[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
[H.A.S.C. No. 109-13]
MILITARY CONSTRUCTION, FAMILY HOUSING, BASE CLOSURES AND FACILITIES
OPERATIONS AND MAINTENANCE
__________
HEARING
BEFORE THE
READINESS SUBCOMMITTEE
OF THE
COMMITTEE ON ARMED SERVICES
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
__________
HEARING HELD
MARCH 15, 2005
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READINESS SUBCOMMITTEE
JOEL HEFLEY, Colorado, Chairman
HOWARD P. ``BUCK'' McKEON, SOLOMON P. ORTIZ, Texas
California LANE EVANS, Illinois
JOHN N. HOSTETTLER, Indiana GENE TAYLOR, Mississippi
WALTER B. JONES, North Carolina NEIL ABERCROMBIE, Hawaii
JIM RYUN, Kansas SILVESTRE REYES, Texas
ROBIN HAYES, North Carolina VIC SNYDER, Arkansas
HEATHER WILSON, New Mexico CIRO D. RODRIGUEZ, Texas
KEN CALVERT, California ROBERT A. BRADY, Pennsylvania
J. RANDY FORBES, Virginia BARON P. HILL, Indiana
JEFF MILLER, Florida JOHN B. LARSON, Connecticut
TOM COLE, Oklahoma SUSAN A. DAVIS, California
ROB BISHOP, Utah RICK LARSEN, Washington
CANDICE S. MILLER, Michigan JIM MARSHALL, Georgia
MIKE ROGERS, Alabama MADELEINE Z. BORDALLO, Guam
TRENT FRANKS, Arizona
JOHN M. McHUGH, New York
Ryan Vaart, Professional Staff Member
Paul Arcangeli, Professional Staff Member
Christine Roushdy, Staff Assistant
C O N T E N T S
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CHRONOLOGICAL LIST OF HEARINGS
2005
Page
Hearing:
Tuesday, March 15, 2005, Military Construction, Family Housing,
Base Closures and Facilities Operations and Maintenance........ 1
Appendix:
Tuesday, March 15, 2005.......................................... 39
----------
TUESDAY, MARCH 15, 2005
MILITARY CONSTRUCTION, FAMILY HOUSING, BASE CLOSURES AND FACILITIES
OPERATIONS AND MAINTENANCE
STATEMENTS PRESENTED BY MEMBERS OF CONGRESS
Hefley, Hon. Joel, a Representative from Colorado, Chairman,
Readiness Subcommittee......................................... 1
Ortiz, Hon. Solomon P., a Representative from Texas, Ranking
Member, Readiness Subcommittee................................. 3
WITNESSES
Grone, Philip W., Deputy Under Secretary of Defense
(Installations and Environment), Department of Defense......... 4
Kuhn, Fred W., Deputy Assistant Secretary (Installations),
Department of the Air Force.................................... 8
Penn, Hon. B.J., Assistant Secretary (Installations and
Environment), Department of the Navy........................... 7
Prosch, Geoffrey G., Principal Deputy Assistant Secretary
(Installations and Environment), Department of the Army........ 6
APPENDIX
Prepared Statements:
Grone, Philip W.............................................. 43
Kuhn, Fred W................................................. 101
Penn, Hon. B.J............................................... 87
Prosch, Geoffrey G........................................... 66
Documents Submitted for the Record:
[There were no Documents submitted.]
Questions and Answers Submitted for the Record:
Mr. Forbes................................................... 117
Mr. Taylor................................................... 117
MILITARY CONSTRUCTION, FAMILY HOUSING, BASE CLOSURES AND FACILITIES
OPERATIONS AND MAINTENANCE
----------
House of Representatives,
Committee on Armed Services,
Readiness Subcommittee,
Washington, DC, Tuesday, March 15, 2005.
The subcommittee met, pursuant to call, at 2:02 p.m., in
room 2118, Rayburn House Office Building, Hon. Joel Hefley
(chairman of the subcommittee) presiding.
OPENING STATEMENT OF HON. JOEL HEFLEY, A REPRESENTATIVE FROM
COLORADO, CHAIRMAN, READINESS SUBCOMMITTEE
Mr. Hefley. The committee will come to order. Today, the
Readiness Subcommittee meets to address testimony from the
Department of Defense (DOD) on the fiscal year 2006 budget
request for military construction, family housing, base
closures and facilities-related accounts.
I welcome our witnesses, and we look forward to your
testimony, particularly, Mr. Grone, we always enjoy having you
back here so that we can abuse you as much as possible,
particularly in your new role, it is your first time in your
new role.
Secretary Grone. Yes, sir.
Mr. Hefley. New title. So that entitles you to more abuse.
The panel before us represents the Department of Defense's
installation environment team. It is my hope that this panel
will help us to understand the facilities-related challenges
facing our military. I also hope they will help to justify what
I view as yet another disappointing Military Construction
(MILCON) budget request.
First, the non-Base Realignment and Closure (BRAC) MILCON
request for 2006 is $400 million less than the amount
appropriated in 2005. It is also $1 billion less than the
amount forecast for 2006 and last year's budget. And as such,
it appears that MILCON budgets continue to be the bill payer
for other DOD priorities.
Second, the Department continues to fall short of meeting
its 95 percent goal for sustainment funding. Not only does the
budget only meet 92 percent of the requirements, but the
Department still not has implemented models for restoration,
modernization and base operations.
As a result, sustainment accounts will continue to be
raided during the year to fund other must-pay requirements, and
they will ultimately be executed at levels that will allow the
continued erosion of our military facilities.
And, finally, Army base operation support accounts are
funded at approximately 70 percent of requirements, leaving
them at least $1 billion short of the level necessary to keep
child care centers open, dining halls serving chow, lights
turned on and base employees reporting to work.
Considering the Army base commanders have already
considered such extreme measures in fiscal year 2005 due to
budget pressures, I am astonished that the service has budgeted
these accounts in this manner for 2006.
Last year, I expressed the view that the Department had put
its facilities programs on hold until BRAC 2005 in the hope
that billions of dollars in facilities funding shortfalls would
vanish after BRAC. My perspective has not changed, and I am
concerned that the backlog of shortfalls continues to grow due
to new costs associated with changes in our global basing, Army
transformation, Marine Corps force structure changes and now
the enormous up-front costs of BRAC.
On this note, I hope Mr. Grone will address the committee's
interest in the base realignment and closure process. Not only
is the committee interested in the Department's justification
for $1.9 billion in 2006 for implementation of BRAC decisions,
but we are very interested to hear how the Department
anticipates spending $5.7 billion in fiscal year 2007 for
implementation.
Furthermore, I would like to hear the Department's
justification of the relatively small $300 million request for
the Office of Economic Adjustments. This office, which is
tasked with the critical role of supporting community efforts
to cope with BRAC changes, appears to be significantly
underfunded for the task at hand.
And perhaps most importantly, I would like to ask Mr. Grone
to describe his vision of the Department's disposal and reuse
policies for the upcoming BRAC rounds.
For example, what will the roles of public auctions, public
benefit conveyances and negotiated sales in BRAC property
disposal, how do you see that breaking down? And how does the
Department intend to manage BRAC property clean-ups more
effectively? DOD's approach to property disposal will affect
every community touched by the BRAC process in 2005.
For the members of this subcommittee, I should note that
Mr. Grone's comments on BRAC today are well-timed in light of
our Thursday subcommittee briefing from Government
Accountability Office (GAO), Association of Defense Communities
(NAID) and the Office of Economic Adjustment on community
options for preparing and managing the local effects of BRAC.
That briefing will be held at 2 p.m. in 2118 in Rayburn, right
here in this room.
Clearly, the panel before us has much to address, so I want
to close with one final comment. The House Armed Services
Committee has a long history of recognizing the importance of
facilities to military readiness and quality of life. We
believe in treating DOD facilities as assets worthy of
investment, maintenance and modernization.
The 2006 budget request does not treat DOD facilities as
assets. Instead, it treats DOD facilities accounts as bill
payers for other Department priorities. This approach erodes
readiness and diminishes quality of life for America's military
personnel.
I am confident that our witnesses recognize this fact, and
I urge each of them to renew their commitments to increase and
protect facilities budgets in the future. This is nothing new.
We have been dealing with this for a long, long time.
At this time, I would like to recognize the Honorable
Solomon Ortiz, my friend and colleague from Texas and the
ranking member of this committee, for any comments he might
have.
STATEMENT OF HON. SOLOMON P. ORTIZ, A REPRESENTATIVE FROM
TEXAS, RANKING MEMBER, READINESS SUBCOMMITTEE
Mr. Ortiz. Thank you, Mr. Chairman. It is nice to see some
of our old friends here sitting on the other side.
I thank you, Mr. Chairman, and I join you in welcoming our
distinguished witnesses, and I look forward to hearing their
testimony on this important issue.
Mr. Chairman, let me first say that I am concerned with the
direction that the Department has taken with regards to its
overall military construction budget request. The fiscal year
2006 MILCON budget request is nearly half a billion dollars
less than the 2005 request. It is $1 billion less than last
year's budget forecast. I think this is very troubling trend.
It is a trend that suggests that MILCON continues to be
used as a bill payer for the Department's other requirements.
At this funding level, the recapitalization of facilities
will continue to slip. I hope that the Department has some plan
to stop the slide quickly and recover the ground it has lost
before this shortfall impacts the readiness of the armed
forces.
I would like to point out that despite the MILCON shortage,
progress is being made on improving the condition of military
family housing. It appears that the services have public-
private ventures and are now on track to eliminate inadequate
family housing by fiscal year 2009. While this still is not
soon enough, I am very pleased to see many military families
already benefiting from housing PPVs.
I encourage the service to continue their efforts to
support quality of life and correct the family housing problems
caused by years of underfunding and neglect.
One last point I would like to address is the base
operations support budget for the services. This budget was
underfunded in 2004 and 2005, and the request for 2006 is no
different. The Army's request for 2006 will only fund 71
percent of the Base Operations Support (BOS), which is the base
operations support requirements, and will fall $1 billion short
of meeting the Army's basic needs.
Base operations support represents such essential
requirements as municipal services, force protection and
communication services. It also funds family support programs,
such as child care, gymnasiums, libraries and other quality of
life programs that our soldiers and their families depend on.
Unless BOS is funded adequately, many installations will be
forced to cut services. I do not believe that the services can
afford to cut quality of life programs that directly affect
morale. We ask a great deal of our service members and their
families. Should we reward their service by asking for greater
sacrifices at home? I hope that our witnesses will take this
opportunity to explain how the Department plans to correct this
serious shortfall.
Mr. Chairman, I am interested in hearing the testimony of
our witnesses and their thoughts on how we can endure the
readiness of the Department's facilities and meet the needs of
our service members and their families.
Mr. Chairman, I thank you and welcome all the witnesses.
Thank you, Mr. Chairman.
Mr. Hefley. Thank you, Solomon.
First up is Phil Grone, the Deputy Undersecretary of
Defense for Installations and Environment.
And, Mr. Grone and all the witnesses, without objection, we
will enter your complete statements in the record, and I would
ask each of you to take whatever time you need. This is
important testimony, but at the same time if you can keep it
brief and we can have some interchange, that would be good as
well.
Next up is Geoffrey Prosch, Principal Deputy Assistant
Secretary of the Army for Installations and Environment. Next
is Mr. B.J. Penn, the newly confirmed Assistant Secretary of
the Navy for Installations and Environment. And, finally, Mr.
Fred Kuhn, the Deputy Assistant Secretary of the Air Force for
Installations.
Phil, with that, we will turn it over to you.
STATEMENT OF PHILIP W. GRONE, DEPUTY UNDER SECRETARY OF DEFENSE
(INSTALLATIONS AND ENVIRONMENT), DEPARTMENT OF DEFENSE
Secretary Grone. Thank you, Mr. Chairman.
Mr. Hefley. And you really are welcomed back.
Secretary Grone. I do appreciate that, sir. I truly do.
Chairman Hefley, Mr. Ortiz and distinguished members of the
Subcommittee on Readiness, I am pleased to appear before you
this afternoon with my colleagues to discuss the President's
budget request for the Department of Defense for fiscal year
2006.
This budget request for the Department continues the
efforts of this Administration to place our military
infrastructure on a sound management footing.
The Department's management responsibilities extend to an
infrastructure with 510,000 buildings and structures and a
replacement value of $650 billion, as well as stewardship
responsibility for roughly 29 million acres, or 46,000 square
miles of land, roughly the size of Connecticut and my native
Kentucky combined.
And this the business are comprising the Department's
support for the support of military installations, assets and
the stewardship of natural resources includes programs totaling
over $46 billion for the coming fiscal year.
The President's management agenda contains three key
elements for which my office has primary responsibility. Those
initiatives include competitive sourcing, the privatization of
military housing and real property asset management, the last
of which is the focus of Executive Order 13327, issued on
February 4 of last year.
We have made significant progress in many of these areas
with the strong assistance of the Congress. The military
housing privatization initiative is achieving results. Through
the end of fiscal year 2004, leveraging the power of the market
and the expertise of industry, we have awarded 43 projects,
privatizing 87,000 units.
To achieve the scope of those 43 projects, the taxpayer
would need to provide $11 billion in military family housing
construction. Over the life cycle, these privatized projects
will save the taxpayer 10 to 15 percent, even when taking into
account the allowances paid to our military personnel.
And 10 of those 43 projects have reached the end of their
initial development phase, and tenant response is very
positive.
By the end of fiscal year 2007, we expect 185,000 units of
housing, 84 percent of the inventory, to be privatized.
The Department's efforts to more properly sustain and
recapitalize our facilities inventory is also demonstrating
results. Four years ago, the recapitalization rate stood at 192
years. The President's budgets supports a recapitalization rate
of 110 years, and we remain committed to our goal to achieve a
67-year recapitalization rate in fiscal year 2008.
Facility sustainment is budgeted this year at 92 percent of
the requirement. In both cases, we have built the program
around private sector best practices and commercial benchmarks
wherever they can be applied and continue to refine our models
and guidance to keep them current those best practices and
benchmarks.
We also continue our efforts to strengthen the nation's
defense through the global posture review and BRAC. Abroad, we
will reconfigure our basing and presence to meet the threats of
the 21st century as opposed to the static defense of the Cold
War. At home, we will rationalize our infrastructure to further
transformation and to improve military effectiveness and
business efficiency.
As well, the Department continues to be a leader in every
aspect of environmental management. To make our operations more
efficient and sustainable across the Department, we are
continuing our aggressive efforts to implement environmental
management systems at our installations based on the plan, do,
check, act framework of the international standard for EMS ISO
14001.
In concert with the President's August 2004 executive order
on facilitating cooperative conservation, the Department has
developed a program of compatible land use partnering that
promotes the twin imperative of military test and training
readiness and sound conservation stewardship through
collaboration with multiple stakeholders.
Moreover, we are fundamentally reengineering the business
process for real property inventory, resulting in standard data
elements and definitions for physical, legal and financial
aspects of real property, and we have developed a real property
unique identification concept that will enable greater
visibility of our assets and linking them to our financial
obligations.
Our most recent defense installation strategic plan, issued
late last year, entitled, ``Combat Power Begins at Home,''
reflects our focus on improving the management of our
installation assets and to ensure their ability to contribute
to military readiness.
All of our efforts are designed to enhance the military
value of our installations and to provide a solid foundation
for the training, operation, deployment and employment of the
armed forces, as well to improve the quality of life for
military personnel and their families. While much remains to be
done, we have accomplished a great deal, and with the support
of this subcommittee, we will continue to do so.
Thank you, Mr. Chairman.
[The prepared statement of Secretary Grone can be found in
the Appendix on page 43.]
Mr. Hefley. Thank you, Phil.
Mr. Prosch.
STATEMENT OF GEOFFREY G. PROSCH, PRINCIPAL DEPUTY ASSISTANT
SECRETARY (INSTALLATIONS AND ENVIRONMENT), DEPARTMENT OF THE
ARMY
Secretary Prosch. Chairman Hefley, Ranking Member Ortiz and
members of the committee, I am pleased to appear before you
today. This is my fourth year to have this distinct honor to
represent our great Army and testify before Congress.
It is wonderful to be here today with old friends and Army
supporters from this committee. I look forward to the
opportunities this committee brings toward leveraging enhanced
quality of life for our soldiers and families.
I have provided a written statement for the record that
provides details of our Army's fiscal year 2006 military
construction budget.
Joining me today are my installation management partners:
Major General Geoff Miller, from the active Army; Major General
Walt Pudlowski, from the Army National Guard; and Brigadier
General Gary Profit, from the Army Reserve.
So on behalf of the entire Army installation management
team, I would like to comment briefly on the highlights of our
program.
I begin by expressing our appreciation for the tremendous
support that the Congress has provided to our soldiers and
their families who are serving our country around the world. We
are a nation and an army at war, and our soldiers would not be
able to perform their mission so well without your steadfast
support.
We have submitted a military construction budget of $3.3
billion that will fund our highest priority active Army, Army
National Guard and Army Reserve facilities, along with our
family housing requirements. This budget request supports our
Army vision, encompassing current readiness, transformation and
people.
As we are fighting the Global War on Terror, we are
simultaneously transforming to be a more relevant and ready
Army. We are on a path with the transformation of installation
management that will allow us to achieve these objectives.
We currently have hundreds of thousands of soldiers
mobilizing and demobilizing, deploying and redeploying. More of
our troops are coming and going on our installations than in
any era since World War II. Our soldiers and installations are
on point for the nation.
And on a special note, I would ask you to keep our forward
deployed soldiers in your thoughts and prayers. New forces have
rotated recently to Iraq. The 3rd Infantry Division is back for
its second tour, and the enemy will test them early on. Keep
them in your hearts and prayers.
The Army recently identified key focus areas to channel our
efforts to win the Global War on Terror and to increase the
relevance and readiness of our Army. One of our focus areas is
installations as flagships, which enhances the ability of our
Army installations to project power and support families. Our
installations support an expeditionary force where soldiers
train, mobilize and deploy to fight and are sustained as they
reach back for enhanced support from the installations.
Soldiers and their families who live on and off the
installation deserve the same quality of life as is afforded
the society they are pledged to defend.
The installations are a key ingredient to combat readiness
and well-being. Our worldwide installations structure is
critically linked to Army transformation and the successful
fielding of the modular force. Military construction is a
critical tool to ensure that our installations remain relevant
and ready.
Our fiscal year 2006 military construction budget will
provide the resources and facilities necessary for continue
support of our mission. Let me summarize what this budget will
provide for our Army: New barracks for 5,190 soldiers, adequate
on-post housing for 5,800 Army families, increased MILCON
funding for the Army National Guard and Army Reserve over last
year's request, new readiness centers for over 3,300 Army
National Guard soldiers, new reserve centers for over 2,700
Army Reserve soldiers, a $292 million military construction
investment in training ranges and facilities support and
improvements for our Stryker brigades.
With a sustained and balanced funding represented by this
budget, our long-term strategy will be supported. With your
help we will continue to improve soldier and family quality of
life while remaining focused on our Army's transformation to
the future force.
In closing, Mr. Chairman, I thank you for the opportunity
to outline our program. As I have visited Army installations, I
have witnessed steady progress that has been made, and we
attribute much of this progress and success directly to the
long-standing support of this committee and your able staff.
With our continued assistance, our Army pledges to use fiscal
year 2006 MILCON funding to remain responsive to our nation's
needs.
Thank you for the opportunity to appear before your
subcommittee and answer any questions you may have.
[The prepared statement of Secretary Prosch can be found in
the Appendix on page 66.]
Mr. Hefley. Thank you.
Mr. Penn.
STATEMENT OF HON. B.J. PENN, ASSISTANT SECRETARY (INSTALLATIONS
AND ENVIRONMENT), DEPARTMENT OF THE NAVY
Secretary Penn. Mr. Chairman, members of the subcommittee,
it is a privilege for me to be here today. Being in this job
for a little over a week, I can assure you I will be very
brief.
I believe you will find much good news on the Department of
the Navy's installations and environmental program from my
written statement. I would like to talk about one specific
aspect of our fiscal year 2006 budget request: The financing of
our prior BRAC cleanup and caretaker needs with a mix of $143
million in appropriated funds and an estimated $133 million in
land sales revenue.
It is important to view the 2006 prior BRAC request in the
context of the fiscal year 2005 request. The Department
expected to finance the entire fiscal year 2005 prior BRAC
program from the sale of the former Marine Corps air station,
El Toro, California and did not request nor receive any
appropriations in fiscal year 2005.
That sale was delayed by unforeseen circumstances.
Fortunately, the sale of portions of the former Marine Corps
air station, Tustin, California in 2003, gave the Department
the financial flexibility to slow fiscal year 2004 program
execution to conserve cash to cover its fiscal year 2005
environmental commitment, most of which are in the State of
California.
With fiscal year 2005 execution depleting prior year BRAC
funds and the public auction of the El Toro property still a
future event, the Department last fall opted to include
appropriated funds in fiscal year 2006 to finance its minimum
cleanup and caretaker needs, along with the conservative
estimates for land sales revenue to accelerate the
environmental cleanup.
Although the auction of the El Toro property has now been
completed with a winning bid of nearly $650 million, I must
caution the members of this committee that there is still some
measure of risk ahead until the buyer and Navy complete the
sales transaction at settlement. I want to emphasize that we
cannot be absolutely sure of having land sales revenue until a
settlement occurs, which is planned for sometime in July. The
buyer of a previous property in 2003 defaulted at settlement.
Even after settlement, our past experience is that it often
takes well over four months for the sales proceeds to be
processed to the DOD accounting system before the funds are
available to the Navy for program execution.
We still have a substantial cost to complete environmental
cleanup, primarily at closed bases in California, and are
developing plans to responsibly accelerate cleanup. That will
be our first priority for the use of the land sales revenue.
Even with successful settlement of the El Toro property in
July, we may still need some measure of fiscal year 2006
appropriated funds to finance first quarter program
commitments.
Mr. Chairman, I would like to thank you and your committee
for all you are doing for our great country. I look forward to
working with you and the Congress on resolving this situation
and on to more challenging installations and facilities issues.
Thank you.
[The prepared statement of Secretary Penn can be found in
the Appendix on page 87.]
Mr. Hefley. Thank you.
Mr. Kuhn.
STATEMENT OF FRED W. KUHN, DEPUTY ASSISTANT SECRETARY
(INSTALLATIONS), DEPARTMENT OF THE AIR FORCE
Secretary Kuhn. Mr. Chairman, Mr. Ortiz and distinguished
members of the committee, good afternoon.
This year's Air Force military construction budget request
is the largest in 14 years with increases across the spectrum
of Air Force operations throughout our total force. Our fiscal
year 2006 military family housing submission is the largest in
Air Force history and keeps us on target to meet our goal of
eliminating Continental United States (CONUS) inadequate
housing in 2007, 2008 for four northern tier bases and 2009
overseas.
The Air Force remains committed to funding restoration and
modernization to meet the Office of the Secretary of Defense
(OSD) goal of a 67-year recapitalization rate by 2008. The Air
Force is meeting OSD facilities sustainment goal by funding 95
percent and will continue to fund sustainment in accordance
with that model.
Air Force facilities, housing and environmental programs
are key components of our support infrastructure. At home, our
installations provide a stable training environment and a place
to equip and reconstitute our force. Both our stateside and
overseas bases provide force projection platforms to support
combatant commanders.
Because of this, the Air Force has developed an investment
strategy focused on sustaining and recapitalizing existing
infrastructure, investing in quality of life improvements,
accommodating new missions, continuing strong and environmental
leadership, optimizing use of public and private resources and
eliminating excess obsolete infrastructure wherever possible.
In fiscal year 2006, the Air Force bolstered operation and
maintenance investment in our facilities infrastructure, which
is comprised of two components: Sustainment and restoration and
modernization. Sustainment funds are necessary to keep good
facilities good, and restoration and modernization (R&M)
funding is used to fix critical deficiencies and to improve
readiness.
This year, the amount dedicated to total force sustainment
funding is $2 billion, right on the OSD goal of 95 percent of
the facilities sustainment model requirement. In fiscal 2006,
the Air Force's total force R&M funding is $174 million. In the
future, the Air Force will invest in critical infrastructure
maintenance and repair through our Operation and Maintenance
(O&M) Program to achieve the OSD goal of a facility
recapitalization rate of 67 years in 2008.
In conclusion, I would particularly like to thank the
members of this committee and the Congress for its efforts to
lift the cap on housing privatization. Without that relief, our
military members and their families would be deprived of the
opportunity to choose to live in a privatized home on or near
our Air Force bases.
Our leverage of nine privatized dollars for every taxpayer
dollar would have been lost, and additional pressures on the
housing MILCON budget would have been immense. Your efforts are
appreciated by all our Air Force men and women and their
families.
That concludes my statement. Thank you.
[The prepared statement of Secretary Kuhn can be found in
the Appendix on page 101.]
Mr. Hefley. Thank each of you. We appreciate it very much.
Let me ask you, it appears that if you look at the
timelines of the BRAC process, that this bill will be completed
along with the appropriations companion bill before the BRAC
process is finalized. We do not know that for sure, but it
would appear, if you look at all the timelines, that that will
be the case.
Phil, you and probably the rest of you, except for those
who have been here one week may not have, have visited bases
after prior backgrounds, which had new basics changes, nice new
parking lots with weeds growing up in them, computer centers,
all kinds of things that were built new at bases just prior to
base closings.
We do not have enough money to do everything. We do not
want to waste any of these MILCON dollars, but we do want to
provide you what you need to do your job. So what would your
suggestion be to this committee as we look at the MILCON
requests.
I know you cannot give away, because you probably do not
know at this point, you do not because it has not gone to the
committee and you may not have all your recommendations put
together yet, do not know for sure what is going to stay and
go. How would you recommend this committee handle it so that we
do not waste money on facilities that are going to be closed
fairly shortly but that we do put the money into things that
are vitally needed?
Phil, you want to take that?
Secretary Grone. Mr. Chairman, I will begin and then to the
extent my colleagues want to further elaborate, certainly I
hope they will do so.
As we built this budget request, as you indicated, we did
not build the budget request and the services did not build
their budget request with an eye on recommendations for base
realignment and closure that were not yet able to be developed,
because we were still doing the analysis. So the budget request
reflects the Department's best judgment as to the support of
its missions and forces in their current configurations.
As with all things in the first year of an implementation,
there are steps we will have to go through. One of the steps we
will likely go through, and I have discussed this with the
Undersecretary of Defense Comptroller, is that upon the
Secretary's release of recommendations to the independent
commission on May 6, we will likely to provide the oversight
committees and the appropriations committees with appropriate
documentation on projects that we believe in the budget request
are there, by the fact of the recommendations, no longer
required and may provide for some additional substitutions for
other needs of the Department.
I understand with regard to internal and committee markup
and floor action, that timing is going to be a little tight,
but I think it is fair to say that if we work in a
collaborative way, heading toward conference agreement, I think
we can probably work this out in a way where we will not have
that kind of significant strains of investment or that we will
be putting money in the actual budget for facilities we will
not require.
We will have to sort of take our chances that the
commission will not make any significant changes, but I think
we will have to just, as we work through the year, work through
that.
With regard to the underlying budget request for $1.9
billion, and you asked in your opening statement for some
justification for that, we certainly today cannot provide a
justification at a detailed level of how we would expend those
funds in fiscal year 2006. That will have to await the final
determinations of the commission process.
We built that number taking a very careful look at the
lessons of the past. And if you look at the 1993 round of base
closure and you sort of inflate the first year's request to
current-year dollars, it comes out to about $1.5 billion,
approximately. The 1995 round, if you applied that same
analytical framework, represents about $1 billion in today's
terms.
But the General Accounting Office, as they have noted on
many occasions, indicated that the Department's recommendations
for the 1995 round were smaller than were projected at the
start of that process, and their analysis at the time found
that the services' concerns over closing costs forced them not
to take certain actions. There was an issue of affordability
with regard to the internal BRAC process that caused the
services to pull back from recommendations that they might
otherwise have made.
So that when we look at that history and when we also
consider the cost of returning forces from abroad as part of
the global posture realignment and our desire to do that and
utilize BRAC to be able to select sites within the United
States, it seemed prudent to us that the request for $1.9
billion was reasonable.
We will exercise the same process that we have utilized in
the first year of implementation from prior years. Upon the
disposition of the recommendations, the committees will receive
a report that detail how we will expend those funds in the
first year of execution.
The Congress has traditionally given the Department great
latitude on the budget request and awaiting that initial
report, and it would be my expectation based on what we will
need to do with the closure and realignment round, that we can
sufficiently expend those funds and implement them in fiscal
year 2006.
Mr. Hefley. Would the Department have any objections to
something like a reverse supplemental by the 1st of the year if
there were funds out there, we had closed the bill out, that
would give you the authority, rescission authority,
reprogramming authority for those funds so that we do not go
ahead and spend them on some things--in other words, can we be
assured that you are not going to let contracts until we know
for sure what we are going to need?
Secretary Grone. I think it is fair to say that in
implementation we would not expend funds on any fiscal year
2006 project that we knew we were not going to need. That would
not be prudent management. And in terms of any particular
device that the Congress might suggest, I think we would have
to discuss that with the appropriate senior officials in the
Department, but I think anything that would improve our ability
to work cooperatively and with some flexibility I think would
be welcome.
Mr. Hefley. Thank you very much.
Yes.
Secretary Prosch. Sir, If I could just reinforce what my
colleague has said, we will continue to fund our highest
priority projects without prejudice, but once the decisions
have been made, we will evaluate all projects to determine the
future utility and take appropriate action. We may withhold the
award if we have time to do that, we could issue a stop work
order if it is earlier enough on or we could elect to complete
the project and include the structure as part of the value of
the closed property that we would work with our local reuse
authority.
For us in the Army, this BRAC 2005 is very important to us.
It is a strategic lever to help us transform. We are going to
be taking a look at where we are putting our 10 new brigade
units of action to validate where we have placed them. We will
be using it to verify where we reset our OCONUS brigades coming
home, and we will be using it to transform the Army by
synchronizing and consolidating, and I think you will be very
pleased with the candidate list.
Thank you, sir.
Mr. Hefley. Well, I just want it on your radar screen that
we have made some mistakes, we have screwed up in the past with
this, and I want it very clear that we do not want to screw up
with it this time. And I am not even talking about saving
money. I do not think your MILCON budget is what it ought to
be, particularly in the Army, but we do not want to waste the
money. We want to put it where you really do need it, so help
us as we work through that process.
Mr. Ortiz.
Mr. Ortiz. Thank you, Mr. Chairman.
Secretary Prosch, you described the installations as
flagships. Can you please explain to the committee what you
mean by flagships?
Secretary Prosch. Yes, sir. That is one of the Army's 17
focus areas to allow us to really bore in on what is important.
And it is to help us understand that installations are very,
very key to everything we do. Think about what goes on at our
installations. That is where we project power from, that is
where we support our families, that is where we mobilize,
demobilize, it supports an expeditionary force. We are
transforming from a division-centric type of organization to a
brigade unit of action organization where the brigades are task
organized to hit the ground running when they deploy and hit
the ground.
We have to have reach-back capability and with our
satellites and our information management, our installations,
we now have that. It is critical to our soldiers and our
families, and to retain an all-volunteer force, we must have a
top quality of life. Our soldiers live there, the families stay
there when they are deployed, and surely our soldiers deserve
the same quality of life that is afforded the people off-post
that they are pledged to defend.
So they are a very key part of the Army vision, and as we
transform, we want to make sure we keep a focus on
installations.
Mr. Ortiz. I know that everybody on this committee is
waiting for the list to come out to see which bases are going
to be on that list, what will be recommended. And this list may
include installations that are vital to the defense industrial
base which supports the war fighter.
Currently, our industrial capacity is under great strain to
meet the needs of the forces in the field. When making
determinations about base closure, is the Department
considering the need to maintain a search capacity in the
industrial base? Also, how is the Department ensuring
compliance with the laws, such as the 50-50 rule when
considering base closure. How does that play in that, the 50-50
rule?
Secretary Grone. Mr. Ortiz, to the first part of your
question on surge, the selection criteria that the Secretary
had caused to be published required us within the scope of the
analysis to consider mobilization, demobilization, contingency
and other requirements. The Congress, believing that there was
a bit of an ambiguity there and wanting to ensure that we did,
as a matter of requirement what had been policy, required the
insertion of the word, ``surge,'' into the selection criterion
3.
So all of the analysis that we are doing, pursuant to the
statutory requirements for BRAC and the implementation of the
selection criteria in that process, all encompasses missions to
take into account the components, the joint cross-service
groups who are analyzing the common business oriented support
processes, of which the industrial base is one, industrial base
of the Department is one. We have to take surge into account.
Surge will vary depending upon the mission, it will vary
depending on the needs of the component. But we have to define
it, we have to asses it, and we have to take it into full
consideration as we develop recommendations that the Secretary
will produce in May.
So, yes, we are taking surge fully into account. And,
certainly, with regard to existing statutory frameworks,
everything that we are doing in the process is fully consistent
with the statutory frameworks of existing law, and we will
produce recommendations based upon it.
Mr. Ortiz. So you do not think there is going to be any
messing around with the 50-50 rule.
Secretary Grone. Mr. Ortiz, I mean, I think I would like to
stand on my statement that we will follow the statute. I would
prefer not to get into characterizations of tweaks in any areas
or adjustments in any area or what we may do in a particular
area of analysis, as the Secretary has not finalized
recommendations, and I would not want to mischaracterize what
we may do within the industrial group or in any other group.
But I think it is fair to say that we will adhere to the
statutory framework as it has been laid out by Congress.
Mr. Ortiz. As long as you understand where this committee
stands or at least the caucus stands.
Secretary Grone. Yes, sir.
Mr. Ortiz. Something else that I would like to mention, I
have been through all base closures. One of the things that I
see happen is that when you close down a base many
installations that have been paid by soldiers' funds--PXs,
commissaries, theaters--are not paid by appropriation funds.
They are paid by the money generated from soldiers' purchases
and things like that.
Are we going to take that into consideration when we shut
down a base to be sure that that money that belongs to the
soldiers comes back to the soldiers' funds so that they can
generate more support for the soldiers, family welfare for the
children and things like that?
Secretary Grone. It is certainly my understanding that as
any assets that are mass supported, the proceeds resulting from
those kind of assets would return to the NAF accounts, and I
believe there is a reserve account established, pursuant to
law, for the receipt of those funds.
In prior years, there had been some difficulty with
accessing those funds, because the funds were subject to
subsequent appropriation. But I believe, and I can be corrected
for the record, but I thought that provision has been addressed
or there had been at least an attempt to address it. There was
direct spending, I believe, associated with it, but I believe
in a prior year it may have been addressed.
If it has not been, I will clarify that for the record,
but, certainly, we are not unmindful of the soldier and
sailors' funds, and, certainly, as assets are disposed of, that
reserve account would be in receipt of those revenues.
Mr. Ortiz. If you could look into that because we have seen
some foreign bases where we have shut down, and of course that
had to do with the State Department reaching an agreement of
some sort where we lost millions and millions of dollars in
facilities, from golf courses, to theaters, to bowling alleys,
and we never saw that money. I just hope that somehow we could
look after the welfare of the soldiers and that fund goes to
where it belongs.
Thank you, Mr. Chairman.
Mr. Hefley. Mr. Ryun.
Mr. Ryun. Thank you, Mr. Chairman.
First of all, let me say thank you to the witnesses for
being here and their staff and all the personnel that are in
uniform for serving our country. We very much appreciate what
you do.
I would like to address this, if I may, to Secretary Grone,
and it is with regards to housing. Due to modularity and
repositioning, many bases will soon experience large increases
in soldiers coming back, which is a good thing. For example,
Fort Riley in Kansas will have an additional 3,400 troops early
2006 and possibly more later in the future. Bases like this may
experience housing shortages for military and civilian
personnel.
What is DOD doing with regard to accommodating these needs,
and do you have any recommendations for the surrounding
communities as to ways they might be able to be prepared for
all of this?
Secretary Grone. Mr. Ryun, I certainly would, particularly
with regard to the Army, yield at the appropriate time to my
colleague, Mr. Prosch, but in a general way, what we have to be
mindful of when we permanently station forces in new locations,
particularly when we have a significant increase in the
population of that base, the housing of course is an issue.
We will do whatever we can to work cooperatively with state
and particularly local government and the development community
to ensure how we can do that in as seamless a way as we
possibly can.
With regard to our own programs, certainly our policy
remains that we want to rely on the private sector and the
private market first. If it is clear that that is not able to
be absorbed or there is a capacity issue, our housing
privatization authorities give us the ability to begin look at
alternatives that would begin to build out that deficit,
address that deficit to ensure that our people have adequate
housing options available to them.
It will be a long-term process in some ways, but I believe
that we are postured well internally looking at the heart of
that question. Certainly, there are some things that we are not
in a position to do yet until we have final outcomes. Where
will temporary units of action be based on a permanent basis?
Where will forces returning from Europe be based on a permanent
basis?
And as those decisions come into clarity, we will be able
to work with all affected stakeholders in this process but
certainly local government to ensure that we have as seamless a
transition as we possibly we can. But we are not unmindful of
the impact, particularly on the local housing markets, and we
are going to address that as well as we can.
Secretary Kuhn. If I could add to that just a couple of
examples of the cooperative efforts the Air Force and the Army
and housing privatization are working the McGuire Air Force
Base-Fort Dix combined initiative in New Jersey. We have been
asked to look and consult with the Army as they are doing
housing privatization at Fort Lewis in Washington and we at
McCord Air Force Base taking into account that there might be
additional forces from the Army potentially coming into Fort
Lewis and how could our privatization help that.
We also have provisions, Mr. Ryun, in our housing
privatization contracts that allow the successful developer, at
his own risk, to build beyond the requirement. In other words,
if he believes that they will come and occupy his housing with
some minimal restrictions, he is allowed to build above the
requirement, anticipating some of those points that you have.
We are trying to be flexible in these areas.
Mr. Ryun. And if I may say, I appreciate the assurance you
have given me, because I know a lot of my smaller communities
that surround those particular installations are just
concerned, they just need to know that there is a plan, and I
wanted to reassure them of that, but I also know that there are
certain things that have to happen here first.
And if I may go to a second question just very briefly,
Fort Leavenworth is in my district and it is entering a final
phase of construction on the Lewis and Clark Education Center.
I have been informed that the fiscal year 2006 budget actually
reduces the planned funding for that center by several hundred
thousand dollars. Too early yet to tell what that cut means. In
other words, if they start the project, are they going to have
sufficient funds to actually finish it?
And so I guess that is my question: What kind of guarantee
once they start, if they should start this, will there be that
there might be some shifting of funds to allow them to go ahead
and complete this most important education center?
Secretary Prosch. Sir, let me comment for a minute, and let
me just assure you on your previous question that the Army has
pledged to work closely with you for the RCI project at Fort
Riley, which we are very excited about. You will notice in the
fiscal year 2006 budget, we do have $68 million of equity
investment to fund the pump to make sure that that project
goes.
And for the record, I would like to thank the good chairman
and this committee for really coming up with this overall
military housing privatization initiative. You all really
created this, and we thank you for lifting the cap and for
helping us to sustain this.
Concerning the Lewis and Clark facility, I am going to be
at Fort Leavenworth on the 28th of March with Lieutenant
General Scott Wallace, my college classmate. We are going to do
a terrain walk, and I will get back to you personally to let
you know the status of that project. I would invite you to join
us if you would like, sir. We are going to have our
installation association United States Army symposium in Kansas
City where Phil Grone is one of the keynote speakers, and so we
will be in your area of operations, and I will bore into that
for you, sir.
Mr. Ryun. Thank you very much.
Thank you, Mr. Chairman.
Secretary Prosch. And, finally, sir, our goal is to build
it to the total requirement.
Mr. Hefley. Dr. Snyder.
Dr. Snyder. Thank you, Mr. Chairman.
Thank you, folks, for being here.
Secretary Grone, I wanted to ask, I guess I have three
questions I wanted to direct to you. First one can just be a
really short answer.
One of the concerns that I guess all Americans that follow
the issue has always been about the BRAC processes, both past
and future, is are they going to be decided on the merits and
not on the politics or in whose district or all the kind of
pressures, and it seems like we have had a tremendous number of
lobbyists involved in these kinds of activities on base
closure.
If you were to give the process, as it has progressed over
the last year or two, at this point, in terms of a process that
is proceeding based on the merits and not on considerations
other than the merits, what kind of a letter grade would you
give it, A, B, C, D or F?
Secretary Grone. On the merits, I give it an A-plus. I
mean, there has been no consideration of politics in
development, analysis, process. And as we build options for the
leadership to consider and for ultimately for the Secretary to
recommend, political considerations are not--favoritism toward
any area for any particular consideration that bears no
relationship to the military value simply is not part of the
process.
Dr. Snyder. Good. Thank you.
Secretary Prosch. Sir, if I could just add from the Army's
perspective, I have been very pleased to have the opportunity
to participate. Ever since August, twice a week, we have been
really working this very hard, and the thing that is
encouraging in this BRAC is the jointness.
There are seven joint cross-service groups--Education and
training, supply and storage, industrial, technical, medical,
intelligence, headquarters and support activities--that are
working very closely with the services. We have visibility over
the Air Force and the Navy data, and so I think we have the
opportunity for the first time to really have some jointness,
to have an Army unit stationed at an Air Force base where it
makes sense.
Dr. Snyder. Thank you.
Secretary Grone, the second question I wanted to ask is
about real property maintenance, and I read through your
statement, and I do not know if the terminology has changed or
I am having trouble sorting it out.
You may remember, I think it was in 1998 or so, one year on
the committee staff here we had a witness from the National
Academy of Engineering that thought we needed to aim for a two
percent of plant replacement value as an annual budgetary
number for real property maintenance. And if my calculation is
right, $650 billion from your statement of real property
replacement value gets us to $13 billion, an approximation of
real property maintenance.
But I cannot--I mean, where are we at with regard to that?
Did you aim for a two percent goal? Help me understand. Maybe
the terminology has changed a bit or I do not understand the
terminology.
Secretary Grone. Yes, sir. I believe I can do that. What I
am looking for is a couple of quick numbers here.
Dr. Snyder. Are you in your written statement?
Secretary Grone. One way of looking at a long-term
maintenance requirement is the, and sort of an older way of
sort of thinking about the question was as a raw percentage of
plant replacement value. Depending on the kind of inventory you
are discussing or depending, frankly, on which engineer you are
talking to, it could be two percent, it could be three percent.
I have seen some as high as 3.5 or 4 percent.
But in many ways, what we have tried to do is we have tried
to move away from that framework, because it is useful as sort
of a blunt instrument. What it is not useful is looking at your
requirements from the experience of industry, the experience of
what happens in your own inventory.
So what we have tried to do is move the framework from
simply one that is driven by a raw dollar calculation to one
that relies on private sector, appropriate public sector and
other benchmarks, rigorously controlled by cost factors that
feed a model that is sort of based on our own inventory.
So what we have tried to do is bring in a whole series of
private sector best practices and apply them to our inventory
in a way that would generate a requirement, a need for the
Department to sustain its assets over the long term, attempt as
best we can to budget to that need and execute as well as we
can.
Over the long term, a fully funded sustainment program will
have an impact or an effect on the long-term build to
recapitalize your facilities. No one, in industry or in
government, knows what the one-to-one relationship between
those two are, but we are doing a lot of research and work on
it.
But the old real property management, real property
maintenance framework has given way to a different, more
nuanced, more highly rigorously benchmarked concept called
sustainment.
Dr. Snyder. It seems that my time is up, Phil. It seems,
though, that what you call more nuanced, it seems to me it is a
bit difficult to follow. I mean, I frankly cannot tell if we
have too much money or too little money in line with Mr.
Hefley's concerns that we have got a bill payer budget rather
than an assets budget or we are just like baby bear's porridge
and just right. And I do not know how to follow these numbers
over time, and maybe that is something I could talk to you
another time about.
Secretary Grone. Well, the baseline does change every year.
Cost factors change every year.
Dr. Snyder. Right.
Secretary Grone. For two or three running years, we were
able to hold cost factors down, but with global markets,
concrete lumber prices and the rest increasing, our need
increases. We are trying to track markets, and we are trying to
track private sector benchmark costs and apply them to our own
facilities. That is really what we pay. We do not pay based on
what happens to be two percent of our plant value. We pay on
what is actually going on in the marketplace.
So in this President's budget, we have budgeted for 92
percent of the sustainment requirement. It is not full
sustainment. It is a bit of a reduction in terms of the
percentage of the requirement from what, as the chairman
indicated earlier, but we do believe that it is a very
sufficient amount to continue us on the pathway to good
management practice.
And the fact of the matter is just a handful of years ago,
we had no way of understanding what the need was. Now we have a
way with a model to understand the need and try to resource to
that need as best we can.
Dr. Snyder. And maybe we can follow it over time.
Secretary Grone. Yes, sir.
Dr. Snyder. Thank you all for being here.
Thank you, Mr. Secretary.
Mr. Hefley. Dr. Schwarz.
Dr. Schwarz. Thank you, Mr. Chairman.
I would like to have each of you, perhaps starting with Mr.
Grone and then Mr. Prosch, Mr. Penn, Mr. Kuhn, comment on the
concept of joint reserve bases and with the BRAC coming, with
there being numbers of reserve units which might be moved or
actually shut down or combined with other reserve units and
with there being certainly ample property on numbers of bases,
one in fact in my district, how enthusiastic is the Department
of Defense about joint reserve bases, having a base which would
have an Army Reserve outfit, a Navy Reserve outfit, a Marine
Reserve outfit and an Air Force Reserve outfit on it, maybe a
couple of guard units from that state as well?
Does that not seem to be a pretty efficient way if such
property is available and that property might have a 10,000-
foot prevailing wind runway, it might have rail facilities, it
might have--Mr. Grone, why are you smiling?
Secretary Grone. I just was not sure if you were thinking
about any particular installation. [Laughter.]
Dr. Schwarz. And might have 7,500 acres right next door
that has been nothing other than a military base since 1917,
but who is counting.
So just the general concept of joint reserve bases. Is that
something that you are considering? Is that something that the
Department considers a good idea?
Secretary Grone. Well, certainly, sir, one of the important
concepts, predicates of this BRAC process is to try to find
ways and means to improve the joint utilization of all of our
assets, be they active or reserve, and to try to employ them
more effectively from a total force concept.
So whether it would be opportunities that might present
themselves in the process to create more joint reserve
installations or facilities or to have reserve and active more
directly share even more of the assets than they do today, all
of those options are on the table as part of the process.
What we aim to do through that process is not start with
the predicate that we have to have so many joint facilities
come out at the end of the process. Where we want is we are
starting with the best military value we can. And in order to
support the joint war fighter, we are looking at all the
options that we can to assure that we have the best
infrastructure support for the joint war fighter. And in many
cases, that may result in a recommendation to do something on a
more joint basis.
But in terms of how many or whether or what the weight of
emphasis is going to be on final recommendations, I simply
could not say.
Dr. Schwarz. Would it be safe to say that in general it is
a concept that you would embrace?
Secretary Grone. Jointness is an important part of the BRAC
process.
Dr. Schwarz. Any of the other gentlemen care to comment on
that idea?
Secretary Prosch. Yes, sir, if I could just comment. I
would just assure you that Lieutenant General Schultz, the
chief of the Army Guard, and Lieutenant General Helmly, chief
of the Army Reserves, have a chair and meet with us every
Tuesday at the Army Senior Review Group as we analyze all of
our BRAC options with our active members.
One of the tools that you all have given us, the real
property exchange tool, we have been using that to good use.
Where we find an old armory and maybe a valuable piece of
terrain in an urban area and we work with the local community
to build a perhaps joint facility out in the suburbs. That is a
great tool that you all have given us, something we are going
to look at as we execute this BRAC 2005.
But if I could ask my colleagues behind me from the
reserves and the guard, do you have any comments?
General Profit. Sir, Gary Profit, deputy chief of the Army
Reserve.
I would only add that we have a process action team inside
of the BRAC process that is looking at every opportunity to
create joint reserve basing throughout CONUS, and we think it
has great promise.
Dr. Schwarz. Thank you, gentlemen.
Thank you, Mr. Chairman.
Mr. Hefley. Mr. Butterfield.
Mr. Butterfield. Thank you, Mr. Chairman.
First, let me thank the four of you for coming forward
today to give us your testimony and certainly thank you for the
work that you do for our country. I want to direct my specific
question to Secretary Penn.
Now, Mr. Secretary, I realize that you have only been on
the job for a few days; so have I. That is why I am sitting on
the lower tier at the far end. And so I share your anxiety, and
I thank you so very much for coming forward today with your
testimony.
I trust that by now you are somewhat familiar with the
outlying landing field in eastern North Carolina. If not, I
want to share a bit with you to give you some information on
it.
The Navy is proposing to place an outlying landing field in
my congressional district, which is in eastern North Carolina.
Specifically, the field is to be located in Washington and
Beaufort Counties, and I just want this committee to know and I
want you to know and the Navy and the Nation to know that I
fully support the development of an outlying landing field and
certainly I support it in eastern North Carolina.
My constituents there in eastern North Carolina likewise
support the development of such a field. But we are concerned,
we are deeply concerned, the citizens of eastern North Carolina
are concerned that this landing field is being placed in the
middle of a wildlife refuge, and that is not good. And the
citizens are very concerned about it. They feel that it is
unwise and unfair to locate this landing field at this
location.
The governor of our state commissioned a team of experts
recently to examine this site and to propose alternatives,
viable alternatives that may be within a few minutes of flying
time from Oceana and Cherry Point and the other bases. And in
just a few minutes I would like to submit a copy of the draft
of that report of the governor's commission for your
consideration and to be a part of the record.
What further complicates this matter, Mr. Secretary, is the
fact that the United States District Court has heard this case;
it is in litigation. A lawsuit was brought by the citizens of
those two counties to the U.S. District Court, and the court
has ruled in their favor and has issued an injunction against
the Navy prohibiting further development of this site.
So we are very concerned about it, and I want you--I do not
want to unduly put you on the spot here today. I realize that
you are new to the process, but I want you to know that the
people of eastern North Carolina are deeply concerned with
locating this landing field in the middle of a wildlife refuge,
and we are begging the Navy, we are urging the Navy to look at
alternative sites.
I guess my first question is, Mr. Secretary, are you
familiar with this issue in any respect?
Secretary Penn. Yes, sir, I am familiar with it.
Mr. Butterfield. Okay. And I guess the next question is, is
the Navy just unalterably opposed to exploring any alternative
site? In other words, are you willing to look at any
alternatives whatsoever?
Secretary Penn. Sir, until we have the final results from
the court action, the only thing we are doing is looking at
other analysis of the environment.
Mr. Butterfield. Well, the case is ongoing, certainly----
Secretary Penn. Right.
Mr. Butterfield [continuing]. In the appellate courts, but
for my understanding, the Navy is still attempting to acquire
land in this region.
Secretary Penn. No, sir, we are not.
Mr. Butterfield. That is not correct.
Secretary Penn. No, sir, that is not correct.
Mr. Butterfield. And so the land that has been acquired--
you are no longer making an acquisitions.
Secretary Penn. That is correct, sir.
Mr. Butterfield. All right. Has the Navy completed any type
of bird management plan that would reduce the risk to pilots?
This wildlife refuge is full of animals and birds that are 20
pounds in weight, they are 9 feet in diameter when fully
extended. And the citizens are just so concerned about the
possibility of bird strikes. Have you explored any----
Secretary Penn. Yes, sir.
Mr. Butterfield. Have you done any research on this?
Secretary Penn. We are in the process of conducting a BASH,
which is what they call a study, on bird impacts now. And from
experience, I can tell you there is nothing worse than hitting
a bird in a landing pattern, especially a large bird. Quite
often they come inside the cockpit with you. It is a very
frightening experience. And you can lose an aircraft and the
crew.
Mr. Butterfield. And of course you are a naval aviator
yourself.
Secretary Penn. Yes, sir.
Mr. Butterfield. Of course, you would share that concern.
Secretary Penn. Yes, sir.
Mr. Butterfield. Yes.
Secretary Penn. But we are analyzing it to make sure that
it has to be safe for everyone, and I think the area that we
are concerned with is not exactly near the wildlife refuge.
Mr. Butterfield. All right. I just want to continue to urge
the Navy to look at alternative sites. I know that has been
resisted to this point, but I want to encourage you to continue
to look at other sites, because other sites are available in
eastern North Carolina.
And I am going to submit for the record, Mr. Chairman, with
your permission, a copy of the governor's report. I yield back
the balance of my time.
Mr. Hefley. Mr. Forbes.
Mr. Forbes. And thank you all for being here today.
Secretary Prosch, I would like to particularly thank you
and your staff for all the work you have done to support the
troops at Fort Lee and their families stationed there. You have
just done a great job. And as you know, from time to time, some
of those troops will approach us and they will talk about those
1950's era open-bay barracks that are still there and they ask
when are they going to be modernized. And I know that you have
a program that is doing that, and I was wondering if you could
just share with the committee the current status of the Army
Barracks Modernization Program.
Secretary Prosch. Yes, sir. We are in the 13th year of this
program, and thanks to your solid support, we have been making
steady progress. With the fiscal year 2006 appropriation, we
will be 85 percent complete with the modernizing of our
barracks for our 136,000 single soldiers.
Over one-half of this year's active Army MILCON budget is
for barracks. As I mentioned in my opening remarks, 5,190 new
soldiers will now have barracks at the one-plus-one standard.
The one-plus-one standard, as you know, is a suite that we
build for the soldiers where we have private bedrooms, a walk-
in closet, a shared kitchen and a bathroom area.
I had a chance to take my son when he was a college student
into one of these at Fort Bragg, and he said, ``Dad, how do you
enlist? This is great.'' So we thank you so much for allowing
us to give our soldiers what they really deserve.
I would like to also advise you that we are spending $250
million of OMA dollars this fiscal year 2005 to try to get at
some of our substandard barracks that are in a red status. We
want to triage these barracks immediately and make sure the
heating, the air conditioning, in some cases mold and leaks are
repaired. And so we are going to continue to make a steady
progress, and you can tell those soldiers that it is coming,
sir.
Mr. Forbes. Well, thank you, Mr. Secretary, and they
appreciate it. As you know, they have waited a long time for
it, and we just appreciate your efforts there.
Secretary Grone, I have a question for you about overseas
bases. You know, we have had a lot of discussion about long-
term bases in central Asia, for example, and I know that our
traditional overseas bases existed in regions where the
stability of the government was not much at issue. But the
instability is of particular concern in some of the areas that
we are looking at overseas bases.
Now, how do we ensure that our investment in long-term
bases in these regions will not be wasted if we must at some
time abandoned the bases we have built?
Secretary Grone. Well, sir, the best way I can answer your
question is we have, as you indicated, tried to provide
Congress with our best thinking on this as we have moved along
the process that the Secretary initiated nearly three years ago
or about three years ago to take a look at our global assets
and global basing and presence laydown and make what
adjustments were necessary and prudent for the needs of the
future rather than the requirements of the past.
In September, we provided a report to Congress. It was an
initial report on our basing and presence laydown, and just
within the last two weeks or so, each of the regional combatant
commanders coordinated across the building and submitted
through my office, submitted to the committee, overseas basing
and overseas master plans for their areas of responsibility.
We are trying to take a long-term, prudent, reasonable
approach to the basing laydown that U.S. forces will require.
In not all cases are we talking about main operating bases with
static forces in which we have traditionally been organized. In
many cases, what we are looking for are access agreements,
great deal of flexibility, a lightly to no stationing of U.S.
forces in many of these locations. It would just simply give us
the ability to fall in on infrastructure as contingencies would
warrant.
So we will have a far more mixed approach to our basing
laydown with main operating bases that look similar to our
Ramstein Air Base, a main operating base, a large contingent of
U.S. forces, significant mission and mission throughput, but in
other areas, in other regions, we will have something that
looks far less intensive that relies more on access and we can
provide you all the appropriate briefing to give you a sense of
what our best thinking is on this at the present time.
But to the extent that a good deal of that is classified,
without getting into specifics, I think that probably might be
the best approach there if I might suggest that.
Mr. Forbes. Thank you, Mr. Chairman.
Secretary Prosch. Sir, if I could just jump in, just for
one second. I would just urge you to support the Army's request
for Outside Continental United States (OCONUS) funding this
year. We have very carefully selected our projects in Germany
for Grafenwoehr, Hohenfels; for Italy, Vicenza; and for Korea
vicinity, Camp Humphreys.
These are enduring installations, and we have very good
combatant commanders in General Bell and General LaPorte, who
for a $20 million equity investment have earned over $800
million in host nation funding to support these projects. So it
is a very wise investment, and we would appreciate your
continued support here.
Secretary Grone. Mr. Chairman, if I might just follow up
quickly on that point. As we were developing the initial report
to the Congress last year, we were very careful to look through
the last year's budget request as well as the Future Years
Defense Program and make financial adjustments based on where
we saw the basing and presence strategy heading over time.
So we tried to take a very forward-leaning approach to
remove military construction projects from areas where we were
not intending to have a long-term presence, so we would not
have that kind of stranded investment in the future.
And what we tried to do with this budget request, as Mr.
Prosch indicated, is we have put a significant amount of
resourcing, $782 million worth, for military construction to
meet our requirements based on the Combatant Commanders' and
the Secretary of Defense's and the President's best judgment
for that overseas posture laydown looking to the future. And
that is a reasonably consistent number, in fact it is less than
what we have requested in some prior years, but it represents
very clearly our judgment as to where we will be in the end
state.
Mr. Forbes. My time is up but if at some time you could
also get back to me, I know that China and Russia are
increasing their military influence or trying to in central
Asia, and whether or not that is going to pose a threat to our
long-term efforts to establish long-term bases and facilities
in that region.
Thank you, Mr. Chairman.
[The information referred to was not available at the time
of printing.]
Mr. Hefley. Mrs. Davis.
Ms. Davis of California. Thank you. Thank you, Mr.
Chairman.
Thank you to all of you for being here.
Secretary Penn, perhaps I want to ask you more of the
questions, and I appreciate the fact that you have been on the
job a very short time. But I wanted to just ask about the
rationale for the Navy MILCON budget being below, I believe it
was about a 14 percent reduction in 2006 from 2005. That is of
interest to me.
But I also wanted to applaud the fact that we have raised
the cap. I think particularly in San Diego that has been very
positive. But could you also address the fact of how are we
dealing with the privatization with bachelor housing? We know
that one of the real management strategies in privatized
housing is to move families in and out very quickly, but in
some cases if we have bachelor housing, it works a little
differently in the Navy because they do not necessarily give up
that place on deployments and other needs to leave that
housing.
Could you respond to that? How is that working? What is
that vision that we have for bachelor housing facilities after
privatization?
Secretary Penn. Yes, ma'am. At this time, we have three
projects going for bachelor privatization. One, as you may
know, is in San Diego, and we have already started on that. It
is moving along fine. The second will be in the Chesapeake, the
Hampton Roads area, and we are looking at the third in the
Puget Sound area. We are also looking at trying to start a
second phase, also in the San Diego and Coronado area.
Ms. Davis of California. Does it work the same as it does
for families?
Secretary Penn. Yes, ma'am, it does. And it is working
well.
Ms. Davis of California. So there are no transition needs
that would be different in whether or not that particular
service member is actually in that housing.
Secretary Penn. That is correct, it would not. When they go
to sea, they will check out. Someone else can go in there, just
like they do now. If you are living in a barracks, you go to
sea, someone else moves into your space.
Ms. Davis of California. Okay. So will this be providing--
--
Secretary Penn. Exactly.
Ms. Davis of California. Okay. All right. Thank you.
I had another question about how we manage the land,
because in urban settings where we have bases, we have
geographic constraints, how are we doing at looking at the best
use of land on those particular bases, especially where we have
great housing needs.
It is interesting to me that in San Diego particularly the
number of on-station housing units are so much smaller than in
the community and what we depend upon in the community, and yet
I do not know if we are looking as hard as we can. Sometimes it
is finding ways of developing that housing on base.
Do you have a sense of whether or not we are looking into
those issues as rigorously as we should?
Secretary Penn. Yes, ma'am, we are.
Ms. Davis of California. How do we evaluate that?
Secretary Penn. Quite often we try to get land obviously
inside the fence line, because we already own it and we can use
that. If it is not available, then we go outside the fence
line, outside the confines of the installation and purchase
that land, Public Private Venture (PPV), and go forward from
there.
Ms. Davis of California. If we develop land within the
fence line and for some reason or other it is not filled by the
military, what happens then? Do we move the fence?
Secretary Penn. Inside the fence line not filled by the
military--sorry. If we get down to the point where we have
empty units, private sector people can occupy the units inside
the fence line.
Ms. Davis of California. On the base.
Secretary Penn. Yes, ma'am.
Ms. Davis of California. And have we done that on a number
of occasions?
Secretary Penn. No, we have not at this time.
Ms. Davis of California. Okay. Thank you.
If I have some more time, Mr. Chairman, just a minute or
two, just a question about the base operation support funding,
and I know that we do see some concerns about shifting those
dollars. Previously, we were able to take money out of other
sources, the sustainment, restoration and modernization (SRM)
accounts, apparently, and I am just wondering whether or not we
are finding a different way to do that since we are not able to
shift those dollars in the way that we did before? And of
course some of those dollars were spent in the past, I believe,
on services such as child support services, child care
services.
Do we still have the ability to move some of those dollars
if in fact we find----
Secretary Penn. Yes, ma'am, we do. One of the things that
we have done recently we have set up a new organization called
CNI, Commander Naval Installations, and for the first time we
have been able to get our hands around a good budget as to what
we need for our boss. And this is the year we have done it. We
are confident that this is going to help us manage all of our
assets much, much better. It really seems to be working well.
Ms. Davis of California. Thank you very much.
Secretary Penn. Yes, ma'am.
Secretary Grone. Ms. Davis, with the chairman's indulgence,
because it was mentioned in the chairman's opening statement,
it is important to the question you just asked. With the
sustainment--and all of this has to be looked at as a business
process for facilities.
We began some years ago to work on the sustainment
question, and we are in the seventh version of that model. We
are this year taking the recapitalization metric from a metric
to a model that will generate more fully the need for financing
for recapitalization.
We are currently working on a joint--each of the services
had a way of assessing their base operating support
requirements but it is not a joint process the way sustainment
and recapitalization are.
We had initially set out on a path that would have taken us
three to four years to get to a joint programming model. We
have accelerate that through working with each other to the
prospect that we may have that model within 12 months.
All of that leads to an end-to-end business process for
facilities and facilities management in the Department, which
we have never had before. Within that process, we will still
have the flexibility, barring the imposition of any statutory
prohibition, but currently we have the ability to move those
funds around, all of which or most of which are operations and
maintenance funding, from sustainment to base operating
support, to O&M recapitalization, as circumstances require.
But as our end-to-end business process matures, it is
better now than it was the year prior, than it was the year
prior, and it will improve every year as we move forward, but
as that process matures, we will have a far better sense as we
are building a budget, even more than we do already, and we
knew a good deal today, of what the real needs are and how we
should budget and make those respective trades as we are
building the budget. Which should, theoretically, and in most
normal years put us in a position where we would have less
money moving from pot A to pot B, because we would be more in a
position to define that need.
We still need flexibility, however, for unanticipated
bills, so we are working a joint business process together. We
are putting more funds into these areas than we have in the
past. We are benchmarking them to private sector standards
while retaining some flexibility to meet our needs.
Ms. Davis of California. Mr. Secretary, if I may, just what
would indicate to you that that is not working? What would be
the first thing that you would look at in hoping that that
flexibility exists that would not be occurring? How would you
define that?
Secretary Grone. Well, currently we have the flexibility to
move funds from sustainment to base operating support and back,
subject to the transfer limitations that are imposed by
Congress and subject to reprogramming.
If there is a specific sort of instance at an installation,
we can certainly look at that, but I am not--absent looking at
sort of broad trends in execution or the way in which funds
would move around, that is usually what we would look to as an
indicator of something that is either we did not anticipate a
requirement or a bill or whatever it might be.
Ms. Davis of California. One quick question: Will you still
have the ability to shift the money between the BOS and the SRM
under the new appropriations alignment?
Secretary Grone. We would have that ability now and we
would have that ability in the future.
Ms. Davis of California. Okay. You will have it. Okay. I
was trying to get at that question. Thank you.
Mr. Hefley. Mr. Hayes. Sorry to wake you, Mr. Hayes.
[Laughter.]
Mr. Hayes. Thank you, Mr. Chairman. I have been here so
long I had forgotten about it. Anyway, thank you for holding
the hearing. Gentlemen, thanks for being here. Secretary
Prosch, the Army is having big problems, as you were just
talking to Ms. Davis about, SRM and BOS funding. The Army's
2006 request will fund only 72 percent of BOS requirements
which are typically must-pay bills. These accounts must be
funded at approximately 90 percent in order to maintain base
services.
I am aware that the Army is in the process of identifying
ways to fund BOS at 90 percent in 2005 and 2006, but meeting
this requirement would require as much as $1.8 billion in
additional funding for BOS.
How will you meet the 2005 and 2006 goal, and why does the
Army continue to fund BOS at levels far below spending
requirements? Question number one.
Number two, I am also aware that the Army's budget for 2006
funds SRM at only 91 percent, short of the 95 that DOD has as a
goal. As you know, SRM accounts that are regularly utilized as
bill payers for BOS requirements generated 400 unheated
buildings at Fort Bragg and a lack of SRM funds. This is
unacceptable. We have talked about it. Redefining heat in a
building with a space heater or a stove is not the way to solve
the problem.
I am aware the Army has already shifted approximately $400
million from SRM to BOS in 2005. Because SRM accounts are
raided to pay BOS, in 2004, sustainment budget received less
than 60 percent of requirements, and we are on a similar track
in 2005.
Mr. Secretary, I would not buy a new vehicle or build a new
building if I did not have funds to pay for the upkeep or the
gas and the oil.
If your MILCON dollars are unwisely spent, there is no way
to sustain the facilities. How do you intend to fix this SRM
funding deficit, both in short and long term?
And last but not least, Secretary Kuhn, if we have the
time, the Air Force is embarking upon privatized housing. From
what I hear it is going very well. As you know, we have a
successful program at Fort Bragg in its third year. At such
installations as Pope and Bragg where there is already a
privatized housing program, to what degree are you working with
the other service and existing developers to ensure a seamless
and uniform housing program to all service members which is
really working well?
Thank you.
Secretary Prosch. Sir, let me start off. Our goal is to
work closely with OSD to try to get this model to where we do
fund SRM and BOS at the right level. The Army has historically
underfunded BOS and SRM. Our installations have been the bill
payer too long.
Our Secretary and our Chief two weeks ago have made a bold
policy change. They said that in some ways our socks do not
match. We say that the quality of life and that infrastructure
is key, and so we need to go ahead and get on with doing that.
And they have made the decision starting in 2005 to fund our
base operations support and our sustainment at 90 percent.
So we are going to do that this year, we are going to do
that in the 2006 budget, and we pledge next year to go ahead
and work this up-front, as we should be doing.
We thank you for all your support at Fort Bragg. We did
have a bad cold spell there with over 400 buildings without
heat. As of yesterday, 45 of those buildings are without heat.
We will get them fixed in the next three weeks, and we pledge
to take care of our soldiers and our facilities, sir.
Secretary Kuhn. If I could answer your question on the
housing privatization at Pope Air Force Base, we had originally
looked at Pope as a stand-alone housing privatization project
because of the basic allowance for housing. Its financials
placed it in doubt as to whether it could be economically
feasible.
So we have now grouped Pope Air Force Base, Andrews Air
Force Base here in Maryland and MacDill Air Force Base in
Florida in a group of three that we will be going our in early
2006 with the RFP asking for bids on all of those as one group.
And then we plan to award that in early 2007.
Mr. Hayes. Thank you, Mr. Secretary, and I appreciate those
comments. It has been very, very successful for the folks in
uniform.
Mr. Prosch--and welcome back, Phil, as well--I appreciate
the high level of awareness that you have and the commitment to
fixing it. Is there any kind of market we can lay down on the
table to show that for sure this is going to take place this
time?
Secretary Prosch. Yes, sir. We have our mid-year review
coming up here toward the end of March. Why don't I promise to
come see you and the good chairman and tell you how we are
going to realign our funds from different bins to make sure
that the base support is funded properly?
Mr. Hayes. Appreciate that. And bring the money, we will be
glad to see you. [Laughter.]
Mr. Hefley. Mr. Marshall.
Mr. Marshall. Thank you, Mr. Chairman. Appreciate you all
being here. I will get the advertising out of the way to start
out with. Secretary Prosch, I know you know that Stewart and
Benning are ready to welcome any of the 10 brigades you want to
send that way. And Warner Robins is already a multi-service,
multi-mission facility. So that takes care of the advertising.
Secretary Kuhn, in your testimony, you make reference to
the Air Force's commitment to be recapitalizing on a 67-year
schedule. That would be about 1.5 percent of your current
capital. You say that in the sustainment budget you are at 95
percent this year.
Secretary Kuhn. That is correct.
Mr. Marshall. You say that you have fallen short on the
balance of the recapitalization and modernization----
Secretary Kuhn. And restoration and modernization.
Mr. Marshall. Restoration and modernization. You are at 173
and you say that by 2006--no pardon me, 2008, two years from
now, the backlog will be 9.8 billion. Assuming that the
recapitalization--and I have heard what Secretary Grone said
where we have gone through seven theories already and we are
into our eighth as far as this sort of issue is concerned--but
assuming the Air Force's commitment to a 67-year schedule, that
is 1.5 percent, what is 1.5 percent of our current capital?
What should we be spending right now, on average?
Secretary Kuhn. On average, in restoration and
modernization? In the 2006, like you said, we have the $2
billion for sustainment and----
Mr. Marshall. And 173.
Secretary Kuhn [continuing]. And 173. And in restoration
and modernization to reach the recap rate in 2008, we will have
to get to just a little under $800 million, and we have
budgeted for that to hit the 67 recap in 2008. I realize that--
--
Mr. Marshall. You have got in your testimony a description
what you call a $9.8 billion shortfall as of 2006. Maybe I am
misreading this. I do not think I am. It is on page four.
Secretary Kuhn. I am going to have to go back and look at
that.
Mr. Marshall. It says, ``The restoration and modernization
backlog is projected to grow to nearly $9.8 billion in 2006.''
Secretary Kuhn. I am not sure that is necessarily
associated with how we reach the recap rate as to what we think
needs to be funded in those programs. I think we have a ways to
go. We are going to have to come out of a little bit of a
deeper valley than we thought, but we have the money into the
President's budget in the future years, and we still believe
that we are on goal to hit 67-year recap, not only in year 2008
but in the years thereafter.
Mr. Marshall. We had a huge problem with recapitalization
of the quarters, housing stock for soldiers, airmen, Marines,
sailors, and at some point prior to my tenure we made the
decision to have private funding, recapitalization and then
lease, which effectively is just borrowing money and adding to
our debt. But it inures to our benefit right now because we get
a whole bunch of money that we can invest, and, consequently,
we have a nice new housing stock that is available for these
soldiers.
Secretary Kuhn. That is correct.
Mr. Marshall. Have we considered doing the same thing with
regard to our commercial capital stock? I toured Robins on
Saturday, some 1940 warehouses that were converted to office
space and are now, what is that, 65 or 67 years old, pretty
sorry shape, housing about 4,000 people who are doing support
services for our efforts in Iraq and Afghanistan and in pretty
bad circumstances.
The cost to just fix that with a new building would be in
the neighborhood of maybe $200 million, $300 million. I am sure
we could find private individuals willing to do it and lease it
back to us.
Secretary Kuhn. I think we are trying to do just that
through a concept that has been available in the law to us in
recent years, called the enhanced use lease, where the military
departments now are authorized to use underutilized property to
allow somebody outside of the fence, in the private sector, to
do something, to build something on that underutilized land
that insures to their benefit and for the use of that land to
build something that inures to our benefit.
We are asking all of the commands to look at that, Air
Force Materiel Command (AFMC) under which Robins falls, has not
that I know of, but Hill Air Force Base in Utah is looking at
using this authority over a period of probably 20 years to use
private sector funding to gain facilities that would encompass
perhaps as much as one-third of the installation through this
enhanced use lease process. The Army is doing it as Walter
Reed, and we are looking at many other ways of leveraging
private sector dollars.
Now, there are issues associated with this--force
protection issues, allowing people to come on to the base--but
if all these are met and they are met to the satisfaction of
the installation commander, we are definitely looking at ways
of leveraging private sector dollars in our commercial
activities, as we have in our housing privatization and utility
privatization.
Mr. Marshall. Secretary Grone, I know I am out of time. I
do not know whether you are the appropriate person to do this.
I would certainly like somebody to come in and help me
understand the effective dollars and cents of these kinds of
techniques used to modernize our stock.
It just seems to me that this is like buying a car,
borrowing the money to do so, effectively adds debt, whether
you call it a lease or you call it a loan, and if you combine
the extent to which we are failing to recapitalize, so, for
example, the $9.8 billion backlog, which, in essence, is a
future obligation, with the obligations that are incurred as
part of the leasing processes, I wonder to what extent we are
just adding debt that is just not showing on the books.
Secretary Grone. Well, Mr. Marshall, we will be happy to
provide you a briefing and have whatever discussion you believe
may be necessary.
I do want to clarify one item, though, if I might. The
discussion about housing seemed to center, unless I
misinterpreted it, on the notion that we would lease the
housing back from the private sector. That is not what we are
doing in housing privatization.
If it is an on-base housing area, in many cases we retain
the fee simple title and we out-lease that land on a 50-year or
longer lease to a private entity, which the financial markets
treat as ownership. Off-base, it is not our land.
If we are conveying housing units into the stock, we convey
those as part of the deal, they become the property of the
developer, and the individual service member chooses whether to
execute a lease with that developer. The government does not
lease the housing back from the private developer. The risk is
on the private sector.
What this program gives us the ability to do is give our
people better housing options. They are competitive with the
private marketplace, but in the sense that it builds up a
financial liability with all that implied from some sort of a
leasing arrangement, as one might traditionally think about it,
it is certainly not that, although it is understandable why one
might draw that conclusion. But we do not lease the housing
back for our people. Our people make those individual choices
themselves.
Mr. Hefley. Mr. Ryan.
Mr. Ryan. Thank you, Mr. Chairman. We have a vote here, so
I am going to try to be relatively brief.
Real quick, over the past few BRAC closures, how much
savings have we recognized up to this point, do you know? I
have not seen any number. Ballpark.
Secretary Grone. The Government Accountability Office and
every audit that we have seen suggests that the annual
recurring savings from after implementation of all prior BRAC
decisions is approximately $7 billion a year, with $17 billion
that we saw through the implementation of the prior 4 rounds of
BRAC. But that is $7 billion is an annual recurring savings
based on decisions that were taken in those four rounds.
Mr. Ryan. Great. Thank you very much.
One of the questions I have, and I am not going to plug my
base directly, the 910th Airlift in Youngstown, I guess I will
do it directly. [Laughter.]
I am not going to let everybody else do it and then I am
not going to do it.
One of the questions and the concerns that I had is as we
are moving troops back to this country and we are closing down
bases in the new post-9-11 threats that we may and maybe the
role that some of these air bases or military installations are
going to play for homeland security. And one of the concerns is
we may close down a base that may be able to somehow help us
down the line that we may not see just yet.
What role throughout the closure process will location
play? I mean, we are in Youngstown, Ohio. We are 500 miles from
two-thirds of the country. We have the only fixed wing aerial
spray unit, and there are things that we are working on for
biopreparedness with Kent State where that aerial spray unit
may play a role down the line in some kind of homeland security
issue. Is location considered in the process?
Secretary Grone. Certainly, location is a key component of
the assessment process. The availability of land, air, sea
assets, associated facilities is part of the selection criteria
upon which the Secretary must make his judgment to develop his
recommendation.
From a homeland defense, homeland security perspective,
homeland defense is a mission of the Department, and we
certainly take that mission into account as we build a basing
laydown and infrastructure for the future. We are doing that.
So, certainly, all of those factors are a part of the
process. Without being able to be specific about any given
location, certainly, that is an obvious part of--an overt part
of the selection criteria and a part of the assessment process
internally.
Mr. Ryan. Thank you. One final----
Mr. Hefley. Very quickly, Mr. Ryan, or we could come back
if you would like to come back and finish up your testimony.
Mr. Ryan. Yes. I will get you and let Mr. Taylor go.
Mr. Hefley. Can the witnesses stay? Okay. Evidently, we
just have one vote, so we will go try to do it quickly and come
back.
The committee stands in recess.
[Recess.]
Mr. Hefley. The committee will come back to order, and
since Mr. Ryan is not here right now, we will go to Mr. Taylor.
Mr. Taylor. Thank you, Mr. Chairman. I am reading with
great interest the environmental hurdles of building the
outfield that is described in Secretary Penn's remarks in North
Carolina. Secretary Penn, if Cecil Field were still part of the
Navy's inventory, would you have to be doing all that in North
Carolina?
Secretary Penn. I honestly do not know, sir, but I know I
love Cecil Field.
Mr. Taylor. I think the correct is answer, no, if Cecil
Field was still in the inventory, we would not be looking for
additional bases. Why was Cecil Field closed? Did the local
community ask us to close it or was that the result of a base
closure decision?
Secretary Penn. I believe that was the result of a base
closure, sir.
Mr. Taylor. Secretary Penn, while I have you, I just on
Saturday visited--and I realize you have only been on the job a
couple of days, but on Saturday I visited some brand new family
housing built to take care of the sailors at Homeport
Pascagoula. And when I say brand new, they have not even been
occupied yet.
With this round of BRAC, should Pascagoula be marked for
closure or mothballing or whatever, what becomes of that
housing? And the reason I ask is the housing is located almost
equal distance between Homeport Pascagoula and Keesler Field in
Biloxi, Mississippi.
What I am curious is, is there a mechanism where another
branch of the service could ask of that, because the absolute
last thing I want to see is this housing built at taxpayers'
expense either allowed to fall into disrepair for lack of use
or, worse yet, be sold for pennies on the dollar in some
brother-in-law deal that just makes all of us look bad.
Secretary Penn. No, sir. It is PPV. It is up to the partner
as to what happens to the house.
Mr. Taylor. If I am not mistaken, this is not that. I think
this was actually paid for with taxpayer funds. There was some
talk at some point of transferring it over to a public-private
venture, but the word I got on Saturday that it was actually
taxpayer money that built that.
Secretary Penn. Sir, I will take that for the record and
get back to you.
[The information referred to was not available at the time
of printing.]
Mr. Taylor. Would you?
Secretary Penn. Pleasure, yes, sir.
Mr. Taylor. Secretary--and I do not mean any offense--
Prosch?
Secretary Prosch. Prosch.
Mr. Taylor. Okay. Recently returned from Roosevelt Roads to
see the--again, do not say this happily--to see that base being
shut down. I think it is a mistake. I did not realize it was
buried in the authorization bill a couple years ago, but I
voted for it, and therefore I share the responsibility.
It is my understanding that not only did that language
require the closing of Roosevelt Roads, which, again, I think
is a mistake, but has pretty well put a moratorium on all
military construction on the island of Puerto Rico.
A, is that accurate, and, B, what sort of problems, what
sort of unintended problems is that creating for the Army down
there that maybe we can correct in this year's bill?
Secretary Prosch. Let me talk about that. Thank you for the
opportunity to discuss that, then I am going to defer to my
reserve colleagues in the rear here.
We have got about 4,500 reserve soldiers in 48 units, in 14
different locations across the island, and if you look at the
number of soldiers and the total population per capita, Puerto
Rico is as high as any state we have got for serving their
country. And so it is important that we try to sustain the
facilities that we use.
Overcrowding can be relieved through the use of military
construction funds, and the problem we have is that this
moratorium was imposed. And you will see in the Army-
recommended and OSD-approved legislation some relief from this
moratorium, because we think it is important that we be able to
lift this moratorium and be able to drive on with our
construction.
The guard wants to put their headquarters at Fort Buchanan.
Fort Buchanan could be a satellite for consolidation of a lot
of outlying reserve units. And so it would be very important if
we could get your support on that.
And I would just briefly like to ask my reserve and guard
colleague to my rear to comment on that.
General Profit. Yes, sir, if I could. First of all, the
moratorium applies only to Fort Buchanan, but having said that,
Fort Buchanan is the centerpiece of an island-wide answer to
facilities in Puerto Rico. That also includes an enclave at
Naval Station Roosevelt Roads, Camp Santiago and armories and
reserve centers throughout the island.
Frankly, sir, you asked about the impact. The impact is
that it is not very helpful for us to be able to provide
facilities for quality of life and quality of service for
soldiers, sailors, airmen, Marines, coastguardsmen that frankly
is commensurate with their service to the nation. And we would
ask your support to lift the moratorium.
Mr. Taylor. Mr. Chairman, if I may.
Secretary Penn, one thing I did notice at Roosevelt Roads--
I am a scrounger by nature, I literally built a boat out of
other people's junk, of course, it looks like it--but one of
the things that I noticed is that at Roosevelt Roads--I come
from hurricane country. Loss of power is something we
anticipate every August and September, and therefore almost
every community one of the things they really place a premium
on are generators for the courthouse, for the jail, for the
police and fire departments.
One of the things I did notice at Roosevelt Roads, on the
good side, is that the Navy had done a very good job of pulling
almost every stick of furniture out of there, because I did not
want to see anything wasted.
On the not so good side, and I do want to compliment the
young lieutenant commander who rode me around that Saturday,
who gave up his Saturday and did a great job, one of the things
I did notice is there were probably 100 generators of various
capacities, some of them in the hundreds of kilowatts, that the
Navy had planned on leaving behind.
I would ask that you take another look at that. I think
that given that local communities can use them, given that the
guard and reserve, particularly engineering battalions have
left behind in Iraq almost all of their generators, I would
hope that the Navy, again, using our great CBs, using the
reserve capacity that you have, using possibly the Puerto Rican
National Guard engineering units, I hate to see that
transferred to the next person who buys those buildings. They
are going to get a bargain anyway. They do not need a bargain
plus that.
Secretary Penn. Yes, sir. Yes, sir.
Mr. Taylor. And that was my request of you. If you could
follow up on that.
Secretary Penn. I will follow up on that, sir.
[The information referred to was not available at the time
of printing.]
Mr. Taylor. And, quite frankly, if you can find no one else
that is interested in it, I would certainly like the
opportunity to see if I cannot get the Mississippi National
Guard down there.
Secretary Penn. Yes, sir.
Mr. Taylor. Okay.
Secretary Penn. We will get back to you.
Mr. Taylor. Thank you, Mr. Chairman.
Mr. Hefley. So far as lifting the moratorium, I would like
to say just as one member of this committee, I would not put a
dime of military money back into Puerto Rico if I had my way
after they shoved us off the island, which we really needed,
which had a military necessity for us to use, Vieques. And we
got shoved out because of local politics and politics up here,
Gene.
And I think it is a darn shame. We needed that facility,
and it was not hurting anybody. But it became a political and
emotional thing, and I think we should have closed Roosevelt
Roads and everything else we have got down there.
So you do not have to come lobby me on that now.
Mr. Ryan.
Mr. Ryan. Thanks, Mr. Chairman, I appreciate it.
One of the questions I had was one of the criteria for the
BRAC is the economic impact. If you could just maybe explain
that a little bit, how broad that is. My concern is that an
area like I represent that has a high unemployment rate, is
very poor area, losing a base that employs 2,000 people and has
$110 million economic impact, losing that to us means a lot
more than if that base was closed down in an area that was
doing very well.
And you do not have to give me the exact stuff but just
what is your sense, because I think in the long run it may cost
the government more money to--the government as a whole more
money to close down that base and that area. It may save the
military money, but it may have an overall cost to the
taxpayer.
Secretary Grone. Well, sir, I take your point, and you are
certainly accurate that we do have to take into account the
economic impact of the Secretary's recommendations on
communities. How precisely we are going to asses that, the
weight of it, the breadth of it, and how we are going to do
that is not something I am in a position to discuss today.
Suffice it to say that all of that material will become
available to the Congress and to the Commission on the 16th of
May for both entities to exercise their respective
responsibilities under the statute. But it is just simply not
something, because it is for the internal assessment process at
this point that I cannot detail at this time.
Mr. Ryan. Let me just encourage you, because from our
position, although we are on this committee, we also vote and
represent other interests as well. And to save money in the
military budget, to get the taxpayer more money because of the
social need that would be made there I think is very important.
So thank you very much. You guys do a great job, and I
really appreciate your time.
Thank you, Mr. Chairman.
Mr. Hefley. Mr. Taylor, you have a follow-up.
Mr. Taylor. Yes, sir.
Gentlemen, I--and, Phil, you are a great guy, we go way
back on this issue. You are for it, I am against it, and
unfortunately your side won; there will be another round of
BRAC. The number that was tossed out repeatedly by the
Secretary of Defense and others was somewhere in the
neighborhood of 23, 24 percent excess capacity.
I look out and I see the simultaneous cancellation or
reduction or delay in the purchase of the DDX, the tall combat
ship, the F-22, the V-22, C-130 Js, and I know I am missing a
couple. I happen to believe that reflects--and then I have
talked to friends within the services who tell me how their O&M
accounts are being raided. I happen to believe that that
reflects the hidden costs of the war in Iraq where we are just
not being straight with the American people as to the true cost
of this. And so in order to do that war right, and I hope we
are doing it right, we are creating some future vulnerabilities
over here.
My fear is that now that we have given the Department
authority for another round of BRAC, that it is not 24 percent
of capacity, that it is actually much worse than that, because
you are looking for some additional savings to cover the cost
of the war in Iraq. What guarantees do we have, if any, that
this round of BRAC will not end up closing one base out of
three or two bases out of five, as far as a percent of total
capacity?
Secretary Grone. Mr. Taylor, the best way for me to answer
that question at the present time is to say what that number is
and what it is not.
That number was an estimate of excess capacity based on
baseloading construct which was the best way that we could
judge capacity at that time, absent an actual BRAC analysis.
The Congress asked on two occasions, once in 1998 and once last
year, for reports to be delivered that assessed balance of
excess capacity available to the Department.
In the 1998, the number across the entirety of the
Department came out to 23 percent. The number in the last
report to Congress came out at 24.
I think we have gone to great lengths to say, and I have
said repeatedly, that that does not necessarily mean that one
base in four will close. The entire thrust of base realignment
and closure or the mandatory direction from the Congress, not a
matter of discretionary policy choice by the Department, but as
a matter of law is that the military value of our installations
and the missions that they support is the primary consideration
for base closure and realignment recommendations. Not savings,
not targets for capacity reduction, but the military value to
the national defense based on a 20-year threat assessment and
force projection and also founded upon the selection criteria.
I cannot give you any assurances with regard to specific
numbers, because the Secretary has not made his recommendations
clear. What I can say is that we have set no internal or
external targets with regard to savings projections that have
to be achieved with regard to this BRAC. We take very seriously
our obligations under the statute to ensure that military value
is the highest criteria by which we make these judgments.
We believe there are savings to be had, specifically for
the kinds of things that you have spoken about that accrue from
getting rid of excess capacity that we no longer require. Our
track record demonstrates that, and I know we have had
disagreements on that point, but, clearly, there are savings to
be had from offloading infrastructure that is not required for
the mission and not required by the Department for any purpose.
Those funds can be used for a better and higher military use.
So all I can assure you today is that we are doing the best
we can to develop options for the Secretary for his
consideration and ultimately his recommendation that have
military value as that best and highest criteria within the
process and that we have not established any arbitrary targets
for closure and realignment, and we certainly have not set any
internal goals for simply closing bases for the sake of
achieving a budgetary target. That is not what we are doing.
Mr. Taylor. Again, to the point, the number that was thrown
out is 24 percent excess capacity; you have confirmed that. Is
there anything to limit it from being 30 percent? Is there
anything to limit it from being 50 percent?
Secretary Grone. The limitation is the best military
judgment of the uniformed and civilian leadership of the
Department.
Mr. Taylor. Okay. But in simplistic terms, there is really
nothing to stop this BRAC from closing every other base in
America if they choose to.
Secretary Grone. Congress provided no baseline, and it
provided no ceiling to the scope of the analysis, specifically,
because it asked us to look at it from the perspective of
military value.
Mr. Taylor. Just wanted to get that on the record.
Thank you, Mr. Chairman.
Mr. Hefley. Thank you, Mr. Taylor. Mr. Taylor has had two
continuing themes when we talk about BRAC. One is Cecil Field
we have already talked about, and we did screw up there, I
think. We should not have lost that. That is one of the
mistakes of the BRAC process.
And the other is that we get value for what we give up. And
that was part of the original formula when we talked about the
BRAC thing. Mr. Armey brought the BRAC procedure to the floor
and we talked about in our calculations about how much money we
were going to save and what we were going to do with it and so
forth, that we would actually sell these properties and they
would bring in money, and we would use that to make better some
of the installations we had. And that has worked to a greater
or lesser extent over the years, most lesser extent, I think.
What is your sense, Phil, that in terms of getting value in
this BRAC process, because there are some places that have very
little economic value. They are good for a base and they are
good for not much else. And there are some places with enormous
value. The one, Gene, that you referred to many times is that
island in New York and so forth--what?
Mr. Taylor. Governor's Island.
Mr. Hefley. Governor's Island, which has enormous value or
anywhere around San Diego or Norfolk or Jacksonville would have
enormous value.
So do we plan to give this stuff away mostly or do we plan
to try to do what we can to realize value from it?
Secretary Grone. Well, Mr. Chairman, we are taking a very
good hard look at lessons learned from the past from prior
rounds of BRAC and taking into account the comments that we
received from a number of sources to include members who have
expressed concern about the disposal process over the years,
including members of this committee.
Recently, I have spoken about five fairly broad principles
through which we would entertain and manage our policy process
for base reuse after the decisions are rendered and assuming
they are enacted into law.
First, we want to do whatever we can to expedite the
movement of the mission. It is in the interest of the
Department to have realigned missions or missions moving from a
closed installation to their ultimate destination as
expeditiously as we can.
That is certainly in the interest of military efficiency
and effectiveness, and it certainly leads to the second
principle, which would be that we must do what we can, and we
will do what we can, to expedite the beneficial reuse of a
closed military installation, to put it back on the local tax
rolls so it can provide the kind of economic benefit to the
local community that it can.
In many cases, those processes have taken a significantly
long time for a number of reasons, and we are looking at those
reasons very carefully to see what we can do to expedite it.
Fundamentally, what we seek to do as a third principle is
to implement a mixed toolkit approach. And by that, I mean all
the authorities that are currently available to the military
departments, be it public sale, public benefit conveyances,
economic development conveyances, whatever the package of
authorities that is necessary are all on the table, and in many
cases we could have a cookie-cutter approach but it would not
be very effective.
And, quite frankly, in the early part of the first rounds
of BRAC, we probably overestimated both our capacity and our
ability to execute public sale in an effective way. Over the
years, that pendulum tended to swing very much to the other
direction, much to the consternation, I think, of a number of
players in the process.
What we are trying to do is rebalance that equation,
recognize that we have some powerful authorities at our
disposal but that we have to have all of the authorities at our
disposal in order to this process to be effective.
Within that mixed toolkit, certainly, we do want to rely as
a fourth principle more on the market. So to the extent that we
have assets that are valuable in the public marketplace, we
should seek and will seek to sell those where we can, assuming
that they are not the subject of a public benefit conveyance or
other process. But we do want to try to maximize value in
return for these parcels where it is appropriate, and it will
be appropriate in a number of venues.
Our ability to do that, both to execute the mixed toolkit
and to maximize value, relying on the market, is entirely
dependent on the fifth principle, which means we cannot execute
any of this without a very strong partnership with state and
local government, those who have zoning authority, state
environmental regulators, state and local development
authorities in the private sector to do what is necessary to
develop a local redevelopment plan or base reuse plan that can
be effectively and expeditiously implemented.
So it is would not be a process of we will have a parcel
property and we will stand off to the side and try to sell it,
as some have suggested we might do. For this process to be
effective, we have to be involved in an aggressive way at the
local level, with affected parties, to ensure that we get the
best plan developed and that can provide us where we are going
to use public sales the maximum value for property.
The Navy has one that recently at El Toro, they have done
it and are postured to do it at Naval Station Roosevelt Roads,
using a mixed toolkit approach, relying on public sale where it
is viable, relying on strong partnership with state and local
government and the local redevelopment interest to make sure
that we do have a package that can, in the event we do have a
base closure, put ourselves in the best position possible to
have economic reuse in the most expeditious way we can.
Mr. Hefley. Thank you. Are there any other questions?
If not, we want to thank you again for being with us. Your
testimony was very, very helpful.
The committee stands adjourned.
[Whereupon, at 4:25 p.m., the subcommittee was adjourned.]
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A P P E N D I X
March 15, 2005
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QUESTIONS AND ANSWERS SUBMITTED FOR THE RECORD
March 15, 2005
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QUESTIONS SUBMITTED BY MR. FORBES
Mr. Forbes My time is up but if at some time you could also get
back to me, I know that China and Russia are increasing their military
influence or trying to in central Asia, and whether or not that is
going to pose a threat to our long-term efforts to establish long-term
bases and facilities in that region.
Secretary Grone. [The information was not available at the time of
printing.]
______
QUESTIONS SUBMITTED BY MR. TAYLOR
Mr. Taylor. Secretary Penn, while I have you, I just on Saturday
visited--and I realize you have only been on the job a couple of days,
but on Saturday I visited some brand new family housing built to take
care of the sailors at Homeport Pascagoula. And when I say brand new,
they have not even been occupied yet.
With this round of BRAC, should Pascagoula be marked for closure or
mothballing or whatever, what becomes of that housing? And the reason I
ask is the housing is located almost equal distance between Homeport
Pascagoula and Keesler Field in Biloxi, Mississippi.
What I am curious is, is there a mechanism where another branch of
the service could ask of that, because the absolute last thing I want
to see is this housing built at taxpayers' expense either allowed to
fall into disrepair for lack of use or, worse yet, be sold for pennies
on the dollar in some brother-in-law deal that just makes all of us
look bad.
If I am not mistaken, this is not that. I think this was actually
paid for with taxpayer funds. There was some talk at some point of
transferring it over to a public-private venture, but the word I got on
Saturday that it was actually taxpayer money that built that.
Secretary Penn. [The information was not available at the time of
printing.]
Mr. Taylor. Secretary Penn, one thing I did notice at Roosevelt
Roads--I am a scrounger by nature, I literally built a boat out of
other people's junk, of course, it looks like it--but one of the things
that I noticed is that at Roosevelt Roads--I come from hurricane
country. Loss of power is something we anticipate every August and
September, and therefore almost every community one of the things they
really place a premium on are generators for the courthouse, for the
jail, for the police and fire departments.
One of the things I did notice at Roosevelt Roads, on the good
side, is that the Navy had done a very good job of pulling almost every
stick of furniture out of there, because I did not want to see anything
wasted.
On the not so good side, and I do want to compliment the young
lieutenant commander who rode me around that Saturday, who gave up his
Saturday and did a great job, one of the things I did notice is there
were probably 100 generators of various capacities, some of them in the
hundreds of kilowatts, that the Navy had planned on leaving behind.
I would ask that you take another look at that. I think that given
that local communities can use them, given that the guard and reserve,
particularly engineering battalions have left behind in Iraq almost all
of their generators, I would hope that the Navy, again, using our great
CBs, using the reserve capacity that you have, using possibly the
Puerto Rican National Guard engineering units, I hate to see that
transferred to the next person who buys those buildings. They are going
to get a bargain anyway. They do not need a bargain plus that.
Secretary Penn. [The information was not availabe at the time of
printing.]