        With regards to deployment, the request for forces/deployment order
    process we are using for OIF allows the Secretary of Defense to meter
    the force flow. This approach provides a more flexible response to the
    combatant commander's force requests and ensures excess forces are not
    deployed. This approach also ensures we have as many forces as possible
    available for other potential contingencies and reduces the costs of
    the operation by avoiding unnecessary deployments. As we work through
    the lessons learned, we will seek to reengineer the current joint
    deployment process to streamline and to increase responsiveness to meet
    combatant commander requirements.

        2. Senator Akaka. General Schwartz, how well does the fiscal year
    2004 budget request support any improvements that are necessary?
        General Schwartz. The fiscal year 2004 budget request does not
    include funding estimates for mobilization and demobilization
    improvements based on Operation Iraqi Freedom. Future budget requests
    may address improvements to the mobilization and deployment process as
    the Department continues to study lessons learned to create more agile
    and responsive processes.

                             HELICOPTER MAINTENANCE

        3. Senator Akaka. General Cody and General Bedard, some of the
    media coverage in Iraq has talked about the challenges that the very
    fine dust in that region poses for our rotary wing aircraft in
    particular. Certainly it makes landings very hazardous. How difficult
    is it to maintain our helicopters there now, and how hard will it be
    for us to restore our helicopters to good condition once they return?
        General Cody. Helicopter operations in a desert environment are a
    tremendous challenge, both operationally and logistically. Operation
    Iraqi Freedom has proven to be no exception.
        Operationally, our pilots experience ``brown-outs'' during nearly
    every takeoff and landing. A ``brown-out'' is when a cloud of dust or
    fine sand, stirred up by the helicopter's rotor wash, becomes so thick
    that it obscures the pilots' vision. When pilots lose visibility during
    a takeoff or landing, they may become disoriented and inadvertently
    begin to drift in a direction that they had not intended. These `brown-
    outs' have resulted in at least seven significantly damaged aircraft. A
    flight stabilization system is available to mitigate this risk to our
    aircraft and crews. The system uses Global Positioning Satellite
    signals and an internal display to improve low visibility situational
    awareness.
        The extremely fine sand in the region has also significantly
    impacted the maintenance and logistical support of our aircraft. The
    sand erodes rotor blades, clogs and unduly wears engines, pits our
    windscreens, clogs filters, causes premature bearing failure, intrudes
    into and chafes wire bundles, and a host of other problems. Not
    surprisingly, we have seen a tremendous increase in our consumption of
    engines, blades, and bearings. While it hasn't been a significant issue
    yet, the extreme temperatures of the region will also adversely impact
    our aircraft engine performance; limiting operational loads, range, and
    maneuverability.
        We do anticipate a large reconstitution effort, for both air combat
    and combat support systems. Our primary objective will be to return our
    fleets to a pre-war condition to ensure readiness to meet future
    missions. In addition to the extensive cleaning and repair of deployed
    systems, the effort will include the acquisition of new systems to
    replace those lost in combat and accidents. Where it is efficient to do
    so, we may incorporate some of our recapitalization efforts with the
    reconstitution. We will have to be extremely careful to synchronize
    this effort in such a way that we continue to support the Army's
    ongoing missions; peace keeping, humanitarian, stability and support,
    and global war on terrorism operations, as well as support home station
    training requirements and Army transformation. This may mean we have to
    conduct some of our reconstitution efforts forward in the theaters of
    operation.
        Currently, the Army Staff, the Army Material Command, Program
    Executive Office-Aviation, and the Major Commands are conducting a
    detailed mission analysis to determine the full requirement and to
    develop a coordinated, synchronized strategy that balances the
    reconstitution workload across the full spectrum of the Army's
    industrial base capability. The Army is reviewing the full capability
    of the sustainment base to include, organic depots, installation
    Directorate's for Logistics and the private sector industrial base. We
    anticipate the private sector, in partnership with our organic base, to
    conduct a significant amount of work, within the limits imposed by
    United States Code Title 10, Sections 2464 and 2466. Additionally, our
    parts suppliers, both manufacturers and overhaul facilities, will be
    called on to increase production to support this reconstitution effort.
        General Bedard. The impact on aircraft engines particularly the T-
    64 has resulted in engine changes at a rate of twice the normal non-
    deployed rate. Failures are due primarily to leaking/inadequate Engine
    Air Particle Separators (EAPS) and EAPS seals. The purpose of the EAPS
    is to filter out and discharge overboard all particulate matter in the
    air stream. The inability of the EAPS to effectively filter out fine
    sand while operating in austere desert sites results in excessive wear
    on the engines, resulting in reduced power, and early removal. Current
    availability of engines is adequate, but accelerated engine removals
    negatively impacted both the organizational and intermediate level
    maintenance departments' ability to reconstitute engine pools.
    Additionally, the accelerated removals drive up the cost per flight
    hour for the CH-53.
        The major effects on rotor blades continues to be pitting and
    corrosion, however, the damage rates and replacement ratios for
    Operation Iraqi Freedom (OIF) have not yet been determined. Aircraft
    returning from OIF will initially require some level of additional
    maintenance to recover from deferred maintenance that could not be
    accomplished in theatre. The initial increase in required maintenance
    man-hours per flight hour may be significant on return to home bases
    but should not be long term in duration.

        4. Senator Akaka. General Cody, I am particularly concerned about
    the Army's helicopters, which I know you care deeply about, because of
    their ongoing problems with spare parts shortages. I believe a recent
    readiness report stated that Army helicopter readiness rates are likely
    to remain low for at least 12 to 18 months, until long-lead spare parts
    arrive in the fleet. Would you comment on this issue?
        General Cody. I do expect to see lower aircraft readiness rates for
    a period of time, but not solely due to spare part lead times. The
    primary reason for lower readiness will be from the increased
    maintenance down time resulting from reconstitution.
        As I discussed in the previous question, the aviation
    reconstitution will be a tremendous effort. Our goal is to complete
    this effort in approximately 2 years. As discussed earlier, we are also
    in the process of synchronizing the effort to support the Army's
    ongoing peace keeping, humanitarian, stability and support, and global
    war on terrorism operations, possible future missions, as well as
    sustain home station training requirements and Army transformation.

                              OPERATIONAL LESSONS

        5. Senator Akaka. General Cody, Admiral Green, General Bedard, and
    General Schmidt, last year witnesses from each of your Services
    provided a fairly lengthy written response about lessons learned in
    recent operations. If you would, I'd like to ask you to update those
    answers for the record to reflect the past 13 months. Are there
    particular lessons that stand out from the global war on terrorism and/
    or Operation Iraqi Freedom?
        General Cody. Our current operations in Afghanistan and in Iraq
    have provided the Army with several lessons. The first lesson is that
    our training programs work--in particular our Combat Training Center
    (CTC) program. Soldiers and leaders continually have attested to the
    value of the ``CTC experience'' in preparing them for combat operations
    in Afghanistan and Iraq. We must continue to fund training and training
    resources, to include the expansion of our range capacity and the full
    implementation of our Joint National Training Capability (JNTC)
    concept.
        Tough, demanding training supported by an infrastructure that
    allows us to train, sustain, and deploy is essential to readiness.
    History shows that the higher the quality of training, the better the
    leaders and warfighters we produce. The performance of Army soldiers in
    OIF clearly shows the benefits of high quality training and improved
    readiness. Army forces repeatedly engaged and defeated numerically
    superior enemy forces in a variety of terrain and weather conditions.
        To continue our successful training strategy, we must fully
    modernize training ranges, combat training centers, and training aids,
    devices, simulators, and simulations to provide adequate and
    challenging training. In addition to live field training, the Army has
    funded the integration of virtual and constructive training
    capabilities. Yet, despite all the advantages of virtual and
    constructive training we expect to gain, there is no substitute for
    training in the field. As the quality of our forces, our equipment, and
    our networkcentric command and control operations continue to advance,
    our forces will operate with ever-greater dispersion. Maintaining
    sufficient maneuver areas for training these extended formations will
    become even more critical.
        Prior to initiation of combat operations in Iraq, Army forces
    utilized vast portions of Northern Kuwait for training exercises. This
    training area afforded our forces the opportunity to exercise in the
    same tactical formations used in combat operations and contributed to
    their success in OIF. Such opportunities are limited to only a few
    training areas in the world. Both within the continental United States
    and in our overseas training areas, these areas are increasingly being
    encroached upon, intensifying environmental constraints and operational
    limitations that place very restrictive limits on testing and training
    facilities. The Army is one of the best stewards of the environment. To
    improve on our stewardship, we are implementing a sustainable program
    that integrates operational needs, land management, explosives safety,
    and environmental concerns into the lifecycle management of our ranges.
        The next lesson is that our forces are ready to fight when they
    arrive, but we must continue to work with the Air Force and Navy as
    well as the Joint Staff and USTRANSCOM to ensure that they arrive in
    theater faster. OIF clearly illustrated the need for more strategic
    airlift and sealift. This weakness became apparent when the movement of
    forces into northern Iraq was delayed after Turkey denied our request
    to stage from their territory. The lack of strategic airlift and the
    inability to sustain our forces through airlift once deployed to Iraq
    delayed the movement of heavy and medium forces from Europe. The Army
    fully supports continued purchase of C-17 aircraft and fast sealift to
    ensure the joint force can get us to where the Nation needs us, when it
    needs us.
        Finally, the complexities of the Contemporary Operational
    Environment (COE)--as experienced in both Operation Enduring Freedom
    (OEF) and OIF--are here to stay. This reinforces the Army's
    transformation efforts and demonstrates a clear need to field both the
    Stryker Brigade Combat Teams (SBCT) and the Objective Force. Operations
    in Iraq demonstrated the need for a rapidly deployable medium force.
    The SBCT provides the combatant commander with a rapidly deployable
    force to deal with unforeseen challenges. If the SBCT had been
    available, it could have been quickly deployed to Iraq to provide
    greater security for Army and Marine lines of communication, or could
    have provided light forces in Northern Iraq with more lethality,
    survivability, and mobility.
        OIF clearly illustrated the great promise of transformation and the
    continuing relevance of the Army's heavy forces. The joint force
    exploited dramatically improved C\4\ISR capabilities to achieve near
    real time situational awareness. Commanders used their improved
    understanding of the battlefield to leverage the speed and lethality of
    air and ground forces resulting in the Iraqi regime's complete
    disintegration--with minimal collateral damage and coalition
    casualties. We must continue to enhance our C\4\ISR capabilities with
    particular focus on joint and multi-national interoperability. The M2
    Bradley fighting vehicle and M1 Abrams tank continued to prove their
    worth in major combat operations, surviving multiple engagements with
    minimal damage, and dominating enemy forces. During OIF, we achieved an
    unprecedented level of integration of SOF units/elements with our heavy
    forces and a re-validation of the heavy-light concepts we train at the
    CTCs.
        OIF also exposed vulnerabilities in the current force that will be
    addressed by Army transformation. Heavy ground forces are still
    dependent upon vulnerable supply lines. The Army's Interim and
    Objective Forces reduced logistics footprints will minimize the
    requirement to maintain long lines of communication. These forces will
    also deploy more rapidly and with less strategic lift to provide the
    commander with multiple options for responding to unforeseen challenges
    on the battlefield.
        The Army does not think short term. History has shown that the Army
    not only wins wars, but it also bears the preponderance of the
    responsibility for post-hostility operations. U.S. ground force
    presence is critical to stabilize the region and support the long
    process of rebuilding the economic and political infrastructure in
    Iraq.
        As we have demonstrated previously in Panama, the Gulf, Haiti,
    Bosnia, and Kosovo, and more recently in Afghanistan and Iraq, soldiers
    can defeat enemy armies, seize and control terrain, and control
    populations and resources with minimal collateral casualties and
    damage. They can operate across the spectrum of military operations,
    from full-scale conventional conflicts to asymmetric conditions, from
    fighting terrorists to setting the conditions for humanitarian
    assistance and transition seamlessly between these levels. In an era of
    precision weapons, nothing is more precise and discriminating than the
    U.S. Army soldier.
        Admiral Green. While we continue to analyze the lessons from OIF
    and the ongoing global war on terrorism, our preliminary analysis
    reinforces the lessons learned from Operation Enduring Freedom,
    validates some enduring principles of naval warfare, and provides
    additional insights that we are using to prepare for future joint
    combat operations.
        Navy lessons learned from OEF stressed the value of carrier-based
    airpower in a limited access environment, the importance of leveraging
    Special Operating Forces (SOF), the significant impact of agile and
    ready expeditionary forces, and the contributions of our coalition
    partners. As OEF continued, the readiness investments that Navy was
    able to make over the previous 2 years with your support continued to
    pay dividends. We were able to provide the President significant
    flexibility in setting the force for OIF with a focused effort to
    provide 7 Carrier Strike Groups (CSG) on call from August 2002, the
    planning and execution of a surge plan to get 12 TLAM-armed SSNs on
    station to support strike operations, the availability of two maritime
    pre-positioned squadrons to support deployment of a Marine
    Expeditionary Force (MPSRONs), the short notice deployment of two
    Amphibious Task Forces (ATF), and early activation of sufficient
    Military Sealift Command shipping to meet TRANSCOM requirements.
        OIF clearly validated the strategic utility of sea-based forces.
    Even with the difficulties in obtaining access, overflight, and basing
    from countries in the region, and the requirements to posture
    additional deterrent forces in the Western Pacific (1 CSG, 1 ARG, and 4
    SSNs), Navy provided the flexibility to be able to meet Central
    Command's naval force requirements, including 5 CSGs, 3 ARGs, 2 ATFs, 2
    MPSRONs, 12 SSNs, a command ship for theater Reserve, and ISR
    capabilities.
        Naval forces were able to contribute significantly to the timely
    precision fires necessary for an effects-based war. A key enabler for
    successful precision fires was persistent, fused ISR at both the
    strategic and theater level. We were able to mitigate early basing
    shortfalls with over 800 sea-based TLAMs fired, with over 88 percent
    discernible damage assessed in the preliminary analysis. Similarly,
    carrier air provided tremendous flexibility and precision, with over 95
    percent of the ordnance expended being precision guided, and targeting
    information sent to over 78 percent of the missions in-flight. In
    conjunction with the JFACC, an unprecedented number of time sensitive
    target (TST) missions were executed within the ATO process, with over
    800 conducted with an average of 3.5 hours from nomination to ordnance
    on target.
        OIF again demonstrated that it was possible to meet strategic
    objectives without massed force by leveraging conventional support to
    SOF, including immediate precision fires (e.g. Navy Tactical Air
    (TACAIR) providing close air support) and support by ISR assets at the
    tactical level. In fact, SOF both supported conventional forces such as
    3rd ID and IMEF and was supported by conventional ground forces such as
    the 26th MEU and 173rd Airborne Brigade. Navy SOF successfully executed
    key missions by taking early, calculated risks focused on key nodes.
    One example was the early take down of the Iraqi gas oil platforms and
    Al Faw pumping stations to preserve the oil infrastructure and prevent
    environmental damage. This integrated operation involved SEALs,
    coalition SOF, coalition surface ships, tactical ISR, Navy armed helos,
    Air Force SOF helos, and USMC support. Similarly, Joint SOF was able to
    integrate dedicated general-purpose forces to support WMD and
    leadership interdiction as well as POW rescue operations. Finally, the
    effective integration of Information Operations (IO) into the OIF
    campaign plan also appears to have achieved unprecedented success.
    Initial observations support the conclusion that IO contributed to oil
    fields being preserved despite the emplacement of explosives, mass
    desertions of enemy forces, and WMD not being employed.
        Maritime dominance remained critical to success in OIF. Over 25
    surface combatants were dedicated to escorting shipping for OIF, which
    supported the flow of forces and logistical support into theater
    including over 184 sealift and pre-positioned ships. Because of the
    ongoing terrorist threat, force protection requirements extended
    worldwide. This requirement was met by leveraging coalition naval
    support assigned to OEF and coalition naval forces outside the region
    (e.g. Spain in the Straits of Gibraltar). Although our maritime
    dominance provided unimpeded tactical movement of naval forces and
    rapid access for humanitarian assistance, an equally important lesson
    is that OIF was not as challenging as potential future scenarios in
    that there was no submarine threat, a negligible enemy surface force,
    and no Iraqi air threat. Clearly, maritime dominance cannot be taken
    for granted in future conflicts but remains crucial for success.
        OIF also generated several issues that we are working jointly to
    resolve. First, multiple blue-on-blue engagements occurred in OIF,
    involving coalition partners and all Services. Second, execution of
    joint close air support (JCAS), while successful, requires
    standardization throughout the joint force. Third, the growing
    importance of IO demands the development of measures of effectiveness
    and a timely, integrated kinetic/non-kinetic combat assessment process.
    Fourth, ISR capabilities require improved analytical capacity to permit
    timely exploitation. Fifth, a number of processes instituted to support
    targeting in OIF (e.g. Time Sensitive Targets, Commander Priority
    Targets, and TLAM ATO changes) require improvement and effective
    integration into CAOC doctrine. Sixth, although the CAOC structure was
    effective and joint to an extent never before realized, we must
    institutionalize a process to quickly stand-up a truly joint CAOC.
    Finally, coalition networks were not mature enough to provide the
    required connectivity for all users.
        In preparation for future conflicts, Navy has begun to
    significantly modify its operational posture to provide a constant
    surge capability in addition to its rotational force presence. The CNO,
    Admiral Clark, has directed the Commander, Fleet Forces Command, to
    implement a concept called the Fleet Response Plan. In his
    implementation message to the Fleet, Admiral Natter noted that the war
    on terrorism requires the Navy to ``be more ready and more
    responsive.'' The FRP has a goal of providing a force of six surge-
    ready CSGs, including those forward deployed, with two additional CSGs
    ready soon after. As such, the Navy's traditional schedule of sending
    ships to sea for 6 months, followed by 18 months at home preparing for
    the next deployment, could be made far more flexible so more ships are
    available to surge during a national crisis. Navy expects to be able to
    reset its forces and be ready to respond to future threats within the
    approved supplemental funding of $9.8 billion approved by Congress and
    allocated into direct appropriations and the approximately $1 billion
    allocated from the Iraqi Freedom Fund.
        General Bedard. The Marine Corps recently published the Combat
    Assessment Team summary report for Operation Enduring Freedom and
    distributed them to Members of Congress (HQMC, Office of Legislative
    Affairs can provide additional copies if desired). Some of those
    lessons may apply to OIF. Teams are in the Central Command theater,
    gathering surveys and interviews in order to capture lessons from OIF,
    and we'll share our assessment when complete. There will undoubtedly be
    areas for improvement, but the indications that I've received are that
    many of our lessons will be positive and favorable.

            - Our expeditionary, forward deployed forces provide combatant
            commanders a rapid response capability, and sea-basing can
            overcome challenges of anti-access.
            - Our ability to quickly deploy, marry up with pre-positioned
            equipment, and provide combat forces ready for immediate action
            is crucial to our continued success.
            - Our Marine Air Ground Task Forces (MAGTFs) are scalable,
            multi-faceted, and able to task organize on the fly to conduct
            highly sophisticated joint and coalition operations covering
            the spectrum of combat missions, including port seizure,
            operations in urban terrain, hostage rescue, and peace keeping
            operations.
            - An increased confidence and reliance on the timing and
            prioritization of well-coordinated precision fires (artillery
            and close air support), enabled the bold maneuvering of our
            MAGTF, SOF, and coalition ground forces operating in the
            MAGTF's assigned area of responsibility, while facilitating the
            exploitation of their successes.
            - Marine forces conducted sustained operations ashore on an
            unprecedented scale and at great distances.
            - Our MAGTFs must possess the ability to communicate and
            interface with SOF, joint, and coalition forces without being
            constrained by terrain or geography.

        General Schmidt. Success in future operations hinges upon our
    ability to learn from previous operations and prepare for future
    operations. To ensure the Air Force learns from ongoing operations and
    adapts accordingly, the CSAF established the Task Force Enduring Look
    (TFEL) office. TFEL is responsible for Air Force-wide data collection,
    exploitation, documentation, and reporting for all our campaigns in the
    global war on terror--including ONE, OEF-A, and now OIF. The objective
    for TFEL is clear--provide reach-back support to the warfighter, and
    properly recognize and apply lessons learned--during, rather than only
    at the conclusion of, these operations. To accomplish this mission, we
    deployed TFEL experts to the Combined Air Operations Center (CAOC)
    during Operation Iraqi Freedom to collect data during all phases of the
    war--from planning-preparation-execution through assessment--
    traditionally done in the months following a conflict. We are beginning
    to analyze the data that we've collected from OIF and at least one
    major theme is emerging: ``Integration is the Key.''
        A well-trained integrated joint force is a force multiplier
    producing effective and successful results, and very lethal results to
    our enemies. The potential is unlimited when the unique and
    complementary (Air-Land-Sea-Space-Info) capabilities of all the
    Services and our allies are linked together for integrated joint
    employment. The U.S. military again proved ``the more we sweat in
    peace, the less we bleed in war.'' Our joint team achieved victory in
    Iraq because we were the best-trained, equipped, and prepared force
    ever fielded for an operation. The CAOC painstakingly trained and
    practiced its processes, procedures, and scenarios before the onset of
    OIF. The USAF and Special Operations Forces jointly practiced counter-
    mobile missile operations (``SCUD hunting'') to deny the Iraqi SCUD
    threat. The Army/Air Force joint mobility rehearsed exercises and
    training of airborne ops which allowed the seamless inter-service
    execution of air insertion. Our ``precision employment force,''
    composed of ISR, navigation, information, and weapons systems,
    successfully prosecuted a record number of surgical TST strikes at a
    pace faster than any in history. The persistent all-weather precision
    employment against all target sets mitigated collateral damage. The
    experiences gained from Joint C\2\ISR and air dominance in the AOR for
    the past decade (due to OSW, ONW) has paved the way for these
    integrated joint successes.
        We are only at the genesis of OIF lessons learned and will continue
    to gather, analyze, exploit, and assess the data from Operation Iraqi
    Freedom and focus on the improvements for future potential operations.

        6. Senator Akaka. General Cody, Admiral Green, General Bedard, and
    General Schmidt, to the extent that any of these lessons have resource
    implications, how well are any adjustments supported in the fiscal year
    2004 budget request?
        General Cody. Because the Army's planning and programming is not
    short sighted, the fiscal year 2004 budget does provide adequate
    funding for the readiness and transformation lessons addressed in
    Question #5.
        The first lesson is that our training programs work--in particular
    our CTC program. Soldiers and leaders continually have attested to the
    value of the ``CTC experience'' in preparing them for combat operations
    in Afghanistan and Iraq. We must continue to fund training and training
    resources, to include expansion of our range capacity and the full
    implementation of our JNTC concept. To support this lesson learned all
    scheduled training rotations are fully funded: 10 brigade rotations (9
    Active components and 1 Army National Guard) through the National
    Training Center, 10 brigade rotations (9 Active components and 1 Army
    National Guard) through the Joint Readiness Training Center, and 4
    brigade rotations through the Combat Maneuver Training Center. The
    Battle Command Training Program will conduct three corps warfighter
    exercises and train seven Active component division command and staff
    groups.
        The next lesson: the complexities of the COE--as experienced in
    both OEF and OIF--are here to stay. This reality reinforces the Army's
    transformation efforts and demonstrates a clear need to field both the
    SBCT and the Objective Force. To support this lesson learned, in fiscal
    year 2004 the Army continues the research and development of the Future
    Combat Systems (FCS), providing the Army a full spectrum force system
    with substantially improved deployability; provides funding to purchase
    301 Stryker vehicles for the 4th Stryker Brigade Combat Team; continues
    selected procurement programs to improve strategic responsiveness,
    increase lethality of light forces, and recapitalize legacy systems;
    and restructures or divests $2.3 billion from procurement programs that
    did not meet the Army vision to provide research, development, test,
    and evaluation resources for the Army transformation.
        Admiral Green. Initial analysis of the lessons learned from the
    global war on terrorism (GWOT), including OEF and OIF, has validated
    the enduring principles of naval warfare and the funding decisions
    supporting their development. The PB04 budget request supports
    investments in current readiness, weapons procurement, and the further
    development of specific focus capabilities, such as information,
    surveillance, and reconnaissance (ISR), IO, and antiterrorism and force
    protection (AT/FP). As additional analysis is completed, and new
    lessons learned are analyzed, the Navy's future budget requests will
    reflect the necessary adjustments.
        Readiness investments remain an integral part of the success
    achieved in recent operations. OEF and OIF validated Congress' and the
    Navy's recent investments in current readiness. The PB04 request
    maintains current readiness funding levels necessary to support the
    Navy's forward presence and surge capabilities being developed as a
    part of the Fleet Response Plan (FRP).
        In addition to overall fleet readiness, significant investments
    have been made in weapons procurement, that contributed to the
    successes of the global war on terrorism. While Tomahawk land attack
    missile (TLAM) is no longer in production, funding for the follow-on
    missile, Tactical Tomahawk, was increased by $835 million across the
    FYDP between PB03 and PB04. The effect is an increase in production
    totaling 638 missiles across the FYDP.
        Both OEF and OIF validated the theory that military campaigns of
    the future would require less ordnance but more precise weapons. The
    shift in weapons procurement in the PB04 Navy budget reflect a trimming
    down of weapons inventories and development of more capable, precise,
    tri-service weapons such as the Joint Direct Attack Munition (JDAM),
    Joint Standoff Weapon (JSOW) and Joint Common Missile (JCM).
        To support the delivery of new weapons, the DON PB04 budget for
    naval aviation includes several significant initiatives to sustain our
    current force and produce a future naval aviation capability that
    incorporates lessons learned from OEF and OIF. The premiere strike
    fighter capability delivered from Carrier Strike Groups (CSGs) has been
    right-sized in the TACAIR integration initiative jointly endorsed by
    the Chief of Naval Operations (CNO) and the Commandant of the Marine
    Corps (CMC). This transformational initiative set inventory objectives
    for F/A-18E/F and Joint Strike Fighter, as well as set investment
    objectives for significant capability improvements such as Advance
    Targeting FLIR, Advanced Electronically Scanned Array (AESA) radar and
    Joint Helmet Mounted Cueing System (JHMCS). These capability
    investments promise a smaller, more capable force.
        A focus of the lessons learned from GWOT has been in the areas of
    ISR and IO, two of the mission capability packages (MCP) that comprise
    the FORCENet pillar of the CNO's Sea Power 21. Funding for both ISR and
    IO programs experience a substantial increase across the FYDP,
    reflecting the importance the Navy has placed on improving performance
    in these two areas. Several key programs have begun development or have
    received necessary funding increases to meet overall Navy objectives in
    these two areas. These programs include: broad area maritime
    surveillance (BAMS), unmanned combat air vehicle (UCAV) and EP-3
    upgrades. The chart below summarizes the increases in funding from PB03
    to PB04 in the areas of ISR and IO.

                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                          Fiscal Year
                                                    ------------------------------------------------------    FYDP
                                                       2004     2005     2006     2007     2008     2009
    ----------------------------------------------------------------------------------------------------------------
    PB03 ISR.......................................    160.1    457.8    188.0    187.0      N/A      N/A      992.9
    PB04 ISR.......................................    301.3    509.1    515.5    569.9    651.6    679.6    3,227.0
    DELTA (fiscal year 2004-2007)..................   +141.2    +51.3   +327.5   +382.9  .......  .......     +902.9
    ----------------------------------------------------------------------------------------------------------------
    PB03 IO........................................    324.4    408.9    568.4    924.2      N/A      N/A    2,225.9
    PB04 IO........................................    775.8    817.6    830.8    710.9    756.5    537.8    5,529.4
    DELTA (fiscal year 2004-2007)..................   +451.4   +408.7   +262.4  (213.3)  .......  .......     +909.2
    ----------------------------------------------------------------------------------------------------------------

        As a result of recent global events, including the U.S.S. Cole
    incident, the events of September 11, 2001, and the two recent
    conflicts, the Navy has focused strongly on improving the protection of
    its forces. The Navy has increased its efforts in antiterrorism and
    force protection in the 2004 President's budget submission. Aggressive
    programs have been funded in physical security (afloat and ashore) and
    chemical and biological protection (ashore, afloat, and aviation).

                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                          Fiscal Year
                                                    ------------------------------------------------------    FYDP
                                                       2004     2005     2006     2007     2008     2009
    ----------------------------------------------------------------------------------------------------------------
    ATFP PB03......................................  1,628.0  1,857.3  2,066.4  1,977.7      N/A      N/A    7,529.4
    ATFP PB04......................................  2,139.5  2,669.9  2,582.7  2,324.6  3,183.5  2,912.7   15,812.9
    DELTA (fiscal year 2004-2007)..................   +511.5   +812.6   +516.3   +346.9  .......  .......   +2,187.3
    ----------------------------------------------------------------------------------------------------------------

        In addition to the aviation investments in ISR/IO discussed above,
    DON has initiated replacement for the EA-6B electronic attack
    capability with the EA-18G. Investment in anti-terrorism/force
    protection and mine warfare were improved with commitment to funding
    the helicopter concept of operations through procurement of the MH-60R
    with integrated armed helicopter capability and the MH-60S that will
    field both an organic mine countermeasure and armed helicopter
    capability.
        The PB04 budget request has been validated by several key lessons
    learned from recent operations. Throughout future budget processes, the
    lessons learned will be incorporated into the analysis that supports
    future budget submissions.
        General Bedard. The fiscal year 2004 budget serves as a baseline
    that addresses our program requirements and forward posture, to include
    lessons learned prior to the budget submission. The costs incurred
    associated with Operation Iraqi Freedom and global war on terrorism
    support have not yet been fully identified and need to be addressed in
    a future budget adjustment. In the interim, we will continue to
    evaluate our lessons learned, re-validate our requirements, and make
    whatever adjustments are needed to ensure that the Marine Corps remains
    the Nation's premier total force in readiness.
        General Schmidt. Integration is the key requirement to meeting our
    current and future Air Force's expeditionary challenges. The fiscal
    year 2004 budget continues to make investments prioritized to develop
    our airmen, to pursue machine-to-machine interfaces, and to integrate
    our air and space operations with our sister Services' operations to
    create desired effects. Our integration achievements were the
    foundation to the success of Operation Iraqi Freedom. Today, we are
    still assessing the lessons of this operation. We hope to accommodate
    some of the lessons learned in recent engagements as we plan for the
    reconstitution of assets in Operation Iraqi Freedom.

                                  SPARE PARTS

        7. Senator Akaka. General Cody, I am pleased to see the Army
    appears to have found the resources to address its shortfalls in spare
    parts, which we knew are crucial to equipment readiness. It seems,
    however, that this issue had to reach a ``crisis'' stage before it was
    dealt with. In your view, why did it take the Army so long to identify
    that it had severe spare parts shortages?
        General Cody. The Army first identified the problem in the summer
    of 2000. In the mid-1990s, the Army systemically reduced our strategic
    inventories supporting all major weapon systems. This decision was made
    in response to the Office of the Secretary of Defense (OSD) mandate to
    reduce inventories and implement stock funding of depot level
    reparables as well as force structure changes. For several years, high
    weapon system readiness rates and high supply stock-availability rates
    were maintained by redistribution of excess inventories and local
    repair of components. However, in recent years, the combination of
    increased operating tempo (OPTEMPO), aging weapon systems, and reduced
    national level stocks negatively impacted weapon system readiness and
    supply availability.
        In early 2000, the Army logistics and financial communities started
    working to develop and validate the increased requirement for spares.
    The initial fiscal year 2001 requirement of $1.268 billion was to
    support current readiness and OPTEMPO, ``prime the pump'' for our RECAP
    program, and put spares on the shelf to sustain future contingency
    operations. The Army worked internally to fund some of the sustainment
    requirement and the RECAP program--we took risks on the contingency
    operations stocks. In fiscal year 2002, the strategic-level requirement
    to sustain current peacetime readiness continued to grow, specifically
    $1.006 billion for aviation support, $320 million for ground systems as
    well as a $237 million for future contingency operations. The Army
    continued to work the issue internally, but this requirement was
    competing with a multitude of other force structure and operational
    requirements. As the global war on terrorism started to unfold, the
    requirement continued to grow until the fiscal year 2003 unfinanced
    requirement (UFR) reached $1.563 billion in August 2002. The Army
    leadership was able to fund 91 percent of the requirement. This
    provided authorization to the United States Army Materiel Command to
    procure new assets and repair unserviceable ones where we did not have
    enough on hand to support the increased demand. Because the Army has
    long acquisition lead-times due to the complex, highly technical,
    weapon system specific items that we manage, it will be 18-24 months
    before the majority of stocks are delivered. Repair lines should start
    producing serviceable items in 4-6 months.
        The fiscal year 2003 UFR primarily supports a garrison OPTEMPO. We
    have asked for an additional $408 million in funding for spares in the
    current supplemental request to support OIF and might have to increase
    our requirement to support the demands we are continuing to incur
    during OIF. We are closely monitoring the supplies flowing into the
    theater of operation. As units redeploy, we will use these assets to
    the maximum extent possible to offset the UFR, but they will not fill
    our total requirement. In addition, we do not know at this point how
    much will be expended in the area of operations, returned to the
    shelves, or be available for redistribution. The Army continues to size
    the requirement in order to sustain the warfighter.

        8. Senator Akaka. General Cody, why were indicators of these
    problems not evident in readiness reporting?
        General Cody. The Army's readiness reporting encompasses several
    systems with varying degrees of detail depending upon the specific
    application or functional area. For example, our unit status reporting
    (USR) system provides information regarding the status of personnel,
    equipment, and training for our operational forces. Specific details
    regarding class nine (IX) repair parts reside in our logistics
    reporting channels maintained by the Office of the Deputy Chief of
    Staff for Logistics (G4). On a monthly basis, the Army's senior leaders
    review key readiness indicators that draw information from these two
    systems, as well as many others. The specific indicators revealing unit
    level shortcomings with spare parts were not available via our current
    reporting systems. In October 2002, the Army began implementing the
    Strategic Readiness System (SRS) designed to capture leading measures
    that trigger leadership intervention prior to performance falling below
    acceptable levels. Our previous systems as mentioned above rely on
    lagging measures using empirical data. The SRS will look across the
    entire Army to assess for example, the distribution pipeline,
    production timelines, warehouse stockage levels, and transshipment
    timelines that effect availability of spare parts. When fully
    implemented, the SRS will synchronize the cause and effect of
    performance across the Army through the alignment and use of balanced
    scorecards.

        9. Senator Akaka. General Cody, what steps are being taken to
    ensure that we don't end up with shortfalls in the future, which
    degrade readiness, while parts are being manufactured?
        General Cody. The Army has established several management oversight
    mechanisms to preclude a future shortage of spares. We have a joint
    logistics/financial process action group with members from the
    Department of the Army and the United States Army Materiel Command
    (USAMC). This group reviews and validates the requirement, works to
    obtain funds, and oversees the execution of additional funding and
    authorization for repair and procurement. As a result of the efforts to
    support the global war on terrorism, the Office of the Deputy Chief of
    Staff, G-4, in conjunction with the USAMC, G-3, established a biweekly
    reporting structure that analyzes the top 25 readiness drivers for our
    major weapons systems--helicopters, ground equipment, and engineer
    equipment. This has allowed us to focus our attention and funding on
    items that are essential to sustain readiness and the warfighter. We
    report out quarterly to the Vice Chief of Staff, Army (VCSA) on
    execution of the additional funding for spares. The monthly Army
    strategic readiness update to the Secretary of the Army and Chief of
    Staff, Army provides the current readiness posture. We are working to
    include a ``spares assessment'' as part of this update.
        The Army continues to be concerned about the health of our spares
    inventory and its effects on readiness. Our attention is focused on
    getting well. This will take a while. Our initial efforts were focused
    on a peacetime, garrison environment. The successful effort to conduct
    OIF has stressed our logistics system and emptied the shelves of
    essential parts. As we posture ourselves to ``reset'' our equipment and
    sustainment inventory to their pre-OIF levels, we will have to
    undertake the job of replenishing the shelves. The requirement for
    spares will be tempered by our switch to performance based logistics
    and reliance on contractor support. We are currently assessing the
    levels we will need and looking for resources to obtain assets. We are
    working to achieve a judicious mix of spares and equipment to sustain
    readiness. Our capability to sustain the warfighter remains our number
    one goal.

                          FORCE STRUCTURE ADJUSTMENTS

        10. Senator Akaka. General Schmidt, in a written response to a
    question from last year's hearing, General Wald stated that
    ``unprecedented demands are being placed on our aircraft and people,''
    and that coping with higher OPTEMPO would require the Air Force to
    either to ``cut back on the number and types of missions that we do
    worldwide, or increase our force structure to accommodate the new
    demand.'' In your written testimony you stated that you do not need
    additional manpower, but that your force structure needs to be
    adjusted. Will making these changes relieve the stresses on the force,
    or is the Air Force still considering reductions in its missions? If
    so, which ones?
        General Schmidt. The Air Force is currently transforming/maturing
    itself by adjusting both the workforce and the force structure to
    create 10 equally-capable Air and Space Expeditionary Forces (AEFs),
    which exploits advantages in efficiencies and economies of scale.
    Operations Enduring Freedom, Noble Eagle, and Iraqi Freedom, for
    example, continue to validate the AEF construct. The AEF is allowing
    the AF to present sustained Air and Space Expeditionary Task Forces
    (AETFs) to provide combat employment capability to the Joint Force
    Commander much quicker, precisely, and more lethal than in the past.
        As our AEF continues to mature, the AF continues to mitigate the
    ``AEF stresses'' through increasing the eligibility across more airmen
    for AEF taskings, and to identify and create the correct mix/balance of
    job skills required for AEF operations.
        We believe these measured investments will result in the long-term
    stress reduction in our worldwide OPTEMPO while preserving our ability
    to meet our current and future missions. As always, the U.S. Air Force,
    along with our sister Services, will continue to be prepared to achieve
    the national security objectives for the United States.

                             FLEET RESPONSE CONCEPT

        11. Senator Akaka. Admiral Green, the Chief of Naval Operations has
    directed that the Navy will move to a new Fleet Response Concept (FRC)
    in order to enhance the Navy's surge capability. Would you give a brief
    description of the FRC, including its implications for maintenance and
    training?
        Admiral Green. The purpose of the FRC is to ensure we are always
    ready to rapidly build on the combat power of our forward deployed
    forces. It is an approach to achieve and maintain a Navy ready to surge
    when required. CNO tasked Commander, Fleet Forces Command to lead an
    effort to develop the FRC, changing our readiness processes to
    institutionalize an enhanced surge capability for our Navy. The FRC
    requires both readiness and asset availability.
        By the FRC, the intent is to conduct more efficient maintenance
    scheduling and execution, and following maintenance, to train units to
    prescribed readiness goals, achieving various phases of employability
    prior to regularly scheduled deployments.

        12. Senator Akaka. Admiral Green, does implementing the FRC have
    any budget implications, and if so, are they reflected in the fiscal
    year 2004 budget request?
        Admiral Green. The FRC was developed to align within current
    budgetary considerations (President Budget 2004). The FRC has now
    evolved into the Fleet Response Plan (FRP) as discussed in CNO GENADMIN
    222221Z May 2003. Implementation of this plan centers around a
    progressive readiness concept with significant emphasis on maintaining
    manning levels and properly planned and funded ship depot maintenance
    periods. The FRP contains no new funding requirements. Commander Fleet
    Forces Command (CFFC) is reviewing all aspects of the FRP to determine
    any associated funding risk within the fiscal year 2004 budget request.

                              SUSTAINING READINESS

        13. Senator Akaka. General Cody, Admiral Green, General Bedard, and
    General Schmidt, in your written testimony, Admiral Green, you stated
    that overall readiness is higher than you can ever remember it. A
    number of other witnesses have made similar statements to our committee
    this year, and some of you have mentioned it to me in personal
    conversations as well. This is great news, and I want to make sure we
    stay focused on what things we can do that would be most helpful in
    ensuring that readiness stays as high as possible in the future. Can
    each of you tell me your ``top three'' priorities for sustaining the
    readiness of our forces?
        General Cody. As outlined in my opening statement, the Army's
    primary metric for resourcing and ensuring future years' readiness is
    ground and air operating tempo (OPTEMPO). To this end it is essential
    that we continue to maintain adequate funding in these critical
    training accounts to support execution of our training strategy. It is
    this strategy that prepared and trained the force we currently have in
    Iraq and fighting the global war on terrorism. The post-Iraqi Freedom
    Army will undoubtedly have substantial reconstitution costs to reset
    our forces, repair and replace our equipment, restock our spare parts,
    and replenish prepositioned stocks and munitions. Being able to do this
    as quickly and efficiently as possible will be a critical factor in
    sustaining our future readiness and may require substantial
    supplemental funding. In addition, continuing to fund Army
    Transformation to enable the Army to fully field the Interim Force and
    continue to move toward the Objective Force, while sustaining the
    Legacy Force, will ensure that the Army maintains its current high
    readiness levels.
        Admiral Green. The Navy's top three readiness priorities are as
    follows:
        1. Full funding of the readiness accounts (Ship Operations and
    Flying Hour Program), as well as the readiness enabler accounts (ship
    and aviation maintenance, aviation support equipment, air systems
    support, etc.). This will ensure that personnel are properly trained,
    that the systems are properly maintained, and both are ready when
    needed.
        2. Readiness and Range Preservation Initiative (RRPI). Encroachment
    on military training and test areas has gradually increased over time
    to the point where we find ourselves stretched to the limit of our
    ability to implement effective training processes. While we have found
    ways generally to work around encroachment in the past, the net effect
    of satisfying existing regulatory requirements is ``death by a thousand
    cuts,'' and DOD is increasingly forced to restrict or relocate training
    and testing when encroachment affects our ranges. Both of those
    alternatives degrade the readiness of U.S. military forces, and the
    cumulative effect of environmental restrictions can prevent effective
    training for combat. The RRPI seeks modest and narrowly focused
    legislative clarification where laws are being applied beyond their
    original legislative intent. These reforms strike a balance between the
    Title 10 requirement of providing a combat ready force and creating a
    regulatory regime for military readiness activities while maintaining
    our commitment to environmental stewardship.
        As it pertains to the Marine Mammal Protection Act (MMPA), the
    proposal would clarify the definition of ``harassment'' to reflect the
    position of the National Research Council and focus on minimizing
    injury and biologically significant disruptions to behavior critical to
    survival and reproduction. It also clarifies the application of the
    MMPA to strictly military readiness activities when permits are
    required, adds a national security exemption, and provides definitions
    for the terms ``military readiness activities,'' ``combat,'' and
    ``combat use'' as they are used in the statute.
        As it pertains to the Endangered Species Act (ESA), the legislative
    proposal requests the use of Integrated Natural Resource Management
    Plans (INRMPs) as a substitute for critical habitat designation under
    the ESA, where the U.S. Fish and Wildlife Service (USFWS) concurs with
    the INRMP. INRMPs are required for all installations by the Sikes Act,
    are prepared in coordination with USFWS and State fish and wildlife
    agencies, and are subject to public review and comment. They consider
    an installation's natural resources holistically and provide greater
    flexibility for installation commanders to manage their lands for the
    benefit of both readiness and threatened and endangered species that
    are present.
        3. Expanding mission funding of naval shipyards. Our naval forces
    returning from wartime operations will challenge our shipyard capacity.
    To alleviate this, we are expanding our mission funding initiative of
    naval shipyards with a proposed 2-year pilot program at the Puget Sound
    Naval Shipyard (PSNSY). Also, allowing a consolidated depot maintenance
    budget will help us achieve the synergistic benefits (e.g. more
    efficient sharing of skilled workforce) that we anticipate from a
    common funding system based on the previously executed pilot and now
    permanent program at the Pearl Harbor Naval Shipyard and Intermediate
    Maintenance Facility.
        General Bedard. The Marine Corps' pre-conflict readiness rates were
    high due to: the Corps' emphasis on current readiness--even greater
    than the emphasis placed on the important goals of modernization and
    transformation, stop loss/stop move, and recent congressional actions
    which increased the funding available for readiness efforts. We are
    grateful for Congress' support. Our top three priorities are to
    maintain current readiness, reset our force, and modernize/transform
    our force.
        General Schmidt. Sustaining and restoring our readiness will
    require years of substantial and sustained recapitalization in our
    people, equipment, and infrastructure. To accomplish this the Air Force
    will:
        1. Continue to address personnel issues such as manning shortfalls
    in critical specialties through bonuses, re-enlistment incentives, re-
    training programs, and the continued use of Air Reserve component
    volunteers.
        2. Continue to address aging weapon system concerns. The age of
    some aircraft have resulted in previously unanticipated problems on the
    aircraft. Service life extensions, fleet viability, and maintenance
    costs remain concerns across the Air Force. The old age of a variety of
    aircraft and systems in the Air Force inventory require new solutions
    such as the Lockheed Martin [LMT] F/A-22 and the lease of Boeing [BA]
    767 tanker aircraft. Additionally, the Air Force has continued
    commitments to improve spares management to include funding.
        3. Stabilize the operations and personnel TEMPO in order to restore
    our capabilities to meet future AEF requirements. It's important to
    return to a predictable AEF battle rhythm for our expeditionary force,
    especially for the LD/HD assets. To accomplish this the following
    factors will be considered. First, provide our people needed post-
    hostility time for their overall health, family matters, and
    professional education opportunities. In addition, units need time to
    resume training plans, repair equipment, reduce backlogs, and restock
    consumables.

                                 FORCE ENABLERS

        14. Senator Akaka. General Schmidt, your statement noted that
    ``force enablers'', like lift and munitions, would be the biggest
    inhibitors to responding to other contingencies. Are we redirecting
    significant resources in the fiscal year 2004 budget request or across
    the Future Years Defense Plan to relieve pressures in these areas? If
    not, why not?
        General Schmidt. The Department is currently looking at all force
    enablers to determine how we can best invest to ensure responsiveness
    to future contingencies. We will request that Congress redirect fiscal
    year 2004 resources if necessary.
                                     ______

                   Questions Submitted by Senator Bill Nelson

                               SIMULATION SYSTEMS

        15. Senator Bill Nelson. Dr. Mayberry and General Schwartz, we have
    noted the cancellation of the Joint Simulation System (JSIMS) program
    in the Department's fiscal year 2004 request. Those of us on the Armed
    Services Committee who care deeply about the pace and scope of efforts
    to increase joint experimentation, joint training, creation of a
    standing joint operational headquarters, and validation of joint
    requirements and acquisition, are troubled by this development. I am
    concerned that we have abandoned this program on the threshold of its
    initial operational capability. Block I of the system is supposed to be
    undergoing validation testing at Joint Forces Command now. We seem to
    be blithely accepting years of possible delay of a simulation system
    necessary to successful joint training and experimentation. What
    analysis informs this decision and provides the compelling
    justification for so dramatic and comprehensive a reduction?
        Dr. Mayberry and General Schwartz. The Department added significant
    resources on three occasions to provide full funding for the JSIMS
    program and keep it on schedule. In August 1999, $7.9 million was
    reprogrammed to ensure an initial operational capability (IOC) of April
    2001. In August 2000, an additional $265.5 million was allocated for
    fiscal year 2002-2007 to support a rescheduled IOC of March 2002.
    Several months later, during the budget review, a further $7.4 million
    increase was approved for fiscal year 2001-2002, to address shortfalls
    identified late in the process by the program office.
        Several changes also were made to the management structure in an
    attempt to improve program performance and keep development on track.
    In December 1999, the program was given an ACAT-1D (Acquisition
    Category 1D) designation to increase management oversight. In January
    2000, the Army was directed to appoint a full-time program manager. At
    the same time, the program office was instructed to produce a cost
    estimate, split JSIMS development into blocks, and develop appropriate
    acquisition documents. Although some of these measures were adopted,
    problems persisted. By December 2002, the official IOC date had slid to
    March 2005.
        In addition to standard ACAT-1D oversight, there were at least four
    other reviews to assist program management, two of which were led by
    former Directors of Defense Research and Engineering. In December 1999,
    the Senior Review Board directed the program office to reconfigure its
    development plan around the Department's high-level architecture
    standard. Then, in 2001, an independent panelled by Dr. Anita Jones
    concluded that JSIMS needed to establish sound performance-prediction
    capabilities and improve its integration with its major partners, like
    the Army's Warfighter Simulation program. That same year, an audit
    conducted by the Army Materiel Command concluded that current
    engineering practices would not resolve performance issues within cost
    and schedule constraints. Finally, in December 2002, another
    independent review team, this time headed by Dr. Dolores Etter,
    recommended looking externally for commercial technologies and
    strategies that support scalability in order to facilitate spiral
    development for future JSIMS blocks. Dr. Etter's team also recommended
    an independent outside assessment of the JSIMS architecture. All of
    these reviews, in addition to numerous ACAT-1D assessments, highlighted
    serious concerns about the technical and performance standards for
    JSIMS. The decision to conduct an analysis of alternatives (AoA) before
    proceeding with further JSIMS development is consistent with the
    results of these reviews.

        16. Senator Bill Nelson. Dr. Mayberry and General Schwartz, what
    alternatives are DOD/JFCOM considering to meet the requirement for a
    simulation tool that supports joint training, joint experimentation,
    and joint program evaluation?
        Dr. Mayberry and General Schwartz. This question will be addressed
    by the AoA and cannot be definitively answered before the study is
    complete. Final guidance is now being developed, but the AoA will
    likely consider the following alternatives: 1) continuing the JSIMS
    program, 2) separating the joint and Service JSIMS elements and
    pursuing them as independent programs, 3) modifying existing
    simulations, and 4) commercial sources.

        17. Senator Bill Nelson. Dr. Mayberry and General Schwartz, how
    much will delivery of a joint simulation system slip based on this
    decision and what risks (operational and programmatic) are associated
    with such a slip?
        Dr. Mayberry and General Schwartz. JFCOM did not plan to fully
    replace the Joint Training Confederation with the JSIMS until the Block
    III software had been delivered. Since Block III software requirements
    have not yet been defined and there is no delivery schedule, any
    estimates of slippage in JSIMS' delivery would only be speculative.
    Because of this, the military Services and defense agencies had all
    programmed funds to support legacy simulation training systems through
    at least fiscal year 2008.
        Current systems and the JNTC, when it is available, will meet the
    Department's immediate training needs. One limitation of current
    systems is the lead-time required for scenario generation, narrowing
    the scope of missions the Department can rehearse on short notice. It
    is unknown whether JSIMS would correct this deficiency, but it should.
    The AoA is intended to be a risk-mitigating step to determine the most
    cost-effective method for meeting joint and Service training
    requirements. The AoA will assess risk associated with each alternative
    against the JSIMS cost estimate.

        18. Senator Bill Nelson. Dr. Mayberry and General Schwartz, how
    will DOD/JFCOM support, and who will be responsible for, a new joint
    simulation program in the fiscal year 2004 request?
        Dr. Mayberry and General Schwartz. A new joint simulation is not
    funded in the fiscal year 2004 budget. The Department has initiated an
    AoA to identify the most cost-effective approach for meeting joint and
    Service training requirements. Until the AoA is complete, we cannot say
    whether a new program ultimately might be needed.

        19. Senator Bill Nelson. Dr. Mayberry and General Schwartz,
    Congress appropriated millions of dollars for JSIMS and its related
    Service programs in fiscal year 2003. How does DOD/JFCOM propose to use
    that funding now that they are all (with one exception) zeroed in the
    fiscal year 2004 request and Future Years Defense Plan?
        Dr. Mayberry and General Schwartz. All fiscal year 2003 funds
    remained with the program to ensure delivery of Block I software in
    accordance with program office estimates. The JSIMS Software Support
    Facility was funded at $14 million in fiscal year 2004, using monies
    originally planned for the JSIMS program office. The remaining $168.6
    million in fiscal year 2004 funding proposed in the fiscal year 2003
    President's budget was allocated to other priorities.

        20. Senator Bill Nelson. Dr. Mayberry and General Schwartz, this
    program decision memorandum potentially unhinges a valuable ``center of
    gravity'' in modeling and simulation research, development, and
    acquisition based upon the synergy of a tightly organized and
    interdependent network of industry, academia, and military agencies
    that has existed and excelled over a number of years. How will DOD/
    JFCOM ensure that this network is sustained, energized, and leveraged
    in fiscal year 2003 and fiscal year 2004 while alternatives to JSIMS
    and its related programs are evaluated for the out years?
        Dr. Mayberry and General Schwartz. The intent of the Program
    Decision Memorandum (PDM) is to take delivery of Block I software at
    the Joint Warfighting Center, where a software support facility will be
    established to maintain JSIMS products. This action, in conjunction
    with moving the hardware and cataloging documentation, will preserve
    our software investment for future use, should a decision be made to
    resume the program. JSIMS is only one of many modeling and simulation
    programs being conducted in Orlando, Florida. While many engineers will
    no longer work directly on JSIMS, their expertise will transfer readily
    to these other programs, thereby keeping their modeling and simulation
    skills current. Should the AoA recommend a continuation of the program,
    we would seek to reassemble the best of the team and restart the
    program, using the Block I software maintained at the software support
    facility.

        21. Senator Bill Nelson. Dr. Mayberry and General Schwartz, how
    will DOD/JFCOM avoid increased costs associated with a ``new start''
    program in the out years?
        Dr. Mayberry and General Schwartz. The JSIMS program has a poor
    cost-forecasting record, and no independent cost estimates have been
    prepared for it, making it impossible to assert that any new start
    would incur additional costs. It is possible that a new program may
    actually be less costly. This question will be addressed by the AoA and
    cannot be answered prior to the study's completion.

                       JOINT NATIONAL TRAINING CAPABILITY

        22. Senator Bill Nelson. Dr. Mayberry and General Schwartz, what is
    the current state of analysis and planning leading to creation of a
    JNTC?
        Dr. Mayberry. The JNTC program has an approved budget, and JFCOM is
    setting up a Joint Management Office. The implementation plan, now
    being drafted, will define what will be required to support JNTC
    certification and accreditation. Fiscal year 2003 activities will
    include establishing and testing technical support requirements,
    determining opposing force capabilities, developing and testing data
    collection methods, and establishing and testing the exercise-control
    architecture. JFCOM is leading the planning for JNTC events in fiscal
    year 2004 and beyond.
        General Schwartz. U.S. Joint Force Command is making significant
    progress on analysis and planning leading to the creation of a Joint
    National Training Capability by October 2004. The Joint Management
    Office (JMO) has been established. It has instituted a formal
    requirements process with full Service participation, developed a
    detailed implementation plan, and prepared personnel, facilities,
    equipment, acquisition, and interim contracting plans. The JMO has
    coordinated efforts to transform Service-training venues to accommodate
    training in specific joint tactical tasks including joint combat air
    support, joint personnel recovery, joint combat identification, and
    joint fires. Plans for integrated east and west coast range complexes
    and communications architectures are being developed. Initial event
    planning has yielded significant operational improvement related to the
    single integrated air picture (SIAP), exercise fidelity, joint context,
    instrumentation, live virtual-constructive simulation, coalition
    capabilities, and logistics. Site certification and event accreditation
    requirements are also in development and will be implemented for
    initial sites and events.

        23. Senator Bill Nelson. Dr. Mayberry and General Schwartz, what
    are the overarching challenges identified at this point to creation of
    a JNTC?
        Dr. Mayberry. The overarching challenge for the program is to
    create a solution within a high-level architecture that provides for
    rapid integration of live, virtual, and constructive components so that
    trainees are immersed in a seamless, combat-like environment, without
    realizing that some aspects are virtual or constructive.
        General Schwartz. The foremost challenge is to establish
    transformed training programs that preserve Service core competencies
    while at the same time making needed improvements in training within a
    proper joint context. This includes the need to fully identify tasks,
    conditions, standards, and desired capabilities that can be measured
    ranging from the tactical to strategic levels of military operations. A
    second challenge is to integrate the best training capabilities and
    systems of the individual Services and defense agencies promoting
    improved joint training, reducing redundancies, and optimizing use of
    national resources. Third is the challenge of the program to create a
    solution within a higher level architecture that provides for rapid
    integration of live, virtual, and constructive simulations so that
    trainees are immersed in a seamless, combat-like environment such that
    the training audience is unaware of artificialities.

        24. Senator Bill Nelson. Dr. Mayberry and General Schwartz, how
    does cancellation of the JSIMS and related Service simulation programs
    contribute to the challenge or facilitate the creation of a JNTC?
        Dr. Mayberry. JSIMS and JNTC are independent of each other,
    although JSIMS could be used by JNTC if it met JNTC requirements.
    Without JSIMS, JNTC will use legacy systems, complemented if necessary
    by new systems, to meet its objectives.
        General Schwartz. Our ability to achieve initial operational
    capability and execute near-term JNTC activities is not impacted by the
    success or failure of Joint Simulation System. These are independent
    capabilities. The current Joint Training Confederation, the Millennium
    Challenge 2002 model federation, tools such as the Joint Theater Level
    Simulation and the Joint Conflict and Tactical Simulation, and
    continuing efforts by the Services, industry, and academia to search
    for and develop improved models will be sufficient to sustain the
    implementation and maturation of the JNTC. The single area not fully
    supported by current models or projected near-term model improvements
    is rapid database builds for mission rehearsal. But, this is a future
    requirement.

                                  MOBILIZATION

        25. Senator Bill Nelson. Dr. Mayberry and General Schwartz, current
    and future operations in Iraq and in the global war on terrorism are
    increasingly requiring mobilization of large numbers of Reserve
    component forces. Mobilization of these patriotic citizen-soldiers is,
    of course, a burden on thousands of families and communities
    nationwide. Looking into the future, what do you think the long-term
    impact of extended and frequent Reserve mobilizations will be on the
    strength and readiness of the Reserve Forces?
        Dr. Mayberry. On April 17, 2002, we had a total of about 220,000
    Reserve component (RC) individuals and units mobilized in support of
    Operations Noble Eagle/Enduring Freedom/Iraqi Freedom. This number
    represents about 18 percent of the RC force of 1.2 million. Although a
    small majority of these reservists have been mobilized frequently, the
    Department has been effective in implementing judicious and prudent use
    of RC personnel. We have tried to minimize the burden on families,
    employers, and communities through a variety of support programs.
        In the long run, history tells us there will be a modest, positive
    readiness impact on most mobilized units and individuals--especially in
    the short-term. Troops who are mobilized in a prudent and judicious
    manner are personally and professionally satisfied at having
    accomplished a meaningful mission. There is a higher degree of morale
    and comradeship in these units and an increased appreciation for the
    value of good training and maintenance. Retention improves, personnel
    are better trained following a call-up, and for the most part recently
    mobilized units tend to have more and better equipment. The readiness
    effect of recently mobilized units and individuals needs to be
    maintained during normal training periods to sustain the improvement. I
    see no reason to believe this trend will not continue.
        General Schwartz. While the current operations are certainly
    demanding, our Reserve component (RC) forces will continue to
    participate in contingencies with minimal impact to strength and
    readiness. Our RCs are completely integrated into operations in Iraq
    and our war against terrorism. Because we do have a substantial RC pool
    to draw from we are able to support additional requirements using the
    current partial mobilization authority and the use of volunteers. It is
    our intent to demobilize RC forces as quickly as possible consistent
    with ongoing operational requirements. We have seen no marked changes
    in RC recruiting or retention over the past 12 months. It may be too
    soon to tell if recent PERSTEMPO will negatively impact retention. We
    are monitoring these trends closely. But, we'll certainly need the
    continued support of employers and families to maintain the commitment
    of our many reservists and guardsmen.

        26. Senator Bill Nelson. Dr. Mayberry and General Schwartz, is the
    current mobilization causing you to re-think the size, structure, and
    readiness priorities of the Reserve Forces?
        Dr. Mayberry. The overall size of the Reserve Force is about right
    and we do not recommend any changes to end strength this time. However,
    there are efforts underway within the Department to rebalance the
    Active/Reserve component force mix to prevent the frequent, repeated
    mobilization of the National Guard and Reserve that have occurred
    during Operations Noble Eagle/Enduring Freedom/Iraqi Freedom. The
    readiness priorities of the Reserve and forces continue to focus on
    ensuring that our soldiers, sailors, airmen, marines, and
    coastguardsmen are trained and ready to fight.
        General Schwartz. There are always lessons to be learned from any
    action, and of course we attempt to consider all previous actions (OIF,
    ONE, OEF, etc.) when we do our planning for the future.
        I am certain there are minor adjustments for the Reserve components
    that should be considered based upon our observations of current
    mobilizations, just as there are adjustments we should make to the
    Active component to improve the total force. We do not believe,
    however, that wholesale changes are required, as by all accounts we
    appear to have been rather successful.
        We do need to guard, however, against the ever-present temptation
    to ``fight the last war,'' as the next requirement will invariably not
    be a repeat of the most recent event. Hence, as we study the full
    spectrum of requirements and make force recommendations to satisfy
    them, we must review the mobilization process to make certain it is as
    efficient as possible. We must determine what forces/specialties we
    anticipate having the highest usage. We must make certain they are
    readily available, Active or Reserve. If it makes sense to have a given
    force type in the Reserve components, we must make certain they are
    adequately funded for training so that their readiness level allows us
    to immediately draw upon their skills.

                          BASE REALIGNMENT AND CLOSURE

        27. Senator Bill Nelson. Dr. Mayberry and General Schwartz, what is
    your role in the establishment of criteria, collection, and analysis of
    data, and recommendations or decisions during the base realignment and
    closure (BRAC) 2005 process?
        Dr. Mayberry. In his November 15, 2002, memorandum to kick off the
    BRAC 2005 process, ``Transformation through Base Realignment and
    Closure,'' the Secretary of Defense directed the formation of two
    senior groups to oversee and operate the BRAC 2005 process. The
    Infrastructure Executive Council (IEC), chaired by the Deputy
    Secretary, will be the policymaking and oversight body for the entire
    BRAC 2005 process. The subordinate Infrastructure Steering Group (ISG),
    chaired by the USD(AT&L), 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 ISG approved the Principal Deputy
    USD(P&R) as chair of the Education and Training (E&T) Joint Cross-
    Service Group (JCSG). The E&T JCSG has been convened with the key
    Service and Joint Staff education and training OPRs who will
    participate in the consideration and recommendation of the functions
    that should receive joint cross-Service analysis. I am participating in
    this process within the JCSG.
        General Schwartz. The BRAC process is an important effort designed
    to ensure the Department maintains and operates a military basing and
    supporting infrastructure posture that optimally balances training,
    readiness, and presence requirements in order to meet national security
    needs in the most cost-efficient manner.
        To oversee and operate the BRAC 2005 process, two senior leadership
    groups have been established. The Chairman of the Joint Chiefs of Staff
    sits on the Infrastructure Executive Council, which will be the
    policymaking and oversight body for BRAC 2005. The subordinate
    Infrastructure Steering Group will oversee joint cross-Service analysis
    of common business oriented functions and ensure the integration of
    that process with the military departments and defense agencies. These
    leadership groups will oversee the establishment of criteria,
    collection, and analysis of data, and make recommendations or decisions
    during the BRAC 2005 process.

        28. Senator Bill Nelson. Dr. Mayberry and General Schwartz, several
    admirals in the Navy have told me how much they regret losing Naval Air
    Station Cecil Field in the 1995 BRAC. How will we avoid that kind of
    mistake in this next round?
        Dr. Mayberry. The BRAC 2005 process we are now embarking on 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
    fair and objective, 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 Education & Training (E&T) Joint Cross-Service
    Group (JCSG) will work to develop closure and realignment
    recommendations through detailed analyses and strict adherence to BRAC
    guidelines. The Infrastructure Steering Group and the Infrastructure
    Executive Council will review the E&T JCSG procedures and
    recommendations for consideration by the Secretary of Defense. 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. 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 Congress.
        General Schwartz. The BRAC 2005 process we are now embarking on
    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 16 May 2005). The President in consultation with the
    congressional leadership will nominate commissioners. Upon completion
    of public hearings and deliberations, the Commission must forward its
    closure and realignment recommendations to the President for approval
    not later than 8 September 2005. The President must approve the
    recommendations (on an all-or-none basis) and forward them to Congress.
    I am confident this process will produce basing recommendations that
    will serve us well over the long term.

        29. Senator Bill Nelson. Dr. Mayberry and General Schwartz, how
    will training resources be captured and evaluated through this process
    to ensure that installations are accurately measured for their current
    and future military value?
        Dr. Mayberry. 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 indicated
    that a primary objective of BRAC 2005 is to examine and implement
    opportunities for greater joint activity. To implement this direction,
    the memorandum further divided the BRAC analyses into two categories of
    functions: joint cross-Service teams will analyze the common business-
    oriented support functions and the military departments will analyze
    all Service-unique functions. Where the Department determines that
    education and training functions are common business-oriented, they
    will be reviewed and analyzed by one of these teams. The remaining
    training functions will be analyzed by the responsible military
    department.
        General Schwartz. Public Law 107-107, which authorizes the BRAC
    process, requires that military value be the primary consideration in
    making closure and realignment recommendations. Installation training
    resources is an important component in determining military value. The
    Secretary of Defense 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 indicated that a
    primary objective of BRAC 2005 is to examine and implement
    opportunities for greater joint activity. To implement this direction,
    the memorandum further divided the BRAC analyses into two categories of
    functions: joint cross-Service teams will analyze the common business-
    oriented support functions and the military departments will analyze
    all Service-unique functions.
        All 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 being primary
    consideration. In doing so, we will take into account the training
    resources at these installations.

                               SPECIAL OPERATIONS

        30. Senator Bill Nelson. Dr. Mayberry and General Schwartz, the
    President's budget includes a significant increase in funding for
    Special Operations Forces. Special Operations Forces are busier than
    ever, but there are real limits to how big these forces can be without
    compromising their quality. In future years, how do you see the
    Department managing the training challenge of ever-increasing
    operational tempo for these forces with the inherently limited size of
    Special Operations units?
        Dr. Mayberry. This question is equally applicable Defense-wide and
    is not limited to Special Operations Forces. America's competitive
    advantage of her Armed Forces is people. Those who serve--be they in
    the Active, Reserve, or civilian component--are well trained and
    equipped. But it is our people, quality/people, who make the difference
    every day of every year. We will never compromise quality for size.
        We can however mitigate risks be they operational tempo,
    requirements-resource imbalances or training challenges, by adopting a
    capabilities based approach to planning to deter and defeat adversaries
    who will rely on surprise, deception, and asymmetric warfare to achieve
    their objectives. We must, as Secretary Rumsfeld has said, maintain our
    military advantages in key areas while developing new areas of military
    advantages through the transformation of U.S. forces and capabilities.
    This administration is committed to transformation. We will divest
    ourselves of legacy forces and organizations and processes to maximize
    warfighting effectiveness. As part of this transformation, Special
    Operations Command will be divested of various missions, such as
    routine foreign military training and civil support that can be
    successfully accomplished by other elements of the U.S. Armed Forces,
    agencies, or outsourced.
        The Secretary's highest priority following fighting the global war
    on terrorism is transforming training to better enable joint
    operations. The Department's vision for transformation training is to
    provide dynamic, capabilities-based training for the Department of
    Defense in support of national security requirements across the full
    spectrum of Service, joint, interagency, intergovernmental, and
    multinational operations.
        The Department is in the process of defining the requirements to
    develop a training capability that provides interoperability of live,
    virtual, and constructive training systems across the Department,
    leading to the creation of a Joint National Training Capability
    environment that meets Service, interoperability, and combatant
    commander training needs.
        With your continued support we will create this Joint National
    Training Capability that allows for a realistic network centric,
    distributed global combat joint training and mission rehearsal
    capability.
        General Schwartz. I agree that SOF cannot be mass-produced, and it
    is the human dimension of SOF, not necessarily the hardware, which
    makes U.S. Special Operations Command such a capable organization. We,
    therefore, continue to wrestle with the operational tempo implications
    that the war on terrorism has imposed on SOF units.
        While it's true that prosecuting a major combat operation impacts
    the readiness of the overall force, it is also true that nothing
    prepares our forces for conflict as well as participation in real-world
    operations. That said, a period of reconstitution following combat
    operations will be necessary and we expect the Reserve component forces
    to assume a significant role in the reconstitution process for the
    foreseeable future.
        This is not a new problem set for SOF commanders. SOF has always
    been a low-density/high-demand commodity performing a balancing act
    between operational demands, training requirements, and personal time.
    SOF commanders have met this challenge, and will continue to do so,
    through a combination of careful management of personnel, awareness of
    current and future requirements, and individual sacrifice.
        In an attempt to mitigate the burden on the SOF community, we
    intend to increase numbers but will not do so at the expense of
    readiness or quality of personnel, as this would result in a net loss
    of capability. We will focus on retention of personnel by providing
    quality-of-life, advancement opportunities, and effective family
    support. Where appropriate, we will utilize the expertise of former SOF
    personnel, DOD civilians, and contractors, and will carefully manage
    assignment of SOF personnel outside the SOF community.
        Finally, we must ensure that we do not over-commit at the expense
    of our training institutions. Instructors are sometimes seen as a
    convenient source of additional personnel. Cannibalizing our
    schoolhouses to support operations, however, is risky as it restricts
    our ability to reconstitute the force and will quickly result in
    reduced readiness.

        31. Senator Bill Nelson. Dr. Mayberry and General Schwartz, how
    will managing this training challenge affect the global war on
    terrorism in the long term?
        Dr. Mayberry. As the Secretary has stated, when our Nation was
    attacked on September 11, there was a great deal of pressure to put off
    transformation--people cautioned, you can't fight the global war on
    terrorism and simultaneously transform the Department. The opposite is
    the case. The global war on terror has made transforming an even more
    urgent priority. Our experience on September 11 made clear that our
    adversaries are transforming the ways in which they will threaten our
    people. We cannot sit still.
        The leadership of the Department is deeply engaged in training
    transformation. Our implementation efforts are growing significantly in
    pace and intensity. Over time this effort will significantly enhance
    our capability to fight the global war on terrorism.
        General Schwartz. As I stated previously, nothing prepares our
    troops for conflict as well as real-world operations. Experience is
    perhaps the single greatest force multiplier there is. SOF units are
    gaining experience with each passing day and stand prepared to meet the
    full demands of Operation Iraqi Freedom and to continue to fulfill our
    global commitments in the war on terror. We will manage reconstitution
    of the force while satisfying our global military demands.
        Maintaining this level of effort obviously presents challenges.
    While our ability to generate major forces is robust, our SOF assets
    will require close management and careful prioritization. We are
    conducting an assessment of both SOF core and collateral missions and
    capabilities required for the global war on terrorism. As we transform
    the Services, it is likely that some capabilities and missions now
    commonly associated with SOF could find a home in conventional forces.
    We expect the skill-sets of our conventional forces to increase
    dramatically as we continue to prosecute the global war on terror,
    allowing them to assume increasingly difficult missions and lessening
    the burden for SOF.
        Additionally, the U.S. Special Operations Command and the U.S.
    Marine Corps are working closely together to examine how SOF and U.S.
    Marines can operate jointly to undertake a range of contingencies
    previously done exclusively by SOF. Similar collaborations will further
    ease demands on our special operations units and allow them to focus on
    core missions.

                                   SIMULATORS

        32. Senator Bill Nelson. General Cody, Admiral Green, General
    Bedard, and General Schmidt, what is your position on the cancellation
    of the JSIMS program and the impact on your related Service simulation
    programs?
        General Cody. I do not believe the cancellation of the program will
    have an impact on joint training. The fiscal year 2003 funding was
    retained, so that the program manager could deliver the Block I
    software to the Joint Warfighting Training Center (JWFC) for their use
    to conduct Joint Task Force (JTF) component level training. This will
    enable the JWFC to continue further development to support joint
    training, doctrine, and experimentation. Moreover, the program decision
    memorandum (PDM) directed an AoA to identify a cost effective method of
    meeting future joint and Service training requirements. The impact on
    the Army simulation is greater, however, because the Block I software
    provides little utility for Service use. To this end, I believe it is
    better for the Army to pursue its own Title 10 solution with a
    capability to link with a joint simulation when it has matured.
        Admiral Green. Navy supports the decision to cancel the JSIMS for
    Service use. JSIMS was over budget ($12 million in fiscal year 2003),
    behind schedule (over 1 year for Block I and estimates as much as 5
    years for Block II), and delivering a product that does not meet all of
    the requirements in the Operational Requirements Document. The impact
    to the Navy is that funding to support wargaming development has been
    zeroed. However, unlike the other Services, Navy training requirements
    for wargaming are directed at a small audience (Battle Group/Amphibious
    Ready Group Staff only) and therefore do not require the extensive
    hardware and manpower to run a JSIMS scenario. Navy will reprogram
    existing funds to upgrade the Enhanced Naval Wargaming System (ENWGS)
    to meet emerging training requirements. Because the reprogramming is
    minimal, Navy chose not to reclama the JSIMS portion of the PDM to DOD.
        General Bedard. The cancellation of JSIMS will not have a
    significant effect on the near term Joint National Training Center
    support or simulation programs.
        General Schmidt. The Air Force accepts the fiscal trade-offs that
    led to the OSD PDM decision on the JSIMS program. Impacts to related
    Air Force simulation programs will require funding adjustments to
    maintain and improve legacy systems in current use for Service and
    joint training, doctrine, and experimentation.

        33. Senator Bill Nelson. General Cody, Admiral Green, General
    Bedard, and General Schmidt, are you satisfied that DOD directed the
    cancellation with a clear understanding of the risks and costs
    associated with closing the existing program, delaying establishment of
    a replacement program, and the potential loss of time and skilled
    modeling and simulation development personnel?
        General Cody. I can only assume that DOD had a clear understanding
    of the risks and costs of terminating this program. The Army worked
    very closely with them while they were drafting the PDM. We recommended
    completing Block I, assessing the software, and then developing an AoA
    before deciding on termination. We also strongly recommended the
    Service program funding be retained regardless of the JSIMS decision so
    that the Services could progress on their own toward their own Title 10
    capability with the intent to link to JSIMS at a later date.
        Admiral Green. Navy is satisfied that DOD made a good faith
    decision on the JSIMS based on dysfunctional management structure,
    overhead, and nature of the separate development environments. JSIMS
    has not adhered to basic acquisition principles and shows no potential
    to deliver a usable product for Service use in the near future
    (certainly not within the Acquisition Program Baseline timeframe).
    However, the PDM does allow for completion of Block I to address joint
    training requirements. The PDM directed AoA should recommend a follow-
    on program that has the ability to ``learn'' from JSIMS mistakes and
    possibly deliver a better product in less time than JSIMS had projected
    for Block II.
        General Bedard. Simulation training support for MEF level exercises
    and Joint Task Force exercises were two of eight primary objectives for
    the Marine Corps participation in the JSIMS development program that
    the Marine Corps would like to enhance with simulation. The JSIMS
    program simulates a joint training capability that is less than the
    Marine Corps' desired threshold. Therefore, further development of the
    JSIMS program would not be prudent. The Marine Corps supports the
    Secretary of Defense's ongoing initiative to develop and field a JNTC
    for all of the reasons provided during Dr. Mayberry's testimony. In the
    interim, the Marine Corps will forego simulation training in these
    particular areas until the JNTC concept can be adapted to provide the
    degree of automation required.
        General Schmidt. We are satisfied that OSD principals understood
    the risks and costs implied and that the final decision reflects the
    difficult fiscal trade-offs often required among competing OSD
    priorities and the mandate to remain within DOD total obligation
    authority.

        34. Senator Bill Nelson. General Cody, I understand that the Army
    has found funds to continue development of WARSIM, but to what joint
    simulation will this be connected? How will we know if WARSIM will be
    compatible with the next joint simulation? Isn't this a bit of a
    developmental gamble?
        General Cody. The Army has not found funds to continue development
    of WARSIM. The only funds currently against the program are the $15
    million the Office of the Secretary of Defense restored in fiscal year
    2004. We are exploring options for the next generation of constructive
    simulations, and it will certainly be built to link to a joint
    simulation at a later date. However, the WARSIM program lost $168
    million of Army Total Obligation Authority in fiscal year 2004-2009,
    and it will difficult to restore that funding in the program objective
    memorandum.

        35. Senator Bill Nelson. General Cody, are you satisfied that
    cancellation of the JSIMS program is necessary to accelerate
    establishment of a Joint National Training Capability or does it
    complicate achieving such an objective?
        General Cody. Cancellation of the JSIMS program should not
    complicate achieving a JNTC. Constructive simulations are only a small
    piece to JNTC effort and current/existing simulations should support
    near term JNTC requirements until JSIMS is built to meet that
    requirement.

        36. Senator Bill Nelson. General Cody, what are your views on the
    importance of quality modeling and simulation to joint experimentation,
    joint training, joint doctrine, joint requirements development, and
    joint acquisition?
        General Cody. Quality modeling and simulation is indispensable to
    effective joint experimentation, joint training, joint doctrine, joint
    requirements development, and joint acquisition. Regrettably, a
    simulation that is good for training and doctrine may not be suitable
    for experimentation and requirements development. We in the Army and
    DOD need the flexibility to develop the right simulations for each of
    the purposes you mention.
        Problems frequently arise in simulation development when we try to
    apply a single modeling and simulation solution to accomplish multiple
    requirements. Recent history has shown that trying to develop large,
    complex simulations can be costly, difficult, and very risky. Even
    federations made up of smaller simulations, such as Millennium
    Challenge 2002, can grow in size to where the cost, complexity, and
    risk can become excessive. We can't let the word ``joint'' delude us
    into thinking that one simulation is applicable for every situation and
    every Service.
        The DOD must have a modeling and simulation environment available
    to it that allows for multiple simulations to be quickly and
    efficiently built and/or used. Critical to this type of environment is
    the underlying knowledge, data, models and algorithms, and especially
    the organizational agility, to rapidly assimilate these components into
    a ``quality'' simulation that is most relevant to the intended use.
    Ultimately, smaller overlapping simulations are likely to be more
    effective and efficient than attempts to create one all-encompassing
    simulation.

        37. Senator Bill Nelson. General Cody, in your view, what DOD
    agency should be responsible for the definition of requirements,
    research, development, testing, evaluation, and procurement of a joint
    simulation system?
        General Cody. No single agency can address all of these tasks by
    itself. A combination of established agencies working through one
    overarching organization, such as Joint Forces Command (JFCOM), would
    provide a unified direction and purpose. JFCOM should identify research
    topics but allow established research agencies at both the Service and
    Office of the Secretary of Defense level to conduct research within
    their guidance. Established Service level agencies should continue
    small or unique program procurement, while larger programs are managed
    through a Joint Program Management office. In both cases, requirements
    definition, testing, and evaluation for a joint simulation system
    should be a JFCOM responsibility with Service input.

                          BASE REALIGNMENT AND CLOSURE

        38. Senator Bill Nelson. General Cody, Admiral Green, General
    Bedard, and General Schmidt, I have no doubt that the Services are well
    into preparation for data collection and analysis leading up to a BRAC
    recommendation in 2005. I am interested to know your views on BRAC.
    What is your role within your Service or DOD in the establishment of
    criteria, collection and analysis of data, and recommendations or
    decisions during the BRAC 2005 process?
        General Cody. I view BRAC 2005 as a great opportunity to enhance
    our warfighting capability and efficiency through infrastructure
    realignment. It will be a critical component of our transformation.
        As the Deputy Chief of Staff, G3, I am the staff proponent for unit
    activations, inactivations, relocations, and other force structure
    changes, and, ultimately, the strategic stationing of Army forces. I
    will provide the Army's Stationing Strategy to the Army's Basing Study
    Group, and participate in the development and evaluation of
    alternatives.
        I am also a member of the Army's BRAC Senior Review Group, which
    provides guidance to and reviews products of the BRAC 2005 study group.
        Admiral Green. A successful BRAC 2005 is most important to the
    Department of the Navy, to the Department of Defense, and to the
    Nation. Now more than ever we need to convert excess capacity into
    warfighting capability--we owe it to all Americans--particularly our
    men and women in uniform--to seek every efficiency in the applications
    of funds on behalf of our warfighter.
        As the Deputy Chief of Naval Operations (Plans, Policy and
    Operations), I do not have a direct role in any aspect of the
    Department's BRAC 2005 efforts. However, my understanding is the
    Department of Defense, with all of its components, will work as a team
    to develop the BRAC 2005 selection criteria. The common theme will be
    having military value as the primary consideration.
        General Bedard. The Marine Corps supports the requirement of the
    Department of Defense to reduce excess infrastructure, in order to
    redirect resources to other important programs. The Marine Corps is
    fully committed to participation in the BRAC process. The Department of
    Defense has formed two senior groups to oversee and evaluate the
    process. The Commandant of the Marine Corps serves on the
    Infrastructure Executive Council and the Assistant Commandant serves on
    the Infrastructure Steering Group. Marine Corps Reserve Forces are also
    fully participating in the review and analysis. I will be actively
    engaged in this process through periodic updates as the analysis
    proceeds, and will consult as to the military value of the results or
    recommendations arising from that analysis from my perspective as
    Deputy Commandant, Plans, Policies, and Operations. The Secretary of
    Defense has stated that all installations will be subject to review
    during this analysis.
        General Schmidt. Under BRAC law, the Secretary of Defense proposes
    and finalizes selection criteria upon which the Services and DOD are to
    base their closure and realignment recommendations. All Services will
    have input into these criteria through the Infrastructure Executive
    Council and Infrastructure Steering Group created by the Secretary of
    Defense to oversee and operate the BRAC 2005 process.
        Based upon these criteria, both DOD joint cross-Service groups and
    the Services will design detailed questions to collect the information
    and data necessary to analyze all required military installations on
    the basis of these criteria, the DOD force-structure plan, and the
    infrastructure inventory required by BRAC law. Through both DOD and
    Service internal control plans, we will ensure our analysis and
    recommendations are based on accurate and complete data and that the
    process is properly documented and auditable. The Services have
    established interdisciplinary teams to design the questions and make
    recommendations through the Service Secretary to DOD, and DOD in turn
    has established similar mechanisms. Under the BRAC law, however, the
    final recommendations transmitted to the BRAC Commission are those of
    the Secretary of Defense.

        39. Senator Bill Nelson. General Cody, Admiral Green, General
    Bedard, and General Schmidt, what systems are in place that give you
    confidence that we will avoid a NAS Cecil Field kind of mistake in this
    next round?
        General Cody. I cannot comment on decisions made involving
    installations belonging to other Services in previous BRAC rounds.
    However, the Army intends to take full advantage of lessons learned
    from previous BRAC rounds throughout our entire process. In addition,
    the Army has implemented several systems that give me confidence that
    we can avoid missteps in this round of BRAC. They include more
    sophisticated analytical tools, a disciplined data collection/
    certification process, a rigorous set of internal control procedures,
    and a thorough, comprehensive review of all BRAC products by the Army's
    Senior Review Group.
        Admiral Green. I cannot speak to decisions made in previous BRAC
    rounds however, for BRAC 2005 the law sets out a very fair selection
    and review process. It requires all bases to be treated equally,
    whether considered for closure or realignment in the past; all
    recommendations will be based only on 20-year force structure plan,
    infrastructure inventory, and published selection criteria; all data
    used will be certified as accurate and complete and provided to the
    Commission and Congress; and all DOD recommendations will be reviewed
    by independent Commission and President.
        General Bedard. The Department of Defense has studied lessons
    learned from the last four rounds of BRAC. The Marine Corps is working
    closely with the other Services to develop tools that will improve the
    BRAC decision-making processes. One of the tools the Office of the
    Secretary Defense is developing to use in BRAC analysis is the
    Installation Visualization Tool (IVT), which will employ Geographical
    Information Systems (GIS) to provide decisionmakers with more complete
    information about installations and their environment. The Air Force
    has the lead for the development of the IVT. The IVT will assist in
    relating operational infrastructure, training requirements, airspace
    and environmental analysis.
        General Schmidt. The BRAC law prescribes a very logical progression
    of rigorous and objective reports, studies, and analysis that should
    culminate in Secretary of Defense recommendations for closures and
    realignments that reasonably, effectively, and efficiently meet our
    national defense security needs. The Department of Defense and the
    Services either have or will establish and rigorously adhere to
    Internal Control Plans to ensure our analysis and recommendations are
    based on accurate and complete data and that the process is properly
    documented and auditable. As DOD's recommendations are reviewed,
    evaluated, revised, and/or approved by the BRAC Commission, the
    Comptroller General's Office, the President, and ultimately by
    Congress, numerous levels of checks and balances are built in to the
    process.

        40. Senator Bill Nelson. General Cody, Admiral Green, General
    Bedard, and General Schmidt, how will your critical training
    resources--land, airspace, and sea--be captured and evaluated through
    this process to ensure that installations are accurately measured for
    their current and future military value?
        General Cody. We have well-defined training resource requirements
    for our current forces and a good working template for future force
    requirements. Our critical training resources will be captured and
    evaluated to ensure that installations are accurately measured for
    their current and future military value by implementing a process which
    includes clearly defined requirements, a disciplined data collection/
    certification process, a rigorous and auditable analytical process, and
    a thorough post-analysis review.
        Admiral Green. The law requires that published selection criteria
    must ensure that military value is the primary consideration. I
    anticipate that both current and potential future training resources
    will be identified and considered as a part of the installation
    military value assessments during the BRAC 2005 process. Additionally,
    as required by the law, the selection criteria must address the
    following:

            - Preservation of training areas for maneuver by ground, naval,
            or air forces
            - Preservation of military installations in the United States
            as staging areas for the use of the Armed Forces in homeland
            defense missions
            - Preservation of military installations throughout a diversity
            of climate and terrain in the United States for training
            purposes
            - Consider the impact on joint warfighting, training, and
            readiness
            - Contingency, mobilization, and future total force
            requirements at both existing and potential receiving locations
            to support operations and training
            - The extent and timing of potential costs and savings,
            including the number of years, beginning with the date of
            completion of the closure or realignment, for the savings to
            exceed the costs
            - The economic impact on existing communities in the vicinity
            of military installations
            - The ability of both the existing and potential receiving
            conununities' infrastructure to support forces, missions, and
            personnel
            - The impact of costs related to potential environmental
            restoration, waste management, and environmental compliance
            activities.

        General Bedard. The Department of Defense has begun to form the
    structure for the Base Realignment and Closure process. The Commandant
    of the Marine Corps serves on the Infrastructure Executive Council and
    the Assistant Commandant serves on the Infrastructure Steering Group.
    These groups will provide the executive level oversight to ensure
    future requirements are fully considered. Marine Corps Reserve Forces
    are also fully participating in the review and analysis. Six joint
    cross-Service groups are formulating procedures for looking across the
    Services for many common functions. Individual departments will review
    Service unique functions. We will be working closely with the other
    Services to ensure accurate data collection and analysis to determine
    the optimum infrastructure and alignment to support our force
    structure, weapons systems, doctrine, and tactics for how we will
    operate and train for the foreseeable future. The Secretary of Defense
    has stated that all installations will be subject to review during this
    analysis.
        General Schmidt. Until DOD's final selection criteria are proposed
    and finalized in accordance with the BRAC law, we cannot provide a
    definitive response. However, the BRAC law does provide that for the
    BRAC 2005 process military value must be the primary consideration for
    these selection criteria and DOD's recommendations. The BRAC law
    further specifies that military value must include: preservation of
    suitable training areas for maneuver for all forces now and in the
    future; preserving military installations for training purposes
    throughout a diversity of climate and terrain; impact on training; and
    contingency, mobilization, and total force requirements, current and
    future, at both existing and potential receiving locations to support
    operations and training. Accordingly, critical training resources will,
    at a minimum, be captured and analyzed in this manner.

        [Whereupon, at 4:11 p.m., the subcommittee adjourned.]