[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.
---------------------------------------------------------------------------
    \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\
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    \1\ Consolidated Appropriations Resolution, 2003, P.L. 108-7.
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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.
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    \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.
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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.
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    \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\
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    \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).
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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;
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    \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.
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                  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\
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    \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\
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    \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.''
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                  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
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    \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.
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                  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\
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    \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\
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    \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\
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    \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).''
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    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\
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    \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.
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    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\
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    \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.''
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    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\
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    \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.
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    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\
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    \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\
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    \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.
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      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\
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    \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\
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    \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'').
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    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\
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    \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.''
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         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\
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    \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.
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    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\
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    \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.
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    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\
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    \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.''
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    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\
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    \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.
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    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.
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    \43\ See Exhibit 8.
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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.
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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.
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    \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.
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    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.
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    \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\
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    \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.
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    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.
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    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\
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    \55\ 60 Fed. Reg. 56488 (Nov. 8, 1995).
    \56\ 62 Fed. Reg. 6625 (Feb. 12, 1997).
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    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\
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    \57\ ``Military Munitions Rule,'' 62 Fed. Reg. 6622, 6632. See note 
48, supra.
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    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\
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    \58\ 62 Fed. Reg. 6631.
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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.]

                                 
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