    [Senate Hearing 109-22]
    [From the U.S. Government Publishing Office]

                                                      S. Hrg. 109-22, Pt. 6

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2006

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

                                    HEARINGS

                                   before the

                          COMMITTEE ON ARMED SERVICES
                              UNITED STATES SENATE

                           ONE HUNDRED NINTH CONGRESS

                                 FIRST SESSION

                                       ON

                                    S. 1042

         TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2006 FOR MILITARY
    ACTIVITIES OF THE DEPARTMENT OF DEFENSE, FOR MILITARY CONSTRUCTION, AND
       FOR DEFENSE ACTIVITIES OF THE DEPARTMENT OF ENERGY, TO PRESCRIBE
    PERSONNEL STRENGTHS FOR SUCH FISCAL YEAR FOR THE ARMED FORCES, AND FOR
                                 OTHER PURPOSES

                                   __________

                                     PART 6

                                   PERSONNEL

                                   __________

                              APRIL 5 AND 13, 2005

             Printed for the use of the Committee on Armed Services

                                   ----------
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    21-107 PDF                       WASHINGTON : 2005

    For sale by the Superintendent of Documents, U.S. Government Printing
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    Washington, DC 20402-0001

                          COMMITTEE ON ARMED SERVICES

                        JOHN WARNER, Virginia, Chairman

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

                        Judith A. Ansley, Staff Director

                 Richard D. DeBobes, Democratic Staff Director

                                     ______

                           Subcommittee on Personnel

                  LINDSEY O. GRAHAM, South Carolina, Chairman

    JOHN McCAIN, Arizona                 E. BENAJAMIN NELSON, Nebraska
    SUSAN M. COLLINS, Maine              EDWARD M. KENNEDY, Massachusetts
    SAXBY CHAMBLISS, Georgia             JOSEPH I. LIEBERMAN, Connecticut
    ELIZABETH DOLE, North Carolina       DANIEL K. AKAKA, Hawaii

                                      (ii)

                                C O N T E N T S

                                  ----------

                        CHRONOLOGICAL LIST OF WITNESSES
      Active Component, Reserve Component, and Civilian Personnel Programs
                                 april 5, 2005

                                                                       Page
    Chu, Hon. David S.C., Under Secretary of Defense for Personnel
      and Readiness..................................................     5
    Hagenbeck, LTG Franklin L., USA, Deputy Chief of Staff for
      Personnel......................................................    31
    Hoewing, VADM Gerald L., USN, Chief of Naval Personnel, United
      States Navy....................................................    37
    Osman, Lt. Gen. H.P., USMC, Deputy Commandant for Manpower and
      Reserve Affairs, United States Marine Corps....................    57
    Brady, Lt. Gen. Roger A., USAF, Deputy Chief of Staff, Personnel,
      United States Air Force........................................    70
    Strobridge, Steven P., Co-Chairman, The Military Coalition.......    89
    Raezer, Joyce Wessel, Director, Government Relations, National
      Military Family Association....................................   131
    Holleman, Deirdre Parke Esq., Co-Director, National Military and
      Veterans Alliance..............................................   148

          Active and Reserve Military and Civilian Personnel Programs
                                 april 13, 2005

    Hall, Hon. Thomas F., Assistant Secretary of Defense for Reserve
      Affairs........................................................   183

                                     (iii)

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2006

                                  ----------

                             TUESDAY, APRIL 5, 2005

                                   U.S. Senate,
                             Subcommittee on Personnel,
                                   Committee on Armed Services,
                                                        Washington, DC.

      ACTIVE COMPONENT, RESERVE COMPONENT, AND CIVILIAN PERSONNEL PROGRAMS

        The subcommittee met, pursuant to notice, at 2:35 p.m., in
    room SR-232A, Russell Senate Office Building, Senator Lindsey
    O. Graham (chairman of the subcommittee) presiding.
        Committee members present: Senators Graham and E. Benjamin
    Nelson.
        Committee staff member present: Leah C. Brewer, nominations
    and hearings clerk.
        Majority staff members present: David M. Morriss, counsel;
    Scott W. Stucky, general counsel; Diana G. Tabler, professional
    staff member; and Richard F. Walsh, counsel.
        Minority staff member present: Gerald J. Leeling, minority
    counsel.
        Staff assistants present: Alison E. Brill and Pendred K.
    Wilson.
        Committee members' assistants present: Steven R. Norton,
    assistant to Senator Chambliss; Meredith Moseley, assistant to
    Senator Graham; and Eric Pierce, assistant to Senator Ben
    Nelson.

        OPENING STATEMENT OF SENATOR LINDSEY O. GRAHAM, CHAIRMAN

        Senator Graham. Good afternoon, everyone. The subcommittee
    will come to order.
        The subcommittee meets today to receive testimony on
    Active-Duty, Reserve, and civilian personnel programs in review
    of the defense authorization request for fiscal year 2006.
        I would like to begin by stating how honored I am to be
    chairing the Subcommittee on Personnel. It really is an honor,
    and I look forward to my time here. I am particularly grateful
    to have Senator Nelson as the ranking member. I have found him
    to be a problem-solving Senator who understands what the Armed
    Services Committee is all about, and there is no more dedicated
    Senator to the cause than Senator Nelson from Nebraska. So I
    look forward to our time together.
        My predecessor, Senator Chambliss, did a superb job. He is
    my neighbor from Georgia, and I will try to carry on the
    tradition that he and Senator Nelson have started. I thank him
    for his continuing service as a member of the subcommittee and
    as co-chairman of the Senate Reserve Caucus. Senator Nelson,
    thank you again for volunteering to serve as the ranking
    member.
        As he knows, the subcommittee has a strong tradition of
    operating in a bipartisan spirit on behalf of soldiers,
    sailors, airmen, and marines, and I intend to continue that
    tradition. When I am at home speaking about the problems that
    our country faces, one of the things I stress is that when you
    are in Iraq or Afghanistan or anyplace wearing the uniform of
    the United States, the enemy could care less about your
    politics. They could care less about your heritage. All they
    want to know is are you an American, and if that is the case,
    then you are in harm's way. I really do respect what Senators
    Warner and Levin have done to try to make this committee as
    bipartisan as possible. I am sure that Senator Nelson and I
    will continue that tradition.
        I want to extend thanks and appreciation to Senators
    Collins, Dole, and Kennedy for their continuing membership on
    the Personnel Subcommittee and to Senators McCain, Lieberman,
    and Akaka for joining us on the subcommittee. This is a good
    group. There is a lot going on today in the Capitol and they
    will be very involved as the subcommittee moves forward.
        Secretary Chu, welcome. This will be your fifth appearance
    I believe.
        Dr. Chu. Yes, sir.
        Senator Graham. I really do appreciate you coming. I have a
    lot of respect for your knowledge and your service to our
    country.
        I also would like to welcome the members of our first
    panel, all of them wearing the uniform of our great Nation:
    Lieutenant General Franklin Hagenbeck, United States Army,
    Deputy Chief of Staff for Personnel; Vice Admiral Gerald
    Hoewing, United States Navy Chief of Naval Personnel;
    Lieutenant General H.P. Osman, United States Marine Corps,
    Deputy Commandant for Manpower and Reserve Affairs; and
    Lieutenant General Roger Brady, United States Air Force, Deputy
    Chief of Staff for Personnel.
        Thank you all. I know enough about the military to
    understand that getting one star is a big deal, getting three
    is a huge deal. Thank you for your service.
        Before we get started, I think it is appropriate to talk
    about people out in the field of all ranks, particularly our
    young officers and enlisted people who are serving in far-off
    places. The Personnel Subcommittee's goal is to make sure that
    we have a force fit and ready to fight and that the force and
    the families are well taken care of. Now is an opportunity to
    reflect for just a moment on what we have accomplished as a
    Nation militarily since September 11, 2001.
        Since then, we have defended the homeland. We have routed
    the Taliban during Operation Enduring Freedom (OEF). We have
    ousted Saddam Hussein during Operation Iraqi Freedom (OIF). Our
    troops remain deployed and under combat conditions in
    Afghanistan and Iraq today performing heroically and defending
    those fledgling democracies. I have been to Iraq three times. I
    have been to Afghanistan twice.
        I will talk to you a bit about my observations, but the
    people in those countries are tasting freedom and all the
    burdens that come with it because the young men and women from
    this country and other coalition nations decided to go and make
    that possible. Our subcommittee is going to treat these people
    right.
        In Iraq, our troops continue to fight the insurgents who
    have killed and wounded so many Americans and innocent Iraqis
    who aspire to live in a democratic nation. Our hearts and
    prayers go out to the families of those who have been injured
    and who have made the ultimate sacrifice in defense of freedom.
    On behalf of all of my colleagues, however, I wish to express
    our gratitude and pride in the accomplishments of the men and
    women of the Armed Forces. Their successes could not have been
    achieved without the support of their families, their
    communities and, in the case of our guardsmen and reservists,
    their employers.
        I want to stress that for a moment. I was in a Guard unit
    that was activated during the first gulf war, and when people
    are called to Active-Duty from the Guard and Reserves, many
    times the base or the unit is far away from a military base in
    its traditional form. There is no better experience to see a
    community come together to support families of guardsmen and
    reservists who are deployed to the Gulf to fight the Nation's
    fights. Employers make a tremendous contribution to making sure
    our force is stable and that the men and women who serve in the
    Guard and Reserves are well taken care of. To the employer
    community out there who may be listening, we understand what
    you do. We appreciate what you do, and help is on the way.
        I do want to underscore the role of the Guard and Reserves.
    Fifty percent of the combat forces and 40 percent of all U.S.
    military forces in Iraq are members of the Guard and Reserve,
    the highest use of these forces since World War II. The demands
    on the Guard and Reserve have never been greater, but they are
    meeting the challenge, and this subcommittee must continue to
    carefully assess the tools that the Reserve component may need
    in ensuring its ongoing ability to succeed.
        I have been, along with most Members of the Senate, pushing
    for full-time TRICARE coverage for the Selected Reserves to
    help retention, recruiting, and readiness, and that fight
    continues. I appreciate the compromise that Senator Warner was
    able to establish last year where, if you were called to
    Active-Duty for 90 days, your family received a year of
    TRICARE. I think that is a good start that can be built upon.
        As to the Active-Duty Forces, we will do everything in our
    power to make it so that you and your family can be well taken
    care of. When you decide to sign up, tough conditions can come
    your way, and no one is going to over-promise on this
    subcommittee. That is the one thing that Senator Nelson and I
    are committed to doing, to try to improve the quality-of-life
    the best we can. There is a certain hardship that comes with
    serving one's country, particularly in time of war. We will try
    to ease that hardship the best we can.
        Saying thank you is never enough, but it needs to be said
    as much as possible. To those who serve in the Guard and
    Reserve on Active-Duty, thank you for the sacrifices that you
    are making.
        With that, I will allow Senator Nelson, if he wishes, to
    make an opening statement.

                STATEMENT OF SENATOR E. BENJAMIN NELSON

        Senator Ben Nelson. Well, thank you very much, Mr.
    Chairman. I certainly welcome you as the new chairman of the
    Personnel Subcommittee. I am looking forward to working
    together with you this year.
        In past years, this subcommittee has led the way in
    authorizing measures to improve the quality-of-life for our
    servicemembers and their families. We have authorized pay
    increases above the rate of inflation for the last 5 years, and
    we raised the housing allowance to eliminate average out-of-
    pocket housing costs for military personnel unable to live in
    Government housing. Each year we have reviewed and revised
    special pays and allowances, as well as recruiting and
    reenlistment bonus authorities to provide meaningful financial
    incentives to those who serve in our military forces.
        Over the last several years, as the chairman has noted, we
    have improved health care for military personnel and their
    families by expanding health care coverage by authorizing
    TRICARE for Life and by making the TRICARE health benefit
    available to members of the Reserve components and their
    families before and after mobilization. I am confident that
    under your leadership, Mr. Chairman, we will continue to look
    at expanding health care coverage for members of our Reserve
    components and their families.
        This subcommittee has taken the lead in helping the
    Department of Defense (DOD) address significant issues such as
    spouse and family abuse, and we want to continue to work with
    the Department to address the very serious issue of sexual
    abuse in our military forces. Your leadership on this
    subcommittee comes at a very opportune time.
        Obviously, your service in the Air Force Reserve will be
    invaluable as we craft measures to address the serious
    recruiting and retention issues that are currently and will be
    facing our Reserve and National Guard Forces.
        The subcommittee will also address significant issues
    facing our Active-Duty Forces this year. While the Army
    struggles to maintain and, in some cases, increase its Active-
    Duty end strength, the Navy and Air Force will be making
    sizeable reductions in their authorized end strength. This
    subcommittee needs to ensure that the Services have the tools
    which they need to effectively manage their personnel programs.
        Mr. Chairman, I am really looking forward to working with
    you as we address these personnel issues and others this year.
    I look forward to hearing from our witnesses today. I welcome
    Dr. Chu back, and ask all of you to feel as though this is less
    a hearing and more of a discussion period so that we can better
    understand the challenges that you face, and together, we can
    work to improve the lives of those who are under your command.
    We thank you very much.
        Senator Graham. Thank you, Senator Nelson.
        Dr. Chu, your full prepared remarks and those of the other
    witnesses on the first panel will be entered into the record.
    You may now make an opening statement, if you would like.

     STATEMENT OF HON. DAVID S.C. CHU, UNDER SECRETARY OF DEFENSE
                      FOR PERSONNEL AND READINESS

        Dr. Chu. Thank you, Mr. Chairman and Senator Nelson. Thank
    you both for your warm welcome. It is a great privilege to
    appear before you this afternoon with my colleagues to describe
    our personnel programs, Active, Reserve, and civilian.
        Just 32 years ago this summer, the United States returned
    to its great tradition through most of the Republic, and that
    is the decision to staff the military entirely with volunteers,
    both the Active Forces and the Reserve Forces of the United
    States. That decision was implemented in the summer of 1973.
        The early years of the volunteer were often difficult
    years. It took us a while as a country to set the right
    parameters and the right combination of policies to secure the
    new success of the volunteer force, but by the 1980s, we had
    achieved that success. I think in the operations in the first
    Persian Gulf war in 1990-1991 and again most recently in
    Afghanistan and Iraq, as you have noted, the benefit of a well-
    motivated, highly-trained, volunteer force is clear for all to
    see. That superb performance of our young men and young women
    in the field has, I think properly, earned them the praise of
    their elders as the newest ``greatest generation.''
        It does, as my comments suggest and as you suggested also,
    Senator Nelson, in your opening remarks, require a dynamic
    adjustment of our policy and programs to sustain that success.
    We are very grateful for the support of this subcommittee in
    making those adjustments over time. Permit me, if I may, to
    highlight six of the most important things that we are seeking
    with this year's authorization bill.
        First and foremost, of course, is a pay raise of 3.1
    percent. That is a half a percentage point above the so-called
    Employment Cost Index (ECI), continuing our conformance with
    the guidance of Congress that this should be our metric through
    fiscal year 2006. We believe this is the right pay raise for
    the year ahead.
        Second, we would like to see the maximum amount allowed
    under the so-called selective reenlistment bonus (SRB) raised
    to $90,000 to give us more leeway as we seek to retain certain
    hard-to-fill skill areas.
        We seek likewise an increase in the ceiling for hardship
    duty pay from the current level of $300 a month to $750 a
    month. This allows us, as difficult circumstances accrue to
    particular assignments, to adjust the compensation accordingly.
        For the Reserve Forces, we would like to see greater
    parallelism with the Active Force. We would like a critical
    skills retention bonus authority, similar to the Active Force,
    with the ceiling of $100,000 to recognize the differential
    nature of the service.
        We likewise seek a more modern affiliation incentive, for
    those leaving active service to join a Selected Reserve unit.
    We think that will be very helpful in terms of the recruiting
    challenges we face on the Reserve front.
        Finally and I think very importantly for the long term, we
    are seeking in this authorization bill limited authority for
    the Secretary to carry out a small number of demonstration
    projects regarding the management of officers, recognizing that
    one size does not fit all and that we have specific communities
    where a little different approach might be meritorious. We
    would like authority to carry out some limited pilot projects
    in the years ahead, subject to your oversight and guidance.
        My colleagues and I look forward to working with you again
    this year, just as you both suggested, in ensuring that we
    sustain the success of this All-Volunteer Force which has
    brought so much success to the efforts of the United States, as
    Senator Graham so nicely outlined in his remarks.
        Thank you, Mr. Chairman.
        [The prepared statement of Dr. Chu follows:]
                   Prepared Statement by Hon. David S.C. Chu
                                  introduction
        Mr. Chairman and members of this distinguished subcommittee, thank
    you for the opportunity to be here today.
        For a number of years we have talked about transformation at the
    Department of Defense (DOD). This effort continues, and today I will
    review with you some initiatives we are working on within all
    components of the Total Force: Active-Duty, Reserve, DOD civilians, and
    the families who support our Armed Forces.
        There is no disputing the fact that the Force is facing challenges.
    Where it does, particularly in the areas of recruiting, retention, and
    stress, we carefully monitor the current status and take measures to
    resolve problems. We continually review compensation packages to ensure
    that they are adequate to meet the needs of the recipients, whether the
    need be for basic pay, housing allowances, or survivor benefits. We
    work jointly in many areas to take full advantage of the strength that
    comes from combining resources and knowledge, for example in joint
    training, partnerships with State and local governments, and the new
    Military Severely Injured Joint Support Operations Center.
        We are guided by the understanding that people are more than just
    numbers and budgets are more than just sums in columns. The decisions
    made about funding for the next fiscal year matter a great deal to real
    people. I am happy to be here to answer your questions and discuss the
    programs that we believe are essential to building and sustaining the
    Total Force that will meet our national security requirements.
                          transforming the total force
    End Strength and Relieving Stress on the Force
        The Department of Defense continues to review its military end
    strength to ensure that the Nation's security needs can be met and is
    making progress in alleviating the current high demand on U.S. forces
    caused by operations in Iraq, Afghanistan, and the global war on
    terror. By focusing attention on efforts to reduce stress on our
    forces, we believe we can negate any need for an increase in military
    end strength above what is authorized in the National Defense
    Authorization Act (NDAA) for Fiscal Year 2004.
        Transformation of how the U.S. military is structured--especially
    the increase in combat units in the Army and Marine Corps--is the
    biggest way in which the Department is working to reduce the demand on
    U.S. forces. The fiscal year 2005 Quadrennial Defense Review (QDR) will
    further refine our strategy for future military operations and for a
    more responsive, lethal, and agile force.
        The old force structure, designed to respond to Cold War threats,
    did not provide us with the best balance of capabilities in the Active
    and Reserve components. Rebalancing the force into one that is based on
    capabilities rather than threats improves responsiveness and eases
    stress on units and individuals by building up capabilities in high
    demand units and skills. This will be accomplished by converting
    capabilities in both the Active and Reserve components that are in
    lesser demand, to a higher priority structure.
        As outlined in the report Rebalancing Forces: Easing the Stress on
    the Guard and Reserve, which was published January 15, 2004, the
    rebalancing effort also sought to establish a limit on involuntary
    mobilizations to achieve a reasonable and sustainable rate. This
    produced a force structure planning goal of limiting the involuntary
    mobilization of individual reservists to 1 year out of every 6 years.
        The Services are improving their posture with respect to Active
    component/Reserve component mix by rebalancing about 50,000 spaces
    between fiscal years 2003 and 2005. The Services have planned and
    programmed additional rebalancing initiatives for fiscal years 2006
    through 2011. The amount and type of rebalancing varies by Service. The
    Army, as the largest Service and the one most stressed by the global
    war on terror, will have the bulk of the additional rebalancing.
        Military-to-civilian conversions are also helping to alleviate
    stress on the force. In fiscal year 2004, the Department converted over
    7,600 military billets to DOD civilian or contractor performance. The
    Department currently has plans to convert over 16,000 additional
    billets in fiscal year 2005 and around 6,400 billets in fiscal year
    2006 and is identifying additional conversions for fiscal year 2007-
    fiscal year 2011. Military end strength made available from these
    conversions is being used to reduce high demand/low density units,
    alleviate stressed career fields, demobilize National Guard units, and
    assist with Army modularity.
        The Department is investing in new information age technologies,
    precision weapons, unmanned air and sea vehicles, and other less
    manpower intensive platforms and technologies to relieve stress on the
    force. This is already being utilized by the U.S. Air Force in meeting
    their demands for installation security throughout the world. We are
    also increasing the jointness of our forces, (creating capabilities
    that exceed the sum of the individual Services) to reduce stress. To
    ease the burden on some high demand, low density units and skills, we
    have employed innovative joint concepts to spread mission requirements
    across the force where possible in order to meet mission requirements:
    for example, Navy and Air Force personnel are augmenting ground forces
    in Iraq.
        The Air Force and Navy project decreases in their authorized
    military end strength. The Air Force plans to reduce its end strength
    by turning in military authorizations no longer needed as a result of
    military-to-civilian conversions. The Navy's reduction is attributable
    to technological advancements in the ships in the fleet, altering the
    workforce mix and instituting new manning practices. In summary, the
    Department does not see the need for additional permanent end strength
    at this time. The statutory limits provided for in the NDAA for Fiscal
    Year 2004, along with Service's stress reducing initiatives, provide
    adequate manpower to meet the national security requirements.
    The Reserve Force
        Purpose, Missions, and Policies of the Reserve Components
        The purpose of the Reserve components has changed and a mission-
    ready National Guard and Reserve is a critical element of our national
    security strategy. The Reserve components support day-to-day defense
    requirements and portions have been an operational force since they
    were called up for Operation Desert Storm. This force is not a
    strategic Reserve that we use only during and after planned
    mobilization or in the event of a major war, but a force that
    contributed between 12 and 13 million duty days annually from fiscal
    year 1996 to fiscal year 2001 in support of operational missions. In
    fiscal year 2002 Reserve Force contributions increased to over 43
    million duty days of support, and increased again in fiscal year 2003
    and fiscal year 2004 to over 60 million man duty days of support
    annually.
        The Reserve components support the Kosovo KFOR mission, the
    Guantanamo GITMO mission, the MFO-Sinai mission and, the most demanding
    of the operations, Operation Enduring Freedom (OEF) and Operation Iraqi
    Freedom (OIF). OEF and OIF have resulted in the Reserve components
    currently furnishing about 30 percent of the troops in theater. The
    Reserve components are performing a variety of non-traditional missions
    in support of the global war on terrorism, such as providing command
    and control and advisory support teams in support of the training that
    will allow Iraqi and Afghan forces to assume a greater role in securing
    their own countries. The National Guard will remain an integral player
    in homeland defense and Operation Noble Eagle and will remain dual-
    missioned under both titles 10 and 32.
        Personnel policy guidance published in September 2001 established
    the guidelines for using the National Guard and Reserve to support
    combatant commander requirements. In July 2002, the personnel policy
    guidance was expanded to require proactive management of Guard and
    Reserve members, particularly focusing on husbanding Reserve component
    resources and being sensitive to the quality-of-life of mobilized
    personnel and the impact on civilian employers of reservists. Our
    assessment is that adhering to these policy guidelines, specifically
    limiting the mobilization period to no more than 12 months and limiting
    the frequency with which Reserve component members may be involuntarily
    mobilized (e.g., to no more than 1 year in every 6 years), and
    completing the initiatives the Department has undertaken--particularly
    the rebalancing effort--will allow the Reserve components to sustain a
    utilization rate not to exceed 17 percent per year in the near future.
        Under the old rules, constraints in end strength and grade
    accounting hindered the use of Reserve volunteers. We are extremely
    grateful that last year Congress removed barriers to volunteerism with
    a new strength accounting category for reservists performing
    operational support. Because reservists were counted as Active-Duty end
    strength and were required to compete for promotion against Active-Duty
    personnel, reservists were reluctant to volunteer for extended periods
    of Active-Duty. The new continuum of service construct maximizes the
    use of volunteers, provides greater opportunities for reservists who
    are able to contribute more to do so, and offers accession and
    affiliation programs to meet specialized skill requirements.
        These policies and initiatives were developed to preserve the
    nature of the ``Citizen Soldier'' while still allowing us to meet
    operational requirements. This will provide reservists with reasonable
    tour lengths and give reservists, their families and their employers a
    reasonable expectation of the Reserve service requirements. We believe
    that with these parameters, we can sustain a viable Reserve Force and
    preserve the citizen-soldier. Predictability and reasonable limits on
    frequency and duration of mobilization are key elements of our
    policies, which are designed to not only support reservists, but also
    sustain the support of employers and families, and ultimately enable
    the components to meet recruitment and retention objectives. Similarly,
    the emphasis on volunteerism is designed to allow servicemembers who
    want to shoulder a greater burden of mobilization to do so.
        Reserve and National Guard Utilization
        There has been considerable discussion about the stress that the
    global war on terror is placing on the force--both Active and Reserve.
    A repeated question is: what level of utilization can the Guard and
    Reserve sustain while still maintaining a viable Reserve Force?
    Recognizing that the global war on terrorism will last for a number of
    years, the Department established a strategic approach to ensure the
    judicious and prudent use of the Reserve components in support of the
    war effort. We will continue to assess the impact mobilization and
    deployment have on the Guard and Reserve and adjust our policies as
    needed to sustain the Reserve components.
        There are two ways to look at rates of mobilization for the Guard
    and Reserve. The first is the cumulative approach which looks at all
    Reserve component members who have served since September 11, 2001.
    This approach includes gains but does not account for losses. Under the
    cumulative approach, a total of just over 412,000 Guard and Reserve
    members have been mobilized between September 11, 2001 and November 30,
    2004. That represents just under 36 percent of the 1,157,200 members
    who have served in the Selected Reserve during this period. Of the
    total number of Guard and Reserve members who have been activated,
    63,700 (or 5.5 percent of all members who have served in the Selected
    Reserve Force since September 11, 2001) have been mobilized more than
    once. Of the 63,700, a total of 52,800 (4.6 percent) have been
    mobilized twice, 8,400 (less than 1 percent) have been mobilized three
    times and just over 2,500 (two tenths of 1 percent) have been mobilized
    more than three times. However, no reservist has been involuntarily
    mobilized for more than 24 cumulative months.
        The other way to look at mobilization is in terms of today's
    force--those who are currently serving in the force. This approach
    reflects gains and losses--the currently serving approach. Looking at
    today's force of 849,100 Reserve component members using the currently
    serving approach, we have mobilized 355,400 Reserve component members,
    representing 42 percent of the current force.
        Compared to Operation Desert Storm when we mobilized 30,000
    Individual Ready Reserve (IRR) members, we have not used the IRR in an
    overly aggressive manner to support the global war on terrorism. In the
    past 3 years, we have mobilized 8,000 IRR members. The further
    utilization of the IRR remains a viable option for meeting both near-
    term and long-term commitments. We must establish the proper
    expectations for our Reserve component members, their families, their
    employers, and the public in general. We are undertaking a program to
    establish those expectations: reasonable service requirements for the
    21st century based on the frequency and duration of military duty and
    predictability to the greatest extent possible.
        The National Guard is an integral part of the Air Force and Army
    total force mission capability, yet as evidenced by the three
    devastating hurricanes that hit Florida or the wildfires that blazed
    through our western States during 2004, the National Guard is a crucial
    element in a Governor's response to natural disasters. Similarly, the
    National Guard has a prominent role in supporting local and state
    authorities in their efforts to manage the consequences of a domestic
    terrorist attack. Their roles are vital to the survival of the Nation
    and therefore the National Guard will remain a dual-missioned military
    force.
        The centerpiece of responding to domestic terrorist attacks is the
    fielding of 55 Weapons of Mass Destruction Civil Support Teams (WMD
    CSTs), one in each State, Territory, and the District of Columbia.
    These 55 teams are to support our Nation's local first responders as
    the initial state response in dealing with domestic chemical,
    biological, radiological, nuclear, or high yield explosives (CBRNE) by
    identifying the agents/substances, assessing current and projected
    consequences, advising on response measures and assisting with
    appropriate requests for additional State support. Each team is
    comprised of 22 highly-skilled, full-time, well-trained, and equipped
    Army and Air National guardsmen. To date, the Secretary of Defense has
    certified 32 of the 55 congressionally authorized teams as being
    operationally ready. The WMD CST funding for fiscal year 2005 is $214.2
    million, and the budget request for fiscal year 2006 is for $214.6
    million. The Department is preparing 12 teams for certification in
    fiscal year 2005. The final 11 teams are being prepared for
    certification in fiscal year 2006. Any of these planned certifications
    can be affected by lack of available equipment or fully trained
    personnel; however, we do not anticipate problems with either.
        The fight against terrorism and the protection of our homeland will
    be protracted endeavors. To that end, many outside policy experts,
    independent panels, and analytic studies have advocated expanded roles
    for the National Guard in homeland security. Some have even suggested
    that the National Guard should be reoriented, reequipped, and retrained
    solely for the homeland security mission. However, there has been no
    national strategy change to justify the need to establish a separate
    role for the National Guard to only perform homeland security related
    missions under new statutes and administrative guidelines. There are
    already sufficient legal mechanisms in place that enable State and
    territorial governors to employ their National Guard forces in support
    of local authorities to meet a wide range of these existing missions.
        Reserve Component Recruiting and Retention
        We have been monitoring the effects of Reserve utilization and the
    stress on the force since 1996. The key factors we track are end
    strength attainment, recruiting results, retention, attrition, and
    employer/reservist relations.
        As we have seen in the first 5 months of this fiscal year, we are
    facing a very challenging recruiting environment in the Reserve
    components. With the exception of the Marine Corps Reserve, the Reserve
    components got off to a slow start in October, but we are seeing steady
    improvements with overall attainment of recruiting objectives
    increasing from 75 percent in October to 82 percent, year-to-date, in
    February. The Air Force Reserve and Marine Corps Reserve are leading
    the Reserve components with the Air Force Reserve at 119 percent of its
    goal through February and the Marine Corps Reserve at 99 percent of its
    goal. The Air Force Reserve has exceeded its recruiting goals for each
    of the past 4 months. The Marine Corps Reserve performance is quite
    remarkable since, of the six DOD Reserve components, it has had the
    greatest proportion of its force mobilized since September 11, 2001, in
    support of the global war on terrorism.
        To address the recruiting challenges the Reserve components, as a
    whole, are expanding their recruiter force and using the new incentive
    enhancements in last year's authorization act that best meet their
    needs. The Army National Guard is working closely with the various
    states and territories to rebalance structure as needed to ensure the
    states are properly sized to meet their strength objectives. The Air
    Reserve components are taking advantage of the downsizing of the
    regular Air Force, and they are examining their incentive structure to
    ensure that they can attract and retain sufficient manpower resources.
        The Defense Advisory Commission on Military Compensation will be
    looking at incentive structures and may make suggestions for
    improvements that they believe will assist us in meeting our recruiting
    and retention objectives. The Commission on the National Guard and
    Reserves will review personnel pay and other forms of compensation as
    well as other personnel benefits. We look forward to working with these
    Commissions as they assess the compensation and benefits package needed
    to sustain a healthy National Guard and Reserve.
        In fiscal year 2004, the Reserve components recruited 59,187 first-
    term enlistees and an additional 57,494 individuals with previous
    military service for a total of 118,177 recruits, attaining 96 percent
    of the total Reserve component goal of 123,304 accessions. In addition,
    all of the Reserve components remained under their programmed attrition
    ceilings.
        We anticipate that recruiting challenges will continue in 2005. The
    Army National Guard and the Army Reserve are at risk of falling short
    of their recruiting objectives. They are addressing this problem with
    aggressive use of enhanced recruiting and retention incentives and
    large increases in their recruiting forces. The Army National Guard is
    adding 1,400 recruiters for a total recruiting force of 4,100, and the
    Army Reserve is adding 734 recruiters for a total force of 1,774. In
    addition, the Army is detailing 250 Active Army recruiters to Reserve
    recruiting while the new Reserve recruiters are being hired and
    trained. The other four DOD Reserve components are projecting that they
    will achieve their 2005 objectives, even though three of the four got
    off to a slow start. However, we have seen steady improvement in
    results for each of those three components and even the Army National
    Guard has steadily accessed more new recruits each month.
        We are closely monitoring the effects of mobilization on recruiting
    and retention, especially for the Reserve components. In the aggregate,
    the Reserve components fell short of their end strength objective,
    achieving a strength of 851,395 against an authorized strength of
    863,330, largely due to a significant shortfall in the Army National
    Guard. However, the recruiting shortfall was not as significant as it
    could have been due to very low attrition. This is quite remarkable
    given the increased use of the Reserve components in the global war on
    terrorism. A strong attrition posture continues through January.
        The trend of an increasing percentage of Reserve component recruits
    without prior military service continues. Approximately 50 percent are
    now expected to come directly from civilian life. This is a result of,
    among other factors, high Active component retention contributing to a
    smaller IRR population. For 2005, all Reserve components are continuing
    to focus their efforts on maintaining aggressive enlistment programs by
    using enhanced enlistment and re-enlistment incentives in critical
    skill areas.
        Attention to the prior service market will continue. The Reserve
    components will expand their efforts to contact personnel who are
    planning to separate from the Active component and educate them on the
    opportunities available in the Guard and Reserve. In addition, the
    Reserve components will continue their efforts to manage departures.
    All Reserve components are achieving success in retention, with year-
    to-date attrition at or below our base line year of 2000.
        The mission of the National Committee for Employer Support of the
    Guard and Reserve (ESGR) is directly related to retention of the Guard
    and Reserve Force. Employer support for employee service in the
    National Guard and Reserve is an area of emphasis given the continuing
    demand the global war on terrorism has placed on the Nation's Reserve
    component and the employers who share this precious manpower resource.
    Nationwide support for our troops by employers has been and continues
    to be superb.
        ESGR has established a Customer Service Center hotline (800-336-
    4590) to provide information, assistance and gather data on issues
    related to Reserve component employment. We have established the
    Civilian Employment Information (CEI) database so Reserve component
    members may register their employers in the Defense Manpower Data
    Center (DMDC). The synergy derived from linking these databases enables
    ESGR to measure and manage employment issues.
        Misunderstandings and conflicts between employers and Reserve
    component members do arise. ESGR Ombudsmen provide ``third party
    assistance'' and informal mediation services to employers and Reserve
    component members. Major initiatives undertaken by the ESGR National
    Staff include: a Defense Advisory Board (DAB) for Employer Support to
    provide advice on issues critical to shared human capital; employing
    information technology systems to create ESGR volunteer manpower
    efficiencies; initiating a scientific survey of employer attitudes;
    enhancing strategic relationships with employer organizations such as
    the U.S. Chamber of Commerce, National Federation of Independent
    Business, Society for Human Resource Management, and professional
    associations; implementing a follow-up process to promote the mission
    of ``gain and maintain'' employer support; building on marketing
    successes achieved in the National Employer Outreach program; gaining
    significant national exposure in traditional and new media with the
    singular focus of defining the American employers' role in national
    security.
        The number of complaints filed with the Department of Labor under
    the Uniformed Services Employment and Reemployment Rights Act declined
    each year from 1995 through 2000. While complaints filed during the
    first 3 years we have been involved in the global war on terrorism have
    increased, the ratio of complaints compared to the total number of duty
    days of operational support provided by the Reserve components actually
    declined during the past 3 years. For example, between 1996 and 2001,
    reservists performed an average number of 15,500 duty days for every
    complaint filed with the Department of Labor. Compared to the last 3
    years with the Reserve components supporting the global war on
    terrorism, reservists performed an average of 43,000 duty days for each
    complaint filed with the Department of Labor. We are answering every
    call and complaint we receive from an employer, family member or
    individual guardsmen or reservist.
        Reserve Component Health Benefit Enhancements
        The Department is moving forward expeditiously to implement recent
    benefit enhancements for Reserve component members and their families.
    Recent legislative action dramatically improved health benefits. The
    Department has implemented the permanent earlier TRICARE eligibility
    (up to 90 days prior to activation) for certain Reserve component
    members and the extension of post-mobilization coverage for 180 days,
    and authorized waiver of TRICARE deductibles and higher provider
    payments for activated Reserve members and their families consistent
    with the approach in the Reserve Family Health Care Demonstration, in
    effect since 2001.
        In April 2005, the Department will implement the premium-based
    ``TRICARE Reserve Select'' program, offering medical coverage to
    reservists and family members who have served in support of contingency
    operations since September 11, 2001 and who commit to continued service
    in the Selected Reserve. The benefit will be similar to TRICARE
    Standard, the fee-for-service option of TRICARE.
        These new authorities give us the tools to fully address the health
    care needs of reservists and their families. Assuring the medical
    readiness of reservists when they are called to Active-Duty registers
    as one of our highest priorities. In addition, providing excellent
    benefits to the families of activated reservists and supporting them in
    the transition to and from Active-Duty are vitally important
    responsibilities. It will be important to assess the effect of the new
    entitlement for reservists who are not on Active-Duty. A key issue will
    be the effect of a new entitlement on recruitment and retention of both
    Reserve and Active-Duty component members.
    The Active Force
        Force Management
        As with the Reserve components, we look to recruiting and retention
    results, benefits packages, and force-shaping initiatives when
    measuring progress and shortcomings in the management of the Active-
    Duty Force. Some issues, such as the prevention of sexual assault and
    rest and recuperation, affect all Service members equally, whether they
    belong to an Active or a Reserve component; but there are also
    requirements unique to the permanent, All-Volunteer Force. We strive to
    ensure that the men and women who have chosen to be a part of the
    Active-Duty Force are satisfied that their commitments are fairly
    rewarded and always appreciated.
        Compensation
        Prosecuting the global war on terrorism requires top quality,
    highly skilled men and women whose compensation package must be
    competitive enough to recruit them and retain their voluntary service.
    Basic pay, housing and subsistence allowances, bonuses, special and
    incentive pay and other key benefits must serve to sustain these
    warfighting professionals. We are grateful to Congress for its work in
    improving each of these areas, especially over the past several years.
    Military pay raises, reducing out-of-pocket housing costs for
    servicemembers and their families, bonuses, and special and incentive
    pays send a clear signal that our Nation values the courage and
    sacrifice required of our military members.
        Since September 11, 2001, the Department and Congress have worked
    together to increase military basic pay by more than 21 percent. The
    across-the-board 3.1 percent pay raise in this year's budget represents
    the last year in which the law calls for a military pay raise equal to
    \1/2\ percent greater than the Employment Cost Index (ECI).
        In addition to maintaining efforts to achieve competitive pay, the
    Department has accomplished its goal of eliminating average out-of-
    pocket housing costs by 2005. The success of this effort is a direct
    result of the close cooperation of the Department and Congress,
    resulting in housing allowances that are more than 41 percent greater
    than they were in 2001. Servicemembers view the housing allowance as
    one of the key elements of their total compensation package and can be
    confident they can afford adequate housing when they move in the
    service of their country. Further, the Department will continue its
    efforts to improve our data collection to ensure the allowance
    accurately reflects the current housing markets where servicemembers
    and their families reside.
        The Department is committed to taking care of servicemembers and
    their families through appropriate compensation while members are
    deployed and serving their country in dangerous locations around the
    world. Military personnel serving in OIF and OEF in a designated combat
    zone, as well as members serving in direct support of these operations,
    receive combat zone tax benefits that exclude all the income of our
    enlisted members from Federal income tax. These servicemembers also
    receive $225 per month in Imminent Danger Pay (IDP) and $250 per month
    in Family Separation Allowance (FSA), amounts made permanent in the
    NDAA for Fiscal Year 2005. Additionally, these individuals qualify for
    Hardship Duty Pay-Location at the rate of $100 per month and $105 per
    month in incidental expense allowance. This results in pay increases
    for a typical married member of over $700 per month and over $500 per
    month for a typical single member, while deployed. These pays and
    allowances acknowledge the hardship and danger involved at these
    deployment locations as well as the sacrifice associated with tours
    away from family.
        In recognition of deployment frequency and excessive duration, the
    Department has authorized payment of Assignment Incentive Pay (AIP) to
    members serving longer than 12 months in Iraq or Afghanistan. These
    payments are as much as $1,000 per month for members in units serving
    necessary but involuntary extensions beyond 12 months. The Department
    is grateful to Congress for its substantiation of AIP as a flexible and
    responsive means for Services to appropriately compensate members who
    are called on to extend their service in demanding assignments. We
    again seek an increase in the ceiling for Hardship Duty Pay to further
    increase our flexibility with additional options to better address
    these pressing issues.
        Retention of Special Operations Forces presents another critical
    compensation challenge as a result of the war on terror. The United
    States Special Operations Command force structure is projected to
    increase through September 2008. Increased retention of current Special
    Operations Forces members, in the face of ever demanding requirements
    and lucrative alternatives, is critical to the success of that growth.
    In December, the Department authorized a robust retention incentive
    package that includes extensive use of the Critical Skills Retention
    Bonus, Special Duty Assignment Pay, Assignment Incentive Pay, and the
    Accession Bonus for New Officers in Critical Skills. For example, we
    are offering bonuses of up to $150,000 for highly-skilled senior
    noncommissioned officers to serve an additional 6 years. The Department
    continues to monitor Special Operations Forces retention and review
    initiatives to leverage Special Operations Forces readiness through
    high return investments in military compensation and benefits designed
    to sustain these highly valued professionals.
        Shaping the Force
        As we transform to a more flexible, lethal force for the 21st
    century, the Department of Defense is exploring various alternatives to
    ensure the force has the proper balance and mix of skills and
    experience. We are looking at developing an integrated package of
    voluntary separation incentives--we do not want to ``break faith'' for
    their loyal and dedicated service and create significant recruiting and
    retention risks. These voluntary incentive tools are of particular
    importance when the Air Force and Navy are decreasing in size while the
    Army is increasing operating strength.
        In practice, we see the military departments implementing the least
    expensive tools appropriate to their circumstances, progressing to more
    expensive tools only as their force shaping requires. Only if voluntary
    separations did not suffice would the military departments, as a last
    resort, implement involuntary separation measures such as Selective
    Early Retirement.
        Death and Survivor Benefits
        We realize that no benefits can replace a human life; the lost
    presence of the family member is what survivors face. Nevertheless, we
    must address the difficult issue of how to compensate these survivors.
    Our system of benefits is generally good, but recent assessments
    concluded that the overall package could be improved to honor properly
    the contributions and sacrifices of our servicemembers. We are working
    within the Department and with other agencies to address these
    deficiencies, primarily in the area of immediate cash compensation, for
    those whose death is the result of hostile actions. We are looking at
    ways to improve the lump sum payments through increased insurance and
    death gratuity payments. Our objective is to ensure that we fully
    support our servicemembers when we send them into harm's way, and that
    we properly support the family's needs if the servicemember dies on
    Active-Duty.
        Benefits for survivors vary significantly in purpose and method of
    payment. Some are immediate cash payments or reimbursements for costs
    incurred; others provide long-term monthly income. These benefits are
    typically available whether the death is a result of hostilities, the
    result of non-hostile duty-related activities, or even the result of
    disease or off-duty injuries. Among the benefits currently available
    are: the Death Gratuity benefit, funeral costs reimbursement,
    Servicemembers Group Life Insurance (SGLI) proceeds, housing-in-kind or
    cash allowance for housing, continued medical benefits, continued
    military community privileges, Veterans' Administration (VA) monthly
    Dependency and Indemnity Compensation (DIC), monthly DOD Survivor
    Benefit Plan (SBP) payment, Social Security survivor benefit, education
    benefits from the VA, and financial counseling.
        The NDAA for Fiscal Year 2004 included a requirement for the
    Department to study the totality of all current and projected death
    benefits for survivors of deceased members of the Armed Forces. The SAG
    Corporation completed the study in June 2004 and concluded that the
    system of benefits provided to survivors of members who die on Active-
    Duty to be adequate, substantial, and comprehensive. However, it
    identified areas where improvements could make the benefits more
    comparable to benefits provided by other employers. The Government
    Accountability Office (GAO) was required to conduct a similar study.
    The GAO report, dated July 2004, made no recommendations, but reached
    findings similar to the SAG report.
        We agree with the findings of the SAG and GAO reports that our
    benefits, while substantial, do not provide specific recognition of
    deaths that occur when our members are sent into harm's way in the
    service of their Nation; so we propose increasing the cash benefits for
    deaths that occur under these circumstances. We support the principle
    that a servicemember be able to elect a benefits package that would
    provide up to $500,000 to the surviving family. This compares to the
    approximately $262,000 they are able to receive today. The President's
    recent death benefits proposal includes improvements to the SGLI and
    death gratuity programs.
        Active Duty Recruiting and Retention
        The success of our All-Volunteer Force starts with recruiting.
    During fiscal year 2004, the military Services recruited 176,026 first-
    term enlistees and an additional 6,799 individuals with previous
    military service into their Active-Duty components, for a total of
    182,825 Active-Duty recruits, attaining over 100 percent of the DOD
    goal of 181,308 accessions.
        The quality of new Active-Duty recruits remained high in fiscal
    year 2004. DOD-wide, 95 percent of new Active-Duty recruits were high
    school diploma graduates (against a goal of 90 percent) and 73 percent
    scored above average on the Armed Forces Qualification Test (versus a
    desired minimum of 60 percent).
        Through February, fiscal year 2005, all Services except Army
    continued to meet or exceed both quantity and quality objectives. Army
    has achieved 27,438 of their 29,185 accession goal through February,
    for a 94-percent accomplishment. Preliminary figures suggest that Army
    missed its March goal for Active-Duty enlisted accessions by about
    2,100. Army quality levels remain strong, in excess of DOD quality
    benchmarks.
        We do not expect to see improvement in the Army recruiting
    situation during the traditionally challenging February-March-April-May
    (FMAM) recruiting season. However, the Army is aggressively attacking
    any potential shortfall through three avenues of approach: (1) growth
    in recruiters in all components, with an additional 250 Active
    recruiters programmed over the next 60 days; (2) stronger incentives,
    with increased enlistment bonuses, and an increase in the Army College
    Fund; and (3) more targeted advertising, focusing on influencers,
    particularly parents. With the Army aggressively shifting resources to
    respond to recruiting challenges, we are cautiously optimistic that it
    will achieve its year-end recruiting and end strength goals. However,
    achieving these goals will require funding and policy adjustments such
    as targeted funding increases included in the supplemental budget and
    market expansion pilot programs now in effect.
        The Services accessed 16,431 commissioned officers to Active-Duty
    in fiscal year 2004. The Army, Navy, and Marine Corps met their
    numerical commissioning requirements. The Air Force finished with a
    shortfall of 12 percent, almost exclusively in medical specialty direct
    appointments. In fiscal year 2005, Active-Duty officer accessions are
    on track in all Services for numerical success this year.
        Army and Marine Corps met or exceeded fiscal year 2004 retention
    goals. Navy and Air Force were retaining high at the outset of the
    year, but force shaping initiatives aimed at balancing manpower skills
    and assisting with force reduction caused them to retain fewer members
    during the last quarter of fiscal year 2004.
        For fiscal year 2005, retention is on track. Over the past 3 years,
    the Department has worked to improve servicemembers' quality-of-life.
    We continue to work with Congress to achieve needed military pay raises
    and to develop flexible and discretionary compensation programs. We
    have every confidence that funding and policy modifications will be
    sufficient to ensure continued success in achieving authorized strength
    levels.

                          FISCAL YEAR 2005 ACTIVE DUTY ENLISTED RETENTION THROUGH FEBRUARY 2005
    ----------------------------------------------------------------------------------------------------------------
                                                  Reenlisted                                                Fiscal
         Active Duty Enlisted Retention       (Through February    Mission      Performance of Mission     Year 2005
         (Preliminary Through February)             2005)                                                    Goals
    ----------------------------------------------------------------------------------------------------------------
    Army
      Initial...............................             11,165      12,094  92.3 percent...............      26,935
      Mid Career............................              9,991      10,378  96.3 percent...............      23,773
      Career................................              7,180       5,874  122.2 percent..............      13,454
    Navy
      Initial...............................         59 percent  53 percent  Exceeded...................  53 percent
      Mid Career............................         69 percent  69 percent  Met mission................  69 percent
      Career................................         85 percent  85 percent  Met mission................  85 percent
    Air Force
      Initial...............................         55 percent  55 percent  Met mission................  55 percent
      Mid Career............................         59 percent  75 percent  Short......................  75 percent
      Career................................         94 percent  95 percent  Short......................  95 percent
    Marine Corps
      Initial...............................              4,953       2,972  Exceeded...................       5,944
      Career................................              3,072       2,540  Exceeded...................       5,079
    ----------------------------------------------------------------------------------------------------------------

        Stop-Loss
        The Army is the only Service currently executing stop-loss. In
    January 2005, stop-loss programs impacted 6,657 Active soldiers, 3,016
    Army Reserve soldiers, and 2,680 Army National Guard soldiers. Active
    Army Unit Stop-Loss Program takes effect 90 days prior to unit
    deployment or with official deployment order notification and remains
    in effect through the date of redeployment to permanent duty stations,
    plus a maximum of 90 days. Reserve component unit stop-loss begins 90
    days prior to mobilization or with official mobilization alert
    deployment order notification, and continues through mobilization, and
    for a period up to 90 days following unit demobilization.
        The Army will terminate stop-loss as soon as it is operationally
    feasible. Army initiatives of modularity, restructuring, and
    rebalancing the Active/Reserve component mix, and force stabilization
    will over time eliminate any need for stop-loss. Until those
    initiatives are fully implemented, stop-loss must continue if we are to
    meet strength, readiness and cohesion objectives for units deploying to
    OIF and OEF.
        Joint Officer Management
        The nature of war and warfighting has undergone significant change
    since 1986, when the Goldwater-Nichols Act was passed. Since that time,
    our warfighters have risen to meet new and increasingly complex
    challenges with superior joint doctrine, enhanced joint warfighting
    capabilities, and a new joint effectiveness enabled by the cultural
    revolution this visionary piece of legislation brought about. The data
    gives evidence that our officer corps has become more joint with each
    passing year. Likewise, Service missions are increasingly joint.
        Unfortunately, we have a growing sense, supported by recent reports
    or studies, that joint officer management is following this trend more
    slowly. Just as our force structure was a legacy of the Cold War, joint
    officer management policies need to be updated to better serve the
    intent of Goldwater-Nichols in the 21st century. Some aspects of the
    current statutory management policies were designed to force jointness.
    In today's environment where the Department embraces jointness, the old
    rules are impeding progress. A 2002 GAO report and a 2003 independent
    study conducted by Booz Allen Hamilton, both suggested that the
    Department needed a strategic approach to joint officer management and
    joint professional military education (JPME) to better address this
    issue.
        In late 2003, the Department, in partnership with the Joint Staff
    and with the assistance of contractors, began a comprehensive,
    strategic review of joint officer management and JPME in the Active-
    Duty Force. A strategic approach was developed for the Active-Duty
    officer force, and an initial tactical analysis of the current joint
    duty assignment list was undertaken to better understand the ``kinds''
    of joint that currently exist. This effort has now progressed to the
    data gathering and analysis phase from which we hope, once completed,
    to better understand the need and availability of joint characteristics
    in the strategic environment.
        We have also started down the path to develop a strategic approach
    to joint officer management in the Reserve components to ensure our
    total force remains effective and able to seamlessly integrate. As a
    result of direction in the NDAA for Fiscal Year 2005, we are further
    broadening the scope to include an assessment of, and recommendations
    to improve, the performance of senior DOD civilians, senior
    noncommissioned officers, and senior Reserve component leadership in
    joint matters.
        Another area of emphasis is to ensure officers with skills specific
    to the joint environment are recognized with promotions commensurate
    with their potential. It is unreasonable to expect Military Department
    promotion practices will adequately address unique joint requirements.
    The Department is researching alternative methods to current promotion
    policies that will enhance our capabilities in this area.
        Through all of these efforts, we hope to develop a comprehensive
    slate of legislative and policy initiatives that will change the way we
    manage human capital in the joint realm. Our goal is to build on the
    tremendous progress made since the Goldwater-Nichols Act was enacted
    and to ensure our management of the joint warfighter adequately
    prepares him or her to meet the challenges he or she will face in the
    future.
        Expanding Our Foreign Language and Regional Expertise Capabilities
        The demand for increased foreign language and regional expertise
    capabilities is increasing and the skills are needed for the entire
    spectrum of the Department's operations. Current operations and the
    global war on terrorism require capabilities in a growing number of
    languages and at higher proficiencies, not only in intelligence, but
    also in activities such as stability/reconstruction operations and
    maritime intercept operations. At the same time, gaining knowledge of
    the psychology and cultures of those who oppose us is a mandate.
        We are committed to creating foundational language and cultural
    expertise in the force; creating the capacity to surge foreign language
    and regional expertise skills to operational units on short notice;
    establishing a cadre of language specialists possessing a level 3
    ability; and establishing a process to track the accession, promotion
    and separation rates of language professionals and Foreign Area
    Officers.
        We have formed a committee of General Officer and senior civilians
    to oversee the Defense Language Program, address problems, and affect
    systemic changes. We have conducted several studies to inform our
    decisions. In response to Congress, we are conducting a study on how to
    integrate foreign language and regional expertise training into
    Professional Military Education curricula. To strengthen the Office of
    the Secretary of Defense (OSD) oversight and improve management of our
    language assets, we have written a Defense Language Transformation
    Roadmap. The Roadmap is based on thorough review of lessons learned and
    research and was developed with the Services, combatant commands, and
    defense agencies having language requirements. It will serve as the
    guide to incorporate foreign language and regional/cultural competency
    into doctrine, operational planning processes, and readiness
    assessments. When completely implemented, the Roadmap will embed force
    language and regional expertise as a necessary skill set for the 21st
    century soldier, sailor, airman, and marine.
        In the fiscal year 2006 budget, we increased the language training
    budget at the Defense Language Institute in Monterey, California by
    $44.7 million to improve language training. These funds sustain the
    budget increase in fiscal year 2005, allowing us to continue
    improvement of testing, curriculum material, and ``crash courses'' for
    deploying forces. These funds will also allow us to aggressively move
    forward to improve the proficiency of graduates from the Defense
    Language Institute Foreign Language Center (DLIFLC) to meet the
    identified needs of the Intelligence Community.
        We also have an initiative in the Army to immediately enhance our
    language expertise. The Army is implementing a pilot program to recruit
    Iraqi-Americans into the IRR for deployment with operational forces as
    translators and interpreters. To date, 44 soldiers have been deployed,
    19 await deployment, and an additional class of 14 soldiers will
    graduate in March and 26 will be entering the training pipeline in
    June.
        You have helped us in our efforts and I thank Congress for raising
    the cap on Foreign Language Proficiency Pay (FLPP). We are now
    rewriting our FLPP policy to better incentivize foreign language
    learning within the force.
        The need for language and cultural expertise is vital for a robust
    military, but we recognize this need reaches beyond DOD. Language and
    cultural expertise are necessary for national security, the ability to
    compete in a global economy, and the stability and well-being of our
    communities. We alone cannot fix the national shortfall in these
    necessary skills, but we can lead the effort. The Department convened
    the National Language Conference: A call to action this past year,
    bringing together Federal agencies, academia, and business for the
    first time to address the need for greater foreign language
    capabilities in the U.S. workforce. With their help, we constructed a
    White Paper outlining a proposed national strategy. We are in
    continuing dialogue with leaders in other Federal agencies and academia
    about ways to encourage more young Americans to learn a foreign
    language, particularly the less commonly taught languages. Such skills
    will serve our youth and our Nation very well.
        Sexual Assault
        Sexual assault is a crime that tears at the bonds of trust and
    respect that unite men and women in uniform. The Department has taken
    aggressive action to combat this crime. Our efforts are paying off, as
    evidenced by the 1995 and 2002 congressionally mandated surveys. These
    indicate that sexual assaults within the military have decreased by
    almost half since 1995. Although we are making progress, even one
    assault is too many.
        Over the past year, the Department has been working collaboratively
    with the Services, Members of Congress, and national experts to address
    the crime of sexual assault within the Armed Forces. As a result, the
    Joint Task Force for Sexual Assault Prevention and Response was
    established in October 2004 as the single point of accountability for
    the Department's sexual assault policy. Its initial task was to develop
    policy incorporating the criteria set forth in the NDAA for Fiscal Year
    2005, which directed the Department to have a sexual assault policy in
    place by January 1, 2005.
        I am pleased to report that the Department has made great progress.
    We have developed a comprehensive policy to strengthen our prevention
    efforts, enhance the support and care for victims of sexual assault,
    and increase system accountability. The Department's new Sexual Assault
    Prevention and Response policy demonstrates our commitment to building
    a climate of confidence, one that assures victims will receive the care
    they need, and one that instills in our servicemembers that this crime
    will not be tolerated.
        A cornerstone of the Department's sexual assault policy is the
    establishment of guidelines for confidential, restricted reporting by
    victims of sexual assault. Restricted reporting allows a sexual assault
    victim, on a confidential basis, to disclose the details of his/her
    assault to specifically identified individuals and receive military
    medical treatment and counseling, without triggering the official
    investigative process. This fundamental change will encourage more
    victims to come forward to receive needed medical care and support,
    while providing commanders more situational awareness of the command
    climate.
        Other core areas of the policy include specific guidelines for
    referring reports of sexual assault to investigative authorities;
    medical treatment and care for victims; a commander's checklist for
    response actions; enhanced reporting of sexual assault information; and
    expanding access to care through collaboration between military
    installations and local community support.
        The Department's sexual assault policy will ensure there is
    uniformity in the standards of care and support for all victims of
    sexual assault throughout the military services, as well as rigorous
    training and education on how to prevent it. To further improve the
    Department's response to this critical issue, we will soon send you our
    report containing recommendations for amending the Uniform Code of
    Military Justice (UCMJ) for sexual assault offenses.
        The next steps for the Department will be conducting oversight and
    coordinating with the Services on the implementation and roll out of
    the different components of the new policy. We will continue to keep
    Congress informed on the progress being made as we meet key milestones
    in the Department's effort to fully implement our new Sexual Assault
    Prevention and Response policy.
        Citizenship
        The Department works closely with the Department of Homeland
    Security's Citizenship and Immigration Service to expedite citizenship
    applications for immigrants who serve honorably as members of our Armed
    Forces. Approximately 30,000 Active-Duty and 11,000 Guard and Reserve
    personnel are non-U.S. citizens. Over 20,000 military personnel have
    become U.S. citizens since September 11, 2001 and approximately 5,000
    military personnel have citizenship applications currently being
    processed. The average time for processing expedited citizenship
    applications has been reduced from 9 months to approximately 60 days.
    We have worked closely with the Citizenship and Immigration Service to
    conduct naturalization interviews and swearing-in ceremonies in
    Afghanistan, Iraq, Germany, Korea, and Japan. The Department has also
    implemented a new policy to authorize emergency leave for
    servicemembers who need to finalize their naturalization.
        Rest and Recuperation (R&R) Leave
        Almost 160,000 servicemembers and DOD civilians have participated
    in the R&R Leave Program in support of OIF and OEF. The R&R Leave
    Program is vital to maintaining combat readiness when units are
    deployed and engaged in intense operations. Feedback from
    servicemembers participating in the R&R Leave Program indicates it is a
    successful program offering servicemembers a respite from hostile
    conditions, an opportunity to leave the Area of Responsibility (AOR),
    release stress, spend time with their family/friends and return
    reenergized. R&R Leave will continue to be offered to military members
    and DOD civilians deployed in Central Command (CENTCOM) AOR in support
    of the global war on terrorism at the discretion of the theater
    commander.
    DOD Civilians
        Human Capital Planning
        It is only through the integration of DOD civilian employees that
    we can realize the potential of a total force. The Department continues
    to make strides in our strategic human capital planning, by ensuring
    that human capital investments are focused on long-term issues. These
    guiding principles are continually reviewed and refreshed in the
    Department's Human Capital Strategic Plan. Our 2002-2008 plan
    identifies the tools, policies, programs and compensation strategies
    needed for the future. This allows us to position the Department as the
    employer of choice by identifying new ways of doing business based on
    new missions and technologies, thus ensuring the right programs are in
    place to develop the leaders necessary to meet evolving needs. This is
    reflected in the Department's 2004 President's Management Agenda
    scorecard results, where ``green'' (a ``success'' grade) was achieved
    in progress toward human capital implementation.
        The role of the Defense civilian is changing. Thousands of civilian
    employees have voluntarily put themselves in harm's way to support the
    global war on terrorism. Civilians are an integral and essential part
    of our total force structure. The Department depends on their skills
    and expertise. Agile military forces need agile support from DOD
    civilians. The Department will maximize this agility through
    implementation of the National Security Personnel System (NSPS). NSPS
    provides an opportunity to improve the effectiveness of the Department
    through a modern civilian personnel system that will improve the way we
    hire and assign, compensate and reward our employees. This modern,
    flexible, and agile human resource system will be responsive to the
    national security environment, while preserving employee protections
    and benefits, as well as the core values of the civil service.
        The Department will begin to implement NSPS as early as July 2005.
    NSPS design and development has been a broad-based, participative
    process involving key stakeholders, including employees, supervisors
    and managers, unions, employee advocacy groups, and various public
    interest groups. Employees slated for conversion will be included in
    groupings called Spirals. Spiral One will include approximately 300,000
    General Schedule, U.S.-based Army, Navy, Marine Corps, Air Force, and
    other DOD civilian employees and will be rolled out in three phases
    over an 18-month period beginning as early as July 2005. The labor
    relations and appeals provisions of NSPS will be implemented across the
    Department this summer as well.
    Acquiring, Developing, and Retaining Civilians
        The Department's civilian workforce is a unique mix of employees
    providing support to DOD's national security and military mission. The
    Department continues to face an enormous challenge in recruiting talent
    in a highly competitive labor market. Our challenge is not attracting
    sufficient applicants, but attracting the right applicants.
    Technological advances, contract oversight, and complex missions have
    generated the need for more employees with advanced education and
    greater technical skills. Inability to hire the right civilian talent
    quickly and efficiently would put at risk the vital capabilities needed
    to support our military. Additionally, there must be a very active
    campaign for recruitment of a diverse workforce. We take seriously the
    responsibility to foster and promote an environment that is attractive
    to individuals from all segments of society. Our strategic plan focuses
    on the recruitment of entry-level, minority, disabled, and female
    applicants.
        This year, the Department has launched a special campaign to reach
    the disabled men and women who bravely fought and served on behalf of
    our Nation. We are committed to providing every disabled veteran who
    wants to serve our country as a DOD civil servant the opportunity to do
    so. The Department offers over 700 diverse, challenging, and rewarding
    occupations for those who want to continue to serve their country as a
    DOD civilian employee. We introduced a new Defense Web site especially
    for disabled veterans--www.DODVETS.com. This Web portal serves as a
    resource of employment information for veterans and their spouses as
    well for managers. We are also working with the Department of Labor's
    Veterans' Employment and Training Service's (VETS) REALifelines
    initiative, which is designed to provide individualized job training,
    counseling, and reemployment services to veterans seriously injured or
    wounded in the global war on terrorism.
        We have dedicated an office within the Department to help us
    transform the way we attract and hire talented civilian employees. Our
    nationwide recruitment campaign takes us to college and university
    campuses where we personally invite talented individuals to serve the
    Department. Through technology, largely the Internet, we educate and
    interest talent from a variety of sources. Our exciting internship
    programs, while still too modest, continue to entice and infuse
    specialized and high-demand talent into our workforce.
        Workforce planning takes on a special importance with the expected
    exodus of Federal employees over the next decade. Significant to this
    equation are DOD career Senior Executive Service (SES) members, 67
    percent of whom are eligible to retire in 2008.
        The Defense Leadership and Management Program (DLAMP) is important
    to DOD readiness, providing a vehicle to mature a cadre of future
    civilian leaders with a joint perspective on managing the Department's
    workforce and programs. Through a comprehensive program of Professional
    Military Education, formal graduate education, and courses in national
    security strategy and leadership, DLAMP ensures that the next
    generation of civilian executives has the critical skills to provide
    strong leadership in a joint environment in challenging times. To take
    maximum advantage of DLAMP results, DOD is working with the Office of
    Personnel Management (OPM) toward final approval to establish DLAMP as
    the DOD Candidate Development Program (CDP). This achievement will
    provide a major benefit to our SES candidate pool.
        As we work toward an environment where safety is paramount for our
    employees, the Department is establishing the Pipeline Reemployment
    Program. The program enables partially recovered employees with job
    related injuries and illnesses to return to work. The program supports
    the President's Safety, Health, and Return-to-Employment (SHARE)
    initiatives by assisting each Department installation in reducing lost
    days resulting from injuries. DOD organizations will have resources and
    funding to reemploy partially recovered injured employees for up to 1
    year. Returning injured employees to suitable productive duty, as soon
    as they are able, improves that employee's sense of value to the
    organization while minimizing the cost of workers' compensation
    disability payments.
        Civilian Force Shaping
        A number of initiatives are and will impact the size and shape of
    the Department's civilian workforce. The most significant items are
    upcoming Base Realignment and Closure (BRAC), global repositioning of
    deployed military and civilians, competitive sourcing, and military-to-
    civilian conversions. To mitigate the impact of these force-shaping
    initiatives on our civilians, we are reviewing our transition
    initiatives to ensure drawdowns and reorganizations are handled
    strategically, not only to take care of our employees, but to make sure
    we maintain and continue to recruit the talent needed to support the
    Department's mission.
        To date, the Department has accounted for the vast majority of the
    downsizing of the Federal workforce. Between the beginning of fiscal
    year 1989 and through the end of fiscal year 2004, DOD has reduced its
    civilian employment by over 421,000 positions. In support of these
    upcoming initiatives the Department will build and improve upon current
    transition tools, including the Priority Placement Program, Voluntary
    Separation Incentive Pay, the Voluntary Early Retirement Authority
    program, and Voluntary Reduction in Force authority.
        The Department will continue to seek regulatory and legislative
    changes to assist employees affected by these actions in transitioning
    to other positions, careers, or to private life. We are establishing
    employment partnerships with Federal agencies, State, county, and local
    governments, trade and professional organizations, local Chambers of
    Commerce, and private industry. Our goal is to provide comprehensive
    transition tools and programs that take care of our employees and their
    families.
                      keeping the force healthy and ready
        A servicemember's career in the Armed Forces is book-ended by his
    or her accession and separation (or retirement). In between, while a
    part of the force, the Department is responsible for planning for his
    or her health, safety, readiness, and training. The preparation,
    forethought, and funding required to see that every soldier, sailor,
    airman, and marine is fit and ready to fulfill his obligation, is
    absolutely essential.
    Readiness and Training
        Readiness Assessment and Reporting
        Today we face the challenge of sustaining a significant demand for
    our forces without inflicting undue stress. To do so effectively, we
    need visibility into the current status and capabilities of forces
    across the Department. This year we deployed the first spiral of our
    new Defense Readiness Reporting System (DRRS) that provides the first
    step toward this visibility. DRRS contains near real time assessments
    of military capabilities in terms of the tasks or missions that they
    are currently able to perform to the availability of specific personnel
    and equipment. Our partnerships with United States Joint Forces Command
    (JFCOM), United States Pacific Command (PACOM) and the Navy have
    produced working, scalable versions of measurement, assessment and
    force management tools over the past year. This year we will continue
    to add more data describing the structure, status and location of
    military forces. DRRS will integrate inputs from the training
    transformation initiative's joint assessment and enabling capability to
    capture joint training readiness. We will also expand our force
    management tool suite including more robust capability query tools.
    Development of DRRS will continue through 2007.
        Secretary Rumsfeld's Mishap Reduction Initiative
        Since taking office, Secretary Rumsfeld has sought to change how
    the Department of Defense views the safety of its military personnel
    and civilian employees. Our goal is zero preventable mishaps and we
    have taken a major step in that direction. In a May 2003 letter to the
    Department's leadership, Secretary Rumsfeld challenged the Department
    to reduce the number and rate of mishaps by 50 percent by the end of
    fiscal year 2005.
        The USD(P&R) chairs the Defense Safety Oversight Council. The
    Safety Council is an assembly of the Department's upper management
    focusing on reducing preventable accidents and increasing the
    Department's operational readiness. Our Council meets bimonthly to
    provide governance to our accident reduction efforts and ensures that
    the senior leadership is personally involved.
        The direct cost of accidents in the Department is over $3 billion
    per year. These costs are attributable to aviation and ground
    accidents, civilian workers' compensation claims, and military injury
    treatments. Even modest reductions in the mishap rate provide enormous
    savings across the board. For example, in fiscal year 2004, 26 fewer
    aircraft were destroyed than in fiscal year 2002; saving both lives and
    millions of dollars. We still have more work to do in reducing military
    injuries, and have a special focus on our number one category of
    military non-combat fatalities, i.e., private motor vehicles.
        With your support, we strive to provide the best military equipment
    in the world and ensure that it is safe to operate. We believe that
    body armor, helmets and protective vests, are reducing both hostile and
    accidental serious injuries. Historically, about half of the Army 's
    wartime losses were due to accidents; in OIF, about 26 percent of the
    losses result from preventable mishaps. I believe our goal of zero
    preventable mishaps is achievable and we will continue to pursue an
    accident free culture. We are a world-class military and preventable
    accidents will not be tolerated.
        Range Sustainment
        Continued and assured access to high-quality test and training
    ranges and operating areas plays a critically important role in
    sustaining force readiness. Urban sprawl, loss of frequency spectrum,
    restrictions on air space, and expanding environmental regulations on
    training lands increasingly restrict test and training flexibility.
    Over the past several years, we have discussed these problems with
    Congress, and we appreciate your concern and assistance in achieving
    meaningful solutions. We will continue to work closely with you as we
    grapple with how best to sustain our training capabilities at the same
    time we seek to transform our Armed Forces.
        The DOD Range Sustainment Integrated Product Team (IPT), a
    cooperative defense-wide effort, is pursuing a comprehensive agenda to
    relieve encroachment pressures on test and training ranges and ensure
    their long-term sustainability. Through the IPT, DOD is developing
    policy, overseeing range programming, assessing organization and
    leadership challenges, conducting outreach, and pursuing legislative
    and regulatory clarification. In addition, by partnering with state and
    local governments, conservation groups, and other like-minded
    organizations, the Department is committing energy and resources to
    creating buffers and ensuring compatible land use around our ranges to
    provide lasting protection against incompatible development. This work
    is beginning to show results, and the Department is committed to
    following through on this cooperative approach.
        Transforming DOD Training
        Our ability to successfully defend our Nation's interests relies
    heavily upon a military capable of adapting to rapidly changing
    situations, ill-defined threats, and a growing need to operate across a
    broad spectrum of conventional and unconventional missions. The
    operational environment of the 21st century demands that we build upon
    these capabilities in a joint environment. Joint training reflects our
    expanding efforts to train more effectively with interagency,
    intergovernmental and multinational partners.
        The Department's training efforts must be focused on melding world-
    class individual Service competencies into a cohesive, joint
    capability. Training is a key enabler of force transformation and the
    Training Transformation (T2) Program is vital to the Department's
    overall transformation efforts. We have implemented three supporting
    joint capabilities which, when mature, will enable DOD to build
    unparalleled, knowledge-superior and adaptable, joint forces.
        First, the joint national training capability (JNTC) is preparing
    forces by providing command staffs and units with an integrated live,
    virtual, and constructive training environment, with joint global
    training and mission rehearsals in support of current operational
    needs. We achieved initial operational capability in October 2004 and
    our 18 fiscal year 2005 events will keep us on track to achieve full
    operational capability in 2009. We completed our first overseas JNTC
    mission rehearsal exercise in January in U.S. European Command.
        We have conducted JNTC training events since January 2004. The top
    priority for JNTC events is mission rehearsal training. As a result,
    the training is replicating the real-world, increasing the number and
    diversity of opposing threats (civilian insurgents, improvised
    explosive devices); adding missions of increasing importance (joint
    information operations); and incorporating higher fidelity training
    environments through the use of Arab speaking role-players and other
    enhancements. Through the leadership of U.S. Joint Forces Command's
    Joint Warfighting Center, we are adaptively inserting lessons learned
    from OEF and OIF into events. During our next JNTC event, our forces
    will hone their joint warfighting skills in joint fire support
    operations, joint air and missile defense operations and other
    challenging joint training tasks that were and are being used on the
    battlefields of Afghanistan and Iraq.
        Second, the Joint Knowledge Development and Distribution Capability
    (JKDDC) is working to prepare individuals for assignment to combatant
    commands by developing and distributing joint knowledge via a dynamic,
    real-time, global-knowledge network that provides access to joint
    education and training. JKDDC's foundation is anchored in the successes
    we have achieved with our advanced distributed learning initiative and
    the sharable content object reference model (SCORM) standard. We
    declared initial operational capability this January. The JKKDC Joint
    Management Office will distribute our initial 12 courses in August 2005
    and complete another nine courses by this December. Two representative
    courses are COCOM Staff Officer 101 and Joint Task Force (JTF) 201--the
    combatant commands' two top priorities for fiscal year 2005.
        Third, the joint assessment and enabling capability (JAEC) will
    enable us to determine the training value provided by JNTC and JKDDC
    with regard to combatant commander needs; how well T2 is integrated
    with Defense-wide policies, procedures, and information systems; and,
    to what degree are the outcomes of T2 aligned with the Department's
    strategic force transformation goals. In 2005, we will conduct the
    first of three block assessments to determine the state of our initial
    T2 efforts. The assessments will evaluate training and management
    initiatives and activities, and recommend strategic and programmatic
    changes to better enable training readiness.
        Finally, the Training Transformation Interagency,
    Intergovernmental, Multinational Mission Essential Tasks (TIM2) Task
    Force is a collaborative effort between my staff and the Office of the
    Under Secretary of Defense (Policy) to better integrate DOD
    capabilities in support of other Federal entities, including the
    Departments of State and Homeland Security.
    The Military Health System
        Funding
        Defense Health Program (DHP) costs will continue to grow during
    fiscal year 2006 when eligible beneficiaries who previously did not use
    the Military Health System (MHS) start to use the TRICARE benefit. This
    increase in new users will be coupled with increases in health care
    inflation, increases in the utilization of health care services by DOD
    beneficiaries, and new benefits enacted in the NDAA for Fiscal Year
    2005.
        The Department has initiated several management actions to use
    resources more effectively and thus help to control the increasing
    costs of health care delivery. The MHS is implementing performance-
    based budgeting that focuses on the value of health care provided
    instead of the cost of health care delivered. An integrated pharmacy
    benefits program, including a uniform formulary based on relative
    clinical and cost effectiveness, is being established. Discounted
    Federal pricing of pharmaceuticals in the TRICARE retail pharmacy
    program will be used to generate cost avoidance. We have established
    new TRICARE regional contracts to streamline our managed care support
    contracts and reduce administrative overhead. Utilization management
    programs continue to ensure that all provided care is clinically
    necessary and appropriate.
        We need your assistance by restoring the flexibility to manage DHP
    resources across budget activity groups. Our new health care contracts
    use best-practice principles to improve beneficiary satisfaction,
    support our military treatment facilities (MTFs), strengthen
    relationships with network providers and control private sector costs.
    Our civilian partners must manage their enrollee health care and can
    control their costs by referring more care to our MTFs in the direct
    care system. In concert with the new contracts, we are implementing a
    Prospective Payment System to create the financial incentive for our
    MTFs to increase productivity and reduce overall costs to the
    Department. Funds will flow between the MTFs and the private sector
    based on where the patient care is delivered. Currently, MTFs' enrollee
    care funds (revised financing funds) are in the private sector budget
    activity group. Fencing DHP In-House Care funds inhibits the
    Department's ability to provide the TRICARE benefit in the most
    accessible, cost effective setting, particularly during time of war
    when MTFs frequently lose health care providers to support contingency
    operations. We understand and appreciate the congressional intent to
    protect direct care funding; however, congressionally imposed
    restrictions fencing the DHP funds adversely affects both the MTFs and
    care in the private sector. We urge you to allow the MTFs and the MHS
    to manage the DHP as an integrated system. Funds must be allowed to
    flow on a timely basis to where care is delivered.
        TRICARE
        The TRICARE military health plan is a key component in the
    Department's readiness mission, providing essential services to ensure
    continuity of health care services to all beneficiaries as the needs of
    the military and the Nation change.
        Throughout 2004, we successfully completed the consolidation of 12
    geographic regions and seven regional managed care contracts into three
    regions and three managed care contracts. We ``carved out'' some of the
    major elements of the old TRICARE contracts into separate contracts to
    take advantage of contractors' core competencies. Specialized companies
    with extensive experience in pharmacy, dental, marketing and claims
    processing have successfully assumed these responsibilities from the
    old legacy regional contracts. These changes allowed us to streamline
    our management and put performance improvements in place.
        This design introduces an even stronger customer service focus,
    provides beneficiaries with easier access to care through expanded
    networks, addresses portability issues, applies best commercial
    practices, supports optimization of our MTFs and strengthens
    relationships with network providers, bringing world-class benefits to
    more than 9 million beneficiaries.
        Military medical facilities remain at the core of the MHS, and the
    new TRICARE structure promotes increased involvement of the military
    commanders in determining the optimum approach to health care delivery
    within each region. Military commanders' accountability has been
    enhanced with increased responsibility for patient appointing, after
    hours assistance, and local telephone advice lines. The three new
    Regional Directors have been appointed, either a Flag officer or a
    Senior Executive, and are actively engaged in managing and monitoring
    regional health care with a dedicated staff of both military and
    civilian personnel. They are strengthening existing partnerships
    between the Active-Duty components and the civilian provider community
    to help fulfill our mission responsibilities.
        Although during the transition to the new contracts, TRICARE
    experienced some initial start-up problems, all of the contractors
    worked diligently to ensure that beneficiaries continued to have access
    to health care. I am happy to say that performance in all critical
    aspects of health care delivery is returning quickly to the high
    standards our beneficiaries deserve and have come to expect.
        We believe that with these improvements in our health care delivery
    system, we can continue serving our beneficiaries with increasing
    efficiency to meet the growing health demands of Active-Duty members,
    the retiree population, the Reserve components and all eligible family
    members.
        Force Health Protection
        Force Health Protection has a broad compilation of programs and
    systems designed to protect and preserve the health and fitness of our
    servicemembers from their entrance into the military, to their
    separation or retirement, and follow-on care by the VA. Preventive
    measures, environmental surveillance and advances in military medicine
    have supported our worldwide operations with remarkable results.
    Despite deployments to some of the most austere environments in the
    world, we have seen far-forward surgical care save many lives, as well
    as the lowest rates of non-battle illnesses and injuries in the history
    of warfare. This is the result of increased focus, resources, line
    commitment and servicemember education.
        Health Assessments. We ensure a healthy force through high medical
    standards at the time of accession, periodic medical and dental
    examinations, routine and special-purpose immunizations, and ready
    access to high quality health care. Servicemembers receive pre-
    deployment health assessments to ensure they are fit for deployment and
    post-deployment health assessments to identify any health issues when
    they return. Deployment health records are maintained in the
    individual's permanent health record and electronic copies of the
    health assessment are archived centrally for easy retrieval. We have an
    aggressive quality assurance program to monitor the conduct of these
    assessments. Most recently, we have laid the groundwork for a post
    deployment health reassessment to be conducted 3 to 6 months after
    deployment.
        Immunization Programs. Protecting our forces involves countering
    potential health threats. The most important preventive health measures
    in place for our servicemembers today--immunization programs--offer
    protection from diseases endemic to certain areas of the world and from
    diseases that can be used as weapons. These vaccines are highly
    effective and we based our programs on sound scientific information
    that independent experts have verified. They are essential to keep our
    servicemembers healthy.
        Medical Technology on the Battlefield. Last year we introduced
    elements of the Theater Medical Information Program and Joint Medical
    Work Station to OIF. These capabilities provide a means for medical
    units to electronically capture and disseminate near real-time
    information to commanders. Information provided includes in-theater
    medical data, environmental hazards, detected exposures and critical
    logistics data such as blood supply, beds and equipment availability.
    New medical devices introduced to OIF provide field medics with blood-
    clotting capability while light, modular diagnostic equipment improve
    the mobility of our medical forces, and individual protective armor
    serves to prevent injuries and save lives.
        Medical Hold. We are committed to deploying healthy and fit
    servicemembers and to providing consistent, careful post-deployment
    health evaluations with appropriate, expeditious follow-up care when
    needed. A consequence of this commitment is more servicemembers under
    medical treatment focused on returning them to a medically-qualified
    status for military service.
        Individual Medical Readiness. Among the many performance measures
    tracked within the MHS is the medical readiness status of individual
    members, both Active and Reserve components. For the first time, the
    MHS will track individual dental health, immunizations, required
    laboratory tests, deployment-limiting conditions, Service-specific
    health assessments, and availability of required individual medical
    equipment.
        Mental Health Services. Care is available for all servicemembers
    and to their families before, during, and after deployment.
    Servicemembers are trained to recognize sources of stress and the
    symptoms of depression, including thoughts of suicide, in themselves
    and others that might occur during deployment. Combat stress control
    and mental health care is available in theater. Before returning home,
    servicemembers are briefed on how to manage their reintegration into
    their families, including managing expectations, the importance of
    communication and the need to control alcohol use. During redeployment,
    the servicemembers are screened for signs of mental health issues,
    including depression and Post Traumatic Stress Disorder (PTSD). The
    screening process will be repeated at 3-6 months after return; Service
    implementation plans are due in mid June 2005 and the survey process is
    expected to begin by mid August 2005. After returning home, help for
    any mental health issues that may arise, including depression and PTSD,
    is available through the Military Health System for Active-Duty and
    retired servicemembers, or through the VA for non-retired veterans.
    TRICARE is also available for 6 months post-return for Reserve and
    Guard members. To facilitate access for all servicemembers and family
    members, especially Reserve component personnel is the Military
    OneSource Program--a 24/7 referral and assistance service available by
    telephone or on the Internet.
        Transition to VA. I am especially pleased with our work with the
    Department of Veterans Affairs for the seamless, responsive and
    sensitive support to soldiers and marines as they return to duty or
    transition from Active-Duty to veteran status. An important aspect of
    this transition is having the individual medical records available when
    a separated servicemember presents at a VA hospital for the first time.
    We made significant strides forward by transferring to DOD electronic
    health information of servicemembers who leave Active-Duty to a central
    repository at the VA Austin Automation Center. Through this repository,
    VA clinicians and claims adjudicators have access to DOD laboratory
    results, radiology results, outpatient pharmacy data, allergy
    information, discharge summaries, consult reports, admission,
    disposition and transfer information, elements of the standard
    ambulatory data records and demographic data. To date, we have
    transferred this electronic health information on more than 2.9 million
    separated servicemembers to this repository, and the VA has accessed
    more than 1 million of those records. We believe that this
    collaborative effort with the VA has been going extremely well and
    together, the DOD and VA are improving services to our veterans.
        DOD-DVA Sharing
        DOD works closely with the VA at many organizational levels to
    maintain and foster a collaborative Federal partnership. We have shared
    health care resources successfully with the VA for 20 years, but many
    opportunities remain. In the past year, DOD and VA have developed and
    improved a number of joint planning efforts. For instance, the 2005
    Joint Strategic Plan (JSP) builds upon success of the April 2003 JSP.
    Each goal, objective and strategy in the previous plan was reviewed to
    reflect the current climate of DOD/VA joint collaboration.
        DOD and VA are implementing the Demonstration Site Projects and the
    Joint Incentive Fund (JIF) required by Sections 721 and 722 of the NDAA
    for Fiscal Year 2003. The demonstration sites are submitting quarterly
    interim project reviews to the VA/DOD Joint Utilization/Resource
    Sharing Work Group and are finalizing their business plans. In this
    past year, the Financial Management Work Group under the VA DOD Health
    Executive Council (HEC) recommended 12 projects to the HEC for JIF
    funding for a total combined cost of $29.9 million.
        To ensure OEF and OIF veterans experience continuity of care, DOD
    participates on the VA's Seamless Transition Task Force. DOD is
    coordinating with VA's Seamless Transition Office to finalize a
    memorandum of understanding to define protected health information data
    sharing activities between DOD and VA.
        In the coming year, the VA DOD Joint Executive Council will focus
    on achieving greater collaboration, service and assistance to our
    severely injured veterans from OIF and OEF, as well as on our capital
    planning and facility life-cycle management efforts to benefit all of
    our beneficiaries and the American taxpayer.
                  taking care of the force and their families
        The Modernized Social Compact
        The first Social Compact, published in 2002 reiterated the compact
    between the Department, its warfighters, and those who support them--it
    affirmed the Department's commitment to underwrite family support.
    Since the Social Compact is a living document, we continue to identify
    and address emerging American social changes where support to
    servicemembers and their families must be redefined. Now the updated
    Modernized Social Compact is the first effort to measure and publish
    outcomes for troop and family support programs. These measures are in
    support of the Secretary's Balanced Scorecard.
        The global war on terrorism places new demands on every aspect of
    military life. From the anxieties of nation building in hostile
    environments to the significant increase in family separations, the
    stress currently impacting the military has not been of this magnitude
    since the inception of the All-Volunteer Force. We rely more heavily on
    the Reserve and Guard components and stress relationships with
    employers, and families in an unprecedented fashion.
        The Social Compact lays out a 20-year strategic plan for DOD to
    ensure that quality of life keeps pace with the changing expectations
    of the American workforce and addresses the needs of the two-thirds of
    military families living off the installation as well as the Reserve
    component. DOD is refocusing family support with state-of-the-art
    technology to connect to a wide array of quality of life support
    programs and organizations. One of the most exciting new developments
    is Military OneSource, a toll-free telephonic, Internet and e-mail
    information and referral service available 24 hours a day, every day of
    the year, from anywhere in the world.
        Support to the Severely Injured and Their Families
        Each of the Services has initiated an effort to ensure that our
    seriously injured servicemembers are not forgotten--medically,
    administratively, or in any other way. To facilitate a coordinated
    response, the Department has established a Joint Support Operations
    Center. We are collaborating, not only with the military Services, but
    also with other departments of the Federal Government, nonprofit
    organizations, and corporate America, to assist these deserving men and
    women and their families.
        The center, operated under the aegis of the Office of Military
    Community and Family Policy, provides personalized assistance, tailored
    to meet an individual's unique needs during recovery and
    rehabilitation, to include:

             Education, training, and job placement
             Personal mobility and functioning
             Medical care and rehabilitation
             Home, transportation, and workplace accommodations
             Personal, couple, and family issues counseling
             Financial resources

        Twenty-four hours a day, 7 days a week, 365 days a year, we are a
    toll-free phone call away. We provide a venue for each of the separate
    programs to be successful, while ensuring that there is no gap--that
    all severely injured servicemembers and their families receive the
    necessary support. The Center provides a central point of contact for
    information and support.
        In addition to the support provided through the operations center,
    advocates are assigned at or near major military and Veterans Affairs
    medical facilities to provide any hands-on assistance with their
    transition. These advocates are available to the severely injured and
    their families as they make their transition into communities, helping
    them connect with local agencies and community groups.
        A number of our severely injured servicemembers will be able to
    return to duty, thanks to their dedication and commitment, and the
    phenomenal quality of military medicine. Some, however, will transition
    from the military and return to their hometowns or become new members
    of another civilian community. These are capable, competent, goal-
    oriented men and women--the best of our Nation. We are ensuring that
    during their rehabilitation we provide a ``case management'' approach
    to advocate for the servicemember and his or her family. From the joint
    support operations center here, near the seat of government, to their
    communities across America, we are with them. This will continue
    through their transition to the VA, and the many other agencies and
    organizations providing support to them.
        Military Casualty Assistance
        When a military member dies, our first concern is to inform the
    next-of-kin in a manner that is accurate, timely, efficient, and highly
    respectful. Our military casualty assistance program is highly
    developed and well suited to perform this difficult task effectively.
    Notification is made in person by Casualty Assistance Office (CAO)
    personnel who are customarily accompanied by a chaplain.
        Casualty Assistance Office personnel stay with the family following
    notification of the loss, through funeral preparations, burial, and the
    entire process of determining benefits and compensation. They provide
    valuable counsel and support to the families, arranging for the
    military funeral (if desired), offering solutions when problems arise,
    and ensuring that the families receive the benefits and compensation
    due them. The families know that they can contact their CAO
    representative at any time, even long after the servicemember's death.
    We often hear from the families that they consider their CAO
    representative ``part of the family.''
        The Department continues to explore new methods and procedures to
    better support family members during the most tragic of times, the loss
    of their loved one in service to our Nation. One initiative is the
    expedited claims process in partnership with the Social Security
    Administration. It has been extremely successful in providing swift
    financial assistance to our families. A special toll free number allows
    applicants and casualty assistance officers to call when they are ready
    to file. The final results of the pilot program show the average claims
    processing time dropped from several weeks to an average of just over 2
    days time. We established a similar arrangement with the Department of
    Veterans Affairs several years ago. That program, has also
    significantly expedited the delivery of compensation and benefits to
    our families who have suffered the greatest loss.
        Taking Care of Families of the Deployed
        The fiscal year 2005 emergency supplemental funding request
    includes $83 million to provide family support to Active-Duty members
    and their families and to assist severely injured servicemembers and
    their families during recovery and rehabilitation. The Department
    received $108 million in emergency supplemental funding in fiscal year
    2003 and fiscal year 2004. This funding was combined with other funds
    to support families in a variety of ways.
        As the number one service families require during deployment, the
    Department provided $53 million, over 2 years to help thousands of
    families manage work schedules while one parent was gone, to extend
    child care to cover additional work shifts, and to offer a parent time
    to take care of other family business.
        In the past 2 years, the Department used $64 million of
    supplemental funding to institute non-medical counseling for
    servicemembers and their families experiencing the normal stress of
    frequent deployments, family separation and reunion. Access to
    counseling assists Active-Duty, Guard, and Reserve family members
    during this time of high perstempo and lengthy deployments. Families
    who need face-to-face assistance can schedule counseling from a
    licensed counselor within their immediate geographic area in the
    continental United States. This is particularly important for remote
    families of mobilized Guard and Reserve units who may also have a
    deployed servicemember and may live a great distance from the programs
    provided on installations. We were flexible enough to also deploy teams
    of professional counselors to 10 locations outside the continental
    United States as we did to support the families of the 1st Armored
    Division (AD). In fiscal year 2004, when families from the 1st AD were
    informed their spouses would be extended in theater, $1.9 million in
    supplemental funding was provided to help ameliorate the stress on
    families. Funding was used to provide family group support, youth
    programs, family day care, extended hour child care, and youth summer
    hire program.
        Military OneSource
        ``Military OneSource'' provides a customized approach to individual
    information and referral services for military families. ``Military
    OneSource'' is an augmentation, not a replacement, for the family
    centers, and it brings services to all members of the Armed Forces.
    This includes Reserve and National Guard members and families who do
    not live on military installations, and often can't take advantage of
    what DOD has to offer. This service provides all of our servicemembers
    and families with immediate information concerning support available on
    the installation or in their community. The toll-free telephone, e-
    mail, and Web site all include information and referrals on parenting
    and child care, education, deployment and reunion, military life,
    health, financial, relocation, everyday issues (i.e. pet care,
    plumber), work and career to name a few. Each of the military Services
    has fully implemented the Service. The Marine Corps was first to stand-
    up the program and now all the Services enjoy positive feedback and
    results.
        Family Assistance Centers
        Most of the stress faced by military families prior to and during
    deployment involves expectation management and revolves around accurate
    and timely information. To address the stress of mobilization,
    deployment and reunion, the Services have developed Web sites, provided
    information materials, and reached out to families through family
    center staff, chaplains, and unit-based volunteers.
        Each of the military departments has a highly responsive family
    support system to help families cope with the demands of military life.
    The cornerstone is a worldwide network of installation family centers.
    Located at roughly 300 Active military installations worldwide, the
    centers provide a wide range of services supporting commanders,
    military members, and families. There is information and education on
    family well-being, assistance for families with special needs,
    resources for spouse employment, and support during deployment.
        Today, families have multiple sources that may support them while
    their servicemember is deployed. Thanks to the National Guard Bureau,
    over 400 family assistance centers provide outreach not only to Guard
    and Reserve families that are not located near an installation, but
    they also support the large number of Active service and family members
    who reside off the installation. Unit Family Readiness Groups, staffed
    by volunteers, actively maintain communication with families in
    outlying areas through newsletters, websites, and direct communication
    to enhance unit-to-family communication
        In my travels, I make it a point to meet with family support staff
    and volunteers. Across the board, whether talking to Army Family
    Readiness Groups, Air Force Readiness Noncommissioned Officers in the
    Family Support Centers, Navy Ombudsmen or Marine Corps Key Volunteers,
    I find a cadre of dedicated professionals who can address the needs of
    family members.
        Domestic Violence/Victims Advocacy
        Domestic violence will not be tolerated in the Department of
    Defense. It is a crime and an offense against our institutional values
    and commanders at every level have a duty to take appropriate steps to
    prevent it, protect victims, and hold those who commit such acts
    accountable. We have initiated implementation of 82 of the nearly 200
    Domestic Violence Task Force recommendations, focusing first on
    recommendations pertaining to victim safety and advocacy, command
    education, and training key players who prevent and respond to domestic
    violence such as law enforcement personnel, health care personnel,
    victim advocates, and chaplains.
        We worked closely with Congress to create or change legislation
    pertaining to transitional compensation for victims of abuse, shipment
    of household goods for abused family members, and a fatality review in
    each fatality known or suspected to have resulted from domestic
    violence or child abuse. During the past year the Department issued
    additional domestic violence policy including protocols for
    establishing effective command and law enforcement responses to
    domestic violence and established protocols for the Domestic Abuse
    Victim Advocate program.
        In partnership with the Office on Violence Against Women of the
    Department of Justice, we accomplished several joint initiatives that
    include training for literally hundreds of law enforcement
    professionals, victim advocates, chaplains, and fatality review team
    members who will positively influence the lives and behavior of
    thousands of individuals. As a part of our collaboration with the
    Department of Justice, we are conducting demonstration projects in two
    communities near large military installations. The goal of the projects
    is to develop a coordinated community response to domestic violence
    focusing on enhancing victim services and developing special law
    enforcement and prosecution units. MacDill Air Force Base and Lackland
    Air Force Base are participating in the President's Family Justice
    Center Initiative. We know that military and civilian collaboration is
    critical to an effective response to domestic violence since the
    majority of military members and their families live off the
    installations.
        We are also working with the Family Violence Prevention Fund to
    develop a general domestic violence public awareness campaign and with
    the National Domestic Violence Hotline to increase awareness of the
    Hotline as a resource for victims and their families. Finally, $7.5
    million (fiscal year 2004) was used to provide access to on-call victim
    advocates and emergency shelters to assist victims of domestic
    violence.
        We are pleased with the progress we have made but realize there is
    more work to be done. We are working to ensure that the policies we
    implement are viable across all Services in the continental United
    States and overseas, and minimize the possibility of unintended
    consequences that compromise the safety of domestic violence victims
    and their children. We collaborate closely with those who are
    responsible for implementing the policies we write to maximize their
    effectiveness across the Department.
        Financial Stability
        DOD has embarked on an initiative that combines educating
    servicemembers and their families on using their finances wisely with
    expanding employment opportunities for military spouses. Designed to
    enhance education and awareness, with the support of 26 Federal
    agencies and non-profit organizations we have begun to see positive
    changes in the self-reported assessment of the financial condition of
    servicemembers. The lessons learned through this campaign will be
    shared with the National Commission for Financial Literacy and
    Education to assist the Commission in developing a financial literacy
    strategy for the Nation.
        In addition to these collaborative efforts, we have worked with
    State representatives and several have introduced legislation to
    protect servicemembers and their families from the predatory and usury
    aspects of payday lending. For example, in 2004, Georgia enacted
    legislation that limits the maximum annual percentage rate that can be
    charged, prevents payday lenders from using out-of-State bank charters
    to go around interest rate limits, and protects servicemembers and
    their families from certain predatory collection practices. Legislation
    has passed the Virginia Assembly that will parallel the servicemember
    protections enacted in Georgia. The California Department of
    Corporations has instituted a program called ``Troops Against Predatory
    Scams,'' to assist servicemembers and their families residing in the
    state avoid predatory activities and assistance if they become
    involved.
        We are employing a similar collaborative approach to improve
    employment opportunities of military spouses by partnering with
    Federal, state and local governments to address legislative and
    regulatory barriers that may inhibit financial stability and
    portability of jobs, and developing partnerships with government, non-
    profit and private sector organizations to increase the number of
    opportunities available to spouses to develop careers. Through these
    initiatives the Department seeks to enhance financial stability by
    promoting consistent reliable sources of income and the ability to use
    it wisely to support quality of life needs and for attaining future
    life goals.
        Spouse Employment
        Spouse employment is important to both family finances and spouse
    career aspirations, not unlike non-military families. Military spouses
    are required to frequently relocate, making flexibility and reciprocity
    that honors licensing from other States all the more critical. Many of
    our spouses are qualified teachers and nurses and can meet a growing
    need for these professionals. The Department is engaged on numerous
    fronts to assist spouses in their careers, but States can propel and
    create links within this effort to ensure mutual success.
        Military families often require two incomes to achieve their
    aspirations, similar to the needs of American families as a whole.
    Frequent moves can inhibit military spouses' ability to start and
    sustain a career, even though approximately 80 percent of military
    spouses have some college experience. Differing state requirements can
    limit advancement or deter re-entry into the workforce at a new
    location. Spouses often suffer long periods of unemployment and,
    therefore, loss of income. The Department has identified where there
    are licensing barriers and is developing policy recommendations for
    licensing/credentialing requirements across States for high demand, or
    shortage of, careers and jobs.
        Quality of life for our military families is also defined by the
    successful employment of spouses. To succeed we will need the help of
    corporate America. Sixty-one percent of the 700,000 spouses of Active-
    Duty personnel are active in the workforce contribution to the family
    income.
        An historic partnership agreement, signed by Secretary of Defense
    Rumsfeld and Secretary of the Department of Labor (DOL) Elaine Chao in
    July 2003, affords both Departments a unique prospect to increase
    employment opportunities for military spouses while enhancing the
    competitiveness of the American work force. DOD and DOL have made great
    strides in collaborative use of DOL's One-Stop Career centers and in
    creating a broad spectrum of Web-based services exclusively for
    military spouses, including the online Military Spouse Resource Center,
    www.milspouse.org. Additional enhancements are planned as a new
    ``Military Spouse Career Center'' will bring the vast job bank of
    Monster.com to the easy use of military spouses. Employers with a
    military-friendly focus, especially those that see military spouses as
    an important talent pool, will have their jobs spotlighted here. We are
    especially focused on teaching, nursing, real estate, and medical
    assistant fields careers of choice for many military spouses. Through
    Military OneSource, spouses will now have access to career counseling
    and personal assessment that will encourage them to reach for their
    dreams, as they identify their opportunities for more education,
    training or a new or advancing career options.
        State Liaison
        The Department has been collaborating with the Council of State
    Governments, the National Governors Association and others to address
    the needs of the military, Guard and Reserve members and families. Many
    States have recognized school transition and in-State tuition policies,
    spouse employment, and financial well-being as important to
    servicemembers and families, and have enacted legislation to better
    accommodate their needs.
        Over half of the military is married and has children.
    Consequently, military often weigh assignments based on the quality of
    education offerings from the local school systems for their children.
    The mobile lifestyle creates tough challenges for children who often
    attend as many as 6 high schools or 13 schools in 12 years. This, added
    to the anxiety of parental separation during deployments, challenges us
    to ease transitions from school to school.
        Support of children of military families is about ensuring
    educational opportunities are available to all and that current
    policies and practices do not penalize them. For example, providing
    some flexibility in accepting academics achieved in other school
    systems and in tryout times for teams and extra curricular activities.
    Transferring students need their records in a timely manner so that
    class assignments are properly made and the road to graduation is not
    interrupted. We are looking for collaboration between States, school
    districts, and military communities to facilitate these opportunities.
        Since the mission of the military requires frequent moves,
    servicemembers come under numerous state policies that may hinder their
    educational choices. The cost of college attendance can be as much as
    four times in-State rates making education progression unaffordable.
    Twenty-five States (up from 10) currently have adopted state education
    policies for troops and families that allow in-State tuition to
    continue for children after military parents depart. In-State tuition
    is a great incentive to encourage servicemembers and their families to
    engage in higher learning.
        Voluntary Educational Opportunities
        We are proud of our commitment to fund to the fullest extent
    possible voluntary educational opportunities for servicemembers and
    their families. For military personnel, increased levels of coverage
    for the traditional off-duty, voluntary education program helped fund
    just under 900,000 enrollments last fiscal year and generated over
    33,000 diplomas and college degrees. DOD reduced voluntary education
    out-of-pocket costs for troops attending college in their off duty
    time. Servicemembers now have up to 100 percent assistance or about
    $250 per semester hour of credit. Working with major book distributors,
    we have launched an effort, to reduce expenditures for the ever-
    increasing cost of books, which average about $800 to $900 annually per
    student.
        To help spouses attend college at a reduced cost, we are working
    closely with the colleges and universities that provide degree programs
    for DOD overseas, to offer more scholarships, grants and reduced
    tuition to spouses who would like to pursue a degree while in theater.
    Collateral efforts continue to encourage existing relationships with
    the Service aid organizations and United Services Organization (USO).
        Spouses want access to educational opportunities that generate
    degree and certificate programs that prepare them for enduring
    professional careers rather than just jobs. Frequent moves often
    preclude military spouses from achieving career advancement. DOD
    partners with the private sector and other government agencies to
    enhance spouse employment and career opportunities. The new ``Spouses-
    to-Teachers'' program, which is similar to the very successful Troops-
    to-Teachers program, helps military spouses achieve career goals, and
    helps local school districts meet their hiring needs. DOD works with
    States to expand reciprocity for credentialing requirements. A Spouses-
    to-Teachers test program provides information on degree and
    certification requirements from State-to-State, guidance on reciprocity
    for currently held certification, access to certification programs on
    line, information on teaching jobs in the States their family will be
    transferring to, as well as sources to contact for grants and
    scholarships to pursue a teaching career or recertification. If this
    test program proves as successful as we think it can be, we plan to
    expand it into new states this coming year.
        Department of Defense Education Activity
        The Department of Defense Education Activity (DODEA) has been an
    active partner in supporting students and families during the war. All
    schools within DODEA have crisis management teams to assist students
    and teachers during stressful times. Working in collaboration with
    military and civilian communities, they provide support before, during
    and after each deployment. Summer school was customized to meet the
    needs of the children of deployed members, and parents were very
    appreciative of the video-streaming of high school graduations for
    deployed members to view in Iraq. DOD schools are a model for the
    Nation and have embraced the President's ``No Child Left Behind''
    initiative. Our students continue to perform well above the national
    average on standardized tests in all subjects (reading, language arts,
    math, science, and social studies).
        The Department is proud of our school system and we continue to
    address quality issues in the areas of curriculum, staffing,
    facilities, safety, security, and technology. Our dependent schools
    comprise two educational systems providing quality pre-kindergarten
    through 12th grade programs: the DOD Domestic Dependent Elementary and
    Secondary Schools (DDESS) for dependents in locations within the United
    States and its territories, possessions, and commonwealths, and the DOD
    Dependents Schools (DODDS) for dependents residing overseas. Today,
    approximately 8,800 teachers and other instructional personnel serve
    more than 101,000 students in 223 schools. They are located in 13
    foreign countries, 7 States, Guam, and Puerto Rico. Students include
    both military and civilian Federal employee dependents. To meet the
    challenge of the increasing competition for teachers, DOD has an
    aggressive U.S. recruitment program. The program emphasizes diversity
    and quality, and focuses on placing eligible military family members as
    teachers in its schools.
        Elementary and Secondary Education Outside the Gate
        The Department recognizes that quality education is a key factor in
    decisions to accept assignments for servicemembers and their families.
    There are approximately 692,000 school age children in Active-Duty
    families (1.3 million including the Reserves)--more than 101,000 in
    DODEA and 590,000 in a variety of schools in America. Military children
    move on average 2.5 times more often than their civilian counterparts.
        The Department plans to work with Johns Hopkins University to
    identify and disseminate proven educational best practices and policies
    that can respond to the academic and affective needs of mobile military
    children. Further, educational consultants are building an information
    resource of educational options, such as home schooling, public,
    private, and charter schools, around military installations to provide
    military families a wide array of quality educational choices.
        DOD has worked with renowned experts on terrorism, trauma and
    children, regarding publications, website information and program
    development for students of deployed families, their parents and
    teachers. All publications are on a special website designed to meet
    the needs of children of deployed parents, www.MilitaryStudent.org. We
    continue to work to provide national, state and local education
    agencies, schools, parents and health professions with an awareness of
    the issues, current best practices, and services to promote academic
    success.
        Child and Youth Development Programs
        The Department of Defense is the model for the Nation on employer
    supported child care. Child care is the number one service that
    families require in order to deploy and is also needed to allow spouses
    to pursue their own careers. The Department of Defense works constantly
    to ensure high quality child care is available and seeks ways to meet
    the child care need.
        With the return of troops for rest and relaxation or the end of
    deployment, military installations with high deployment rates are
    experiencing an increase in births. Analysis of the infant population
    at military installations with high numbers of deployed servicemembers
    indicate births have increased 15 percent to 53 percent as a result of
    OEF/OIF. As a first priority, the needs of families living in high
    personnel tempo and high deployment locations will be addressed. The
    Services identified 4,403 spaces at 14 of these locations. The plan is
    to use temporary facilities as a stopgap measure.
        To support families impacted by rebasing and to reduce the total
    child care shortfall, the Department is reviewing public private
    partnerships with civilian child care providers and providing
    incentives for in-home care providers on and off the installation. This
    approach has a potential to yield as many as 9,000 spaces by fiscal
    year 2011. Families are a critical deciding factor in retention and
    reenlistment decisions. The Department recognizes an investment in
    child care is also an investment in readiness and retention.
        With the extensive number of parents deployed, it has been more
    important than ever to stay connected. Computer-connectivity and
    special kits help youth ``stay in touch'' and become involved in
    understanding the stages of deployment and the emotional challenges
    that they may experience. DOD recently developed a ``Guide for Helping
    Youth Cope with Separation'' as an additional resource.
        Each youth responds differently to the challenges of military life
    and a variety of programs provide positive outlets and help youth
    channel feelings into personal growth rather than violent or
    destructive behavior. One supportive outlet is camping experiences,
    with an emphasis on leadership and understanding the military better.
    Private organizations such as National Military Family Association,
    with funding from SEARS, created a series of camps throughout the
    country, specifically for youth with a parent deployed. Boys & Girls
    Clubs of America have opened their doors to our military youth and
    provided wholesome recreation designed to help young people succeed in
    school, stay healthy and learn important life skills. A partnership
    between the Services and U.S. Department of Agriculture Extension
    Services/4H provides outreach to those youth whose parents are Reserve
    or National Guard or are not geographically located near a military
    installation.
        Morale, Welfare, and Recreation Initiatives
        The Services have implemented a broad assortment of Morale,
    Welfare, and Recreation (MWR) program initiatives specifically for
    forces deployed to fight the global war on terrorism and their family
    members. These include 170 free, MWR operated, Internet cafes in Iraq,
    computers and Internet service at home station libraries and youth
    centers to ensure families can send and receive e-mails from their
    loved ones who are deployed. Additional recreation packages include
    library book and periodical kits, recreation kits that with large
    screen televisions, DVD/CD players, up-to-date video games and game
    CDs, exercise equipment, sports equipment, pool and ping pong tables
    and first run movies.
        Keeping in touch with family and friends is an important quality-
    of-life consideration for the deployed. It is a longstanding DOD
    practice for servicemembers to be able to make subsidized or free
    telephone calls home. The NDAA for Fiscal Year 2005 extended the
    requirement that prepaid phone cards, or equivalent telecommunications
    benefit, be provided without cost to servicemembers serving in OEF/OIF
    until September 30, 2006. The frequency and duration of calls using
    official phones for health, morale, and welfare (HMW) calls are
    determined by the commander so as not to interfere with the mission. On
    average, 32,000 HMW calls are made each day; servicemembers in the OEF/
    OIF theaters generally average two calls per week.
        The Armed Services Exchanges have mounted an information campaign
    to assist servicemembers, their families and friends to understand the
    unique challenges of communications during deployment, special programs
    supporting HMW and unofficial telecommunications, and lowest cost
    options available for communication during deployment. servicemembers
    will continue to receive current service and rate information
    throughout their deployment. Similarly, family members may access
    updated information through various military channels, including Web
    sites and family support programs. We expect that the ``Help Our Troops
    Call Home'' program will increase the donated support that the
    Secretary of Defense may accept in order to increase opportunities for
    calls home.
        AT&T is under contract to the Armed Services Exchanges to supply
    the prepaid calling cards used in OIF/OEF and shipboard. On February
    23, the Federal Communications Commission (FCC) rejected a petition
    from AT&T to exempt its ``enhanced'' telephone calling cards from
    Universal Service Fund (USF) contributions and intrastate access
    charges. However, nothing in the FCC ruling requires increases in the
    prices paid by consumers for prepaid calling cards. In fact, the FCC
    pointed out that other companies contribute to the USF and offer
    competitive rates.
        Armed Forces Entertainment, in cooperation with the USO, continues
    to provide much welcomed celebrity and professional entertainment to
    our forces engaged in the global war on terrorism. Since May of 2002,
    the Robert and Nina Rosenthal Foundation has worked closely with the
    Country Music industry to provide celebrity entertainment at U.S.
    military installations at no cost to military personnel and their
    family members. The Spirit of America Tour provided 5 shows in 2002, 18
    shows in 2003, and 21 performances in 2004. This initiative has been
    greatly appreciated by the bases that have received Spirit of America
    Tour performances, which are planned to continue through 2005.
        Field Exchanges and Commissaries
        There are 53 Tactical Field Exchanges, 33 exchange supported/unit
    run field exchanges, and 15 ships' stores in the OIF/OEF theaters
    providing quality goods at a savings, and quality services necessary
    for day-to-day living. Goods and services offered include phone call
    centers, music CDs, DVDs, laundry and tailoring, photo development,
    health and beauty products, barber and beauty shops, vending and
    amusement machines, food and beverages, and name brand fast food
    operations. Goods and services vary by location based on troop strength
    and unit mission requirements.
        Our Reserve and Guard personnel have taken advantage of the full
    commissary benefits extended to them by the fiscal year 2004 NDAA. The
    commissary benefit is an important and valued component of non-pay
    military compensation and it is vital to the quality-of-life of all of
    our servicemembers.
        Quality-of-Life in the Integrated Global Presence and Basing
            Strategy
        The quality-of-life of military members and their families is
    considered a priority as the Department moves forward with rebasing and
    BRAC. Unlike previous drawdowns when the Department lost almost a
    million troops, this integrated global and basing strategy will not
    reduce the number of troops.
        To maintain the Department's commitment to families, the Secretary,
    in a March 2003 memorandum to the Secretaries of the military
    departments, directed that ``Candidate strategies must not concentrate
    on the operational dimension alone, but also on how to best improve
    quality-of-life.'' Service strategies must consider access to schools,
    education centers/libraries, family support, child care, youth
    programs, morale, welfare and recreation and fitness programs. From a
    quality-of-life perspective, DOD's planning approach for rebasing and
    BRAC is based on two principles: first, adequate quality-of-life
    funding will be reprogrammed from the losing to the gaining
    installations; and second, the military will look to civilian
    communities to augment programs and services (since two-thirds of
    families live in off-base communities). Service plans at the losing and
    gaining installations will be evaluated using a model that takes into
    account program specific operational funding requirements (baseline and
    enhancement per capita), capital investment, deficiencies, community
    support structures, unique Service characteristics, and civilian
    manpower requirements. The Department's goal is to ensure quality-of-
    life for servicemembers and families is not diminished during
    transformation efforts.
                                   conclusion
        Mr. Chairman, in conclusion, I want to thank you and members of
    this subcommittee for your advocacy on behalf of the men and women of
    the Department of Defense. Whether the career of a member of the Total
    Force is measured in months or years, whether that career is spent in a
    Reserve component, an Active component, a combination of the two, or as
    a Department of Defense civilian, the Nation's gratitude for dedicated
    service is proved in your continued support and funding for the
    programs that keep the force strong and healthy.

        Senator Graham. General Hagenbeck.

     STATEMENT OF LTG FRANKLIN L. HAGENBECK, USA, DEPUTY CHIEF OF
                          STAFF FOR PERSONNEL

        General Hagenbeck. Chairman Graham and Senator Nelson,
    thank you very much for the opportunity to appear before you
    this afternoon on behalf of America's Army.
        The United States Army owes its success to the All-
    Volunteer Force, which provides the high quality, versatile
    young Americans we depend on to serve as soldiers. This is the
    first time in our history in which the Nation has tested the
    All-Volunteer Force during a prolonged war.
        Determining what kind of All-Volunteer Army we need and
    developing the environment, the compensation, education, and
    other incentives to keep it appropriately manned may be our
    greatest single strategic challenge.
        The soldier is the centerpiece of all that the Army is and
    will be doing. For those brave men and women, I want to express
    my sincere gratitude for your continued and committed support.
        To win this war, we must recruit and maintain a quality
    force, soldiers who have a warrior's ethos ingrained in their
    character. Last year the Active and Reserve met their
    recruiting goals and the National Guard missed its goal. The
    global war on terrorism, lower propensity to serve, and
    negative feedback from influencers, coupled with the improving
    economy and the lower unemployment, present a very challenging
    recruiting environment for all of us.
        Recruiting incentives such as the enlisted bonus program,
    the Army college fund program, the loan repayment program, and
    the National Call to Service (NCS) combined with an increase in
    recruiters, incentives, and advertising will help improve our
    ability to make our annual mission.
        In the previous year, the Active Army achieved all its
    retention goals, a result that can be directly attributed to
    the Army's SRB program. The Reserve and the National Guard
    nearly achieved their overall retention objectives, both
    finishing around 99 percent of the yearly mission goals.
        An important component of the Army's ability to retain
    quality soldiers is the selective reenlistment bonus. The bonus
    is offered to all soldiers deployed in Afghanistan, Iraq, and
    Kuwait, and it has been increased to a maximum of $15,000, and
    it has been very well received by our soldiers.
        Congress supported needed pay raises and increases in
    special pays, such as hostile fire pay, as you mentioned,
    family separation pay (FSP), and critical skills retention
    bonuses. These increases significantly contribute to the
    soldier's overall well-being. With your support, the Army has
    the flexibility to encourage soldiers to serve in difficult-to-
    fill positions and less desirable assignments, as well as
    retaining soldiers who hold critical, high-demand skills. These
    tools ultimately provide the Army the ability to continue to
    fight the war on terrorism and recruit and retain our quality
    force.
        With your continued support, we will be able to compensate
    soldiers and their families wherever they serve and under all
    conditions. We will continue to care for our troops and their
    families whether they are healthy, injured, or suffering the
    loss of a loved one who has paid the ultimate price for
    freedom. We appreciate all your efforts on behalf of our
    soldiers.
        In April 2004, the Army introduced the disabled soldiers
    support system (DS3) initiative to provide our most severely-
    disabled soldiers and their families with a system of advocacy
    and follow-up services. Now the DS3 program works closely with
    the Department of Veterans' Affairs (VA) and the new Military
    Severely Injured Joint Support Operations Center located in
    Arlington, Virginia to aid the severely-disabled soldiers. This
    combined effort on behalf of the DOD and each Service ensures a
    consistent level of support to severely-injured and wounded
    servicemembers and their families.
        In closing, even though we have been very successful the
    last few years in recruiting and maintaining quality soldiers,
    to achieve the required temporary increase, the Army will
    continue to need broad incentive packages to shape the force
    and a renewed recognition that raising and maintaining an Army
    is a shared responsibility among all Americans.
        Once again, thank you for the opportunity to appear before
    you today, and I look forward to answering your questions.
        [The prepared statement of General Hagenbeck follows:]
              Prepared Statement by LTG Franklin L. Hagenbeck, USA
        Senator Graham, Senator Nelson, distinguished members of the
    committee, thank you for the opportunity to appear before you today on
    behalf of America's Army. The United States Army owes its success to
    the All-Volunteer Force, which provides the high-quality versatile
    young Americans we depend on to serve as soldiers. This is the first
    time in our history in which the Nation has tested the All-Volunteer
    Force during a prolonged war. Determining the kind of All-Volunteer
    Army we need and developing the environment, compensation, education,
    and other incentives to keep it properly manned may be the greatest
    strategic challenge we face.
        The soldier is the centerpiece of all that the Army is and does. On
    behalf of those brave men and women, I want to express my sincere
    gratitude for your continued and committed support. As I speak to you
    today, approximately 640,000 soldiers are serving on Active-Duty. Of
    those, 315,000 soldiers are deployed or forward stationed in more than
    120 countries to support operations in Iraq, Afghanistan, and other
    theaters of war, to deter aggression while securing our homeland. These
    soldiers are from all components: Active (155,000), Army National Guard
    (113,000), and Army Reserve (47,000). Soldiers participate in homeland
    security activities and support civil authorities on a variety of
    different missions within the United States. A large Army civilian
    workforce (over 250,000), reinforced by contractors, supports our
    Army--to mobilize, deploy, and sustain the operational forces--both at
    home and abroad. Our soldiers and Department of Army civilians will
    remain fully engaged across the full spectrum of the globe and we
    remain committed to fighting and winning the global war on terrorism.
        The Army continues to face and meet challenges in the human
    resources environment. In recent years, congressional support for
    benefits, compensation and incentive packages has ensured the
    recruitment and retention of a quality force. Today, I would like to
    provide you with an overview of our current military personnel policy
    and the status of our benefits and compensation packages as they relate
    to maintaining a quality force.
                                   recruiting
        Recruiting soldiers who are confident, adaptive, and competent;
    able to handle the full complexity of 21st century warfare in this
    combined, joint, expeditionary environment is highly competitive and
    very challenging. The competition with industry, an improving economy,
    and lower unemployment coupled with a decrease in support from key
    influencers have added to the challenges of recruiting solid
    candidates.
        As we projected, we have experienced monthly goal shortfalls for
    all components starting in February 2005. The Active component finished
    February 2005 at 73 percent accomplished with a year to date
    achievement of 94 percent. The United States Army Reserve finished
    February 2005 at 75 percent accomplished with a year to date
    achievement of 90 percent. The National Guard finished February 2005 at
    69 percent accomplished with a year to date achievement of 74 percent.
    Though we may miss some monthly goals, the active Army is projected to
    make their annual mission. However, the annual missions for the Reserve
    and Guard are at risk.
     incentives include enlistment bonuses, the army college fund, and the
                            loan repayment program.
        The Army's recruiters are most effective when given the proper
    tools such as incentives and advertising. The recruiting environment
    remains a challenge in terms of economic conditions and alternatives.
    Therefore we have increased our resources, including additional
    recruiters, incentives, and advertising as necessary to compete in the
    current and future markets and to ensure annual goals are met.
        Bonuses are the primary and most effective tool for MOS precision
    fill. The Army must maintain a competitive advantage to continue to
    attract high quality applicants. The Army offers a range of bonuses
    that pay up to $20,000 to qualified recruits. These bonuses are geared
    to the special needs of the Army and our applicants. The bonuses help
    us react to current market conditions and competitors, today and
    tomorrow. We are able to use the bonuses to target critical skills, the
    college market, and ``quick-ship'' priorities.
        The Army College Fund is a proven expander of the high-quality
    market. College attendance rates are at an all-time high and continue
    to grow, with 68 percent of the high school market attending college
    within one year of graduation. The Army College Fund allows recruits to
    both serve their country and earn additional money for college.
        The Army College fund primarily targets those who have not yet gone
    to college, the Loan Repayment Program is the best tool for those who
    have college education credits and student loans. The Loan Repayment
    Program, maximum of $65,000, is another expander of the high-quality
    market. In fiscal year 2004, 24 percent of our recruits had some
    college education credits.
                               enlisted retention
        Worldwide deployments and an improving economy potentially affect
    retention. All components closely monitor leading indicators including
    historic reenlistment rates, retirement trends, first term attrition,
    Army Research Institute Surveys, and Mobilization/Demobilization
    Surveys, to ensure we achieve total success.
        Moreover, all components are employing positive levers including
    force stabilization policy initiatives, updates to the reenlistment
    bonus program, targeted specialty pays, and policy updates to
    positively influence retention program. Ultimately, we expect to
    achieve fiscal year 2005 retention success in the Active Army, the Army
    National Guard, and the United States Army Reserve.
        The Active Army has achieved all retention goals for the past 5
    years, a result that can be directly attributed to the Army's Selective
    Reenlistment Bonus (SRB) program and the patriotism of our soldiers.
    The Active Army retained 60,010 soldiers in fiscal year 2004, finishing
    the year 107 percent of mission. Both the Army Reserve and Army
    National Guard came in at 99 percent last year.
        In fiscal year 2005, the Active Army must retain approximately
    64,162 soldiers to build to desired manning levels. This is an increase
    of 8,000 over last year's mission and we are on glide path and ahead of
    last year's pace. We remain confident that we will achieve all assigned
    retention goals. Thus far, the active Army has achieved 101 percent of
    year-to-date mission, while both the Army Reserve and the Army National
    Guard have achieved 97 percent of year-to-date missions. A robust bonus
    program will facilitate achievement of our retention goals.
        The Army fully supports a requested update to the Reserve component
    affiliation bonus. Current authority has been in force for several
    decades where a soldier receives $50/month to affiliate with a Reserve
    component unit. To incentivise soldiers when leaving the Active
    component to join a Reserve component unit, a supplemental request to
    the National Defense Authorization Act for Fiscal Year 2005 (NDAA) was
    submitted asking for an increase to the RC Affiliation Bonus to $10,000
    for at least a 3-year commitment. This bonus will help the Reserve
    component meet end strength requirements with seasoned, prior service
    soldiers and in many case, battle-tested, combat veterans. Legislative
    Budget proposal package to include the same legislative change to NDAA
    for Fiscal Year 2006.
        We continue to review our Reenlistment Bonus Programs and its
    association with the retention of sufficient forces to meet combatant
    commander and defense strategy needs. It is imperative for the Army to
    receive complete future funding of the SRB program to ensure program
    flexibility during the foreseeable future. Developing ways to retain
    soldiers directly engaged in the ongoing global war on terrorism is
    critical. We are now using an SRB-deployed as a tool to attract and
    retain quality, combat veteran soldiers. The SRB-deployed aggressively
    targets eligible soldiers assigned to units in Afghanistan, Iraq, and
    Kuwait. Soldiers can receive a lump sum payment up to $15,000 to
    reenlist while deployed to Afghanistan, Iraq, or Kuwait. All components
    are benefiting from this program and we are realizing increased
    reenlistments among deployed soldiers.
                               officer retention
        The Army continues to monitor officer retention rates as an
    important component of readiness. Overall retention of Army competitive
    category officers in fiscal year 2004 decreased slightly at both the
    company grade and field grade ranks. The aggregate fill rate is at
    101.3 percent. There was an increase in attrition for lieutenants and
    captains in fiscal year 2004, after a historically low attrition year
    in fiscal year 2003. The fiscal year 2004 attrition rate for
    lieutenants and captains was 8.5 percent, slightly above the average
    7.3 percent but lower than the attrition witnessed in fiscal year 1999
    and fiscal year 2000. I am encouraged that 1st quarter attrition in
    fiscal year 2005 came in slightly lower than fiscal year 2004.
        The Army has steadily increased basic branch accessions beginning
    in fiscal year 2000 with 4000, capping at 4,600 for fiscal year 2005 to
    build a sustainable inventory to support Captain and Major
    requirements. We accessed 4,484 officers in fiscal year 2004. The Army
    can meet current and projected Active Army officer accession needs
    through current commissioning sources (Reserve Officer Training Corps,
    Officer Candidate School, United States Military Academy, and United
    States Army Recruiting Command). Reserve component lieutenant
    accessions present near- and long-term challenges, but the numbers have
    improved significantly over the past few years, and are expected to
    continue to improve.
                                   stop-loss
        Based on the commitment to pursue the global war on terrorism and
    provide our combatant commanders with the cohesive, trained and ready
    forces necessary to decisively defeat the enemy, required us to re-
    institute the Active Army Unit Stop-Loss Program and to retain the
    Reserve Component Unit Stop-Loss Program currently in effect.
        Department of Defense (DOD) guidance to the Services is to
    discontinue stop-loss policies as soon as operationally feasible.
    Consequently, our policy requires a quarterly review to determine
    continuation or termination. As of January 2005, the current stop-loss
    program affects a total of 13,445 soldiers of all components. We
    understand the stress this puts on individual soldiers and are
    employing force stabilization to reduce that number.
                       military benefits and compensation
        Maintaining an equitable and effective compensation package is
    paramount in sustaining a superior force. A strong benefits package is
    essential to recruit and retain the quality, dedicated soldiers
    necessary to execute the National Military Strategy. In recent years,
    the administration and Congress have supported compensation and
    entitlements programs as a foundation of soldier well-being. An
    effective compensation package is critical to efforts in the global war
    on terrorism as we transition to a more joint, expeditionary, unit-
    centered, and cohesive force.
        We have made tremendous strides in reducing median out-of-pocket
    housing costs for our soldiers. Basic Allowance for Housing (BAH) is
    intended to provide sufficient recompense to meet the average basic
    housing needs of all soldiers based on their regular military
    compensation. The fiscal year 2005 BAH reduces the median out-of-pocket
    expenses to zero. Thank you for your support. Our commanders have been
    instrumental in ensuring BAH program estimates and housing cost data
    collection are accurate thereby generating allowances to cover the
    average cost of adequate housing. This ensures our soldiers and their
    families receive adequate allowances which makes housing in safe,
    prosperous communities affordable.
        The Reserve components represent a significant portion of the
    capability of the Total Force, an essential element in the full
    spectrum of worldwide military operations. Both the Department and
    Congress recognize the importance of appropriate compensation and
    benefits for these soldiers. The National Defense Authorization Act for
    Fiscal Year 2005 amended many of the Reserve component bonus
    authorities allowing the department to offer programs similar to those
    for Active-Duty Forces to these critical soldiers. We continue to look
    for ways in working with Congress to provide compensation for the
    unique sacrifices these soldiers are asked to make in service to our
    Nation.
        The Army continues to develop programs that address the unique
    challenges we face as an expeditionary force. The legislation
    authorized by Congress provides the flexible tools needed to encourage
    soldiers to volunteer for difficult to fill assignments in less
    desirable places or to extend their tours in these places. This past
    year the Department of the Army implemented Assignment Incentive Pay
    (AIP) for soldiers assigned to Korea. This program has been a
    tremendous success in providing soldier stability while enhancing
    readiness for units stationed in Korea. To date, over 12,000 soldiers:
    officer, warrant officer, and enlisted, applied to serve an additional
    1 or 2 year tours resulting in increased stability, predictability and
    improved readiness in Korea while reducing personnel turbulence Army-
    wide.
        The Army has used AIP as an incentive for voluntary and involuntary
    extensions for soldiers serving in Iraq and Afghanistan. Using AIP in
    this manner provides flexibility in maintaining unit stability and
    retaining the necessary soldier experience gained from serving in these
    countries.
        The Army is using Critical Skills Retention Bonus (CSRB) to retain
    the valuable experience of our senior soldiers who are in high-demand,
    low-density critical skills such as explosive ordnance and special
    operations.
        Congressional authorization for increased special pay for our
    warfighters has allowed the Army to take care of soldiers and their
    families serving in the most difficult and stressful duties. The
    increases to Hostile Fire Pay, Family Separation Allowance and
    authorization of per diem for family members of injured soldiers,
    offers comfort and stability to our soldiers while they serve in combat
    and recover from serious injury.
        We continue to look for ways to compensate our soldiers for the
    hardships they and their families endure and we appreciate your
    commitment in this regard.
                fiscal year 2006 personnel and budget & manning
        The fiscal year 2006 budget for the Active Army provides military
    pay to support a 482,400 end strength consisting of 79,900 officers,
    398,300 enlisted, and 4,100 cadets. For the Reserve component, the
    fiscal year 2006 budget supports 555,000 end strength. It funds Army
    Reserve Annual training (101,000 out of 118,000 participating
    soldiers), Active Guard and Reserve (AGR)--14,998 out of 15,270, and
    Individual Manning Augmentees (IMA)--6,000 soldiers. The budget funds
    the Army Reserve at 76 percent for the Inactive Duty training (IDT)
    program (89,000 soldiers out of 117,000 participating soldiers). The
    fiscal year 2006 budget funds the Army National Guard annual training
    at 79 percent (177,000 out of 214,000 participating soldiers), IDT
    program at 74 percent (194,000 out of 244,000 participating soldiers),
    and Active Guard and Reserve (AGR 27,300 out of 28,100 soldiers)
    including 102 Ground Missile Defense (AGR) and 76 AGRs for four
    additional Civil Support Teams (CST).
        The fiscal year 2006 budget also continues the Residential
    Communities Initiative (RCI) program, bringing the number of RCI
    locations operating under the program to thirty four with an end state
    of 71,000 homes. This initiative improves the well-being of our
    soldiers and families and contributes to a ready force by enhancing
    morale and retention.
                        disabled soldier support system
        In April 2004, the Army introduced the Disabled Soldier Support
    System (DS3) Initiative to provide our most severely disabled soldiers
    and their families with a system of advocacy and follow-up services.
    This initiative is a cooperative effort with organizations external to
    the Army, like the Department of Veterans Affairs (VA), that provides
    these soldiers a single focal point for personnel support and liaison
    to resources as they transition through the myriad of medical and
    administrative processes associated with their injuries. To date, 313
    soldiers are enrolled in DS3 and they are supported by a full-time
    staff, projected to grow to 47 to meet the demands of newly injured/
    wounded soldiers are enrolled in the program.
        The DS3 program also works closely with the new Department of
    Defense Military Severely Injured Joint Support Operations Center
    located in Arlington, Virginia. This is a combined effort on behalf of
    the DOD and each Service to provide the same level of support to
    severely injured/wounded servicemembers and their families. The
    operations center staff provides a variety of services such as,
    financial support, counseling, information on resources in the local
    community and many other resources. They have a toll free number, 1-
    888-774-1361, that servicemembers and their families may call at
    anytime to discuss their needs. The Military Severely Injured Joint
    Operations Center Staff have greatly assisted the DS3 program with
    contacting and interviewing potential DS3 soldiers. Their assistance
    greatly enhanced the efforts of DS3 in providing right level of support
    at the right time, ensuring that soldiers and their families get the
    support they need.
                     sexual assault prevention and response
        Sexual assault is a crime that cannot and will not be tolerated in
    the United States Army. The Acting Secretary of the Army's Task Force
    Report on Sexual Assault Policies as well as the DOD Joint Task Force
    identified several areas for improvement. We are in the process of
    implementing those recommendations and taking aggressive actions to
    prevent sexual assault, ensuring perpetrators are held accountable, and
    that victims are provided sensitive care whether deployed in support of
    ongoing operations or serving anywhere in defense of our Nation. The
    Army is correcting areas requiring improvement through an integrated
    team approach involving military and civilian resources with emphasis
    on a measurable program focused on awareness, prevention education,
    advocacy, intervention and direct victim services. This prevention and
    victim centered approach is being communicated throughout the Army
    community to commanders, soldiers, and staff ensuring all know where
    available military and civilian resources exist and how to use them in
    garrison (Active and Reserve) and in the operational theater. Specific
    actions include fostering a positive command climate, where victims
    feel free to report.
        Army policy demands sensitive care for sexual assault victims;
    aggressive, timely, and thorough investigations of all reported sexual
    assaults; and accountability for those who commit these crimes. To
    achieve these objectives, similar to DOD, the Army policy prefers
    complete reporting of sexual assaults to activate both victims'
    services and accountability actions. However, recognizing that a
    mandate of complete reporting may represent a barrier for victims to
    gain access to services when the victim desires no command or law
    enforcement involvement, there is a need to provide an option for
    confidential restricted reporting. Therefore, the Army fully supports
    the new DOD policy for confidential restricted reporting by victims of
    sexual assault. Restricted reporting will allow sexual assault victims,
    on a confidential basis, to disclose the details of their assault to
    specifically identified individuals, receive medical treatment and
    counseling, and participate in a forensic medical examination and
    evidence collection without triggering the official investigative
    process. Restricted reporting is intended to give victims additional
    time and increased control over the release and management of their
    personal information, and to empower them to seek relevant information
    and support to make more informed decisions about participating in a
    criminal investigation. We are writing procedures into our sexual
    assault prevention and response policy to implement the new DOD policy.
                                army well-being
        All of the initiatives I've discussed above are in support of one
    of the Army's top priorities, the quality-of-life and well-being of our
    soldiers, civilians, and their families. In the past, the Army's
    programs concentrated only on the quality of life of our people--
    defined as a standard of living to which individuals, communities, and
    nations strive to meet or exceed. Army well-being organizes and
    integrates those quality of life initiatives and other programs into a
    well-being ``framework'' that support four individual strategic goals:
    to serve; to live; to connect; and to grow, for each member of the Army
    family. Your support of our programs that take care of the Army family
    before, during, and after deployments will ensure their preparedness to
    perform and support the Army's mission.
                                   conclusion
        To ensure our Army is prepared for the future, we need full support
    for the issues and funding requested in the fiscal year 2005
    supplemental and the fiscal year 2006 President's budget to support the
    Army manning requirements given the current operational environment. In
    the event the Department determines additional resources are needed in
    an fiscal year 2006 supplemental request--we would also ask for your
    full consideration and support of that request.
        We would like your support to permanently amend the Reserve
    affiliation bonus authority, which is proposed in the 2005 supplemental
    budget request. Increasing this bonus will significantly help us
    attract already trained and experienced soldiers for continued service
    in the Guard and Reserve.
        Once again thank you for the opportunity to appear before you
    today. I look forward to answering your questions.

        Senator Graham. Thank you.
        Admiral Hoewing.

       STATEMENT OF VADM GERALD L. HOEWING, USN, CHIEF OF NAVAL
                     PERSONNEL, UNITED STATES NAVY

        Admiral Hoewing. Thank you. Senator Graham, Senator Nelson,
    thank you very much for the opportunity to appear before you
    today. On behalf of the men and women of the United States
    Navy, I would like to express our gratitude for your continued
    support of the programs and the initiatives that provide our
    sailors with a high quality of service, better growth and
    development, and ever-increasing opportunities to serve.
        From record retention and recruiting, to enhanced
    compensation and quality of service, the fleet is the most
    capable and talented that we have ever observed. Our Navy's
    performance in OIF and OEF demonstrate more than just combat
    excellence. It reaffirms the single greatest advantage that we
    hold over every potential adversary, the genius of our people.
    I visit them in the fleet, and I can tell you that they are
    proud. They want to serve, and the tone out there in the fleet
    has never been better.
        This is a direct result of your support, but it also
    reflects innovative organizational and operational changes, as
    well as technology investments, that have improved and will
    continue to improve the way we get work done.
        Through our fleet response plan (FRP), we can, like never
    before, support the National Security Strategy with persistent,
    rotational, and surge-capable naval capabilities, capabilities
    enhanced by innovative new manning constructs and practices
    derived from fleet experimentation, such as our optimal manning
    experiments and our sea swap experiments.
        We are investing in technology, designing affordable, next-
    generation ships and aircraft, engineered with systems that
    maximize the performance of our sailors, while decommissioning
    the legacy platforms burdened by manpower-intensive programs.
        These changes present us with a rare, if not historic,
    opportunity to redefine the manpower requirements at sea and
    ashore for the Navy of the 21st century. The truth is we have
    been hampered by a Cold War, Industrial Age manning construct
    that simply will not suffice in the information and
    technologically-rich world we live in today or against the
    diverse and transnational threats that we now face. We can and
    must do better, and we need your support.
        To that end, our Chief of Naval Operations' (CNO) number
    one priority for 2005 is the development and implementation of
    a modern Total Force, human resource strategy that will deliver
    an even more capable Navy, but with fewer and more talented
    people. Just this morning, I had the opportunity to address the
    All Navy Flag Officer and Senior Executive Service Panel at the
    Naval Academy where we talked about this strategy. Our approach
    to creating this smaller and smarter work force is a deliberate
    and careful process built on three supportive tasks.
        First, is to determine the true Total Force manpower
    requirements. We must evaluate not only the relevance of every
    task that takes place out there and how it responds to that
    combat capability, but also if that task is best performed by
    an Active sailor, a Reserve sailor, a civilian, or even a
    contractor. We are eliminating the nonproductive work before
    the personnel numbers are being reduced. We are not placing
    more on the backs of fewer sailors.
        Second, we are shaping the force smartly and precisely to
    better meet those requirements. ``Perform to Serve'' has
    already resulted in the conversion of more than 4,000 sailors
    from overmanned skill sets into those skill sets where we have
    too few sailors to meet the demand.
        Our SRB program remains our most effective retention and
    shaping tool, but we need your support to raise the SRB cap to
    provide the incentive necessary to retain our most talented and
    technically trained sailors such as nuclear plant systems
    operators and maintainers.
        Our assignment incentive pay (AIP) program has been hugely
    successful with more than 3,000 sailors moving into jobs and
    taking orders to critical billets in order to meet the
    readiness needs of the Navy. We request your support of a lump
    sum payment of this assignment incentive pay option to capture
    the positive effect of net present value, effectively giving us
    more bang for less dollars.
        Third, as we continue to evaluate our progress in getting
    the right person to the right job, we need your support and are
    requesting new legislative authorities to shape the force which
    provide market-based, flexible tools designed to encourage
    people to join, encourage the right people to volunteer to be
    retained, and encourage the right people to transition into the
    civilian work force while preserving our final talents without
    breaking faith with our people.
        In conclusion, Mr. Chairman, let me thank you again and the
    subcommittee for the extraordinary support that you have
    provided to our sailors. It has enabled the dedicated men and
    women of the world's strongest Navy to continue to defend
    freedom in the far corners of the earth, taking the sovereignty
    of this great Nation with them on our ships, our submarines,
    and our aircraft. I thank you and I look forward to your
    questions.
        [The prepared statement of Admiral Hoewing follows:]
               Prepared Statement by VADM Gerald L. Hoewing, USN
                                  introduction
        Mr. Chairman, and distinguished members of the subcommittee, thank
    you for this opportunity to appear before you today to talk about the
    wonderful things the men and women of the United States Navy are doing,
    the challenges that face us, and what we are doing to further enhance
    Fleet personnel readiness as we move forward in the 21st century. I
    want to express, on behalf of sailors serving around the world, our
    collective gratitude for your exceptional and sustained support. This
    subcommittee is a partner in, and has contributed in a dramatic way to
    the remarkable achievements of the last 5 years in Navy manpower,
    readiness and our ability to generate capabilities we will need to
    fight and win the global war on terrorism.
                                forward presence
        Our talented workforce, comprised of Active and Reserve sailors,
    Federal employees and contract personnel, is taking the fight to our
    adversaries each and every day. Collectively, they comprise the most
    capable and lethal naval force this world has ever known. We are
    continuing to transform this maritime expeditionary force, while
    concurrently maintaining our forward presence, further enhancing our
    warfighting capabilities and maximizing the benefits of a world-class
    pool of talent.
        There are now approximately 19,000 sailors deployed to the Central
    Command area of responsibility (AOR) in support of Operations Enduring
    Freedom (OEF) and Iraqi Freedom (OIF). In addition to the more than
    8,000 men and women of the U.S.S. Harry S Truman Carrier Strike Group
    (CSG) and the U.S.S. Bonhomme Richard Expeditionary Strike Group (ESG),
    that number includes some 7,000 Navy personnel on the ground throughout
    the theater. Among them are more than 370 Naval Special Warfare
    personnel conducting combat operations, 2,600 medical personnel
    directly supporting ground combat missions, particularly those
    operating with Marine Corps units, and more than 1,000 Construction
    Battalion (Seabees) personnel managing construction projects for new
    Iraqi schools, bridges, roads and facilities. They are also teaching
    construction skills as part of the Iraqi Construction Apprentice
    Program.
        In the past 2 months, as our forces in Iraq and Afghanistan
    continued their heroic and historic contribution to establishing new
    found freedom and democracy for the peoples of those countries, 24 U.S.
    naval ships were on station as part of Combined Support Force 536, a
    contingent of over 15,000 sailors, marines, soldiers, and airmen who
    rapidly and selflessly responded to an urgent need for humanitarian
    assistance and disaster relief to the earthquake and tsunami-stricken
    areas of the Pacific region. Through an unprecedented level of
    international cooperation, Operation Unified Assistance has
    demonstrated the willingness and ability of America's military to work
    hand-in-hand with international government agencies, nongovernment
    organizations (NGOs) and the United Nations in the largest relief
    effort in history.
        Rotating elements in Unified Assistance have included the ships and
    squadrons of the U.S.S. Abraham Lincoln Carrier Strike Group and its
    embarked Carrier Air Wing TWO, which conducted over 1,600 helicopter
    missions, transporting 3,000 people and distributing nearly five
    million pounds of supplies. The U.S.S. Essex Expeditionary Strike Group
    was on hand providing over 1 million pounds of humanitarian aid to the
    Sumatra region of Indonesia by helicopter and landing craft, air
    cushion (LCAC) hovercraft. Twelve ships of the U.S. Military Sealift
    Command (MSC) provided food, fuel, medical supplies, construction and
    road-building equipment, electrical power generating equipment and
    airfield matting. Among those MSC ships, the 1,000-bed hospital ship
    U.S.N.S. Mercy, which, along with its crew of 69 Navy civilian mariners
    and 419-member hospital support staff, 100 embarked civilian volunteers
    of Project Health Opportunities for People Everywhere (HOPE) and 6
    uniformed members of the U.S. Public Health Service, remains on station
    today providing an array of health care to the vast number of victims,
    primarily suffering from illness and infections.
        Clearly, at the heart of everything good happening in our Navy
    today is the vital fact that we are continuing to win the battle for
    people. We are attracting, developing, and retaining a talented cadre
    of dedicated professionals who have committed to a lifetime of service.
    Our ability to challenge them with meaningful, satisfying work, which
    allows them to make a difference, is fundamental to leadership's
    covenant with them. To better fulfill our promise, we are developing a
    21st century Human Capital Strategy (HCS) that will deliver the right
    skills, at the right time, for the right work. We would not be
    positioned to do that today had we not first tackled the fundamentals
    of accessing the right people, significantly reducing post-enlistment
    attrition, and then retaining highly qualified and motivated sailors in
    historically unprecedented numbers.

            ``We must do all we can to increase the speed and agility of
            our great institution to get the right people with the right
            skills to the right place at the right time, and provide them
            with the professional and personal tools to succeed--A
            comprehensive Human Capital Strategy will do that and is a
            crucial deliverable for our Navy.''
          Admiral Vern Clark, Chief of Naval Operations

                             human capital strategy
        Military (Active and Reserve) and civilian (Federal civilian
    employees and contractor personnel) manpower constitutes approximately
    65 percent of Navy's annual investment in national security. To meet
    the challenges of the global war on terrorism and sustain our
    traditional warfighting capabilities, consistent with the National
    Security Strategy, Navy must develop and implement a ``Total Force''
    HCS. Its purpose will be to implement the warfare capabilities and
    operational readiness strategies of the 21st century Navy. A thoughtful
    and time-phased investment plan, including manpower, is fundamental to
    the cost-effective generation of combat power today and in the future.
    We must be able to carefully balance risk and sufficiency. Today, we
    lack the agile processes, knowledge, and focal points of accountability
    necessary to understand and make visible the capability/readiness
    trade-off decisions and risks associated with manpower resourcing
    decisions. A robust and strategic HCS is key to getting on the right
    course.

            ``The Demands of the 21st century security environment are
            markedly different from those that shaped the manpower
            requirements and personnel systems and policies that are used
            in the (Defense) Department today. The current set of human
            resources policies and practices will not meet the needs of the
            21st century if left unchanged.''
         The Defense Science Board Task Force on Human
                                     Resources Strategy

        We have long been stove-piped into Active and Reserve, uniformed
    and civilian, sea and shore, officer and enlisted components . . . our
    HCS must transform these stovepipes into complementary parts of a
    coherent Total Force Alignment Strategy. Moreover, our vision for the
    future is a truly integrated workforce wholly committed to mission
    accomplishment . . . a Total Force approach that can functionally
    assess missions, manpower, technology and training and produce an
    enterprise-wide resource strategy. Total Force refers to the collective
    workforce of Active and Reserve officers and enlisted, Federal civilian
    employees and contractor personnel. Our strategy must incentivize
    innovation in the workplace and implement tools and techniques that
    enable the workforce to challenge existing assumptions, eliminate
    unnecessary costs, and increase efficiency and effectiveness.

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        Navy's HCS will provide both senior leadership and sailors and
    civilian partners with a mutual set of expectations of how Navy will be
    manned, trained and educated to accomplish its missions. It will
    establish the framework to capture the transforming effect on work and
    the workforce, of emerging technologies, mission, delivery systems and
    risk taking. It will focus on continuing to attract and sustain a high
    performing workforce--and recognizing and rewarding the talents of our
    people--all elements critical to our success. We must also recognize
    that a commitment to diversity will permit us to fully leverage the
    skills and potential inherent across the spectrum of our society.
        The Human Capital Strategy will be comprised of five pillars. At
    the foundation of these pillars is leadership. These pillars encompass
    the themes, goals, and objectives to deliver the best value team of
    military and civilian personnel to provide for the Nation's defense.
    They will define the alignment of manpower, personnel training and
    education (MPT&E) and planning, programming, budgeting and execution
    (PPBE) processes to create the critical mass to achieve Total Force
    governance. They will focus our efforts towards increasing the
    operational availability of our workforce and determining the well-
    reasoned and fiscally informed Total Force requirements.

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        The strategy and its pillars will set the goals for defining:

          (1) Future work environment;
          (2) Establishment of competencies and skill-sets to accomplish
    the work;
          (3) Linkages of work to capabilities;
          (4) Best-value manpower mix;
          (5) Training and education requirements;
          (6) Human capital information systems functionality; and
          (7) Modeling tools necessary to support the performance of high
    productivity work by a highly-valued workforce.

        Increasing the speed, agility, and productivity of Navy's
    workforce, coupled with providing work-life balance, are strong demand
    signals on an HCS aligned with Navy's mission. Robust testing of new
    and innovative ideas like the DECATUR pilot, multi-crewing, and
    Assignment Incentive Pay (AIP), along with opportunities for innovation
    under the newly authorized National Security Personnel System (NSPS),
    exemplify the effort we must carry forth each year to discover
    tomorrow's best practices. Concurrently, flexible, discretionary, force
    shaping tools will enable us to set the stage for achieving a more
    efficient and cost-effective workforce.
        Ultimately, strategic development and management of human capital
    is the right thing to do--critical to mission success. The strategic
    plan is intended to be useful and responsive to long-term, as well as
    short term, changes within the Navy and Department of Defense--to be
    agile, flexible and resilient--to accommodate not only today's
    challenges, but future ones, as well. It provides a strategic roadmap
    to enhance Navy's workforce ability to accomplish its mission.
                                  sea warrior
        The manpower component of Chief of Naval Operation's (CNO) Sea
    Power 21 initiative, implements Navy's commitment to the growth and
    development of our people. It is a capabilities-based, best value,
    transformational set of business processes that provide a high quality
    workforce to meet fleet warfighting effectiveness. Sea Warrior, a key
    element in the delivery of our emerging HCS, ensures the right skills
    are in the right place at the right time, and is a major contributor to
    speed and agility of our Navy. Historically, our ships have relied on
    relatively large crews to accomplish their missions. Today, we are
    developing new combat capabilities and platforms that feature dramatic
    advancements in technology and reductions in crew size. The All-
    Volunteer Force crews of modern warships are streamlined teams of
    operational, engineering and information technology experts who,
    collectively, operate some of the most complex systems in the world. As
    we reduce crew size, we will increasingly need sailors who are highly
    educated and expertly trained. Sea Warrior is designed to enhance the
    assessment, assignment, training and education of our sailors.
        Despite technological advances, Navy depends, and will always
    depend, heavily on human capital to fulfill mission requirements. In
    fact, the vision presented of Navy's future in CNO's Sea Power 21
    initiative emphasizes the critical role of the Sea Warrior in enabling
    Navy to operate more sophisticated weapons systems, in an agile and
    speedy manner, to meet the challenges that will be brought about by
    changes in warfighting tactics. Simultaneously, we recognize that
    budget pressures will not abate, so that the goal of placing ``the
    right sailor in the right job, with the right skills, at the right
    time'' will become increasingly important. Therefore, it is essential
    that Navy's various human capital organizations be aligned to operate
    as efficiently and effectively as possible in recruiting, training,
    educating, distributing, and retaining the Total Force required to
    fulfill Navy's future needs.
        The foundation of Sea Power 21 is our people--the Sea Warriors.
    Project Sea Warrior, as linked with the Navy's Human Capital Strategy,
    is how we are going to develop sailors to run the Navy our Nation
    requires. Shaped by the demands of the Cold War and more than a decade
    of draw down, our current processes and systems understandably are not
    designed with the human capital at the center. Despite the many
    misalignments and inefficiencies within the current MPT&E operational
    environment, transformation is within our grasp.
        The goal of Sea Warrior is to integrate Navy's manpower, personnel,
    training, and education functions--Active and Reserve--into a single,
    efficient, information-rich human capital management system. Its focus
    is on growing individuals from the moment they walk into a recruiting
    office through their assignments as master chiefs or flag officers,
    using a career continuum of training and education that gives them the
    tools they need to operate in an increasingly demanding and dynamic
    environment. Through Sea Warrior, we will identify sailors' precise
    capabilities and match them to well-articulated job requirements that
    far exceed the simplistic criteria used today. Additionally, we will
    implement more responsive incentives and flexible rotation dates and
    move Navy toward a competency and performance-based compensation
    system.
        Advanced technology plays an integral part behind the process
    improvements fostered by Sea Warrior. Sea Warrior will take advantage
    of off-the-shelf, corporate-tested, products and methodologies such as,
    knowledge management programs, PeopleSoft, and SkillsNet, all acting as
    enablers, to provide increased options and information for career
    managers, commands and individual sailors. It will provide a one-stop
    information source through a single, Web-enabled portal. Sea Warrior
    provides every sailor with the tools to achieve their personal goals
    and provides human capital managers with powerful tools to shape the
    force.
        As a human capital enabler, Sea Warrior is focused on providing a
    combat capability to the Strike Group Commander in the form of an
    optimally trained sailor who is battle ready. This transformation will
    be accomplished through a comprehensive manpower, personnel, and
    training integration effort targeted at producing a single integrated
    human resource system providing each Sea Warrior with defined
    capabilities.

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                               shaping the force
        As mentioned earlier, the success of Navy's vision for future
    combat effectiveness and employment is tied to our ability to properly
    shape the force--get all Navy members with the right skills to the
    right place at the right time. Our ability to do so hinges on
    availability of broad, flexible, authorities to facilitate required
    realignment within fiscal constraints. As Navy becomes increasingly
    technology-intensive, vice manpower-intensive, we are leveraging
    advances in platform and system design to shed non-essential functions
    and improve productivity and warfighting readiness. Navy is refining
    the shape and skill-mix of the force to provide specialized skills
    needed to respond to new technology and missions. As we continue to
    shed ``excess work,'' we are confronted with statutory constraints/
    inflexibilities, inhibiting our ability to reduce, align, and balance
    the workforce in a selectively targeted manner to ensure skill-mix and
    workforce levels match valid requirements. Current statutory
    authorities help recruit and retain high quality personnel but we have
    limited means to stimulate voluntary separation among personnel in
    overmanned skill areas. Therefore, we are currently evaluating
    initiatives that would provide voluntary separation incentives to help
    shape our force in the short-term while maintaining a positive tone
    that will not detract from recruiting and retaining talented
    professionals over the long-term.
    End Strength Request
        The fiscal year 2006 President's budget supports and the Defense
    Authorization Request seeks a Navy Active-Duty strength authorization
    of 352,700 sailors. Planned end strength reductions are an outcome of:

             Efforts to identify ``excess work'' no longer required
            or that need not be accomplished by uniformed personnel (alters
            the workforce mix, e.g., military-to-civilian conversions),
             Decommissioning older, manpower-intensive platforms,
             Improved training and employment processes,
             Infrastructure manning efficiencies,
             Technology-related efficiencies, and
             New manning practices.

        Changes in operational concepts and investments in technology
    require that we recruit, train, and retain a warrior force that is more
    educated and technically savvy than in the past. Smart ship
    technologies embedded in future-design ship classes, capital-for-labor
    substitutions for performing manpower-intensive tasks, and condition-
    based maintenance with systems that identify when maintenance is
    required, will fundamentally change the nature of our work.
    Consequently, we will need to reassess and modify the fundamental
    elements of our personnel structure to maximize the benefits of that
    change. Technology, innovation, and outsourcing are changing Navy's
    strength requirements. Collectively, this means that we are not
    reducing strength by placing more work on the backs of sailors.
    Technology continues to change the nature of work, allowing us to
    optimize the number of personnel who once performed more manpower-
    intensive tasks. Ongoing piloting of innovative manning methods such as
    optimal manning and sea swap, present enormous potential for savings
    and enhanced readiness. Additionally, outsourcing non-war-fighting
    functions and increasing military-to-civilian conversions further
    reduce military strength requirements.

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    Targeted Separation Incentives
        Navy remains committed to shaping the force to fit current and
    future manpower requirements while optimizing personnel readiness.
    Strength reductions are being targeted so that Navy retains the skills,
    pay grade, and experience-mix required to meet transformation goals,
    while providing mission-ready forces for real world requirements in the
    global war on terrorism. Effectively addressing shortfalls requires a
    broad array of flexible tools in addition to retraining to improve
    manning. While we have a variety of statutory incentives to recruit and
    retain, we have limited tools by which to reduce excess personnel in
    overmanned skills, without forcing them to leave involuntarily, an
    approach that carries significant long-term adverse recruiting and
    retention risks for an All-Volunteer Force. Tools that incentivize
    voluntary separation, when appropriate and necessary, will ensure our
    ability to retain in our ranks those personnel we need, while
    permitting us to stimulate voluntary separation among those no longer
    filling validated requirements. Voluntary incentives will help maintain
    a positive tone conducive to success in recruiting and retention.
    Offering a reasonable severance package to those who voluntarily
    separate, ``keeps faith'' with sailors who have long committed to a
    military career, only to learn that circumstances dictate that we will
    be unable to retain them until they would otherwise become eligible for
    a regular retirement.
        This does not mean that we would indiscriminately implement such
    authorities, nor would we leave it up to the members to decide who
    would qualify for such separation incentives. Prior to considering
    sailors for separation (and selective application of voluntary
    separation incentives), Navy would employ a progressive approach of
    evaluating options for retaining sailors by:

             Shifting personnel from overmanned to undermanned
            skills through retraining and conversion,
             Transferring from Navy's Active component to valid
            Reserve component requirements, and
             Interservice transfer (e.g., Army's Blue-to-Green
            initiative).

        Only after exhausting all logical retention options, would
    consideration be given to releasing sailors whose service/skills are in
    excess. Under no circumstances would we retain personnel in overmanned
    skills if it were feasible and cost-effective to move them into
    undermanned skills. To do so would be poor stewardship of taxpayer
    dollars and would force Navy to endure gaps in undermanned skills to
    remain within authorized aggregate strength levels, thereby adversely
    impacting personnel readiness. Retraining and converting personnel from
    overmanned skill areas to undermanned skills is our primary approach
    for retaining highly trained personnel while simultaneously improving
    the balance of the force. In many cases, however, retraining and
    conversion is neither feasible nor cost-effective. Therefore, statutory
    authorities that incentivize voluntary separation would help shape our
    force, while maintaining a positive tone that will not detract from
    recruiting and retaining highly educated and top performing
    professionals.
                     fair and balanced compensation package
        Military compensation (especially targeted bonuses/pay) is a key
    enabler of Navy's emerging HCS. To remain an ``employer of choice'' in
    an All-Volunteer Force environment, operating in a dynamic,
    competitive, market place, requires a complete array of monetary
    incentives with the flexibility to influence individual behavior. Such
    tools have been, and remain, vital to our efforts to recruit and retain
    high quality individuals with the right skills, in the right numbers,
    at the right time; to motivate individuals to perform to their full
    potential and productivity levels; to assign individuals with the right
    skills/experience to the right jobs at the right time; and to stimulate
    voluntary separation of the right individuals, those in overmanned or
    obsolete skill areas, in a manner that will preserve force quality,
    skill mix, and our reputation as an employer. As Navy becomes more
    mission/sea-centric, success will hinge on having all the necessary
    tools and resources at our disposal, when needed, permitting us to
    employ them in tandem to specific populations they are intended to
    influence, and having the resources needed to guarantee their
    effectiveness. A fair and balanced pay package that offers a
    combination of annual basic pay increases, which properly recognize the
    unique, arduous, and inherently hazardous nature of military service,
    coupled with broadly-based, flexible, and targeted special and
    incentive pays, provide a full range of compensation tools for
    effective, judicious and responsible motivation and management of our
    human capital.
                                   retention
        Navy has experienced significant improvement in reenlistments
    reaching a historical peak at the end of fiscal year 2003. In fiscal
    year 2005, to date, strong reenlistment trends continue with attrition
    rates at or near a 15-year low fostered by a new culture of choice and
    a focus on professional development of our sailors. We are now able to
    be more selective in recruiting and retaining high quality sailors and
    ensuring the right numbers of strong performers reenlist in the right
    ratings thereby effectively shaping the force of the future. At the
    same time, we are developing a more educated and experienced group of
    professionals to lead and manage an increasingly high-technology Navy.
    Targeted and special pays continue to have the strongest impact on
    reenlistments, while maintaining Selective Reenlistment Bonus (SRB)
    funding is proving essential to sustaining retention of critical
    skills. Another key to these successes has been Navy's aggressive
    program to enhance quality of service, the combination of quality of
    work and quality of life.
        Fiscal year 2004 closed with favorable retention in all zones
    achieving Navy manpower and force shaping requirements. In zone A, Navy
    achieved a 54.1 percent reenlistment rate, against a goal of 56
    percent. Numerically, we were short by only 524 reenlistments out of
    27,500 transactions. Since reenlistment rate goals are point targets
    and not floors, this was an acceptable deviation from the goal. Navy
    achieved Zone B and C reenlistment rate goals.
        Navy has set more restrictive targets for reenlistment rate goals
    in fiscal year 2005. Developing IT resources has allowed us to perform
    a more granular analysis of our goals at the individual rating level.
    This allows us to mitigate reenlistments in overmanned ratings using
    perform to serve and other policies. Based on this more rigorous
    analysis and the mitigating effect of perform to serve, Navy
    reenlistment rate goals are going to be more challenging than in
    previous years. Navy is currently above target for Zone A reenlistments
    at 58.5 percent, while we anticipate finishing slightly below the 53
    percent target. Zone B and C reenlistment rates are currently near
    their respective targets and are expected to remain so through year's
    end.

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        As Navy continues transitioning toward a smaller and smarter force,
    retention will remain a key issue. Historically, retention tends to
    follow changes in strength requirements. During times of decreasing
    strength, we must continuously monitor our efforts to ensure that the
    right sailors are going to stay Navy.
                               reduced attrition
        Since 2000, we have also reduced attrition by nearly 33 percent.
    This past year alone, leaders throughout our Navy attacked the number
    one cause for attrition: illegal drug use. Despite an increase in
    testing of 9 percent Navy-wide, the number of positive samples was down
    by 20 percent since 2003. In short, we now have the highest quality
    workforce the Navy has ever seen.
                                perform-to-serve
        In 2003, Navy announced a new Perform-to-Serve program, which
    encourages sailors to reenlist for ratings that offer more advancement
    opportunity. Perform-to-Serve features a centralized reenlistment and
    extension reservation system giving sailors other avenues to pursue
    success. Designed primarily with fleet input, to meet fleet readiness
    needs, Perform-to-Serve offers first-term sailors in ratings with
    stalled advancement opportunity, the chance to reenlist and retrain for
    conversion to a rating where advancement opportunity is better and the
    fleet most needs skilled people. We have already used existing
    authorities and our Perform-to-Serve program to preserve the
    specialties, skill sets and expertise needed to continue the proper
    shaping of the force. To date, more than 4,000 sailors have been
    steered to undermanned ratings, and more than 42,000 have been approved
    for in-rate reenlistment since the program began. Our Perform-to-Serve
    and early release programs are part of a deliberate, controlled, and
    responsible strategy to become a more experienced, better trained, but
    smaller force.
                          selective reenlistment bonus
        SRB continues to be our most successful and effective force-shaping
    tool to retain the right number of high quality sailors we need with
    the right skills and experience. It is, undeniably, a key incentive
    that directly supports Navy's emerging human capital Strategy and
    enables us to selectively retain the sailors we need as we transform to
    a lean, high-tech, highly capable, mission-centric force.
        While we have enjoyed much success in our retention efforts of
    recent years, we must not presume that we can rest on these
    accomplishments or surrender to the notion that the tools that made
    such successes possible can be allowed to atrophy. SRB, has been, and
    continues to be, directly responsible for much of our retention success
    in the key skill sets required to maintain our combat readiness, yet it
    has come increasingly under fire because of the funding needed to
    support it and the increased authority needed to ensure its
    effectiveness. To make certain we are applying those increasingly
    scarce funds in the most cost-efficient manner, Navy has recently
    instilled even more analytical rigor in our use of SRB through the
    Navy-wide expansion of a reenlistment-tracking tool. This tool
    (previously only available within the enlisted nuclear field community)
    displays established reenlistment requirements at a very granular skill
    level by individual year group, and monitors actual reenlistment
    behavior at the same very granular skill level by year group in
    comparison to those requirements. Through inauguration of this
    reenlistment tracker for every Navy enlisted community, each community
    manager has available clear and unambiguous data to ensure SRB is
    applied only when and where needed.
        Enlisted nuclear field community managers have used the tool in
    recent years to implement measured increases in SRB award levels that
    significantly improved retention rates. However, Navy reached the
    current $60,000 legislative limit in 2001 for 13 of 16 senior nuclear
    skill categories while retention among senior, nuclear-trained
    personnel remains significantly below requirements of 70-90 percent.
    This indicates that the private sector job market for nuclear-trained
    individuals remains strong despite a sluggish economy. Increasing the
    SRB statutory limit from its current limit to $90,000 would provide the
    Secretary of the Navy with enhanced incentives needed to compete with
    the strong civilian market in such industries as electronics, computer,
    and power generation for senior nuclear-trained personnel. The
    screening requirements, advanced education, and high standards of
    personal performance and integrity required for the Naval Nuclear
    Propulsion Program produce some of the most highly trained enlisted
    personnel in the military and help the program maintain an unparalleled
    safety record in support of national security. Safe and reliable
    reactor operations require the retention of sufficient nuclear enlisted
    personnel in the program. In addition, improving the retention of
    nuclear-trained personnel is critical to ensuring all nuclear-powered
    carriers and submarines will be adequately manned and able to deploy in
    support of Navy's Fleet Response Plan. Increasing the SRB limit would
    be less costly than the $100,000 it would cost to train new personnel
    to replace experienced personnel who leave for better-paying private
    sector jobs. Furthermore, Navy primarily needs to retain senior
    nuclear-trained sailors eligible for reenlistment in zones B and C
    whose experience, if lost, would take 10 to 14 years to replace. In the
    long term, an increase in the maximum SRB authority would result in
    appreciable overall cost savings.
        The direct cost avoidance associated with not having to access,
    train and grow replacement personnel far outweighs the funds expended
    to retain sailors in critical skills using SRB. Added to that is the
    costs we would have paid in decreased personnel and military readiness,
    had we not been so successful in retaining these outstanding
    professionals in needed ratings. I strongly encourage your continued
    support for this vital program by fully funding SRB at the President's
    fiscal year 2006 requested budget levels of $183.6 million for
    anniversary payments and $168.4 million for new payments. I cannot
    overemphasize the importance that it continues to play in the readiness
    and capability you observe in our Navy today.
                            assignment incentive pay
        Another relatively new, but already highly successful force shaping
    tool in Navy's incentive arsenal is AIP. Introduced to the fleet in
    June 2003, it immediately demonstrated significant benefits to our
    personnel system. The success of AIP in attracting volunteers to
    difficult-to-fill locations and jobs, has led to progressive
    elimination of awarding sea duty credit as an incentive for assignment
    to hard-to-fill overseas shore duty billets. As a result, Navy will
    ultimately be able to assign almost 10,000 additional sailors to sea
    duty, who would have previously rotated to shore duty following a
    qualifying overseas shore assignment. This will provide future
    readiness benefits in the form of better sea manning and a more
    efficient use of sailors' at-sea training and experience.
        Currently AIP authority does not permit disbursement of lump sum
    payments. We believe that expanded authority to allow for payment of
    AIP in either a lump-sum, installments (including current monthly
    installments), or a combination of both, would significantly improve
    the flexibility and cost efficiency of this valuable assignment tool.
                       national security personnel system
        The NSPS provides an additional opportunity to increase our
    organizational speed and agility by improving the way we hire, assign
    and compensate civilian employees. NSPS will make us more effective,
    while preserving employee protections and benefits as well as the core
    values of the civil service.
        In November 2003, Congress granted the DOD authority to establish a
    new civilian human resources management system to better support its
    critical national security mission. DOD and the Office of Personnel
    Management (OPM) have spent the past year engaged in a design process
    with input and participation from key stakeholders, including
    employees, supervisors, managers, union representatives, senior
    leaders, and public interest groups.
        NSPS is a rigorous and broad-based effort to modernize the
    personnel system for the Department, while preserving the core,
    enduring values of the civil service. It offers new rules and processes
    for pay and classification, performance management, reduction in force,
    disciplinary matters and appeal procedures, and labor-management
    relations. Some of the highlights of the proposal include the following
    features:

             Simplified pay banding structure, allowing flexibility
            in assigning work
             Pay increases based on performance, rather than
            longevity
             A performance management system that requires
            supervisors to set clear expectations (linked to DOD's goals
            and objectives) and employees to be accountable
             Streamlined and more responsive hiring processes
             More efficient, faster procedures for addressing
            disciplinary and performance problems, while protecting
            employee due process rights
             A labor relations system that recognizes our national
            security mission and the need to act swiftly to execute that
            mission, while preserving collective bargaining rights of
            employees

        Recently proposed regulations for NSPS implementation were
    published in the Federal Register and they are now open for 30 days for
    comments and recommendations. At the end of the comment period, the
    Department will initiate the statutory 30-day ``meet and confer''
    process with employee unions to discuss, in consultation with the
    Federal Mediation and Conciliation Service (FMCS), their views and
    concerns. In addition to reporting to Congress the results and outcomes
    of the meet and confer period, we will also consolidate, review, and
    consider comments made by the public to the proposal, make any
    necessary adjustments and publish the final regulations.
        Publication of final regulations triggers the implementation period
    which will include development of detailed implementing issuances,
    extensive training of our employees, supervisors/managers, and human
    resources professionals, and the necessary modifications to our
    personnel and payroll systems. Beginning in July 2005, employees will
    be phased into NSPS using a ``spiral'' implementation approach. The
    first group, known as ``Spiral One'' will include up to 300,000 General
    Schedule (or equivalent) employees in selected organizations. After a
    period of review, evaluation, and adjustment (if needed), successive
    groups of employees will be spiraled into NSPS until the process is
    complete.
                         civilian community management
        Navy's approach to Total Force alignment is driving unprecedented
    changes in the strategic management of our fighting force. We have not,
    however, been as efficient as we must be at strategic workforce
    planning for our civilian component. We believe that NSPS provides the
    supporting structure to reform our human capital management processes.
    Ongoing efforts in civilian community management support the NSPS
    requirements structure. We are creating a methodology to provide an
    environment conducive to personal occupational excellence and
    commitment to mission accomplishment. These efforts will shape the
    workforce that supports the warfighter and provides for a secure
    future. Our civilians provide the technical depth, continuity,
    corporate knowledge and linkage with private industries research
    initiatives and its impact on Navy work efforts, all of which are
    critical mission accomplishment.
        During the post Cold War-era drawdown (1989-2000), we were remiss
    in not ``proactively shaping the civilian workforce to ensure that it
    had the specific skills and competencies needed to accomplish the
    future mission'' (GAO). Despite the Navy's mission complexity and
    technology advances, the civilian downsizing in the past decade
    resulted in a smaller workforce doing essentially the same kinds of
    work as it did in 1994. We are changing that with the launch of our
    civilian community management structure, which is the first corporate
    initiative to look at the entire Navy civilian workforce resources,
    requirements, and skill gaps to recognize civilians as a Total Force
    pillar. We have established 21 communities to provide us the capability
    to baseline data about the current workforce, including the current
    competency requirements that are critical to our success. This effort
    establishes a base line of ``as is'' allowing leadership to begin
    workforce planning for the future Navy. The competency identification
    also initiates the view of career development for both the individual
    employee and the corporate Navy.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Our civilians will see the results of these career road maps in
    much the same manner that our sailors will chart their future. Our 5
    Vector model will provide views for our Total Force. Civilians will be
    able to look at their progress and identify what is needed to succeed
    not only within their community, but they will have the opportunity to
    compete for assignments in other communities, based on known skill
    requirements.
        The civilian workforce is part of the total team. We need to make
    sure we have the right people with the right skills doing the right
    job, and that includes our civilian team members. It's all about
    accomplishing the mission, and our civilian workforce plays a major
    role in providing our Navy with the capability to make it happen. As we
    steam ahead, the Navy must be smarter and more creative in its civilian
    recruitment, training, and performance management policies. Navy's
    investment in Civilian Community Management will begin returning
    results as we continue to gather and use strategic information about
    our workforce. With this, the Navy will be better able to develop and
    align its civilian workforce with our mission and provide the Total
    Force structure.
                          officer community management
    Aviation Warfare Officer Community
        Naval aviation retention in fiscal year 2004 was 52.4 percent
    through department head (12 years of commissioned service (YCS)),
    surpassing last year's mark by 3.6 percent. Continued improvement can
    partially be attributed to 5 consecutive years of Aviation Career
    Continuation Pay (ACCP) program success and an economy that is slow to
    recover. These factors combined with the retention surge experienced
    post-911 and Naval Aviation force structure reductions have combined to
    ensure that fleet requirements will be filled to 100 percent even as T-
    Notch year groups progress to the department head milestone. The
    combined effect of force structure reductions, accomplishment of
    recruiting goals, and increased efficiencies in the naval aviation-
    training pipeline has resulted in an excess of student naval aviators.
    The Naval Aviation Enterprise is currently in the process of mitigating
    this excess through a combination of United States Marine Corps (USMC)
    interservice transfers, filling Navy Reserve requirements, and an
    opportunity to compete for available aviation quotas.
        ACCP continues to be our most efficient and cost-effective tool for
    stimulating retention behavior to meet current and future requirements
    and overall manning challenges. During periods of low retention, ACCP
    is needed to simply ensure the minimum quantity of aviators is
    available to fill department head (DH) requirements. While naval
    aviation continues to enjoy unprecedented retention, the ACCP program
    significantly contributes to ensuring that the best-qualified aviators
    are available to fill department head requirements and ensuring the
    health of naval aviation in the years ahead.
        As the airline industry recovers and increases their passenger
    capacity to meet rising demand, it is imperative that Navy continues to
    provide credible incentives to encourage careers in naval aviation. As
    naval aviation once again competes with the civilian sector airlines
    for a limited human capital resource, ACCP is needed to maintain the
    competitive edge in that market, reducing compensation deltas, and
    ensuring that future department head requirements are met. Targeted,
    stable, efficient, and judicious use of limited resources are hallmarks
    of Navy's ACCP program, which continues to offer sufficient incentive
    to stabilize our aviation manning profile; thereby sustaining
    operational combat readiness within naval aviation.
    Surface Warfare Officer (SWO) Community
        Surface Forces are faced with many challenges midway through the
    fiscal year, from maintaining readiness in the global war on terrorism
    to standing up the first littoral combat ship (LCS) commissioning crew.
    Nonetheless, the SWO Community continues its pursuit of innovative
    retention and force shaping initiatives, development of a community
    Human Capital Strategy, and improving the quality of leadership among
    its officers.
        SWO community junior officer retention requirements are based upon
    manning at-sea DH billets. Community retention is based on the SWO
    Continuation Pay (SWOCP) take-rate for a particular year group (YG),
    which enables the community to determine the number of junior officers
    available for assignment as SWO department heads, nominally at 7\1/2\
    years of commissioned service. Junior officer retention continues to
    improve with YG98 becoming the fourth consecutive year group to attain
    over 31 percent retention. Department head school loading in fiscal
    year 2005 is expected to be the highest ever, with over 300 SWOCP
    takers filling DH school seats against an annual goal of 275.
        SWOCP, initiated in fiscal year 2000 to help meet community
    requirements for critical, trained and experienced department heads,
    has favorably impacted retention decisions, encouraging healthy numbers
    of quality officers committing to serve through their operational (at-
    sea) DH tours. This program, targeted at an officer's first retention
    decision, is typically effected at 5-8 years of commissioned service
    while the officer is serving in a post-division officer shore tour.
    Officers are paid $50,000 in total bonuses to complete the DH sequence,
    an arduous and critical mid-grade operational tour series. A typical
    SWO will begin the seventh year of commissioned service at DH school
    and from 7\1/2\-10 years of commissioned service in an afloat DH
    sequence. SWOCP take rate has improved from 23 percent to more than 34
    percent, between fiscal years 1999 and 2004.
        In June 2002, Critical Skills Retention Bonus (CSRB) was authorized
    for SWO for the first time. Up to $46,000 is currently authorized for
    SWO lieutenants commander for Active obligated service through the 12
    to 15 years. Prior to availability of CSRB, retention for CSRB-eligible
    SWOs was 92 percent but improved to nearly 100 percent of eligible
    officers upon CSRB implementation. As a result of CSRB, Navy has filled
    many mid-grade billets in challenging at-sea assignments by retaining
    officers with vital military skills, which were previously gapped as a
    result of a shortage of mid-grade officers. Beginning this year, a
    senior SWO CSRB of $15,000 to $20,000 annually has been authorized for
    commanders and captains serving in certain critical operational and
    overseas billets. The Senior SWO CSRB brings to $191,000 the total
    amount of SWO Community incentives from DH through the rank of captain.
    Despite CSRB implementation, the SWO Community continues to experience
    a critical shortage in control grade inventory (319 O-4, 150 O-5, and
    92 O-6).
        The Specialty Career Path program was recently developed as an
    element of Navy's emerging Human Capital Strategy to offer an
    alternative career path for those choosing not to pursue the
    traditional SWO command-at-sea career path. While providing these
    officers with a viable alternative career path, it also helps reduce
    accessions while helping to mitigate shortfalls in control pay grades.
    New career paths exist in six specialty areas:

             Antiterrorism/Force Protection (AT/FP)
             Anti-Submarine Warfare
             Missile Defense
             Mine Warfare Specialist
             Shore Installation Management
             Strategic Sealift

        This program offers interested officers many potential benefits and
    opportunities, including:

             Continued Service to our Navy and Nation
             Post Graduate education and JPME
             Improved geographic stability
             Specialty training, education, and experience
             Development of marketable skills for post-Navy
            employment
             Promotion opportunity to O-5 and O-6

        To help reduce over-manning among SWO junior officers, caused by
    over-accessions in year groups 1999 through 2003, the Secretary of the
    Navy has authorized release of probationary officers prior to
    completing their Minimum Service Requirements (MSR). We are currently
    focused on releasing 300 officers, the majority of whom are in their
    first or second division officer tour. Officers with approved MSR
    waivers may request Voluntary Release from Active Duty (VRAD),
    interservice transfer to the Army under the Blue to Green Program, or
    may apply for civilian employment at NAVSEA/NAVAIR. To date, 166
    officers have been selected for the MSR Waiver Pilot program. The
    challenge is to execute this force-shaping program while maintaining
    annual department head school throughput to support the force of record
    and retaining the confidence that the community is retaining the ``best
    and brightest.''
    Submarine Warfare Officer Community
        Since fiscal year 2003, submarine junior officer retention has
    remained below requirements, and the submarine community continues to
    experience poor retention of nuclear-trained Limited Duty Officers
    (LDOs) beyond 10 YCS.
        Within the Submarine Warfare Officer community, junior officer
    retention requirements are based upon manning at-sea billets. The
    submarine community measures retention as the continuation rate of
    officers from 3-7 YCS for a particular YG, enabling the community to
    determine the number of junior officers available for assignment to
    submarine DH, nominally at the eight YCS point. Submarine officer
    retention for fiscal year 2004 (41 percent) fell short of the fiscal
    year 2004 requirement of 43 percent.
        To improve retention, on 1 October 2004, the submarine officer
    community executed a restructured Nuclear Officer Incentive Pay (NOIP)
    Continuation Pay (COPAY), and the second phase of a two-stage increase
    of Submarine Duty Incentive Pay (SUBPAY). Analysis indicates that these
    changes will improve retention; however, it is too early to determine
    the impact on fiscal year 2005 retention. Although fiscal year 2005
    retention is improving (currently at 33.7 percent), the submarine
    officer community is projecting that fiscal year 2005 retention will
    finish short of the 39 percent requirement.
        COPAY and SUBPAY changes were developed and implemented to counter
    the declining retention trend seen early in fiscal year 2004, and were
    designed to better incentivize junior officers to continue on to serve
    as a DH. The SUBPAY change was targeted at officers beginning their DH
    tour and in the control grades to incentivize junior officers to
    continue through their DH assignment and beyond.
        Over the last 5 years, the nuclear-trained Limited Duty Officer
    (LDO) community cumulative continuation rate (CCR) from 10-15 YCS has
    been 36 percent (e.g., approximately two-thirds of all nuclear-trained
    LDOs who complete 10 YCS retire from the Navy prior to reaching 15
    YCS). Nuclear-trained LDOs are critical to providing the necessary
    technical oversight in nuclear maintenance, repair, nuclear refueling,
    and new construction. Presently, the nuclear-trained LDO community is
    short 27 control grade officers (e.g., a 20-percent manning shortfall
    among pay grades O-4 to O-6). Additionally, Navy has experienced a
    decline in the number of LDO Program applications received from
    nuclear-trained, enlisted personnel, since the fiscal year 2001 LDO
    Board. Although the number of applicants has recently increased, the
    total number of applications remains insufficient to meet quality
    requirements among nuclear-trained LDO accessions. While selection
    opportunity has been approximately 14 percent in years past, it
    increased to 26 percent for the fiscal year 2006 LDO Selection Board,
    representing a 12-percent impact on selection quality. Continuation of
    this low application rate trend will adversely impact LDO manning
    requirements as a result of insufficient numbers of nuclear-trained
    LDOs and declining quality standards.
        Nuclear Officer Incentive Pay (NOIP) has proven to be an extremely
    effective tool, over its 35-year history. Largely responsible for
    improving and sustaining submarine officer retention, and is widely
    viewed as DOD's model retention incentive program as a result of
    judicious and responsible management in achieving specific retention
    objectives. NOIP remains the surest, most cost-effective means of
    sustaining required retention and meeting Fleet readiness requirements
    by retaining the appropriate number of high-quality, highly-trained
    officers, thereby ensuring continuation of an unparalleled historic
    record of safe reactor operations.
        NOIP rate increases in fiscal years 2001 and 2003 favorably
    impacted 5-year average retention among junior officers, which improved
    from 30 to 34.8 percent between fiscal years 2000 and 2004. Maintaining
    statutory cap authority above current rates has allowed for more timely
    response to unanticipated, rapidly emerging declines in nuclear-trained
    officer retention than can be accommodated by established legislative
    or budgetary cycles.
        Maintaining the flexibility and agility to incentivize LDO
    retention beyond the 10 YCS minimum requirement will correct the
    nuclear-trained LDO community's control grade officer shortage.
    Incentivizing enlisted personnel to apply for commissioning through the
    nuclear-trained LDO community is critical to correcting the low
    application rate trend, thereby enhancing quality selectivity standards
    and, ultimately, improving attainment of necessarily stringent LDO
    manning requirements.
    Naval Special Warfare
        Overall the Naval Special Warfare Officer (NSW) Community is
    healthy, manned at 99 percent of assigned billets. Nonetheless we
    remain faced with a number of manpower and personnel challenges. We
    continue to work diligently to retain our most highly trained,
    qualified and dedicated personnel in the face of increasing competition
    from both civilian and other government agency sources as prosecution
    of the global war on terrorism continues to increase the demand for
    aggressive, intelligent, independent, and well trained warriors.
        To meet increasing U.S. requirements for NSW forces around the
    world, the community has reorganized into squadrons, with a self-
    sufficient O-4 Task Unit organization as our ``maneuver unit'' on the
    battlefield. The associated increased requirement for a lieutenant
    commander and commander, as well as 76 Joint O-4 and O-5 staff jobs,
    has strained our inventory. The NSW community is undermanned in pay
    grades O-4 (86 percent) and O-5 (96 percent) and we are using Naval
    Special Warfare (SPECWAR) Officer Continuation Pay to target these
    shortfalls. SPECWAR pay targets the post platoon commander inventory
    with a continuation bonus of up to $15,000 per year for a 5-year
    commitment, and has dramatically improved cumulative continuation at 6-
    11 YCS from 37.7 percent prior to its implementation to between 73.7
    and 62.8 percent over the past 3 years. However, increasing competition
    from the private sector combined with sustained high operational tempo
    continues to inhibit the community's ability to close the gap. NSW is
    working to improve mid-grade and senior officer retention by offering
    command pay to select NSW O-5s, including LDOs junior officer manning
    within the community remains healthy and we continue to assess 59
    officers per year to meet 28 platoon commander tours (department head
    equivalent). As future platoon commander requirements grow to 34
    percent, beginning in fiscal year 2008, it becomes increasingly
    critical that we improve mid-grade officer manning. NSW officers seek
    opportunity for command in operational environments and the global war
    on terrorism has presented that opportunity, which should improve
    future retention among our most qualified and brightest officers.
                                  navy reserve
    Mobilization/Demobilization
        Since the September 11 attacks, Navy has mobilized over 28,000
    sailors in support of the global war on terrorism. Just over 4,000
    Reserve component personnel are mobilized today. Navy has achieved an
    exceptional level of mobilization readiness, with only a small
    percentage of mobilized reservists being identified as medically unable
    to deploy.
        Our exceptional Reserve component sailors are integrally involved
    in rebuilding Iraq and fighting terrorism worldwide. Over 40 percent of
    construction battalion (Seabees) personnel deployed to Iraq are
    reservists. Expeditionary Logistics Support Force sailors are filling a
    vital combat service support role as customs inspectors. A detachment
    from Helicopter Combat Support Special Squadron FIVE (HCS 5) is
    providing direct support to ground forces in theater. Navy reservists
    are actively engaged and serving with distinction in this monumental
    endeavor.
        Our commitment to Reserve component sailors continues through the
    demobilization process. Our goal is to return the demobilizing sailor
    to their home communities as quickly as possible. However, we remain
    attentive to ensuring that any sailor with ongoing medical issues
    receives all appropriate care prior to deactivation. Toward that end,
    we send most demobilizing sailors who are medically-flagged to one of
    two Navy Mobilization Processing Sites, Norfolk or San Diego, both co-
    located with Navy Fleet Hospitals, capable of meeting the full range of
    medical needs prior to a sailor's release from Active-Duty. In unique
    circumstances, other NMPS sites may be used as long as they are
    adequately equipped to meet required standards of care. Navy remains
    committed to consistently meeting the needs of our sailors.
                                navy recruiting
        Navy recruiting has consistently met, or exceeded, aggregate
    recruiting goals since 2000, allowing more selectivity, resulting in
    increased recruit quality. For example, 12 percent of current recruits
    have college experience, a 300-percent increase since 2000. More than
    95 percent of new recruits possess high school diplomas. Diversity
    officer applications have increased by 16 percent since 2002.
    Operational Single Force
        Commander, Navy Recruiting Command (CNRC), in Millington,
    Tennessee, has continued the process of consolidating Active and
    Reserve recruiting that began in fiscal year 2003. In fiscal year 2004,
    we conducted several pilot programs to evaluate the impacts of the
    organizational change on Active and Reserve accession missions. As a
    result, as of February 2005 all recruiting activity has been
    consolidated under 31 Navy Recruiting Districts (NRDs). Additionally,
    the fiscal year 2004 budget merged Active and Reserve component
    recruiting Operations and Maintenance (O&M) accounts. Through this
    unity of effort, we expect to maximize effectiveness and realize
    operational efficiencies. Throughout fiscal year 2005, we will continue
    the restructuring effort to produce enterprise-wide savings by
    streamlining the organization and eliminating excess overhead.
    Enlisted Recruiting
        Navy recruiting experienced another highly successful year in
    fiscal year 2004, by attaining our numerical accession goals and
    improving upon recruit quality over the previous fiscal year. These
    successes were aided by record retention, which enabled lower accession
    missions, as well as favorable economic conditions and a professional
    and well-resourced recruiting force. Nevertheless, the continued need
    to improve the quality and diversity of new accessions to build our
    future Fleet presents opportunities. Economic conditions that have
    contributed to retention and recruiting successes are not expected to
    continue. The national unemployment rate has declined from 6.0 percent,
    at the beginning of fiscal year 2004, to 5.2 percent, in January 2005,
    and is forecast to remain near that level. While the Middle East
    situation has not yet adversely impacted Navy recruiting efforts,
    prolonged operations could eventually harm retention, necessitating a
    sudden surge in recruiting goal. While re-normalization of the Armed
    Services Vocational Aptitude Battery (ASVAB), in July 2004, better
    reflects the youth population, recruits who would have been eligible to
    serve in the past are no longer eligible. The full impact of re-norming
    will only begin to be felt next year as recruits who were
    ``grandfathered'' by policy pass through the system. With such
    uncertainty looming on the recruiting horizon, it is critical that
    advertising and recruiting budgets remain sufficiently robust to adjust
    for changes to the recruiting environment and to support continued
    pursuit of increasing recruit quality.
        In fiscal year 2004, Navy Recruiting attained 100 percent of active
    duty accessions, of which 95.6 percent were High School Diploma
    Graduates (HSDG)--well above the DOD minimum standard of 90 percent--
    and 69.9 percent scored in Test Score Categories (TSC) I-IIIA (i.e.,
    upper 50 percent) of the Armed Forces Qualification Test (AFQT)--again
    well above the DOD minimum standard of 60. Additionally 12.5 percent of
    recruits had some college experience prior to reporting to active duty.
    CNO Guidance for 2005 is to maintain the same HSDG and TSC I-IIIA
    quality while increasing the number of college accessions to 15
    percent. Through January 2005, we are on track to meet accession
    mission and HSDG and TSC I-IIIA objectives, but still have work to do
    to meet the college objective. The College First Delayed Enlistment
    Program, authorized in the Ronald W. Reagan National Defense
    Authorization Act for Fiscal Year 2005, will help penetrate the college
    market in the future, but the rigors involved in starting the program
    will prevent any accessions until fiscal year 2006. Of particular note
    on the quality front, in fiscal year 2004, 51.3 percent of African-
    American accessions were in TSC I-IIIA, which facilitates greater
    diversity representation among Navy's more technical ratings. This is
    the first year all diversity groups attained at least 50 percent TSC I-
    IIIA.
        In fiscal year 2004, Navy attained 102 percent of Selected Reserve
    (SELRES) accessions. A 20 percent mission increase over last year makes
    fiscal year 2005 very challenging and we have fallen behind our
    recruiting goals through the first quarter. However, the newly
    consolidated single recruiting force has enabled us to mitigate this
    challenge by shifting 166 Active-Duty recruiters and $3.85 million in
    advertising funding to support the Reserve mission. Because Navy
    Reserve relies heavily on attracting prior-service sailors,
    historically unprecedented retention successes among active enlisted
    personnel have led to an inevitable decline in the number of available
    prior-service veterans. To counter the effects on Reserve recruiting,
    we are actively engaging the Fleet to help transition sailors, leaving
    the active Navy, into the Reserve component. In fiscal year 2004, Navy
    accessed 998 recruits under the National Call to Service (NCS)
    Enlistment Incentive Program, and plans to access 1890 in fiscal year
    2005. This program has successfully expanded the opportunity for young
    Americans to serve our country. Likewise, it has presented a dual
    benefit to Navy because NCS recruits have been high quality, scoring
    six points higher than the average recruit on the AFQT, and because,
    upon completing their training and Active-Duty commitment, the first of
    which will be in fiscal year 2006, they will enter the ranks of the
    Reserve Force.
    Officer Recruiting
        Fiscal year 2004 produced mixed results in the area of officer
    recruiting. We met 22 of 24 Active-Duty officer community goals,
    including all unrestricted line, restricted line, and staff corps
    community goals. Dental Corps and Nurse Corps were the only officer
    communities that did not achieve annual goal. For Reserve officers,
    several communities that require prior-service experience did not meet
    accession goals contributing to attainment of just 87.5 percent of the
    overall officer SELRES accession mission. We continue our efforts to
    increase diversity within the officer corps to more closely mirror
    diversity representation among Americans receiving Bachelor's degrees.
    We increased Active-Duty officer diversity new contracts from 21
    percent in fiscal year 2003 to 22.6 percent in fiscal year 2004, while
    Reserve new contract diversity declined from 22.3 percent in fiscal
    year 2003 to 17.4 percent in fiscal year 2004. Meeting the goals for
    medical officers will be difficult for both Active and Reserve
    recruiting. Once again, officer communities that specifically require
    prior-service accessions, such as aviation (pilots) and surface warfare
    remain challenging, as continued retention successes in the Active
    component reduces the pool of prior-service officers who are the
    primary Reserve component target market.
    Reserve Officer Retention
        Retention for SELRES officers continues to be outstanding. Most
    SELRES officer communities are at 100 percent manning while aggregate
    SELRES manning is at 99.4 percent. Some shortages exist in junior ranks
    of communities requiring prior-service personnel, such as aviation and
    surface warfare. Accession goals for junior officers in these
    communities will continue to be challenging because of high Active-Duty
    retention rates. Among communities in which prior-service is not an
    accession prerequisite, such as in the public affairs and Intelligence
    Communities, requirements are being effectively met though direct
    accession commitments. The downside of direct accessions is the
    extensive training and experience required before these officers are
    ready to become mobilization assets.
                  quality-of-life--community support programs
        As fiscal year 2004 came to a close, we completed the successful
    realignment of Morale, Welfare and Recreation (MWR), Child Care, and
    Fleet and Family Support program management functions from the Bureau
    of Navy Personnel (BUPERS) to Commander, Navy Installations (CNI)
    Command. The realignment streamlined operational management, while
    maintaining within BUPERS a significant policy and assessment arm for
    MWR, Child Development, and Fleet and Family Support Programs. The
    seamless transition was transparent to customers and field activities
    with no disruption in support services.
    MWR Fleet Readiness
        Expanding MWR Fleet Readiness Support remained our top priority
    program initiative in fiscal year 2004. In support of deployed units,
    we realigned funds and used supplemental funding to enhance fitness and
    recreation support, enabling us to upgrade and replace fitness
    equipment aboard fleet units. As a result, nearly 130,000 pieces of
    recreation and fitness equipment were delivered to the fleet to replace
    worn, high-demand, equipment. An additional 1,250 pieces of
    recreational gear were provided to 32 commands/units in isolated and
    remote areas of the world to enhance morale and quality-of-life.
        Our Civilian Afloat Program continues to thrive by providing
    recreation (Fun Boss) and fitness (Fit Boss) professionals, who live
    and work aboard various aircraft carriers and amphibious assault ships
    to provide positive leisure programming and support. We believe there
    continues to be substantiated quality-of-life benefits from providing
    fitness and recreational opportunities for deployed sailors and marines
    and by ensuring they are afforded wholesome leisure opportunities both
    aboard ships and in ports of call.
    Sexual Assault And Victim Intervention (SAVI)
        Sexual assault prevention and victim intervention are high priority
    efforts throughout the Navy, especially at the highest levels of the
    chain of command. Not only are such incidents illegal, but they are
    particularly detrimental to mission readiness, including the retention
    of servicemembers. While Navy has had a model SAVI program since the
    early 1990s, we recognize the need to continue strong pursuit of a zero
    tolerance environment while continually improving confidentiality for,
    and support to, alleged victims.
        Navy contributed significantly to the work of the DOD Care for
    Victims of Sexual Assault Task Force. Furthermore, we commend and fully
    support congressional direction, enacted in the Ronald W. Reagan
    National Defense Authorization Act for Fiscal Year 2005, to implement
    policy changes based on DOD Task Force recommendations. Navy has an
    aggressive plan in place to adopt the revised definition, upgrade its
    training, improve reporting and leadership awareness, strengthen
    confidentiality and adopt a case management approach to improve sexual
    assault response capability.
    Casualty Assistance
        There is no more noble a cause than that of rendering prompt and
    compassionate care to a Navy family when one of our sailors dies or
    becomes seriously ill or injured. While Navy has long supported this
    most important role, we continually need to assess the strengths and
    weaknesses of our program. Approximately 1 year ago, I directed a
    detailed review of our entire casualty assistance process to ensure
    that we were, in fact, taking care of our own. This initiative led to
    the swift implementation of several program changes to offer better
    assistance to Navy families in need.
        A well-designed system exists for Casualty Assistance Call Officer
    (CACO) assignments within the Navy structure. Under current operating
    procedures, regional coordinators carry out the principal training of
    CACOs and subsequent assignments to assist surviving family members
    within their respective areas of responsibility. Generally, each region
    trains a specific number active duty personnel from among the commands
    in the region to serve as CACOs. Assignment as a CACO is a total force
    mission requirement that assumes priority over all other assigned
    duties.
        When assigned to assist surviving family members following a
    sailor's death, the CACO notifies the next of kin as soon as possible,
    but typically within 24 hours of the death. Every effort is made to
    arrange for a Navy chaplain to accompany the CACO to offer moral
    support and pastoral care to the family during this important and
    extremely sensitive mission. Initial information provided to surviving
    family members about the death is limited to known facts, and as a
    consequence, is often necessarily vague. The final cause/determination
    of the death and related circumstances is conveyed to the family
    consistent with a medical examiner's determination. During the initial
    notification visit, or in some cases during the second visit to assist
    the next of kin, the CACO presents the death gratuity to assist the
    family with immediate expenses while awaiting disbursement of other
    survivor benefits and final pay and allowances.
        In the days following initial notification, the CACO assists the
    family in making funeral arrangements, filing claims for benefits and
    entitlements and, should the family so decide, relocation of the family
    and household effects. The CACO's duties often last from a number of
    weeks, but in some cases may continue for a number of months, as long
    as the family requires and desires such assistance to adjust to the
    tragic circumstances that have befallen them.
        Throughout the process, the CACO is guided and mentored by a
    worldwide network of certified as grief and bereavement facilitators
    who serve as Regional Casualty Coordinators or on the Navy headquarters
    staff in Millington, Tennessee. This mission requires an extreme degree
    of sensitivity, focus and accuracy, in which there is no margin of
    error. The ultimate mission is to minimize any additional pain and
    anguish that already grief-stricken families must endure.
        Similar procedures exist to lend support to families of sailors who
    become seriously ill or injured. In these cases, our initial purpose,
    beyond notifying the family, is to assist them in traveling to the
    bedside of the sailor in as timely a manner as possible. Seriously ill
    or injured patients tend to recover more quickly when nurtured and
    bolstered by the physical presence of their loved ones. Navy provides
    funding for travel (including per diem) and transportation costs to
    transport three (or, in some cases, more) eligible family members to
    the bedside of a sailor who is medically declared seriously ill/injured
    or very seriously ill/injured. Should the member need additional time
    to recuperate, they may be placed on convalescence leave and/or limited
    duty. If placed on limited duty, they may serve in that capacity for a
    period of 6 months, with a possible extension of 6 additional months
    prior to referral, as necessary, to the Physical Examination Board
    (PEB).
        We have made great strides in achieving and enhancing our casualty
    assistance mission. Improvements have been gained in our casualty
    reporting process by streamlining the amount of information needed to
    notify the loved ones of those reported as casualties. We have also
    successfully integrated a Navy Reserve unit to augment the standing
    Casualty Assistance Division to increase mission capability and to
    reduce manpower requirements. We continuously review our casualty
    assistance programs, initiating changes as appropriate to provide
    timely and compassionate notification and assistance to sailors and
    their families confronted with such tragic circumstances for as long as
    they may require.
    Transition Assistance Management Program (TAMP)
        The Navy Transition Assistance Management Program (TAMP)
    coordinates Transition Assistance Program (TAP) workshops at 65 shore-
    based sites worldwide and, when requested, conducts TAP classes aboard
    ships at sea. These specialized classes assist sailors, including
    disabled members who are retiring or otherwise separating from the Navy
    as they transition to civilian life or prior to a decision to return to
    Active-Duty. During fiscal year 2004, we conducted 3,874 TAP workshops
    for 78,108 military personnel. Another 103,170 military personnel
    utilized other transition assistance training services, e.g., resume
    writing, interview techniques and assistance in understanding benefits.
    This program is estimated to have reduced unemployment insurance
    compensation by $120 million since fiscal year 1993.
        Program accomplishments during 2004 include:

             Development of the first lifecycle approach to career
            management that will parallel career development and career
            change strategies. To complement this approach, workshops were
            developed for first-term and mid-career sailors. They have been
            well received by attendees.
             Delivery of at-sea shipboard TAP workshops in
            partnership with the Departments of Labor (DOL) and Veterans
            Affairs (VA), which provided facilitators to deliver training.

        Current TAMP initiatives include:

             Expanded use of DOL TAP Facilitators at overseas
            locations, including support on Diego Garcia and expanded VA
            services to the Middle East.
    Fitness Program--Cornerstone of Personal Readiness
        The Navy Fitness program continues to improve and support the
    fitness goals of the Chief of Naval Operations. Our goal is to provide
    ready access, for sailors and their family members, to high quality
    fitness programs and facilities dedicated to their total fitness needs.
    Navy MWR is committed to providing support to every sailor in achieving
    optimum fitness levels wherever they may be stationed. MWR maintains
    about 142 fitness centers at 90 bases in addition to supporting Naval
    Reserve Centers and various Defense Attache Offices in the Pacific Area
    as designated by DOD policy.
    Single Sailor--``Liberty Program''
        Navy's Single Sailor Program, also known as the ``Liberty Program''
    is a core MWR program designed to address the recreation needs of 18 to
    25 year old single sailors, the majority of whom live aboard ship or in
    barracks. We have 96 active installation-level programs, 88 of which
    are located in dedicated facilities on piers and in barracks areas,
    making the program readily available to those who use it the most. Our
    objective is to provide a recreational environment free from alcohol
    and tobacco for sailors desiring to relax, participate in healthful
    leisure activities and have a quiet place to socialize with friends and
    relax.
    Navy Movie Program
        Watching movies is one of the most popular recreational activities
    for Active-Duty personnel and their families. Each ship receives a
    monthly shipment of at least 16 new movies in 8mm format, generally 2
    or more months before they are available stateside for video rental.
    Ships can maintain a movie library with more than 800 titles. We also
    provide movies in 35mm format to 46 bases that operate commercial style
    theaters.
        With the cooperation and support of the major motion picture
    studios, Navy has been able to provide units the benefit of an
    extensive early tape release service. Navy receives and distributes
    newly released films to overseas ships and units ashore two weeks after
    opening in commercial theaters.
    Child Development and Youth
        Sailors and their families continue to rank as very high child and
    youth programs as an integral support system for mission readiness and
    deployments. To meet the demand, multiple delivery systems are offered
    to include child development centers, child development homes, child
    development group homes, school-age care, and resource and referral.
        In fiscal year 2004, we achieved 69 percent of DOD potential need,
    100 percent DOD certification, and 97 percent accreditation of our
    programs by the National Association for the Education of Young
    Children (NAEYC). Our objective for 2005 is to ensure that all Navy
    child development centers are accredited. This tells our Navy families
    that their children are receiving top quality care that equals or
    exceeds the highest national standards.
        Families attending the 2002 and 2004 Navy Family Team Summits
    expressed a need for extended hours for childcare to meet the needs of
    shift workers and watch standers in support of the global war on
    terrorism and other military operations. In fiscal year 2003, the Navy
    launched pilot sites in Navy Region Mid-Atlantic and Hawaii. These
    pilot programs include additional in-home care providers that offer
    care around the clock as well as two new child development group homes.
    In 2005, we are expanding these programs to Naval Air Station Sigonella
    and Navy Region Southwest.
    Fleet and Family Support Program
        On the home front, Navy's Fleet and Family Support Program (FFSP)
    ensures that sailors and their families are ready to meet the
    challenges of deployments and the Navy lifestyle. Major FFSP services
    include personal financial management, family advocacy, spouse
    employment, transition assistance, and relocation assistance, crisis
    intervention and individual, marital, and family counseling, all of
    which have a direct and positive link to readiness. FFSP is accredited
    through adherence to a Navy-wide system of quality and service delivery
    standards.
        Fleet and Family Support Centers (FFSC) and their satellite
    activities provide convenient access for naval personnel and family
    members. The range of services provided prepares family members to
    anticipate and understand the demands associated with Navy lifestyle
    and the mission responsibilities of their military spouses or parents
    and provide personal counseling when they need help in coping with
    issues which arise. Pre-deployment briefings are provided to military
    members, spouses, and children prior to deployment. Special emphasis is
    given to prepare families to cope with the suddenness of some
    deployments.
        Return from deployment and reunion with family members also
    presents a range of needs for our military personnel and families. FFSP
    staff met all fleet requests for return and reunion teams in fiscal
    year 2004. These shipboard programs focus on the adjustment challenges
    of returning to spouses and children, children's developmental stages,
    and ``baby showers'' for sailors who became parents during the
    deployment. Staff introduces new parents to infant care and parenting
    skills during these events. Staff also provides information on car
    buying and consumer education, as well as orientation to what's
    happened at home while the ship or squadron was deployed. This year
    information on combat related stress was added to the stress management
    lectures. Similar programs are offered to the family support groups to
    facilitate their reunions.
    Navy ``OneSource''
        In assessing our Navy deployment support efforts, we found there
    was a need to improve our ability to provide accurate, timely and
    easily accessible information and referral services. This was
    particularly apparent for families of Reserve personnel called to duty.
    We also recognized that all our personnel and families would benefit
    greatly from improved communications. Therefore, Navy has partnered
    with the Office of the Secretary of Defense (OSD) to offer a
    contracted, 24 hour-per-day, 7 day-per-week, 365 day-per-year, toll-
    free telephone number and web-based ``OneSource'' service. Extensive
    marketing and installation rollout briefings have been completed and
    first-year usage has been consistent with expectations. In this second
    year of the contract, Navy has requested more marketing, briefings and
    outreach to Reserve families prior to mobilization.
    Fleet Feedback
        In assessing the quality and adequacy of quality of life programs
    we use a range of surveys, program assessments, and certification
    processes. We periodically survey sailors, spouses and Navy leaders to
    ensure we offer a range of quality programs that address their
    recreational and life-support service needs. In addition, customer
    feedback is considered as we set program priorities for the continental
    United States (CONUS), overseas, and shipboard support of sailors and
    their families. The MWR/Navy Exchange Board of Directors provides a
    forum with Navy senior leadership to oversee and assess program
    requirements and needs of naval personnel.
                                   conclusion
        Mr. Chairman and distinguished members of this personnel
    subcommittee, the dedicated men and women of the world's premier naval
    force continue to sustain our forward worldwide presence on a daily
    basis in this fourth year of the global war on terrorism. As the CNO
    has made very clear, ``At the heart of everything good in our Navy
    today is this: we are winning the battle for talent. This is the
    highest quality Navy the Nation has ever seen.'' Your continued support
    for our force-shaping initiatives and programs will maintain that high
    quality and prepare us to better meet the challenges of the 21st
    century. In this way, we will collectively set the stage to project
    greater power and provide greater protection to our Nation--enhancing
    our security in the dangerous and uncertain decades ahead.

        Senator Graham. Thank you.
        General Osman.

     STATEMENT OF LT. GEN. H.P. OSMAN, USMC, DEPUTY COMMANDANT FOR
        MANPOWER AND RESERVE AFFAIRS, UNITED STATES MARINE CORPS

        General Osman. Mr. Chairman, Senator Nelson, I thank you
    for this opportunity to appear before you today to give you a
    report on the personnel status, as well as the future manpower
    picture, of your Marine Corps. I want to thank you up front for
    the great support that you have given to the individual marine
    and, just as important, his family.
        I think you know that today's marine is a marine of
    character. He has a strong work ethic, sound moral fiber, and
    desires to be challenged. On that last note, I think we have
    been able to succeed in that the last couple years. He has been
    challenged.
        I would like to highlight a few points.
        First, recruiting. The Marine Corps continues to makes its
    accession mission as it has been doing for the last 10 years. I
    will be honest. The last several months, we have actually
    missed our contracting mission, but I am confident we will get
    it back on track, and by year's end, we will have the pool that
    we need to set us up for fiscal year 2006.
        The retention picture is very good. We are ahead of last
    year's retention statistics, and our military occupational
    specialty (MOS) match, which is very important to make sure we
    have the right skills, is actually ahead of last year's
    standard. This is both for our first-termers, as well as our
    careerists.
        I want to thank the subcommittee for your hard work in
    allowing us to increase our end strength from 175,000 to
    178,000. This has been very important for the Marine Corps. It
    has allowed us to add the marines to the operating forces, put
    a few more recruiters on the street, and also establish a
    foreign military training unit. This is an effort that we have
    to bring ourselves closer to the special operations community
    and help them in some of their tier 3 missions.
        I will talk for a moment about compensation. That can be a
    double-edged sword. I often say that compensation is one of the
    issues that allows a marine to stay or it can be one of the
    issues that drives him home. The key is to make sure that we
    have a comprehensive compensation package, and I applaud Dr.
    Chu for forming a compensation panel to take a look in a
    comprehensive manner at our compensation needs.
        I will talk for a minute about the Marine Corps Reserve.
    Prior to coming to this job last August, I had served for
    several years as the commanding general of the 2nd Marine
    Expeditionary Force (MEF), a 46,000 marine and sailor force. As
    large as it was, we could not have done the missions that we
    were assigned had it not been for the Reserve establishment.
    Every time I had an opportunity to talk, I made it very clear
    that we could not have done what we did had it not been for the
    Reserves. We really are a Total Force.
        The final thing I would like to touch on is quality-of-
    life. That is a force multiplier. The important pay, as well as
    the non-pay, benefits to our marines and their families are
    incredibly important. I often say that we recruit marines but
    we reenlist families. We really appreciate the great support
    that you have given us in that regard.
        I am optimistic about the overall health of our corps from
    a personal standpoint.
        I look forward to your questions today and stand proud in
    front of you today as a member of your Marine Corps. Thank you,
    gentlemen.
        [The prepared statement of General Osman follows:]
                Prepared Statement by Lt. Gen. H.P. Osman, USMC
        Chairman Graham, Senator Nelson, and distinguished members of the
    subcommittee, it is my privilege to appear before you today to provide
    an overview of your Marine Corps from a personnel perspective. The
    continued commitment of Congress to increase the warfighting and crisis
    response capabilities of our Nation's Armed Forces, and to improve the
    quality-of-life of marines, is central to the strength that your Marine
    Corps enjoys today. Marines remain committed to warfighting excellence,
    and the support of Congress and the American people is indispensable to
    our success in the global war on terrorism. Supporting the global war
    on terrorism and sustaining our readiness, while ensuring our forces
    are prepared to respond to future challenges, is the core of our
    readiness strategy. Thank you for your efforts to ensure that marines
    and their families are poised to continue to respond to the Nation's
    call in the manner Americans expect of their Corps.
                 recent operations and current status of forces
        The emphasis on readiness enables your marines to be fully engaged
    across the spectrum of military capabilities in prosecuting the global
    war on terrorism. Our core competencies coupled with the integration of
    our own organic capabilities produces an agile force capable of
    fighting the prolonged fight against an adaptive enemy. Our scalable
    combined arms teams integrate ground and aviation forces with adaptive
    logistics to create speed, flexibility, and agility in response to
    emerging crises. We must sustain our readiness and maintain the ability
    to project our forces close to home, as in last spring in Haiti, and in
    remote austere environments halfway around the world, as we do today in
    Iraq and Afghanistan. The Marine Corps' role as the Nation's premier
    expeditionary force-in-readiness, combined with our forward deployed
    posture, enable us to fulfill a prominent role in joint operations. The
    readiness of our forces and the quality of our training enabled our
    marines to perform in the chaotic, unstable, and unpredictable
    environments exploited by our adversaries.
        Last year, we redeployed 25,000 marines to the Al Anbar province in
    Iraq. Their focus on readiness, the quality of their training, and
    their commitment to warfighting excellence enabled them to lead the
    multi-national force west, which was responsible for providing
    stability and security throughout the Province. Last spring, we
    responded to an unplanned Central Command (CENTCOM) requirement in
    Afghanistan where we provided a reinforced infantry battalion, and
    aviation combat element, a regimental headquarters, and a Marine
    Expeditionary Unit (MEU). The success of this force greatly assisted in
    setting the conditions for the Afghan national elections later in the
    year and the establishment of a secure and stable government. We
    continue to provide both ground and aviation forces to provide
    stability for this new democracy.
        Over the last year, we also provided concurrent support for several
    other regions including the operations in Horn of Africa, the Pacific,
    peace operations in Haiti, and Tsunami relief in South Asia.
        Today we are rotating our forces in Iraq. We expect to reduce our
    commitment in Iraq to about 23,000 marines and sailors, with Marine
    Corps Reserve Forces providing about 3,000 of these personnel. Your
    support ensures their near-term readiness remains strong and our
    training and equipment is matched to the evolving threat. The entire
    Marine Corps is supporting the global war on terrorism, and the demand
    on our force is high. In the past 2 years, we have gone from a
    deployment rotation of one-to-three (6 months out/18 months back) to
    our current one-to-one ratio (7 months out/7 months back) for our
    infantry battalions, aviation squadrons, and other high demand
    capabilities. Our operating forces are either deployed or training to
    deploy. Despite this high operational tempo, the Marine Corps continues
    to meet its aggregate recruiting and retention goals in quantity and
    quality. The National Defense Authorization Act for Fiscal Year 2005
    providing a 3,000 marine increase to our end strength will assist in
    reducing demands on marines as we increase manning of our infantry
    battalions.
                              personnel readiness
        The Marine Corps continues to answer the call because of our
    individual marines and the support they receive from their families,
    the Nation, and Congress. The individual marine is the most effective
    weapon system in our arsenal. Our ranks are comprised of intelligent
    men and women representing a cross section of our society. Our marines
    must think critically and stay one step ahead of the enemy despite an
    uncertain operating environment; their lives and the lives of their
    fellow marines depend upon it. Morale and commitment remain high.
    Marines join the Corps to ``fight and win battles'' and we are giving
    them the opportunity to do that.
    Force Structure Review
        Last year, the Marine Corps completed a review of our Active and
    Reserve Force structure. We are implementing those recommended force
    structure initiatives with the majority achieving initial operational
    capability in fiscal year 2006 and full operational capability by
    fiscal year 2008. These initiatives are end strength and structure
    neutral, but will require additional equipment, facilities, and
    operations and maintenance resources to implement.
        Structure changes include the establishment of two additional
    infantry battalions, three light armored reconnaissance companies,
    three reconnaissance companies, two force reconnaissance platoons, and
    an additional Air-Naval Gunfire Liaison Company (ANGLICO) for the
    Active component. Our existing explosive ordnance disposal,
    intelligence, aviation support, civil affairs, command and control, and
    psychological operations assets will receive additional augmentation.
        The Reserve component's structure initiatives will further increase
    the Marine Corps' capability to respond to the global war on terrorism
    by establishing an intelligence support battalion, a security/anti-
    terrorism battalion, and two additional light armored reconnaissance
    companies. Civil affairs and command and control units will receive
    additional augmentation, and some Reserve units structure will be
    converted into Individual Mobilization Augmentee (IMA) Detachments--
    allowing more timely access to these Marine reservists in support of
    contingency operations. These increased capabilities were ``brought''
    at the expense of a like number of ``lesser'' required capabilities
    where we believed risk could be taken.
    End Strength
        The Marine Corps appreciates the congressional end strength
    increase to 178,000. A top priority will be to increase the manning in
    our infantry units. We will also create a dedicated military training
    unit to assist in the training of the Armed Forces of other nations. We
    will also add to our recruiting force, our trainers, and other support
    for the operating forces in order to reduce the tempo of operations on
    marines and their families. The added end strength will complement the
    force structure review initiatives.
    Military-to-Civilian Conversions
        The Marine Corps continues to pursue sensible military-to-civilian
    conversions to increase the number of marines in the operating force.
    We are on course to achieve 2,397 conversions in fiscal years 2005 and
    2006.
    Funding
        The fiscal year 2006 budget provides for a total force of 175,000
    Active-Duty marines, 39,600 Reserve marines, and 13,200 appropriated
    fund civilian marines. Approximately 60 percent of our military
    personnel funding is targeted toward military pay and retired pay
    accrual. Essentially all of the remaining funds are committed to
    regulated and directed items such as Basic Allowance for Housing (BAH),
    Defense Health Care, Basic Allowance for Subsistence (BAS), Permanent
    Change of Station relocations, and Special and Incentive pays. Only 1
    percent of our military personnel budget is available to pay for
    discretionary items such as our Selective Reenlistment Bonus (SRB),
    Marine Corps College Fund recruitment program, and Aviation
    Continuation Pay. Of the few discretionary pays that we utilize, the
    SRB is crucial. We take pride in our prudent stewardship of these
    critical resources. For fiscal year 2006, we are seeking an increase in
    funding to $53.6 million, from $51.8 million in fiscal year 2005. This
    remains just one-half of 1 percent of our military personnel budget,
    and it is critical to effectively target our retention efforts. In
    fiscal year 2005, the Marine Corps has derived great results from our
    SRB efforts in the infantry MOSs. This proven application of SRB monies
    is a sound investment. The Marine Corps prudent utilization of the SRB
    reduces recruiting costs and retains experienced marines in the force.
    Congresses continued support of our SRB program is critical to the
    continued health of your Marine Corps. Military personnel funding, as a
    whole, represents 61 percent of the U.S. Marine Corps' Total Obligation
    Authority; 39 percent remains for all infrastructure, investment, and
    operations and maintenance requirements.
    Compensation
        The Marine Corps appreciates the efforts by this committee to raise
    the standard of living for our marines. Being a marine is challenging
    and rewarding. America's youth continue to join the Marine Corps, and
    remain, in a large part because of our institutional culture and core
    values. However, it is important that the environment--the other
    factors in the accession and retention decision--remain supportive, to
    include compensation. Compensation is a double-edged sword in that it
    is a principle factor for marines both when they decide to reenlist and
    when they decide not to reenlist. Private sector competition will
    always seek to capitalize on the military training and education
    provided to our marines--marines are a highly desirable labor resource
    for private sector organizations. The support of Congress to continue
    increases in basic pay, and ensuring a sound comprehensive compensation
    and entitlements structure greatly assists efforts to recruit and
    retain the quality Americans you expect in your Corps. We look forward
    to the comprehensive reviews of both the Defense Advisory Committee on
    Military Compensation as well as the Quadrennial Review of Military
    Compensation.
                                   recruiting
    Active Component
        In fiscal year 2004, the Marine Corps achieved 103.6 percent of
    enlisted contracting and 100.1 percent of enlisted shipping objectives.
    Nearly 98 percent of those shipped to recruit training were Tier 1 high
    school diploma graduates, well above the Department of Defense (DOD)
    and Marine Corps standards of 90 percent and 95 percent, respectively.
    In addition, 71.6 percent were in the I-IIIA upper mental testing
    categories; again well above the DOD and Marine Corps standards of 60
    percent and 63 percent, respectively. Thus far in fiscal year 2005, we
    have assessed (shipped) 14,170 marines which represents 100 percent of
    our accession mission to date. We fully anticipate meeting our annual
    accession mission. We did fall 84 short in January and 192 short in
    February, 277 short of our self-imposed contract mission, but overall
    we are at 99.2 percent of contract mission for the year. As concerns
    officers, we accessed 1,447 in fiscal year 2004, 100 percent of
    mission, and we are on course to make our officer accession mission in
    fiscal year 2005.
    Reserve Component
        Recruiting for our Reserves, the Marine Corps similarly achieved
    its fiscal year 2004 enlisted recruiting goals with the accession of
    6,165 non-prior service marines and 2,941 prior service marines.
    Through February of fiscal year 2005 we have accessed 2,190 non-prior
    service and 1,221 prior service, which reflects 36 percent and 54
    percent of our year to date mission, respectively. Again, we project to
    meet our recruiting goals this year. For our Reserve component, officer
    recruiting and retention for our Selected Marine Corps Reserve units is
    traditionally our challenge, and remains the same this year. This
    challenge exists primarily due to the low attrition rate for company
    grade officers from the Active Force. The Marine Corps recruits Reserve
    officers exclusively from the ranks of those who have first served a
    tour as an Active-Duty Marine officer. We are exploring methods to
    increase the Reserve participation of company grade officers in the
    Selected Marine Corps Reserve through increased command focus on
    Reserve participation upon leaving Active-Duty, and Reserve officer
    programs for qualified enlisted marines. The legislation to authorize
    the payment of the affiliation bonus will help in this effort.
    Accomplishing the Mission
        The Marine Corps' recruiting environment is dynamic and
    challenging, particularly with regards to market propensity. Part of
    the challenge is due to an increased Active-Duty accession mission to
    meet the additional authorized end strength in the Marine Corps. Our
    success in the future will hinge on our ability to overcome our target
    market's low propensity to enlist and the increased cost of
    advertising, while maintaining innovation in our marketing campaign.
    Marketing by its very nature requires constant change to remain
    relevant. While our brand message of ``tough, smart, elite warrior''
    has not changed, the Corps continues to explore the most efficient
    manner to communicate and appeal to the most qualified young men and
    women of the millennial generation. Currently, we are looking to expand
    methods to influence the parents of potential applicants. Parents are
    the primary influencers of the high school student population and it is
    important that we educate them on the benefits of serving in the Marine
    Corps.
        Ensuring young men and women and their parents hear and understand
    the recruiting message requires continual reinforcement through
    marketing and advertising programs. To do this we continue to emphasize
    paid media, generating leads for recruiters, and providing the
    recruiters with effective sales support materials. Quality advertising
    aimed at our target market provides the foundation for establishing
    awareness about Marine Corps opportunities among young men and women.
        Paid advertising continues to be the most effective means to
    communicate our message and, as a result, remains the focus of our
    marketing efforts. As advertising costs continue to increase it is
    imperative that our advertising budgets remain competitive in order to
    ensure that our recruiting message reaches the right audience. Marine
    Corps recruiting successes over the past years are a direct reflection
    of a quality recruiting force and an effective and efficient marketing
    and advertising program.
    Recruiter Access
        The Marine Corps continues to benefit from the legislation enabling
    recruiter access to high school student directory information, the same
    as afforded other prospective employers. America's youth can learn
    about career opportunities in both the public and private sectors now
    that our recruiters are afforded equal access. We look forward to your
    continued support as we strive to meet the increasing challenges of a
    dynamic recruiting environment.
                                   retention
        A successful recruiting effort is but one part of placing a
    properly trained marine in the right place at the right time. The
    dynamics of our manpower system must match skills and grades to our
    commanders' needs throughout the operating forces. The Marine Corps
    endeavors to attain and maintain stable, predictable retention
    patterns. However, as is the case with recruiting, civilian
    opportunities abound for marines as employers actively solicit our
    young Marine leaders for private sector employment. Leadership
    opportunities, our core values, and other similar intangibles are a
    large part of the reason we retain dedicated men and women to be
    Active-Duty marines after their initial commitment. Of course retention
    success is also a consequence of the investments made in tangible forms
    of compensation and in supporting our operating forces--giving our
    marines what they need to do their jobs in the field, as well as the
    funds required to educate and train these phenomenal men and women.
    Enlisted Retention
        We are a young force. Achieving a continued flow of quality new
    accessions is of foundational importance to well-balanced readiness.
    Within our 154,600 marine Active-Duty enlisted force, over 27,000 are
    still teenagers and 104,000 are on their first enlistment. In fiscal
    year 2004, we reenlisted 6,019 first term marines with a 97.7 percent
    MOS match. In fiscal year 2005, our career force requirement requires
    that we reenlist approximately 25 percent of our first-term marine
    population. To better manage the career force, we introduced the
    Subsequent Term Alignment Plan in fiscal year 2002 to track
    reenlistments in our Active career force. In fiscal year 2004, we again
    met our career reenlistment goals and achieved a 96.6 percent skill
    match. For our Reserve Force, we satisfied our requirements as we
    retained 73.8 percent in fiscal year 2004 slightly above our historical
    norm of 70.7 percent.
        For fiscal year 2005, we are off to a strong start. The SRB program
    greatly complements our reenlistment efforts and clearly improves
    retention within our critical skill shortages. In fiscal year 2005, the
    Corps is continuing to pay lump sum bonuses, thus increasing the net
    present value of the incentive and positively influencing highly
    qualified, yet previously undecided, personnel. It is a powerful
    influence for the undecided to witness another marine's reenlistment
    and receipt of his or her SRB in the total amount. With the added
    benefit of the Thrift Savings Program, our marines can now confidently
    invest these funds toward their future financial security. The Marine
    Corps takes great pride in prudent stewardship of the resources
    allocated to the critical SRB program.
        A positive trend continues concerning our first term non-expiration
    of Active service attrition--those marines who depart before their
    enlistment is completed. As with fiscal years 2003 and 2004, we
    continue to see these numbers decrease. The implementation of the
    crucible and the unit cohesion programs continues to contribute to
    improved retention among our young marines who assimilate the cultural
    values of the Corps earlier in their career.
    Officer Retention
        Overall, we continue to achieve our goals for officer retention. We
    are retaining experienced and high quality officers. Our aggregate
    officer retention rate was 91.0 percent for fiscal year 2004, which is
    our historical average. Current officer retention forecasts indicate
    healthy continuation rates for the officer force as a whole. Reserve
    officer retention in fiscal year 2004 was 75 percent, slightly below
    the historical average of 77 percent. For the current year, Reserve
    officer retention is back above the historical norms. It is important
    to note that high retention in the Active component reduces the number
    of officers transitioning (thus accessions) into the Selected Marine
    Corps Reserve.
                              marine corps reserve
        Our Reserve component continues to do an exceptional job augmenting
    and reinforcing our Active component in support of the global war on
    terrorism. Ready, rapidly responsive Marine Reserve Forces provide the
    depth, flexibility, and sustainment vital to the success of our Marine
    Air Ground Task Forces. To date, over 36,000 Reserve marines have
    served on Active-Duty since September 11. The Marine Corps Reserve
    continues to recruit and retain the men and women willing to
    effectively manage their commitment to help in winning the global war
    on terrorism while maintaining their commitments to their families,
    their communities and their civilian careers.
        Thanks to strong congressional support, the Marine Corps has
    trained and equipped its Reserve to be capable of rapid activation and
    deployment. This capability allows Reserve combat deployments to mirror
    those of the Active component in duration.
        More than 13,000 Reserve marines are currently on Active Duty with
    over 11,500 in cohesive Reserve ground, aviation and combat support
    units and nearly 1,600 serving as individual augments in both Marine
    and Joint commands. Sixty-six percent of all mobilized reservists
    deploy to the CENTCOM area of operations. To support ongoing mission
    requirements for Operation Iraqi Freedom (OIF), the Marine Corps will
    activate, reactivate or extend 67 Combat, Combat Support, and Combat
    Service Support units or detachments. The progression of the current
    mobilization has reinforced the point that our Reserve Force is a
    limited resource that must be carefully managed to ensure optimum
    employment over a protracted conflict.
        As mentioned, recruiting and retention remain a significant
    interest as the Marine Corps Reserve continues its support for the
    global war on terrorism. Incentives are an integral tool that aides the
    proper manning of our Reserve Force. The funding increases and
    flexibility inherent in the Reserve incentives you provided in the
    National Defense Authorization Act for Fiscal Year 2005 are an
    invaluable asset to assist in our continued recruitment and retention
    mission. The approved legislation allowing payment of an affiliation
    bonus for officers to serve in the Selected Marine Corps Reserve will
    greatly assist in increasing officer participation and meeting our
    current junior officer requirements.
        Healthcare remains an essential part of mobilization readiness for
    our Reserve component. The assistance provided by Congress in this area
    since September 11 has been invaluable to Reserve marines and their
    families who are making significant adjustments in lifestyle to effect
    successful mobilizations. Increased flexibility and portability of
    healthcare for these families assists in alleviating one of the most
    burdensome challenges facing families of deploying Reserve marines.
        In an effort to ensure a well-balanced total force and address any
    potential challenges that may arise, we are constantly monitoring
    current processes and policies, as well as implementing adjustments to
    the structure and support of our Reserve Forces. The Marine Corps made
    a conscious investment through our Inspector-Instructor Program, which
    provides a strong cadre of Active marines to support our Selected
    Marine Corps Reserve units. This ensures Selected Marine Corps units
    are trained and properly equipped prior to activation, allowing the
    Marine Corps to effectively train, mobilize, and deploy its Reserve
    Forces.
        In order to meet the operational needs of the global war on
    terrorism, the Marine Corps is in the process of making adjustments to
    the force structure of both the Reserve and Active component. Two
    efforts currently underway to rebalance the force for current and
    future missions are the IMA study and the previously discussed force
    structure review. Implementation of the IMA study results will increase
    the number of high demand/low density specialties available for
    deployment.
        Present policy is to only activate Individual Ready Reserve (IRR)
    members who have volunteered for duty. The population of activated IRR
    volunteers to date is 323 officers and 634 enlisted. The two primary
    means of recruiting IRR volunteers for Individual Augmentee billets is
    through the use of Reserve Duty On-Line and the Mobilization Command
    Call Center. Currently there are 1,629 Individual Augment billets being
    filled by IMAs, IRRs, and retired recall or retired retained marines.
    These marines have been critical to filling these requirements.
                                civilian marines
        Civilian marines are integral to the Marine Corps Total Force
    concept. We have approximately 24,000 civilian marines, of which
    approximately 13,000 are appropriated fund employees, and about 11,000
    are non-appropriated fund employees. Our appropriated fund civilian
    marines, comprise just 2 percent of the total DOD civilian workforce,
    the leanest ratio of civilians to military in the Department. Our non-
    appropriated fund personnel are primarily resourced by revenue-
    generating activities and services such as exchanges, clubs, golf
    courses, bowling centers, and gas stations. Our civilian marines fill
    key billets aboard Marine Corps bases and stations, thus freeing
    Active-Duty marines to perform their warfighting requirements in the
    operating forces.
    Marine Corps Civilian Workforce Campaign Plan
        Marines, more than ever before, recognize the importance of our
    civilian teammates and the invaluable service they provide to our Corps
    as an integral component of the Total Force. To that end we continue to
    mature and execute our Civilian Workforce Campaign Plan, a strategic
    roadmap to achieve a civilian workforce capable of meeting the
    challenges of the future. We are committed to building leadership
    skills at all levels, providing interesting and challenging training
    and career opportunities, and improving the quality of work life for
    all appropriated and non-appropriated civilian marines. As part of our
    effort to meet our goal of accessing and retaining a select group of
    civilians imbued with our core values, we have developed a program to
    provide our civilian marines an opportunity to learn about the Marine
    Corps ethos, history, and core values--to properly acculturate them to
    this special institution. All this supports our value proposition, why
    a civilian chooses to pursue a job with the Marine Corps: to ``Support
    our marines. Be part of the team.''
    National Security Personnel System
        The Marine Corps is actively participating with the Department of
    Defense in the development and implementation of this new personnel
    system. Following an intensive training program for supervisors,
    managers, human resources specialists, employees, commanders, and
    senior management, we will join with the Department in the first phase
    of implementation, tentatively scheduled for July 2005. In the Marine
    Corps, we will lead from the top and have our Headquarters Marine Corps
    civilian personnel included in the first phase of implementation, known
    as `Spiral One.'
                             information technology
        We remain committed to transforming our manpower processes by
    leveraging the unique capabilities resident in the Marine Corps Total
    Force System (MCTFS), our fully-integrated personnel, pay, and manpower
    system that serves Active, Reserve, and retired members. The integrated
    nature of MCTFS allowed us to develop our Total Force Administration
    System (TFAS); a web based and virtually paperless administration
    system that provides marines and commanders 24-hour access to
    administrative processes via Marine On Line. Our TFAS allows
    administrative personnel to refocus their efforts from routine tasks to
    more complex analytical duties, and ultimately will enable greater
    efficiencies. Additionally, MCTFS facilitates our single source of
    manpower data, directly feeding our Operational Data Store Enterprise
    and Total Force Data Warehouse. This distinctive capability provides a
    reliable source of data to accurately forecast manpower trends, and
    fuels our Manpower Performance Indicators, which provide near real time
    graphical representation of the Corps manpower status such as our
    deployment tempo. Properly managing our manpower requirements and
    processes requires continued investment in modern technologies and we
    are committed to these prudent investments.
                   taking care of marines and their families
        Your marines have an inherent ability to perform well in the most
    difficult environments, and the current state of combat is no
    exception. Though we are an expeditionary force, the demands we are now
    experiencing lends new significance to the term ``expeditionary.''
    Still, our marines and their families' bravery, courage, and dedication
    to mission are unyielding.
    Quality-of-Life Investment
        The Marine Corps is actively attuned to quality of life. It is
    important to note the potential long-term mission of the global war on
    terrorism and the challenge to support our community services
    infrastructure--both human and material, such as facilities and
    equipment. The spirit of service on our human side will never diminish,
    but the current rotation cycle and heightened tempo impacts the
    resources and time to reconstitute or recapitalize our infrastructure.
    As previously stated, our longstanding expeditionary nature and manner
    of operation have enabled our success to date. As this tempo continues,
    however, our goal will be to ensure no required support is diminished.
    To the degree possible, we will adapt and reorient existing support
    capabilities, but we will also need to determine if our support
    infrastructure requires additional resources for our long-term mission.
    This assessment will be done in conjunction with our installation
    commanders.
    Funding
        In terms of resourcing for quality of life community services
    programs, I am pleased to note that the Marine Corps achieved the DOD
    morale, welfare, and recreation (MWR) funding standard of 85 percent
    for Category A Programs and 65 percent for Category B programs this
    past year. Our actual fiscal year 2004 percentages were 88 percent and
    65 percent, respectively. To achieve this goal, MWR program annual
    direct Operations and Maintenance Marine Corps and Operations and
    Maintenance Reserve (O&MMC/R) support budget-based funding has been
    steadily increased by a total of $15 million from fiscal year 2002 to
    fiscal year 2005. Our fiscal year 2005 Marine and Family Services
    direct O&MMC/R support is at $47.5 million, including child
    development, counseling, transition assistance, relocation assistance,
    etc.; and voluntary education is at $46.7 million, including tuition
    assistance.
    Housing
        It is important to mention that proper housing goes hand-in-hand
    with our support programs to keep morale high and enhance quality-of-
    life. We are providing for our young single marines by focusing on
    housing our junior enlisted bachelor personnel in pay grades of E-1
    through E-5 in our barracks, with a goal of providing a room standard
    that allows two junior enlisted marines (E-1 to E-3) to share a room
    with a private bath. By assigning two junior marines to a room, we
    believe we are providing the correct balance between their need for
    privacy and the Marine Corps' goals to provide companionship,
    camaraderie, and unit cohesion. Noncommissioned officers (NCOs) in the
    pay grades of E-4 and E-5 are provided a private room and bath. We have
    over 170,000 marine family members and we are mindful that the military
    lifestyle can be unsettling in some respects as it calls for frequent
    relocations and deployments. To show our families that we appreciate
    their fortitude in enduring these disruptions, we remain committed to
    improving family housing. We have, and will continue to, increase our
    quality-housing inventory through public private ventures and military
    construction where necessary. Moreover, we are on track to have
    contracts in place to eliminate inadequate family housing by the end of
    fiscal year 2007.
    Deployment Support
        The global war on terrorism mission poses dangers, risks, and
    periods of separation that test the fortitude and stamina of our
    marines and their families. In keeping with our ethos that marines are
    marines for life, our commitment to a continuum of care has never been
    stronger or more effective. Our installation and operational commanders
    are working diligently to ensure that both the deploying marine and the
    marines and families who stay behind are provided support services to
    enhance their quality-of-life. In this capacity, installation
    commanders are continuously evaluating on base and deployed support.
    They utilize all available resources, agencies, and methods of service
    to broadly plan and deliver seemless support. Our installation
    commanders reach out to local and national community service partners
    to expand program access and availability, offer on-line and telephonic
    assistance programs such as Marine Corps Community Services (MCCS)/
    Military OneSource, and flex programs as necessary to decrease low
    utilization services and increase additional demand programs. Finally,
    as they are closest to the need, they monitor and pulse the community
    as needed.
        Five years ago we renovated and revitalized our community services
    infrastructure and philosophical approach to support services. We
    removed program stovepipes that precluded maximum capabilities and
    focused the ``united team'' to pull together for the good of the
    marines and their families. This renovated organization; MCCS is now 5
    years old has matured and not only have they pulled together, they know
    the cadence and direction required. I can personally attest to the
    wisdom of MCCS, as I was both an installation commander responsible for
    pushing support and an operational commander pulling support. Beginning
    with Operation Enduring Freedom (OEF) and continuing through Operation
    Iraqi Freedom (OIF), MCCS listened, learned, and continues to respond
    to the needs of marines and their families. I would like to highlight
    some specific examples of MCCS and other military personnel support.
        Throughout all phases of the deployment cycle: during pre-
    deployment, in-theater, and in post-deployment, the needs of marines
    and their families are addressed. Additionally, home-station support,
    which I will discuss below, is a central element of this multi-phased
    dynamic that sustains all members of the Marine Corps family.
        While in a pre-deployment phase, marines and their families are
    briefed on a variety of issues ranging from deployment coping skills,
    including the potential of traumatic combat experiences and associated
    stress, to financial matters, where they take care of wills, powers of
    attorney, and family care plans. At this stage, marine spouses receive
    important assistance through Marine Corps Family Team Building Programs
    such as the Key Volunteer Network (KVN) and the Lifestyle, Insights,
    Networking, Knowledge, and Skills (L.I.N.K.S.) programs. The KVN is the
    primary communication link between the commanding officer and unit
    families. This spouse-to-spouse connection is used by commanders to
    pass important, factual, and timely information on the status and
    welfare of the operational unit. L.I.N.K.S. helps our Marine spouses
    acclimate to our military lifestyle and learn how to survive the
    challenges associated with frequent deployments and separations. When
    spouses participate in L.I.N.K.S. prior to deployments, this training
    is recognized as a readiness multiplier. This means those spouses who
    took advantage of L.I.N.K.S. are more prepared for the experience of
    separation and rigors of deployment. Both KVN and L.I.N.K.S training
    programs are now available online and have CD-ROM versions for families
    away from a base or station, or if they are too busy to attend classes.
        To maintain our high level of morale and commitment and help ease
    mission-related anxieties during deployment, MCCS and other agencies
    provide support to deployed marines in many different forms, and we
    adjust these support mechanisms as the intensity of the mission
    changes. We have Tactical Field Exchanges, phone service, free Internet
    service and expedited mail service. At the camps in Iraq there is a
    variety of MWR equipment.
        As I have discussed, the Marine Corps Exchange supports deployed
    marines but it is also an important center of activity aboard our
    installations. As part of the non-pay benefits system, we rely upon the
    exchange to provide value through the sale of goods and services, but
    to also contribute dividends to support MWR programs that help to make
    installations home for our marines and their families.
        It is well recognized that mail, voice or other communication, is
    the most significant morale enhancer for anyone separated from loved
    ones. Beyond quality phone and mail service to keep our deployed
    marines in touch with their loved ones back at home, we have a new
    communication alternative that we call ``MotoMail,'' for motivational
    mail. MotoMail allows family and friends to rapidly communicate with
    deployed marines who do not have Internet access readily available. To
    connect, friends and family go to an established website and send an
    email to the deployed marine, where it is downloaded and automatically
    printed, folded and sealed by our Postal Marines for complete privacy.
    The messages are usually delivered within 24 hours or less. As of
    February 22, more than 59,000 MotoMail letters have been delivered.
    Reducing Stress
        To deal with individual and readiness concerns in theater, the
    Marine Corps has a range of proactive counseling services. We are ever
    watchful for symptoms and risks of untreated combat stress and its
    signs, and advise marines of the resources available for treatment. We
    also provide in-theater counseling through the Operational Stress
    Control and Readiness (OSCAR) program, which embeds mental health
    professionals within the Marine Division, where they offer counseling
    in close a proximity to the combat operations as possible. OSCAR keeps
    marines with low-level problems at their assigned duties and allows
    those with more severe conditions to immediately receive appropriate
    treatment. Reports indicate that units implementing the OSCAR program
    have a marked decrease in MEDEVACs for mental health reasons. Before
    marines depart theater, we have a decompression period when military
    chaplains provide our warrior transition brief. The brief consists of
    sessions designed to help marines realize that they have been in
    combat, that they are preparing to rejoin their families at home, and
    where they want to go with relationships in their personal lives.
        In the post-deployment phase, when marines are back at their home
    station, there is a decompression period before they are permitted to
    go on leave. Supportive services are available on installations through
    chaplains, medical treatment facilities, and MCCS for combat stress
    related issues, relationship enrichment, drug or alcohol abuse,
    domestic violence, and financial management. Additionally, Marine
    families are supported by MCCS counseling and advocacy programs and a
    spouse return and reunion briefing, which is provided on a voluntary
    basis to interested spouses.
        As I referenced earlier in this testimony, deployment support
    includes important home-station support. We have a wide array of
    services to strengthen family readiness. The Marine and Family Services
    Program provides counseling as needed, child development programs and
    respite child care services, support for marines with exceptional
    family members, personal financial management guidance, and information
    hotlines to provide accurate information, useful resources, and helpful
    referrals pertaining to our deployments. We also provide recreational
    and stress alleviating opportunities to help them through the
    separation and provide a sense of normalcy as they carry on until their
    marine returns.
    Child Care
        With regard to child development, we fully realize that when a
    parent deploys, the remaining parent can experience stress and burnout.
    Parenting issues can add to the stress placed on families during these
    times. We thank you for the supplemental funds you provided last year.
    We are using them to provide respite care, extended childcare hours,
    childcare during deployment briefs, and deployment training materials
    geared for children. We also sponsored the Enhanced Extended Child Care
    Initiative, which reduces stress on Marine Corps families by providing
    care during nontraditional hours (i.e., evenings, weekends, and
    holidays). It is also designed to lower costs for military families
    during periods of training, deployments, family emergencies or illness.
    To help our families that reside in remote and isolated areas, we are
    developing a partnership with the National Association of Child Care
    Resources and Referral Agencies to provide comprehensive childcare
    consumer education and referrals.
        Beyond addressing parental burnout, we are also mindful that
    wartime deployments take their toll on the very youngest members of our
    Marine families. We work to help these youngsters cope with what can be
    very confusing and frightening situations. For example, we have a new
    deployment video, ``Nothing to Worry About,'' for Marine Corps
    families, especially children ages 4 to 10. It will help families to
    understand the impact of deployment on children and help children
    better understand what their parents may be doing and experiencing
    while deployed. It also discusses means for communication between the
    children and the deployed parent. In addition, Marine and Family
    Services at Camp Pendleton has partnered with the National Child
    Traumatic Stress Network and the Naval Hospital Department of
    Psychiatry at San Diego to develop appropriate protocols to assess the
    impact of a parent's combat-related traumatic exposure on their
    children and family functioning.
    Military OneSource
        I am now pleased to comment on the continued success of Military
    OneSource, another powerful resource for our marines and their
    families. The Marine Corps began OneSource as MCCS OneSource, now
    expanded to all the Services. Everyday, we find ways to use this
    service, which provides round-the-clock information and referral
    assistance service and is available via toll-free telephone and
    Internet access. As recently added support, separating servicemembers
    and their family members are eligible for 180 days and our seriously
    injured and the survivors of those who have died while on Active-Duty
    are eligible indefinitely. Where necessary, referrals for face-to-face
    counseling sessions are available to help marines or their families
    cope with deployments. This program is especially important for our
    Reserve marine families not located near military installations.
    Suicide Prevention
        For all our efforts to take care of marines and their families, we
    are not immune to societal risk factors, such as suicide, domestic
    violence, and drug and alcohol abuse. The Marine Corps is a youthful
    and vigorous force. Our expeditionary nature and current operational
    tempo brings stress, and for some, heightened anxiety. The mission is
    intense. Knowing that negative behaviors may exist or manifest to
    uncontrolled levels is of utmost concern to us. As such, we
    aggressively work to prevent these behaviors or if necessary intervene.
    As I'm sure this committee would agree, one suicide is too many. While
    our suicide rates for 2004 were up compared with previous years, the
    total remains below the national average for the demographic group.
    Moreover, there are no clear trends among any specific groups.
    Interestingly, the rate is higher among those who have not deployed.
    Though the suicide rate remains within normal limits, we continue to
    closely monitor this issue and have taken preemptive preventative
    actions. Last December, the commandant provided guidance to commanders
    on watch signs for stress that could escalate to self-harm.
    Additionally, in the near future, we will issue ``A Leader's Guide for
    Managing Marines in Distress.'' We have also taken steps to ensure that
    the command climate is conducive to seeking help.
    Domestic Violence
        With regard to domestic violence, I am proud to report that our
    prevention and intervention measures continue to be successful.
    Domestic violence in the Marine Corps has been steadily declining since
    fiscal year 2001. Over the past year, both child and spouse abuse have
    declined 27 percent and 18 percent, respectively.
    Substance Abuse
        Drug and alcohol abuse remains a negative throughout society and we
    at the Marine Corps know that we must be mindful of such influences on
    our young population who continue to endure the challenges associated
    with our current deployment climate. Our leadership monitors risk areas
    and works to prevent substance abuse incidents, thereby decreasing the
    need for intervention. Our aggressive testing, commander's commitment
    against drug use, and targeted education allows us to sustain a low
    drug positive rate. I am pleased to report that the positive drug-
    testing rate for the Marine Corps is less than 1 percent.
    Sexual Assault
        It is the Marine Corps' unequivocal position that sexual assaults
    are a criminal act and will not be tolerated in any capacity. We, along
    with DOD and our sister Services, continue to be proactively engaged in
    this matter, issuing new policy and guidance, focusing and coordinating
    procedures to address alleged offenders and the specific needs of
    sexual assault victims. We formally established the Sexual Assault
    Prevention and Response Office to serve as the integrating entity (i.e.
    health services, legal, law enforcement, training and education, etc.)
    for all sexual assault efforts. This cross-discipline effort allows us
    to fully address the issues relating to the victim, alleged offender,
    prevention and response. As for caring for victims, the Marine Corps
    currently has 31 federally employed or contracted victim advocates and
    125 highly trained volunteers at 17 installations. These advocates
    provide information, guidance, and support to victims of domestic
    violence and sexual assault. With regard to deployed marines, a
    Uniformed Victim Advocate (UVA) program has been established to assist
    deployed unit commanders in supporting victims of sexual assault in the
    theater of operations. To date, 172 commander-appointed UVAs have been
    trained. Some of these UVAs have deployed to Iraq and some will remain
    to perform training for other UVAs at home station. It is our intent to
    have a minimum of two UVAs each per squadron and battalion throughout
    the Marine Corps. Also, on this important topic, I am pleased to report
    that the Marine Corps began developing and improving sexual assault
    policies prior to the requirements of the National Defense
    Authorization Act for Fiscal Year 2005. Of course, we will continue to
    adjust policies, where and if necessary, to meet the standards set
    forth by Congress and the DOD.
    Casualty Assistance
        As this testimony reflects, we do our very best to support marines
    and their families. As of February 22, 2005, there have been 467 (365
    hostile and 102 non-hostile) marines killed in Operations Enduring
    Freedom (OEF) and Iraqi Freedom (OIF). There have been 4,010 very
    serious and serious injuries or illnesses (3,711 hostile and 299 non-
    hostile). Of these casualties, 48 of those killed, and 350 of those
    wounded, were from the Reserve component. Support in the wake of a
    casualty must be beyond reproach, and the Marine Corps relies upon our
    expansive network of approximately 5,000 trained Casualty Assistance
    Calls Officers (CACOs) who offer support to Marine families when they
    need it most. CACOs are the prime point of contact for surviving
    families and we see to it that their training matches the sensitivity
    of their mission. The training provided by the Casualty Section at
    Headquarters Marine Corps is a highly detailed ``train the trainer''
    program. The actual training of CACOs is a command responsibility but
    Casualty Section representatives conduct training on a regular basis at
    all the bases and stations. Additionally, the Marine Corps CACO
    Training Information Brief and CACO Guide to Benefits and Entitlements
    are available on the web to all assigned CACOs and provide expansive
    information on the duties of the CACO. We immediately update our
    training documents as information changes to continue effective support
    for assigned CACOs. We also continuously review our CACO program for
    potential improvements. Most recently, we incorporated into the CACO
    Guide a list of reputable benevolent and philanthropic agencies to help
    our survivors in alleviating financial burdens and support gaps
    associated with existing benefits and entitlements. In the event a
    Marine is assigned to perform CACO duties and has not had the
    opportunity to attend a training session, he or she is walked through
    every phase of the process by our Casualty Section utilizing the CACO
    Training Guide. Furthermore, our Casualty Section personnel are
    available around-the-clock to ensure the CACO receives the necessary
    assistance to provide the right support to our surviving family
    members.
        We diligently work to stay in touch with our Marine families after
    the death of their loved one. Our Casualty Section engages next of kin,
    via casualty assistance correspondence, on several occasions following
    the death of a marine. General information on the circumstances of the
    casualty, survivors guides, veterans benefits information, and
    information regarding benevolent and philanthropic agencies are
    provided immediately to assist Marine families as they make the
    difficult transition to life without their marine. Follow-up reports on
    the circumstances of the casualty are mailed when casualty information
    changes. A 60-day follow-up letter to the next of kin is also sent to
    survivors. All of this correspondence includes a reminder to notify the
    Casualty Section if there are any questions or concerns related to the
    marine's death or the assistance they are receiving.
        We understand that life for Marine families following the death of
    their marine can be tumultuous. Even the simplest tasks can become
    arduous and confusing. To ease this confusion and help surviving
    families take care of themselves and their affairs, our Personal and
    Family Readiness Division at Heaquarters Marine Corps stands ready to
    help navigate various benefits and programs, such as the TRICARE
    system. An additional resource is Military OneSource, which I
    previously mentioned. This service provides a wealth of helpful
    information and referrals on many subjects, including parenting,
    education, finances, legal issues, elder care, health and wellness,
    deployment, combat stress, crisis support, and relocation. As I stated,
    survivors are eligible for Military OneSource indefinitely; and we
    believe it will continue to provide help and some measure of comfort to
    our families.
        We are very appreciative of the many benevolent organizations that
    support our marines. Such organizations include: the Navy/Marine Corps
    Relief Society, the Marine Corps Law Enforcement Foundation, the Marine
    Corps Scholarship Foundation, the Fisher Foundation, the Injured Marine
    Semper Fi Fund, and the Intrepid Foundation. We look forward to
    productive and lasting coordination with the various groups who do so
    much for our brave troops and their families.
        As for our marines who sustain injuries in combat, we have a new
    web-based Injured/Ill Patient Tracking system. The system is linked to
    the Corps' casualty databases and contains information on all injured/
    ill reported via a casualty report. The system allows Patient
    Administration Teams (PAT) to enter the most up-to-date general
    treatment information and travel plans and now commanders at all levels
    have visibility of their marines during all stages in the medical
    pipeline. The Marine Corps uses PATs throughout the entire medical
    pipeline, from Iraq through Bethesda and points beyond. Our PATs
    provide tremendous support to the families of our marines brought to
    the beside of an injured marine by the Marine Corps on invitational
    travel orders. For example, they meet arriving families at the
    airports, arrange hotels, provide transportation to and from the
    hospital on a daily basis, and provide any other assistance the family
    may need. PATs also coordinate the ``warm handoff'' to other hospitals
    that will provide additional care and support to our marines.
                        marine for life--injured support
        Building on and leveraging the organizational network and strengths
    of our previously established Marine for Life Program, we are currently
    implementing an Injured Support Program to assist the disabled after
    they are discharged. The goal is to ensure that these marines know that
    the Corps will always be there for them, and to bridge the often
    difficult and lengthy gap between the care we in the Marine Corps and
    Navy provide, and that which the Department of Veterans Affairs (VA)
    assumes. The key is to ensure continuity of support through transition
    and assistance for however long it might take, to include providing
    assistance during the gap in entitlements. Planned features of the
    program include advocacy within the Marine Corps and the Department of
    the Navy for the disabled and their families, and helping them in
    dealing with external agencies from which they may receive support. An
    extremely important part of this will be both pre and post service
    separation case management, assistance in working with physical
    evaluation boards, creation of an interactive web site for disability/
    benefit information, assistance with Federal hiring preferences and
    law, and improved VA handling of marine cases. The latter is being
    effected by the attachment of a liaison officer embedded within the VA
    headquarters. The Marine for Life Injured Support Program began
    operations in early January, and it will continually evolve and improve
    its services. If there is any area that needs continued effort and
    interest, it is in the long-term help and assistance for our disabled
    personnel and their families.
        The Marine Corps looks forward to our continued partnership with
    Congress to enhance support services for marines and Marine families
    when they are dealing with the injury or loss of a loved one. In this
    regard, I thank you for the new authorities provided in the National
    Defense Authorization Act for Fiscal Year 2005 to include the parents
    of deceased servicemembers for burial travel and up to three family
    members to travel to the bedside of an injured servicemember. These new
    authorities go a long way toward helping our Marine families through
    difficult times.
        We appreciate the heightened congressional interest in caring for
    our war casualties and their families. There are no words, deeds or
    compensatory measures that can take the place of our fallen marines.
    That said, we must do our very best to support those families who are
    forced to live without their loved one. We must take every feasible
    step to make the survivors of our fallen heroes whole monetarily, so
    that they are not unduly burdened with financial worry. Such support
    includes appropriate death gratuities, life insurance, ending unfair
    pension offsets, and ensuring that dependents are cared for with regard
    to healthcare and education. There are various legislative remedies
    currently under discussion. However, we should make certain that the
    final remedy treats all servicemembers equitably. We simply cannot
    distinguish between types of service to this great Nation.
                                   conclusion
        Through the remainder of fiscal year 2005, and into fiscal year
    2006, our Nation will remain challenged on many fronts as we prosecute
    the global war on terrorism. Services will be required to meet
    commitments, both at home and abroad. Marines, sailors, airmen, and
    soldiers are the heart of our Services--they are our most precious
    assets--and we must continue to attract and retain the best and
    brightest into our ranks. Transformation will require that we blend
    together the ``right'' people and the ``right'' equipment as we design
    our ``ideal'' force. Personnel costs are a major portion of the
    Department of Defense and Service budgets, and our challenge is to
    effectively and properly balance personnel, readiness, and
    modernization costs to provide mission capable forces. We are involved
    in numerous studies regarding human resources strategy to support our
    military, which requires we must balance the uniqueness of the
    individual Services. In some cases a one-size fits all approach may be
    best, in others flexibility to support service unique requirements may
    be paramount. Regardless, we look forward to working with Congress to
    maintain readiness and take care of your marines.
        The Marine Corps continues to be a significant force provider and
    major participant in joint operations. Our successes have been achieved
    by following the same core values today that gave us victory on
    yesterday's battlefields. Our Active, Reserve, and civilian marines
    remain our most important assets and, with your support, we can
    continue to achieve our goals and provide what is required to
    accomplish the requirements of the Nation. Marines are proud of what
    they do! They are proud of the ``Eagle, Globe, and Anchor'' and what it
    represents to our country. It is our job to provide for them the
    leadership, resources, quality-of-life, and moral guidance to carry our
    proud Corps forward. With your support, a vibrant Marine Corps will
    continue to meet our Nation's call as we have for the past 230 years!
    Thank you for the opportunity to present this testimony.

        Senator Graham. Thank you, General.
        General Brady.

      STATEMENT OF LT. GEN. ROGER A. BRADY, USAF, DEPUTY CHIEF OF
               STAFF, PERSONNEL, UNITED STATES AIR FORCE

        General Brady. Mr. Chairman and Senator Nelson, thank you
    for the opportunity to be with you here today.
        In the years since the fall of the Soviet Union, America's
    airmen have responded to dramatic changes in our force
    structure and the world security environment. We continue to
    streamline our Active-Duty Force while, remaining engaged
    around the world at levels higher than at any time during the
    Cold War.
        As we work toward the future, we must determine our
    personnel needs, shape the force to meet those needs, provide
    relief for our most heavily stressed career fields, and develop
    the leaders who will take the reins deep into the 21st century.
    These are complex and interrelated issues, challenging how we
    manage the Total Force.
        We are on target to meet end strength by the end of fiscal
    year 2005. We will continue to bring balance to the force by
    right-sizing and right-shaping specific career specialties and
    overall officer/enlisted skill sets. We remain postured to use
    various programs already in place such as Career Job
    Reservation, noncommissioned officer (NCO) retraining, Palace
    Chase, and Blue to Green initiatives. Due to the success of our
    programs thus far, you can expect to see continuing adjustments
    to our current force-shaping criteria that will ensure we
    right-size and right-shape our force.
        As we return to our authorized end strength, relief is
    flowing to over-stressed career fields. This is a multi-step
    process, but our guiding principle is simple: we must have the
    right people with the right skills in the right place to meet
    the needs of our Air Expeditionary Force (AEF). We are doing
    this prudently, identifying specialties and specific year
    groups within those specialties where we have more people than
    we need. At the same time, we are correcting our skill
    imbalances by realigning manpower and expanding training
    pipelines.
        We are also taking a hard look at where our people serve.
    We have airmen serving outside the Air Force who do not deploy
    as part of an AEF. They serve in joint and defense agency
    positions. While some of these positions require uniformed
    people, others do not. Through military-to-civilian conversions
    and competitive sourcing initiatives, in consultation with
    other agencies, we are returning some of these airmen to Air
    Force positions.
        The Guard and Reserve obviously play a critical role in the
    Total Force. Today 25 percent of the air expeditionary packages
    are composed of National Guard and Air Force Reserve
    volunteers. As we take steps to ensure the long-term health of
    our Active-Duty Forces, we must do the same for our citizen
    airmen, and bolstering the ranks of the Air Reserve component
    is a critical part of our force shaping.
        While reducing Active-Duty accessions is one tool currently
    being used to bring the force down to authorized levels, it is
    imperative that we continue to renew and replenish the ranks
    with targeted recruiting. For fiscal year 2005, we plan to
    access 19,000 enlisted members, and just over 5,000 officers.
        This 1-year reduction in our recruiting goal is part of a
    deliberate effort to reduce force size without jeopardizing
    long-term health. A 1-year reduction will create a temporary
    decrease, offset by the number of people accessed, in preceding
    and subsequent years. Continued congressional support of our
    recruiting and marketing programs is critical to maintain the
    Air Force's competitiveness in a dynamic job market. We must
    all remember that ours is a recruited force, which means we
    must be competitive in the national personnel marketplace to
    both recruit and retain our people.
        A vital element for success is the ability to offer bonuses
    and incentives where we have traditionally experienced
    shortfalls, and we need the continuing authority to use
    incentive tools flexibly in a dynamic personnel market.
    Congressional support for these programs, along with increases
    in pay and benefits and quality-of-life initiatives, have been
    critical to our success in recruiting and retaining airmen and
    their families, and we are most appreciative of that.
        To achieve the Secretary of Defense's objective of shifting
    resources ``from bureaucracy to battlefield,'' we are
    overhauling our personnel services--our Personnel Services
    Delivery Transformation dramatically modernizes the processes,
    organizations, and technology by which we support airmen and
    their commanders. Routine personnel transactions, for instance,
    may now be done ``on-line.'' As a result, we deliver higher
    quality personnel services with greater access, speed,
    accuracy, reliability, and efficiency.
        Our civilian work force will go through a significant
    transformation as well with implementation of the DOD National
    Security Personnel System (NSPS), a more flexible civilian
    personnel system that will improve the way we hire, assign,
    compensate, and reward our valuable civilian employees. This is
    the most comprehensive change to the Federal personnel system
    in more than 30 years and a key enabler in the Department's
    achievement of Total Force management.
        While we continue to size and shape the force to meet our
    evolving mission, we must remain attentive to the quality of
    service for our members. In this regard, we completed an Air
    Force-wide assessment of our sexual assault prevention and
    response capabilities. A campaign plan was approved, and we are
    implementing specific initiatives to better understand the
    problem of sexual assault, to do everything within our ability
    to prevent it, and prepare ourselves to provide consistent and
    continuing care for victims when it occurs.
        We re-emphasized and continue to stress the need for airmen
    to look after one another. We are weaving this mindset into the
    very fabric of our culture. Our airmen have a responsibility to
    a part of the well-being of their wingmen--their fellow airmen.
    This is not a program, it is a mind set, a reaffirmation of our
    culture to take better care of our most valuable resource--our
    people.
        As we continue to develop and shape the force to meet the
    demands of the AEF, we will seek more efficient and effective
    service delivery methods. We will leverage opportunities to
    educate future leaders and make the extra efforts required to
    recruit and retain the incredible men and women who will take
    on the challenge of defending our Nation well into the 21st
    century. Undergirding this effort will be an aggressive
    commitment to nurture and sustain our core values of Service,
    Integrity, and Excellence, which makes ours the most respected
    Air and Space Force in the world.
        Mr. Chairman and members of the subcommittee, thank you for
    calling this hearing and for your continued support for the men
    and women of your Air Force.
        [The prepared statement of General Brady follows:]
              Prepared Statement by Lt. Gen. Roger A. Brady, USAF
                                  introduction
        In the nearly 15 years since the fall of the Soviet Union,
    America's airmen have responded to dramatic changes in our force
    structure and the world security environment. We continue to streamline
    our Active-Duty Force, all the while remaining engaged around the world
    at levels higher than at any time during the Cold War. To prevail in a
    dangerous and ever-changing world, we transformed ourselves from a
    heavy, forward-based presence designed to contain communism into an
    agile, expeditionary force, capable of rapidly responding on a global
    scale, with tailored forces ready to deal with any contingency. Since
    the attacks of September 11, 2001, our transformation took on an even
    more urgent and accelerated pace. With safety at home directly
    challenged, domestic security rose to the forefront and we went on the
    offensive to attack terrorism on a global scale. While we've enjoyed
    great success, this transformation is in its infancy and there is still
    much to do.
        The first step in our transformation was to establish a set of
    strategic goals to focus our personnel mission, and shed light on the
    specific capabilities our system offers to our airmen and their
    leaders. We set out to define the force, implementing a capabilities-
    based requirements system that meets surge requirements and optimizes
    force mix (Active-Duty, Air Reserve component, civilian, and
    contractors) in order to produce a flexible and responsive force.
    Additionally, we continually seek out ways to renew the force,
    maintaining a diverse, agile workforce that leverages synergy between
    Active-Duty, Air Reserve, and civilian components, and private industry
    to meet requirements and sustain capabilities. Throughout the process,
    we committed ourselves to develop future leaders by synchronizing
    training, education, and experience to continuously create innovative,
    flexible, and capable airmen to successfully employ air and space
    power. Key to our success, we identified the need to continually
    sustain the force through focused investment in airmen and their
    families. We will also synchronize our efforts to implement a robust
    strategic planning framework, understand the Air Force human resource
    investment, and link programming and legislative development to the
    plan. Finally, we will transform how we deliver customer service,
    creating a leaner, more cost-effective, customer-focused Human Resource
    Service to support the Air Expeditionary Force.
        At the heart of our efforts was the creation of an environment, and
    the associated tools necessary, to more deliberately develop airmen to
    be the leaders at all levels in the years to come. Our force
    development efforts extend across the Total Force, encompassing
    officers, enlisted, civilian employees, and Air National Guard and Air
    Reserve members.
        As we work towards the future, we must determine our end strength
    needs, shape the force to meet those needs, provide relief for our most
    heavily stressed career fields, and develop the leaders who will take
    the reins deep into the 21st century. These are complex and inter-
    related issues, challenging how we manage the Total Force.
        The success of our efforts is no small measure due to the
    outstanding support we've received from Congress. You've approved
    significant advances in pay, benefits, and retention incentives for the
    men and women who serve in all of the military services. These
    initiatives made a significant difference in Air Force readiness and in
    quality of life for our members and their families. In the coming years
    we look forward to your continued support in helping us develop a force
    the American people will continue to be proud of; a highly skilled,
    professional force dedicated to the defense of our great Nation.
        Our work in shaping the force is key to honing our combat
    capability. The core of this capability is the professional airman who
    voluntarily serves each and every day. Airmen create air and space
    power, turning ideas, tools, tactics, techniques, and procedures into
    power projection, global mobility, and battle space effects. With this
    understanding, the Air Force embraced a personnel vision and strategic
    planning model to transform airmen management across the Total Force
    (Active-Duty, Air National Guard and Reserve; officer, enlisted, and
    civilian). Additionally, we refocused our personnel processes and
    delivery systems on achieving capabilities and creating effects to
    develop the right people, with the skills, knowledge, and experience
    necessary to perform their missions in the right place at the right
    time.
        This vision succinctly defines the role of our manpower, personnel,
    and training professionals: detailing mission requirements; continually
    refreshing the pool to maintain an effective balance of youth and
    vigor, age and experience; deliberately developing the skills,
    knowledge, and experience required by our combatant and support
    missions; sustaining the force by meeting the needs of our airmen and
    their families; and providing integrated program management and service
    delivery systems.
        Important to note, our transformation doesn't end with military
    members. With the increasing threat of an enemy untethered to national
    borders with the flexibility and speed to attack without warning, it
    became obvious to all, that the institutionalized bureaucracy, which
    served us well throughout the Cold War had to transform as well. The
    National Security Personnel System (NSPS) enables our civilian force
    development initiatives in putting the right person in the right job at
    the right time. It provides the flexibility to address emerging threats
    quickly by freeing up essential military resources and allows for
    increased integration of military and civilian roles, ultimately
    translating into a more versatile, more responsive ability to provide
    national defense.
        All of these initiatives are designed to do one thing--take care of
    people. Our force thrives due to the expertise and professionalism of
    its airmen. Unfortunately, recent events revealed a longstanding
    societal problem that threatens everything we hold dear. To address
    this issue, as well as others such as suicide and accident prevention,
    we are embracing a cultural shift to better take care of each other
    personally and professionally. Our commanders have increased the
    emphasis on the manner in which professional airmen relate to each
    other, including a zero tolerance acceptance level for inappropriate
    behavior of all kinds, and a focused effort to take better care of each
    other.
        This statement represents our vision of the way ahead for Air Force
    people. To place these issues in context, we will begin by discussing
    the Air Force core competency directly affecting every Air Force
    member: Developing airmen. This core competency is at the heart of our
    strategic vision for Air Force personnel.
                               developing airmen
        To adapt to dramatic changes in force structure and the security
    environment, we established a set of strategic goals to focus our
    personnel mission.
    Force Development: Right People, Right Place, Right Time
        Over the past 18 months, the Air Force implemented a new Force
    development structure to get the right people in the right job at the
    right time with the right skills, knowledge, and experience. Force
    development combines focused assignments and education and training
    opportunities to prepare our people to meet the mission needs of our
    Air Force. Rather than allowing chance or ad hoc decisions to guide an
    airman's experience, we will take a deliberate approach to develop
    officers, enlisted, and civilian employees throughout our Total Force.
    Through targeted education, training, and mission-related experience,
    we will develop professional airmen into joint force warriors with the
    skills needed across the tactical, operational, and strategic levels of
    conflict. Their mission will be to accomplish the joint mission,
    motivate teams, mentor subordinates, and train their successors.
        One of the first steps in implementing our development efforts was
    the creation of individualized development plans. These plans are a
    critical communication tool capturing the member's ``career''
    development ideas, including desired career path choices, assignment,
    and developmental education preferences. These plans flow through the
    chain of command, to include their most senior commanders, for
    endorsement. The newly created Development Team (DT), comprised of
    senior leaders from the functional community, carefully reviews each
    individualized career plan, along with commander's comments, and Senior
    Rater input. Targeting Air Force requirements, the teams place a
    developmental ``vector'' into the plan as input for our assignment
    teams, and immediate feedback to the member and commander regarding
    their expressed development plans. Assignment teams match members to
    assignments using Developmental Team vectors; thus, ``developing'' our
    people to meet Air Force requirements.
        This year also saw a continued focus on developmental education
    with continued expansion to include not only traditional Professional
    Military Education (PME), but also efforts to reduce resident PME time
    through Automated Distance Learning (ADL) as well as advanced academic
    degree programs, specialty schools, fellowships, education with
    industry, and internships. Our development teams are using the
    individualized development plans, along with the member's record and
    Air Force requirements, to make educational recommendations to the
    Developmental Education Designation Board. This board designates the
    right school for the right member at the right time. Intermediate
    Developmental Education and Senior Developmental Education prepare
    members for a developmental assignment following the respective
    schools. This two-dimensional process facilitates the transition from
    one level of responsibility to the next. All developmental education
    assignments are made with the emphasis on the best utilization of the
    member's background, functional skills, and valuable time, to meet Air
    Force requirements.
        One of our most recent development efforts has been broadening the
    focus to include our enlisted corps. Beginning with the next promotion
    cycle, we will stand up a new top-level course of enlisted PME designed
    specifically for those selected to serve as Chief Master Sergeants. The
    course will focus on leadership in the operational and strategic
    environments, and will constitute a substantial leap forward in the
    development of our Chiefs. Another segment of warriors requiring
    special attention is our cadre of space professionals--those that
    design, build, and operate our space systems. As military dependence on
    space grows, the Air Force continues to develop this cadre to meet our
    Nation's needs. Our Space Professional Strategy is the roadmap for
    developing that cadre. Air Force space professionals will develop more
    in-depth expertise in operational and technical space specialties
    through tailored assignments, education, and training. This roadmap
    will result in a team of scientists, engineers, program managers, and
    operators skilled and knowledgeable in developing, acquiring, applying,
    sustaining, and integrating space capabilities.
        The bottom line of our Force development efforts is to provide an
    effects and competency-based development process by connecting the
    depth of expertise in the individual's primary career field (Air Force
    Specialty Code) with the necessary education, training, and experiences
    to produce more capable and diversified leaders.
        Every aspect of the Total Force development environment is designed
    to develop professional airmen who instinctively leverage their
    respective strengths as a team. The success of this effort depends on
    continued cultivation and institutional understanding of and interest
    in Force development, promoting an understanding of the competency
    requirements of leaders, and funding for the associated development
    initiatives.
    Force Shaping
        We are on track to bring Active-Duty end strength to the
    congressionally authorized level of 359,700 by the end of fiscal year
    2005. This planned reduction shapes the future force without
    jeopardizing career field health. The force shaping plan has two
    phases: 1) increase voluntary separations and retirements, and 2)
    further increase voluntary separations while simultaneously reducing
    programmed accessions. Phase 1, implemented in February 2004, was used
    to judge retention behavior and ensure a measured approach to reducing
    end strength. Phase 2, begun in May 2004, opened the aperture to allow
    more servicemembers an opportunity to leave Active Duty. Additionally,
    we significantly reduced the Selective Reenlistment Bonus (SRB) program
    from 146 to 62 enlisted skills, resulting in a significant decrease in
    first term reenlistment rates; and we continue to review further
    reduction of SRB skills.
        Specific force shaping initiatives include the Palace Chase
    program--early separation from Active-Duty to serve with the Air
    National Guard or Air Force Reserve--waiving of Active-Duty service
    commitments, and resurrection of the Career Job Reservation Program to
    correct skill imbalances and re-train first-term airmen into needed
    skills. Additionally, we took advantage of the statutory authority that
    allows 2 percent of colonels and lieutenant colonels with 2 years time-
    in-grade to retire in grade instead of waiting the normal 3 years; and
    some Air Force Reserve Officer Training Corps (ROTC) graduates may now
    go directly into the Air National Guard or Air Force Reserve.
        In fiscal year 2004, we lowered accession goals by approximately
    3,000. In fiscal year 2005, we continued to lower our accession goals,
    and have temporarily limited enlisted accessions to only the 58 most
    critical combat and combat support skills. We plan to open enlisted
    accessions for the remaining skills in late spring 2005, if we are at
    our authorized strength.
        The results of our force shaping efforts are positive, facilitating
    the migration of personnel into critical shortage specialties while
    reducing manpower to ensure we meet authorized end strength
    requirements by the end of fiscal year 2005.
    Rebalancing the Force
        As we return to our authorized end strength, relief is flowing to
    ``over stressed'' career fields. This is a multi-step process, but our
    guiding principle is simple--we will properly size and shape the force
    to meet the needs of the Air Expeditionary Force. We are doing this
    prudently, identifying specialties and specific year groups within
    those specialties where we have more people than we need. At the same
    time, we are correcting our skill imbalances by realigning manpower and
    expanding training pipelines.
        We are also taking a hard look at where our people serve. We have
    airmen serving outside the Air Force who don't deploy as part of an Air
    Expeditionary Force. They serve in joint and defense agency positions,
    some of which require uniformed people; however, others do not. Through
    military-to-civilian conversions and competitive sourcing initiatives,
    we are returning these airmen ``to the fold.''
        The Guard and Reserve play a critical role in this endeavor. Today,
    25 percent of the air expeditionary packages are composed of Air
    National Guard and Air Force Reserve volunteers. As we take steps to
    ensure the long-term health of our Active-Duty Forces, we must do the
    same for our citizen airmen.
    Recruiting/Retention
        While reducing accessions is a tool currently being used to bring
    the force down to authorized levels, it is imperative that we continue
    to renew and replenish the ranks with targeted recruiting. For fiscal
    year 2005, we plan to access nearly 19,000 enlisted members and just
    over 5,000 officers--a 44-percent reduction from normal enlisted
    recruiting levels and a slightly lower level of officers compared to
    fiscal year 2004.
        As outlined under force shaping, a significant 1-year reduction in
    our recruiting goal is part of a deliberate effort to reduce force size
    without jeopardizing long-term health. A 1-year reduction will create a
    temporary decrease offset by the number of personnel accessed in
    preceding and subsequent years. We are committed to returning to normal
    recruiting targets as quickly as possible. Continued congressional
    support of our recruiting and marketing programs is critical to
    maintain the Air Force's competitiveness in a dynamic job market.
        A vital element for success is the ability to offer bonuses and
    incentives where we have traditionally experienced shortfalls. To
    protect this valuable resource we ensure active senior leadership
    management, including semi-annual reviews of which career specialties,
    and which year groups within those specialties, are eligible for
    bonuses. Congressional support for these programs, along with increases
    in pay and benefits and quality of life initiatives, have greatly
    helped us retain airmen and their families.
    Personnel Service Delivery Transformation
        To achieve the Secretary of Defense's objective of shifting
    resources ``from bureaucracy to battlefield,'' personnel services are
    being overhauled. Our personnel service delivery transformation
    dramatically modernizes the processes, organizations, and technology by
    which we support airmen and their commanders. Routine personnel
    transactions, for instance, may now be done ``on-line.''
        As a result, we deliver higher-quality personnel services with
    greater access, speed, accuracy, reliability, and efficiency. We
    programmed the resulting manpower savings to other compelling Air Force
    needs over the next 6 years. This initiative enhances our ability to
    acquire, train, educate, and deliver airmen with the needed skills,
    knowledge, and experience to accomplish Air Force missions.
    National Security Personnel System
        Our civilian workforce will go through a significant transformation
    as well with implementation of the Department of Defense (DOD) NSPS.
    NSPS is a simplified and more flexible civilian personnel system that
    will improve the way we hire, assign, compensate, and reward our
    valuable civilian employees. This modern, agile human resource system
    will be responsive to the national security environment, while
    preserving employee protections and benefits, as well as the core
    values of the civil service. Implementation will begin as early as July
    2005.
        NSPS design and development has been a broad-based, participative
    process including employees, supervisors and managers, unions, employee
    advocacy groups, and various public interest groups. Employees slated
    for conversion to the new system will be included in groupings called
    Spirals. Spiral One will include approximately 85,400 General Schedule
    and Acquisition Demonstration Project, U.S.-based Air Force civilian
    employees and will be rolled out in three phases over an 18-month
    period. The labor relations provisions of NSPS will be implemented
    across the Department this summer as well. NSPS is the most
    comprehensive new Federal personnel system in more than 50 years and a
    key component in the Department's achievement of a total force
    structure.
    Culture of Airmen
        We completed an Air Force-wide assessment of our sexual assault
    prevention and response capabilities, knowing we were not where we
    needed to be in addressing this societal problem that has serious
    readiness implications. A campaign plan was approved, and we are
    implementing specific initiatives to better understand the problem of
    sexual assault, do everything within our ability to prevent it, and
    prepare ourselves to provide consistent and continuing care for victims
    when it occurs.
        In response to an increased suicide rate among airmen, we re-
    emphasized, and continue to stress, the need for airmen to look after
    one another. Commanders and co-workers are rethinking the way airmen
    interact with one another, calling attention to behavioral indicators
    and risk factors associated with suicide. Safety and risk management
    are also being emphasized to reduce the number of accident-related
    fatalities. We are weaving this mindset into the very fabric of our
    culture.
        All airmen have a responsibility to get involved, pay attention and
    ensure the health and well being of their wingman. It's not a program,
    it's a mindset; a cultural shift designed to take better care of our
    most valuable resource--our people.
                                   conclusion
        As we continue to develop and shape the force to meet the demands
    of the Air Expeditionary Force, we continue to seek more efficient
    service delivery methods, opportunities to educate our future leaders,
    and make the extra efforts required to recruit and retain the
    incredible men and women who will take on the challenge of defending
    our Nation well into the 21st century. While doing so, we will remain
    vigilant in our adherence to our core values of Service, Integrity, and
    Excellence which make ours the greatest Air and Space Force in the
    world.

        Senator Graham. Thank you all. That was well done. I
    appreciate it.
        I will start off, and we will just have a discussion among
    ourselves. I am going to throw out a couple of concepts. We
    have very talented staff that can take all of your requests and
    sanitize them. We will meet as many of them as we can, but in
    our short time together, I would like to try to talk about some
    big themes from a business point of view, for lack of a better
    word.
        One big theme focuses on the difference between retaining
    and recruiting that seems to be obvious. Is this an acute
    problem or a chronic problem, Dr. Chu?
        Dr. Chu. I think this is a problem of the moment brought
    about by a confluence of factors. Yes, sir, it is different,
    and you have noticed that in the testimony that I and my
    colleagues offered. We are doing quite well, Active and
    Reserve, on retention. We are having our challenges in some
    areas of recruiting. Some of it is the larger circumstance of
    our economy. That is something to which our recruiting picture
    responds.
        But there is another factor, and this is something on which
    we would value your assistance and your colleagues' assistance
    over time. That is the reluctance, which has been there for
    some time, of older adults to commend a young person when he or
    she selects a military option, whether that is a tour of
    service or a career. We have seen this increasingly as an issue
    over the last year or so.
        Marine recruiters were among the first to bring it to my
    attention. When you are 17, the parents must sign saying it is
    okay to enlist. Marine recruiters reported about 6-9 months ago
    that we are starting to see more resistance to that signature.
    I think the Army is seeing a similar trend in its recruiting
    efforts.
        We think a period of military service enhances everyone in
    terms of life's values, in terms of what you can contribute as
    a citizen over time, whether you serve for a few years or for
    20 or 30 years' time. We think it would be very helpful if more
    adults would make that point to young Americans.
        What the recruiters tell us is that their toughest sell is
    not necessarily the 19- or 20- or 21-year-old. My colleagues
    ought to speak to this. It is selling the parents or the school
    counselor or the coach that this is a good idea, and your
    reinforcement of the value of military service would be a great
    help to the Department.
        Senator Graham. Any comments?
        General Hagenbeck. Sir, I would reinforce what Dr. Chu just
    said. Active-Duty retention is 102 percent for this year. That
    tells us that once they join our team, they and their families
    are very satisfied with their well-being and exactly what their
    missions are which we asked them to do. They are staying on at
    a higher rate than we have ever asked them to stay on before.
    Our retention goals for this year for the Active are just over
    64,000 and we are on a glide path to meet or exceed that, and
    the Reserve and Guard are just behind that at 97 percent right
    now.
        I concur with regard to the recruiting issues. Our surveys
    tell us exactly what Dr. Chu has stated. I make it a point to
    go out to recruiting stations, and I have been to several, to
    include your part of the South. We are tending to get the same
    number of youngsters approaching us--who we call contacts--to
    consider joining the Army. However, we are getting that
    influencer perspective which is telling them in some areas, let
    us wait a few months and see how this business in Iraq sorts
    itself out. So we are spending a lot more time with parents,
    teachers, and coaches than we have in the past. It is a large
    challenge, but we are confident we can get what we need.
        Senator Graham. All right. Let us project forward. I am not
    asking you to be accurate to a person, but generally speaking,
    2 years from now, will we have 100,000 troops in Iraq? More or
    less?
        Dr. Chu. That is well outside my area of responsibility in
    the Department, sir, and I think it is really outside anyone's
    ability to predict.
        I do think in this global war on terrorism, we need to be
    prepared as a military to respond to the country's needs
    wherever they may arise, and that will require of our people,
    Active and Reserve, periods of overseas service. Whether it
    will continue at the current pace and with the current risks in
    the present locations, I do not think that is knowable at this
    juncture, but we must be prepared.
        Senator Graham. Right.
        Dr. Chu. My colleagues and I have worked across the
    Department, Active and Reserve Forces, to create a sustainable
    deployment posture where we can sustain a large number of
    soldiers, sailors, airmen, and marines forward deployed. It
    does mean we need to give them rest. The Actives deserve their
    time at home. The Reserve deserve their time off. But
    predicting the exact number I think is beyond what we can do.
        Senator Graham. Would anyone else like to chime in there?
        General Osman. Sir, I would add that young men and women
    join the Marine Corps because they want to deploy. That is the
    reason you are a marine. It is to, if need be, go in harm's
    way. It is interesting. As you watch, particularly our
    reservists that are called to Active-Duty, when we mobilize
    them, we have been essentially deploying about 67 percent of
    those marines that are mobilized. If you go poll them, the
    reservists that are really gaining the greatest satisfaction
    are those that are deployed. We watch that in the reenlistment
    statistics. So it really does show that marines join to deploy.
        I would add that even though we may be having some
    challenges in recruiting, the numbers, the fact of the matter
    is our quality of recruiting is very high. We are running about
    98 percent high school graduates, over 70 percent the upper
    mental groups. We really are getting the young marines that we
    are going to need for the future. As we look to the future, I
    think we are getting a quality individual who understands what
    they are asking for and are willing to serve. With those
    challenges that we face in the future, I am very optimistic.
        Admiral Hoewing. Sir, we are blessed in the Navy right now
    to be doing very well in the recruiting environment. Also our
    quality is higher than we have ever seen. The high school
    graduates, the percent with college education or some college
    education, performance on the ASAB test, across all ethnic
    backgrounds, is very strong.
        We are solid green in fiscal year 2005 with a couple
    exceptions. We are falling behind a little bit on medical
    officers, and we are behind in Reserve recruiting. We think we
    understand the reason why. One of the reasons is we primarily
    in the past recruited Active-Duty sailors in the Reserve that
    leave the Service. With our reenlistment rates as high as they
    are right now, the actual numbers that are leaving the Service
    is down. So we have to renew our energies in recruiting these
    sailors that leave Active-Duty, and we have engaged in a non-
    prior service recruiting campaign for our Reserve Forces not to
    just bring anybody in, but to bring the types of folks in that
    can be molded to the specific types of skills we need in order
    to fight the global war on terrorism.
        Reenlistment rates continue to be high. We are very proud
    of that, and we thank this subcommittee very much for your
    support in being able to help us in those areas.
        Senator Graham. I will tell you what I will do. I will let
    Senator Nelson speak. I have several more questions, but I do
    not want to hold you too long. Now would be a good time for
    Senator Nelson.
        Senator Ben Nelson. Thank you, Mr. Chairman. Once again, I
    want to thank the witnesses.
        For my first question, I would like to discuss an issue of
    importance to military families, which is consistent with what
    was just said, recruiting individuals but retaining families.
    As we grow more concerned about retaining our people, I think
    it is important to consider ideas that will make the Services
    even more family friendly. The military is already doing a lot
    of these things and doing them very well, but there is one that
    I would like to point out.
        Each of the Services at the present time is doing a great
    job of providing maternity leave for our new mothers. General
    Brady, I understand that the Air Force allows 2 months from the
    time of birth to return to duty. General Hagenbeck, I
    understand the Army provides 6 weeks, and Admiral Hoewing, I
    understand the Navy provides 42 days. But all of this is in
    relationship to maternity leave as opposed to adoption. I
    understand you are all prepared for what I am going to say.
        So I was surprised to learn that when a servicemember
    adopts a child, there is no official adoption leave policy. I
    think that is an oversight as opposed to a planned omission.
    The Department provides up to $2,000 per child and up to $5,000
    per year to compensate for adoption-related expenses, but the
    current DOD policy does not provide servicemembers paid leave
    for the purpose of bonding with an adopted child.
        Speaking as an adoptive parent myself, I can tell you that
    it is important to bond with your adopted child and do
    everything possible to make sure that they come into a happy
    home, just as in the case of maternity and a family.
        Speaking as a member of the Armed Services Committee, I
    obviously want to do everything I can to make the military as
    family friendly as I can. I recently introduced S. 487 with
    Senators Smith, Landrieu, Jeffords, Johnson, and Coburn. This
    legislation will provide up to 21 days of paid leave to the
    primary caregiver immediately after placement of an adopted
    child in their home. It is tough enough to adopt a child in the
    military because of the cost and sometimes the reluctance of
    adoption agencies to begin the process, knowing a family could
    be deployed during that period of time. This legislation would
    remove at least one of those hurdles, and I hope that your
    services will provide support on this important legislation.
        If you would like, I would ask that you might give me your
    thoughts on this proposal. We will start with Dr. Chu.
        Dr. Chu. Senator, if I may. First let me emphasize we will
    certainly take a careful look at the legislation that you have
    cosponsored.
        I should point out that the military is quite generous with
    leave already. People receive 30 days paid leave a year as a
    baseline. In fact, actually we have had, with the current pace
    of deployment, a bit of the opposite problem, people running up
    against leave ``use or lose'' limitations. So we will have to
    look at this. Is this an issue? Is there a need here? Is this
    the right way to satisfy the need? But my instinct is that we
    have a pretty good foundation that gives people a flexible
    stockpile of leave allowance that they can use in any way that
    they find most effective. In fact, most people do have some
    stockpiled leave. If an adoption bonding period is an issue, I
    would think they would have that leave available to take with
    our current allowance.
        Senator Ben Nelson. Well, there is no question that the
    current situation will provide for that, but the current
    situation in the case of maternity provides for that plus. So
    it would seem to me that equity for the situations would
    require that at least the same leave be provided in the case of
    maternity or in the case of adoption, the difference being
    fairly obvious, but the similarities are quite clear as well.
    Bringing a new child into the home requires that attention, and
    if it requires special leave in the case of maternity, I do not
    see requiring the adoptive caregiver to use up personal leave
    for that purpose. I am not advocating taking away the maternity
    leave to level it out either. I think that that is the point
    that we are trying to make.
        Dr. Chu. Well, we thank you for raising the issue.
        Senator Ben Nelson. If the members of the Services would
    like to say anything about it, you certainly may, but if you
    would rather wait and respond to it later, that is okay as
    well.
        General Osman. Sir, I would like to add one point too,
    because I think it is important.
        Dr. Chu is correct. There is a good little bit of leave
    that is being accrued these days, but when you have an order,
    or an instruction, or a law that raises that as an issue, when
    the individual adopts a child, and there is something that says
    you are supposed to get 21 days, or whatever it might be, just
    the fact that there is a recognition that that leave should be
    taken, whether it is basket leave given to the individual or he
    uses his own earned leave, the fact of the matter is somebody
    has put a marker down that that is important. So I think it
    does send a signal.
        We can take a look at the legislation you are proposing and
    see that it, in fact, meets the requirement of the Service as
    well as the individual.
        Senator Ben Nelson. It does not require that they take all
    of it, take up to that, as I think you understand. Each
    situation is different, but it would authorize a maximum. Then,
    of course, if they felt they needed additional leave, they
    could go, as you say, to their surplus of leave and utilize
    that on top of the other leave that would be authorized.
        General Brady. Having adopted two children, I was wondering
    if I could get that retroactively. [Laughter.]
        I would echo clearly it is something the Department needs
    to look at. I appreciate General Osman's comment too, that it
    is a recognition that, as you point out, they are very similar
    circumstances. In terms of care, they are identical.
        Senator Ben Nelson. Absolutely.
        General Hagenbeck. Sir, the Army supports it in principle.
        Admiral Hoewing. I agree with Dr. Chu. We certainly want to
    support our families in every way we possibly can. Family
    friendly, retaining families, that is all key to what we are
    trying to accomplish. It is, however, a time of war. One of the
    advantages with the adoption process is that there is some
    alternative to choose the timing associated with it.
        I would want to have an opportunity to pore through the
    language, and I just want to make sure that all of our folks
    out there have that same opportunity for those leave and
    liberty days in order to make their families all whole.
        Senator Ben Nelson. Thank you. I think General Brady will
    tell you that there may be an option as to the time you start
    it, but there is not necessarily an option at the time they
    arrive. It may be different than maternity. It is not quite a
    storefront situation. That is one of the reasons that there is
    some concern about granting adoption in the case of military
    families because of mobility and uncertainty.
        But in any event, I certainly hope that you will support it
    and look very carefully at it.
        Thank you very much, Mr. Chairman.
        Senator Graham. One more round, if you do not mind. This
    will be the more challenging part here.
        I think it would be fair to say that when you look at
    personnel retention and recruiting models, you look at the best
    case scenario and the worst case scenario. I do not know what
    is going to happen 2 years from now in Iraq either. I think
    that is a very fair answer to a very fair question.
        But let us assume for a moment the worst. Let us assume
    that we have a large military footprint in Afghanistan, and
    Iraq, and God knows where else over the next couple years. Let
    us try to figure out how to answer the questions of those
    parents and influencers in a constructive way, and let us deal
    with the reality of the fact that this war has taken a toll on
    our recruiting process and, I think, will eventually take a
    toll on our retention process.
        General Cody, the Vice Chief of Staff of the Army, said at
    a hearing in March, that what keeps him awake at night is what
    this All-Volunteer Force will look like in 2007.
        Along those lines, General Hagenbeck, why did the Army go
    to 39 years, extended the age limit from which you can recruit
    Guard and reservists, and why did the Army waive the high
    school requirement to enter?
        General Hagenbeck. Sir, with regard to the 39 years, that
    opens up a pool of about 22 million. As I am sure you know, it
    allows the Reserves and the Guard to recruit individuals that
    may have skills that younger members of our society might not
    have. We do not anticipate that we will get large numbers in
    that group, however, that gives them some flexibility to get
    some key skills that are scarce at this particular time.
        Senator Graham. What percentage of the Guard and Reserves
    called to Active-Duty are unable to go to the fight because of
    medical problems?
        General Hagenbeck. Sir, I do not have that number right
    now, but I can get that to you.
        Senator Graham. Does anyone else know for their Service?
        Dr. Chu. About 3 percent.
        Senator Graham. Fair enough.
        What percentage of the Guard and Reserves of any of the
    Services do not have access to health care in the private
    sector?
        Dr. Chu. It varies, sir. We have just completed a survey on
    that front. For the more senior, roughly E-5, E-6, 03 and
    above, typically 90 percent or better have private medical
    insurance. It is the younger people who do not. Part of that is
    voluntary, and that is consistent with experience in the civil
    sector in which young people, who often feel they are
    invulnerable and are subsidizing their elders in this regard,
    decline insurance. So it is not a big issue in our judgment.
        Senator Graham. Well, I just want to put everyone on notice
    that when it comes time to talk about retaining families and
    recruiting soldiers and keeping families, I think from my point
    of view--and I think Senator Nelson shares this view--we need
    to do more for the Guard and Reserve. We need to do more for
    employers.
        You do not have to be a rocket scientist to figure out
    where this is leading. The reason you are having a problem
    recruiting is because people see this war as a dangerous event.
    The military is a dangerous endeavor, but it never really was
    understood to be as dangerous as it is until this war came
    along for millions of Americans. For those who stay in, thank
    God, because they are doing their country a great service.
        General Brady, I have been to Iraq three times, and I have
    taken countless C-130 flights from Kuwait into Iraq and all
    over Afghanistan. I have flown only with one Active-Duty crew.
    Two years from now, if that remains the same, what effect will
    that have on the force?
        General Brady. That is a real challenge. As you are well
    aware, a large percentage of the C-130 fleet is in the Guard
    and Reserve. However, we have been able to mitigate that to a
    large extent by AEF rotation policies. That does not mean that
    we do not have Guard units and Active units that have been
    deployed a number of times. However, our basic rotation policy
    of 120 days for the AEF mitigates that to a certain degree. A
    considerable percentage of our people are able to do that on a
    volunteer basis as opposed to being mobilized.
        I would not minimize the fact that that is a challenge, and
    we are continuing to look at it in the Air Force as to what the
    appropriate mix is for Guard and Reserve for C-130 forces, as
    well as for all of our forces.
        Senator Graham. General, when it comes to the Marine Corps,
    you have the greatest tradition of all Services I think in many
    ways of loyalty to the Corps. The fact that you experience any
    recruiting problems or any retention problems I think is
    something that we need to very much take seriously.
        But money matters, and I have never heard a marine say that
    as directly as you did. I have never heard a marine come up and
    say if I had more money, it would help keep a marine. I think
    that is an honest answer, and I think you are going to get more
    money. You are going to get more flexibility.
        But when we look to retaining young people and their making
    that first decision, would changing the thrift savings plan for
    lower enlisted grades, beefing that program up where they would
    get a matching component, help in retaining and recruiting?
        General Osman. The thrift savings plan, I think, is a great
    tool. I will tell you that the young people who come in the
    Marine Corps are not drawn to the Marine Corps by that plan.
    They are drawn because of other intangibles, the opportunity to
    serve, the challenge, the deployment, as I mentioned before.
        Once they come in the Marine Corps and we educate them
    about the goodness of the program, it is amazing how many will
    then come to it and use it. We would like to see more of them
    do it. Maybe if we were able to look at something like that,
    that probably would draw more of them to it. I think we have a
    responsibility to them to help them build for their future, and
    that is a good way to do it. So I would like to take a hard
    look at such a provision.
        Senator Graham. This will be my last question, and I will
    it over to Senator Nelson.
        Dr. Chu, you have a forward-thinking view of how to reform
    personnel entitlement programs in the military. I can attest,
    having been on Active-Duty in the Guard and Reserve for many
    years, that our military personnel programs are not 21st
    century friendly. I am willing, and I will try, to get other
    subcommittee members to be equally willing to engage on changes
    that will allow military commanders to have more control over
    the Total Force, including the civilian force.
        If you could, share with us what you would like to see this
    subcommittee consider when it comes time to redesigning the
    personnel system that currently covers civilians and military
    members.
        Dr. Chu. On the civilian front, of course, Mr. Chairman,
    you have given us extraordinary authority with the NSPS
    legislation. We are in the process of implementing that
    authority. The meet and confer period with the unions, formally
    required by the statute, begins on April 18. We have already
    had, prior to that period, 10 meetings with the 41 unions
    representing the workers of this Department. We look forward to
    that continued dialogue with them on their comments. We
    received a large number of comments on the draft regulations.
        Your continued counsel and support for that process is most
    welcome and most helpful, and I think essential to its success.
        We are very eager, as my colleagues and I know, to try to
    bring the first spiral, as we are phrasing it, of civilian
    employees under this new system sometime later this summer. I
    think it will have an energizing effect on the Department's
    ability to carry out the Nation's missions.
        To the Active and the Reserve Forces of the United States,
    we continually are seeking, and we have a number of proposals
    in this year's legislative package, as you are aware, to bring
    the tools with which we manage that force into the 21st
    century, to recognize that people can serve longer. People are
    healthier, more active, and fit at later ages than was true
    before, and a number of changes like that, including, as you
    noted, the Army's decision to go to the statutory maximum in
    terms of enlistment eligibility.
        I think where we need assistance is particularly in the
    Reserve community, to some extent also in the Active community,
    in additional targeted incentives, so we can put the
    inducements where they are most needed and to get the most
    effect for the funds that you provide for us.
        I would ask on the Active front your support for the pilot
    authority language that is included in this year's package of
    proposals from the administration. It was, after all, the pilot
    demonstration on the civilian side over 25 years ago, starting
    with China Lake back in 1978, that taught us what we need to
    think about for the civilian work force. We need similar
    authority in specific military communities, and we would like
    to start with four officer communities, if we might, of limited
    scope. What is the best way to recruit, manage, develop, and
    promote the officer force for the future, recognizing that one
    size does not fit all and that we ought to be developing some
    alternative models here? I think that pilot authority would be
    very powerful.
        It will not change things next year, except for those small
    communities that might be involved. It will, I would argue,
    have a dramatic, profound effect in what we will all learn
    together 5 or 10 years from now, and I think that will produce
    the next revolution in military personnel management.
        Senator Ben Nelson. In conjunction with the flexibility in
    changing compensation arrangements, CNO Admiral Clark made
    reference in one of our hearings to changing the compensation
    of the Navy so it is not simply based on rank or on pay grade,
    as it has been in the past. Rather it would look at a way to do
    something in the way of compensation based more on skills that
    are required for certain jobs which would be consistent, I
    think, with retention flexibility. I am clearly inclined to
    support that effort. I think it makes sense. I suspect that
    every branch is looking at how to compensate based on the skill
    levels that you want to acquire and retain for the future.
        Dr. Chu, no one needs to talk about the importance of
    quality education for children of families and for all
    children, for that matter. It is very important to all of us. I
    am concerned that the relocation of significant military units
    from overseas bases to military installations in the United
    States and perhaps even with Base Realignment and Closure
    (BRAC) could result in a significant impact on local civilian
    school systems. Many of these schools are already strapped for
    funds, and they do not have the means to suddenly assimilate
    large numbers of additional students. They do not get the
    Impact Aid funds and other funds, at a time that is convenient
    with their budgeting process necessarily. So they could incur
    the obligations and the expenses before they get any kind of
    compensation.
        I wondered if the DOD is looking at this to see if there is
    any way to assist these local schools and to prepare for those
    increases and/or what we might do in the way of Impact Aid to
    compensate for any of those changes.
        Dr. Chu. Of course, Impact Aid, Senator, is governed by a
    formula that is in statute and subject to the appropriations
    process.
        Let me join you, however, in underscoring the importance of
    quality education for the children of military families. It is
    one of the preeminent concerns of the contemporary military
    household, and properly so.
        We have partnered with Johns Hopkins to look at what we can
    do as an institution to encourage successful educational
    outcomes in local school systems, which I think is the ultimate
    import of your question. It is highly variable today. It is not
    simply a matter of the resource position that the local school
    system has. I do not want to, however, deny the importance of
    resources in achieving good outcomes.
        We do not have the results of that yet, but we would be
    delighted to share those results with you as soon as they are
    available, because our objective is to ensure that every
    military family can look forward to a high quality education
    for their children regardless of the location to which they are
    assigned.
        Senator Ben Nelson. Parents, whether in the military or in
    the private sector, are equally concerned about quality
    education for their children. It's just that simple. The
    complexity is because of relocations based on military
    reassignments and relocation. I am looking at it from the
    standpoint of making sure that the local schools have the
    resources to be able to provide for those kinds of increases
    because of the impact on the school budgets and their ability
    to assimilate these students. I think it is a challenge that we
    need to address and I hope that we can. I will be anxious to
    see that study.
        One further question, Dr. Chu. The Government
    Accountability Office (GAO) has determined that mobilized
    reservists suffer an alarmingly high rate of pay problems when
    they are on Active-Duty. An August 2004 GAO report concluded
    that 95 percent of the soldiers audited had at least one pay
    problem and many had multiple problems associated with their
    Active-Duty pay and allowances.
        Another report was just released last month documenting
    that mobilized Army Guard soldiers were also experiencing
    significant problems getting accurate, timely, and consistent
    reimbursements for out-of-pocket travel expenses. This has
    caused significant financial problems for the soldiers and
    their families as they have had to carry debts on their
    personal credit cards, they have trouble paying monthly bills,
    and in some cases were unable to make child support payments,
    all of which is very unfortunate, as we all understand. They
    are suffering in many cases because of a pay cut due to their
    military service. So this is icing on a very bad cake.
        I wonder if the Department has taken any actions to try to
    address this to ease these pay problems and reimbursement
    problems so that we can avoid this. If we are trying to make
    the military attractive, we do not need to have anything that
    makes it less attractive if there is something we can do to
    overcome that.
        Dr. Chu. Absolutely, sir. Maybe General Hagenbeck would
    like to elaborate on the outline. I will offer it briefly.
        First, on the travel reimbursement funds, I have encouraged
    the comptroller, and she has promised, that we will undertake
    an experiment to think about using debit cards as opposed to
    credit cards because that will solve, I think, a good deal of
    the problems involved in terms of late reimbursement. There may
    be some legal issues associated with that. They have yet to be
    worked out.
        Second, the more important issue raised is the antiquated
    nature of our Reserve component pay systems. The Army has
    worked assiduously to get the current systems to work as well
    as we can. Our future, really, lies in bringing consistent with
    the phrase ``Total Force,'' everyone to the same unified pay
    and personnel system. Take for instance, the model the Marine
    Corps pioneered over 10 years ago. For the Department as a
    whole, it goes under the name of Defense Integrated Military
    Human Resources System (DIMHRS). We are very hopeful of
    bringing the first parts of the Department under that system
    toward the close of this year. I think that really is the way
    ahead. We are grateful for everyone's patience in the meantime.
        The Army and the Defense Finance and Accounting Service
    have taken extraordinary steps to try to deal with these
    issues, but that is an old system. The code is old, hard to
    maintain, and difficult to get to work properly.
        Is there anything you might want to add?
        General Hagenbeck. Senator, he is exactly right. The
    systems themselves are antiquated and difficult, and we have
    put some interim solutions into effect. I just came back from
    theater Saturday night, having spent about a week back over
    there checking, and this was one of the major issues we had
    worked.
        We have done a couple of things. Prior to units deploying
    during the mobilization process, we take the personnel and the
    finance people through a course at Fort McCoy, Wisconsin. We
    also have mobile training teams that go out and train these
    personnel prior to the deployment.
        Then when they go into theater, we have also increased and
    made more robust the higher level headquarters liaison in
    Kuwait, Afghanistan, and Iraq, adding Reserve and National
    Guard liaison finance officers to work these pieces for them
    specifically.
        I got a very encouraging view out of Afghanistan with about
    four or five different liaison officers (LNOs) that are there
    and going out to all the teams. So quantitatively it looks like
    they have gone down, but for the one soldier that has a
    problem, it is a big problem. Until we get this compatible pay,
    which will ultimately integrate with DIMHRS, we are going to
    have to look at this very vigilantly every single day in
    theater.
        Senator Ben Nelson. Well, obviously, we all know it is
    important, and I commend you for looking at it. On behalf of
    those who have experienced the problems, I encourage speed in
    resolving this. Certainly we want the best possible pay system
    for the reservists who are suffering these challenges right
    now.
        Mr. Chairman, thank you.
        Senator Graham. Thank you.
        We will let you go here. One quick question. If it became
    the will of Congress, after hearing the recruiting and
    retention problems, to say that we needed to increase the Army
    end strength by 30,000 in the next 2 years, could you do that?
        General Hagenbeck. Sir, anything is possible. It will take
    a concerted effort to do that.
        Senator Graham. It would be highly unlikely, would it not?
        General Hagenbeck. Yes, sir. It would take a national
    effort. It is more than just an Army problem, as I said before.
    This is a piece that the Nation has to step up to if we want to
    increase the Army to those kinds of numbers.
        Senator Graham. Do we need to increase the Army?
        General Hagenbeck. Sir, I would just reiterate what our
    chief has said before. In terms of numbers, with 640,000
    mobilized right now, the temporary end strength that Congress
    has granted us is adequate for the conditions that exist today.
        Senator Graham. As for the Navy, the Navy is going to
    reduce its force by 13,000?
        Admiral Hoewing. Yes, sir.
        Senator Graham. You did 8,000 last year. Is that correct?
        Admiral Hoewing. 7,800.
        Senator Graham. You are going to do 10,000 reservists?
        Admiral Hoewing. Over a 2-year period, yes, sir.
        Senator Graham. You did 8,000 reservists last year.
        Admiral Hoewing. A total from 87,000 down to about 70,000
    over a 3-year period is what our plan is for Reserves.
        Senator Graham. Do you have enough ships?
        Admiral Hoewing. Yes, sir. Our ships today are much more
    capable than the ships in the past. The metric should not
    necessarily just be numbers, but we do have the littoral combat
    ship coming online, and every single one of those ships that is
    coming online in the future, as a part of a human systems
    integration process, will have less manning on board. So even
    as our ship numbers start to increase, as the shipbuilding
    program picks up over the next several years, our manning
    numbers will not go back up, simply because we have greater
    capability with less human beings on the ships and the
    platforms.
        Senator Graham. Well, thank you all for coming. One last
    comment. I think the problem that we are facing--and this is
    just my personal observation--is a chronic problem, not an
    acute problem. The retention numbers are understandable to me
    because people who join, join for a reason, and they get a lot
    of job satisfaction. But you see, even in the retention
    numbers, certain specialties are being affected because of high
    mobilization. That is why you are wanting a lot more money,
    because you have to entice people to stay because of the
    operational tempo of the Active Forces, because this war is
    stressing the force in my opinion. I would encourage each of
    you to go back and think about a scenario along these lines.
        Senator Ben Nelson. I had one further question that your
    question triggered. With the reduction in the Air Force and the
    Navy end strength, I have heard of ``Blue going Green.'' I
    wonder what kind of success you are having in redirecting many
    of these already highly-trained, highly-skilled military
    personnel, in the direction of the Army and whether the Army is
    able to assimilate and/or utilize these individuals who are
    furloughed out of the military, of the Navy and Air Force.
        Admiral Hoewing. Senator, the Navy strongly supports the
    Blue to Green program. We understand it totally. As a part of
    our transition process for those sailors that are leaving
    Active-Duty, we inform them of the Blue to Green program. We
    have cooperative agreements with the Army. We will give them
    the e-mail addresses, addresses, and phone numbers, in order to
    be able to carry on that conversation back and forth.
        Senator Graham. What is your success rate of people leaving
    the Navy and voluntarily going to the Army?
        General Hagenbeck. Sir, we have just gotten traction on the
    program. The numbers are small right now, 50 officers recently.
    That is a mix from the Navy and the Air Force, and we only have
    under 200 at this point for----
        Senator Graham. Too early to tell. Right?
        Air Force, the same answer?
        General Brady. Yes. We have 109 enlisted and, I think, 26
    officers at this point. Much as Admiral Hoewing said. All of
    this information is given to people as a part of their
    transition. We are working with Army recruiters, making sure
    that they have access to people on Air Force bases, and that
    people are aware, as we are drawing down our manpower
    currently, that this is one of the options that they have,
    including in the Reserve Officers' Training Corps (ROTC). We
    have a handful of cadets in Air Force ROTC that are taking
    their commission with the Army this year. It is not a large
    program. I think it will grow a little bit.
        Senator Ben Nelson. Would a bonus arrangement, in
    particular, to make it even more attractive, be advisable given
    the fact that we have already invested hundreds of thousands of
    dollars in these military personnel?
        General Hagenbeck. From the Army perspective, yes, sir.
    However, I know, as alluded to by General Brady, coming to the
    Army is just one of the options. Obviously, they are looking at
    the Reserve and Guard as well. So we have to balance that among
    the Services.
        Senator Graham. I do not know what it would cost to make a
    Navy guy go in the Army. That might be pretty expensive.
    [Laughter.]
        Or vice versa.
        Senator Ben Nelson. I noticed General Osman was quiet. Are
    any coming your way in that process?
        General Osman. We will make our numbers. We do not need the
    Blue to Green help at this time, sir.
        Senator Graham. We may get some bills going here.
        Admiral Hoewing. Senator, I would add on behalf of my
    friend in the Marine Corps, we actually have increased the
    number of officers going to the Marine Corps from the Naval
    Academy over the last 2 years because the need is there. The
    Navy officer requirement was going down, and it was a perfect
    match. So we believe in both colors of green.
        Senator Ben Nelson. Well, I love this brotherly approach. I
    think it speaks well of our military and of our Department of
    Defense.
        Senator Graham. This has been a great panel.
        I have a fundamentally different read on where we are going
    and why. I think the problem we face is more of a chronic
    problem tied to the war on terrorism. September 11 caused
    everybody to become very patriotic as it should have. People
    joined in record numbers, but this war has drawn out, and it is
    harder than most people thought. I think we are going to have
    well over 100,000 troops in Iraq and Afghanistan 2 years from
    now, not because we have done anything wrong, but because it is
    hard work to go from a dictatorship to a democracy.
        The stress on the Guard and Reserves is a difference
    between the Cold War and the war on terrorism, and we need to
    adapt. We cannot have every C-130 flown into theater 2 years
    from now being flown by Reserve crews. Even the Guard and
    Reserve have a stretching point. If you like being deployed, as
    the marines do, your ship has come in as a marine, because you
    are going to be deployed as far as the eye can see. You do
    retain families, General. You really do.
        We are going to stand with you, Dr. Chu. We are going to
    bring about reform. I honestly believe that we need to beef up
    in every way, not just convincing adults to be better
    influencers here. We need to make it as attractive as possible,
    and when somebody leaves the Navy because the Navy is
    overstaffed, we should do everything we can to keep them
    around, because they are patriotic, well-trained, Americans. We
    should look at this as an opportunity to plus up the Army from
    the Navy and the Air Force.
        From the Navy's point of view, please do not lose sight of
    the fact that there is a certain amount of ships you are going
    to need. I really worry about China taking on Taiwan. I think
    this is a more dangerous world than all of us really completely
    understand, and a lot of people evaluating American Armed
    Forces may misunderstand that this stress is weakness. We are
    not weak. We are stressed.
        God bless.
        Senator Ben Nelson. Thank you.
        Dr. Chu. Thank you.
        General Hagenbeck. Thank you.
        Admiral Hoewing. Thank you.
        General Osman. Thank you.
        General Brady. Thank you.
        Senator Graham. Thank you very much. Now on to our second
    panel here. The heck with the script. We know who you are; you
    know who we are. We thank you all for coming. Each of you in
    your own way is helping America maintain its force, and I
    personally appreciate the energy you bring on servicemembers'
    issues to Capitol Hill, because without people like you, the
    ability of Congress to understand what is going on in the real
    world would be diminished.
        So having said that, Mr. Strobridge will start.

     STATEMENT OF STEVEN P. STROBRIDGE, CO-CHAIRMAN, THE MILITARY
                               COALITION

        Mr. Strobridge. If you would indulge us, Mr. Chairman.
    Thank you, Mr. Chairman, and thank you, Senator Nelson, for
    this opportunity to discuss The Military Coalition's
    recommendations on military personnel and compensation issues.
        I have to say, when I heard your questions, I was jumping
    up and down in the background. I do not think we could agree
    with you more in terms of the threat and the risk and our
    concern about looking at things in the most optimistic scenario
    possible. It is of great concern to us as it obviously is to
    you.
        Before I begin, I would like to ask your permission to
    include a statement in the record from the Fleet Reserve
    Association, a member of The Military Coalition, if that would
    be all right, sir.
        Senator Graham. Absolutely.
        [The prepared statement of the Master Chief Barnes
    follows:]
        Prepared Statement by Master Chief Joseph L. Barnes, USN (Ret.)
                                  introduction
        Mr. Chairman and other distinguished members of the subcommittee:
    The Fleet Reserve Association (FRA) is most grateful for your support
    of our military men and women and, particularly, those serving or
    having served in Afghanistan, Iraq and other troubled spots around the
    globe. At the top of the Association's gratitude list is the quality of
    life improvements adopted in the 108th Congress. Thanks so much for the
    effort FRA knows you contributed in the previous year for making a
    tough life much easier for those that might make the ultimate sacrifice
    in the service of this Nation. BRAVO ZULU.
        This statement lists the concerns of our members, keeping in mind
    that the Association's primary goal will be to endorse any positive
    safety programs, rewards, and quality of life improvements that support
    members of the uniformed services, particularly those serving in
    hostile areas, and their families.
        FRA is concerned that in spite of signs of bravado, many of our
    sailors, marines, and coast guardsmen serving in Operation Iraqi
    Freedom (OIF) and Operation Enduring Freedom (OEF) may not be fully
    armed with the protective devises available for their personal safety.
    Advocating the receipt of these protective devices: i.e.--interceptor
    body armor, outer protective vests, and small arms protective inserts;
    to every uniformed member sent into harm's way is FRA's No. 1 priority.
        The Association's next priority is to see that our wounded troops,
    their families, and the surviving families of the men and women killed
    in action are cared for by a grateful Nation. The Departments of
    Defense (DOD), Veterans Affairs (VA), Labor (DOL), etc., should all be
    working together to provide this support. FRA, as a veterans' service
    organization, will do its share in representing those who seek its
    assistance in gaining medical and health care, special programs, and
    other benefits available now and in the immediate future. In this
    respect, FRA fully endorses the proposed increases to death gratuity
    and life insurance proposed by the administration. Further, the
    Association advocates the adoption of any proposal that authorizes our
    wounded veterans continuance of their combat pay and other special pays
    received while in combat until the completion of their hospital care or
    discharge from their respective military service.
                                  other goals
        Health Care. FRA and its-membership are most grateful for the
    improvements in accessing proper health care for the military community
    and the expansion of the program to provide greater care for military
    retirees and their families. Not everyone in the military community is
    pleased, but Congress has done much with the resources available to
    offer the best program for as many beneficiaries as possible. There are
    other proposals on the table that would increase benefits for those not
    satisfied with the current program. FRA endorses these proposals for
    many of its members would be affected by their adoption. However, the
    Association's primary concern is that existing programs be adequately
    funded for fiscal year 2006 and beyond.
        Active Duty/Reserve Programs. The topping the list among the
    Active-Duty and Reserve members of the Sea Services (Navy and Marines)
    are adequate pay and allowances, child care and housing.
        Pay and Allowances. This distinguished subcommittee has for the
    past years improved compensation that, in turn, enhanced the
    recruitment and retention of uniformed personnel in an All-Volunteer
    environment. Adequate and targeted pay increases for middle grade and
    senior petty and noncommissioned officers have contributed to improved
    morale and readiness. With a uniformed community that is more than 50
    percent married, satisfactory compensation relieves much of the tension
    brought on by operational and personal tempos.
        For the fiscal year 2006, the administration has recommended a 3.1
    percent across the board basic pay increase for members of the Armed
    Forces. This is commensurate with the 1999 formula to provide increases
    of 0.5 percentage points greater than that of the previous year for the
    private sector. With the addition of targeted raises, the formula has
    reduced the pay gap with the private sector from 13.5 percent to 5.2
    percent following the January 1, 2005, pay increase.
        FRA, however, is disappointed that there are no targeted pay
    increase recommended, particularly for mid-grade and more senior
    enlisted personnel. FRA, The Military Coalition, the 9th Quadrennial
    Review of Military Compensation (9th QRMC), and the DOD have advocated
    the necessity for targeted pays. In spite of the number of targeted pay
    increases in the last few years, the pay of our noncommissioned and
    petty officers remains compressed, a situation that has existed since
    the advent of the All-Volunteer Force. Examples of compression are
    noted below:

                                                     PAY COMPRESSION
                                                        Basic Pay
    ----------------------------------------------------------------------------------------------------------------
                                                    E-5--12 YOS             E-7--16 YOS             E-9--20 YOS
                                             -----------------------------------------------------------------------
                                                  Pre                     Pre                     Pre
                                                Average     Average     Average     Average     Average     Average
    ----------------------------------------------------------------------------------------------------------------
      ......................................        $471        $471        $627        $627        $844        $844
    Recruit (E-1)...........................        $144        $269        $144        $269        $144        $269
    Ratio of Pay (Nearest $1)...............         3.1         2.1         4.1         2.1         6.1         3.1
    Ratio of Pay 2005.......................                     2.1                     3.1                     4.1
    ----------------------------------------------------------------------------------------------------------------

        FRA urges the subcommittee to adopt a targeted pay table for fiscal
    year 2006, at least proportionate to that of January 1, 2004, and
    ensure that uniformed members of the Public Health Service (US PHS) are
    included in the pay increase authorized for fiscal year 2005.
        Submarine Incentive Pay. On October 1, 2004, the United States Navy
    authorized increases in Submarine Incentive Pays for commissioned
    officers in grades 03 to 06. The Navy noted this was the second phase
    of increases that began with enlisted and junior officers on October 1,
    2002; however, the Navy has yet to verify it would increase the pay of
    commissioned officers at a later date.
        Submarine Incentive Pay originally was offered only to enlisted
    submariners. Subsequently, commissioned officers were authorized the
    payment at the same percentage as for enlisted (50 percent of basic
    pay). In 1928, the Hook Commission reported the need to provide greater
    incentives to commissioned officers. ``The rates proposed for hazard
    pay serve as an inducement to undertake and continue special duties,
    and such inducement need not be as great in monetary terms for lower
    paid and less advanced personnel as for higher paid and more highly
    trained personnel.'' . . . fortunately this is now not the case. It is
    evident the current Chief of Naval Operations (CNO) Admiral Vern Clark,
    agrees: I'm fond of saying that chiefs make the Navy run. Chiefs are
    the most influential leaders that we have in our institution.''
        The Chiefs' importance to the Navy also applies to the Navy's
    submarine service and FRA questions why the Navy increases the rates of
    submarine incentive pay for certain submarine officers while allowing
    the rates for senior enlisted chiefs to decrease with time in service.
    Are experienced and chiefs with longevity of lesser valuable to the
    submarine service than the officers with like experience and time in
    service? See chart below.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        FRA seeks this subcommittee's assistance in directing the Navy to
    review its submarine incentive pay rates and offer more equitable rates
    to senior enlisted submariners commensurate with those authorized for
    commissioned officers on October 1, 2004.
        Other Pays and Allowances. FRA supports for the continuation, and
    enhancement of bonuses and other compensatory items necessary for the
    military services to function accordingly and to provide the necessary
    incentives for the Nation's young men and women to serve in the Armed
    Forces. Recruiting and retention are vital to the success of the All-
    Volunteer Force and fulfilling the Nation's commitments.
        Basic Allowance for Housing (BAH). FRA supports The Military
    Coalition in seeking revised housing standards. Many enlisted
    personnel, for example, are unaware of the standards for their
    respective pay grade and assume that the applicable BAH level is
    determined by a higher standard than they may be authorized. This
    causes confusion over the mismatch between the amount of BAH they
    receive and the actual cost of their type of housing. As an example,
    enlisted members are not authorized to receive BAH for a 3-bedroom
    single-family detached house until achieving the rank of E-9--which
    represents only 1 percent of the enlisted force--yet many personnel in
    more junior pay grades do in fact reside in detached homes. The
    Coalition believes that as a minimum, this BAH standard (single family
    detached house) should be extended gradually to qualifying
    servicemembers beginning in grade E-8 and subsequently to grade E-7 and
    below over several years as resources allow.
        FRA is most grateful to the subcommittee for acting in 1999 to
    reduce out-of-pocket housing expenses for servicemembers over several
    years. Responding to your leadership on this issue, the DOD proposed a
    similar phased plan to reduce median out-of-pocket expenses to zero by
    fiscal year 2005. Through the leadership and support of this
    subcommittee, this plan has been implemented. This aggressive action to
    better realign BAH rates with actual housing costs has had a real
    impact and provides immediate relief to many servicemembers and
    families struggling to meet rising housing and utility costs.
        The Association applauds the subcommittee's action to deliver on
    this commitment. Unfortunately, housing and utility costs continue to
    rise, and the pay comparability gap, while diminished over recent years
    continues to exist. Members residing off base face higher housing
    expenses along with significant transportation costs, and relief is
    especially important to junior enlisted personnel living off base who
    do not qualify for other supplemental assistance.
        FRA urges the subcommittee to direct gradual adjustments in grade-
    based housing standards as commended above and to more adequately cover
    members' current out-of-pocket housing expenses.
        Permanent Change of Station (PCS) Reimbursements. As The Military
    Coalition noted in its statement FRA, too, is most appreciative of the
    significant increases in the Temporary Lodging Expense (TLE) allowance
    authorized for fiscal year 2002 and the authority to raise PCS per diem
    expenses to match those for Federal civilian employees in fiscal year
    2003. FRA greatly appreciates the provision in the fiscal year 2004
    defense bill to provide full replacement value for household goods lost
    or damaged by private carriers dent directed moves, and looks forward
    to the timely implementation of the DOD comprehensive ``Families
    First'' plan to improve claims procedures for servicemembers and their
    families.
        These were significant steps to upgrade allowances that had been
    unchanged in over many years. Even with these changes, however,
    servicemembers continue to incur significant out-of-pocket costs in
    complying with government-directed relocation orders.
        For example, PCS mileage rates have not been adjusted since 1985.
    The current rates range from 15 to 20 cents per mile--less than half
    the 2005 temporary duty mileage rate of 40.5 cents per mile for
    military members and Federal civilians. PCS household goods weight
    allowances were increased for grades E-1 through E-4, effective January
    2003, but weight allowance increases are also needed for servicemembers
    in grade E-5 and above to more accurately reflect the normal
    accumulation of household goods over the course of a career. The
    Association recommends modifying weight allowance tables for personnel
    in pay grades E-7, E8, and E-9 to coincide with allowances for officers
    in grades O-4, O-5, and O-6, respectively. FRA also supports
    authorization of a 500-pound professional goods weight allowance for
    military spouses.
        In addition, the overwhelming majority of service families own two
    privately owned vehicles, driven by the financial need for the spouse
    to work, or the distance some families must live from an installation
    and its support services. Authority is needed to ship a second POV at
    government expense to overseas' accompanied assignments. In many
    overseas locations, families have difficulty managing without a second
    family vehicle because family housing is often not co-located with
    installation support services.
        With regard to families making a PCS move, members are authorized
    time off for housing-hunting trips in advance of PCS relocations, but
    must make any such trips at personal expense without any government
    reimbursement such as Federal civilians receive. Further, Federal and
    State cooperation is required to provide unemployment compensation
    equity for a military spouse who is forced to leave a job due to the
    servicemember's PCS orders. FRA also supports authorization of a
    dislocation allowance to servicemembers making their final ``change of
    station'' upon retirement from the uniformed services.
        FRA is sensitive to the subcommittee's efforts to reduce the
    frequency of PCS moves. But we cannot avoid requiring members to make
    regular relocations, with all the attendant disruptions in their
    children's education and their spouse's career progression. The
    Association believes strongly that the Nation that requires them to
    incur these disruptions should not be requiring them to bear the
    resulting high expenses out of their own pockets.
        FRA urges continued upgrades of permanent change-of-station
    reimbursement allowances to recognize that the government, not the
    servicemember, should be responsible for paying the cost of government-
    directed relocations.
        Combat and Incentive Pays during Hospitalization. FRA joins The
    Military Coalition in strongly urging the subcommittee to take action
    to ensure combat-wounded servicemembers do not have their pay reduced
    or their taxes increased during periods of hospitalization. The
    Coalition believes that such compensation treatment is essential for
    servicemembers who continue to suffer from the hazardous conditions
    that combat-related incentive pays and tax relief were created to
    recognize.
        Basic Allowance for Subsistence (BAS). FRA is grateful for the
    increases in BAS over the years. There is more to be done; however, to
    permit single career enlisted members greater individual responsibility
    in their personal living arrangements believes it is inconsistent to
    demand significant supervisory, leadership, and management
    responsibilities of noncommissioned and petty officers, but still
    dictate to them where and when they must eat their meals while at their
    home duty station.
        FRA urges the subcommittee to repeal the statutory provision
    limiting BAS eligibility to 12 percent of single members residing in
    government quarters. As a long-term goal, extend full BAS eligibility
    to all single career enlisted members, beginning with the grade of E-6
    and, eventually, to the lower grades as budgetary constraints are
    eased.
        MGIB. The Montgomery GI Bill (MGIB) often is characterized as a
    form of compensation or as a ``recruiting tool.'' However, FRA would
    argue that it would be more appropriate to consider the benefit an
    investment in our Nation's future. Military personnel can use the MGIB
    on Active-Duty to aid in their professional development, giving them
    the tools to become better leaders, mentors and representatives of
    their respective Service. Many veterans who leave the military and use
    the MGIB to further their education have become more productive members
    of our society. From the offensive backfield of the Denver Broncos to
    the halls of Congress to several Fortune 500 Companies to small
    businesses in Main Street, America, there are college graduates who
    used the MGIB stipend to help pay for their education. These veterans
    pay taxes, returning more in revenue to the Treasury than what they
    might have contributed without a degree. (Persons with Bachelor Degrees
    earn 70 percent more on average than those with a high school diploma.)
        Our Nation has a responsibility to ensure the MGIB investment
    remains a relevant supplement to completing one's education. We must
    give our veterans the tools to excel in an academic environment.
        FRA recommends the enhancement of benefits currently available in
    the MGIB. The Association is grateful for the October 1, 2004 increases
    in basic rates but they cover only about 60 percent of current tuition
    expenses. A creation of a benchmark for the MGIB will keep pace with
    the cost of an average 4 year college education. The cost of a 4-year
    college education for the school year 2004-2005 ($20,082 for 4-years at
    private institutions; $5,132 at public institutions) is much greater
    than what is available through the MGIB. Enhancing the value of the
    MGIB would be an improved incentive to enlist or reenlist in the Armed
    Forces.
        There are 61,000 senior enlisted members in the Armed Forces who
    entered military service during the Veterans Education Assistance
    program (VEAP) era and did not have the opportunity to enroll in the
    MGIB. FRA urges the adoption of an open enrollment period offering
    these enlisted leaders a chance to sign up for the education benefits
    available through the MGIB. In fact, the Association believes the MGIB
    should be expanded so that any uniformed member reenlisting in his or
    her military service will have the opportunity to enroll in the
    program.
                          family readiness and support
        It's most important that DOD and the military services concentrate
    on providing programs for the families of our servicemembers. There are
    a number of existing spousal and family programs that have been fine
    tuned and are successfully contributing to the well-being of this
    community. The Navy's Fleet and Family Centers and the Marines' Marine
    Corps Community Services (MCCS) and Family Services programs are
    providing comprehensive, 24/7 information and referral services to the
    servicemember and family through its OneSource links. OneSource is
    particularly beneficial to mobilized reservists and families who are
    unfamiliar with varied benefits and services available for their use.
        It's true that `the servicemember enlists in the military service
    but it's the family that reenlists.' To ensure the family opts for a
    uniformed career, the family must be satisfied with life in the
    military. To assist in bringing that satisfaction, FRA recommends the
    following to the subcommittee.
        Child and Youth Programs. Both programs rank high in priority for
    the families of sailors and marines. As an integral support system for
    mission readiness and deployments, its imperative these programs
    continue to be improved and expanded to cover the needs of both married
    and single parents. Currently, the Navy's program cares for over 31,000
    children 6 months to 12 years in 227 facilities and 3,180 on- and off-
    base licensed child development homes. With the high priority tagged to
    child care, FRA urges Congress to continue enhancing and increase
    funding for this important benefit.
        Pre-tax Treatment Child Care Expenses. FRA seeks the support of the
    subcommittee to direct the DOD to implement flexible spending accounts
    for pre-tax payment of child-care expenses. The Association urges the
    subcommittee to coordinate with the Ways and Means Committee to enact
    such authority as may be needed as soon as possible.
        Spousal Employment. Today's All-Volunteer environment requires the
    Services to consider the whole family. It is no longer adequate to
    focus only on the morale and financial well-being of the member. Now,
    his or her family must be considered. One of the major considerations
    for spousal employment is it could be a stepping-stone to retention of
    the servicemember--a key participant in the defense of this Nation. The
    Association urges Congress to continue its support of the military's
    effort to affect a viable spousal employment program and to authorize
    sufficient funds to assure the program's success.
        Impact Aid. FRA is most appreciative for the Impact Aid authorized
    in previous Defense measures but must urge this subcommittee and its
    full committee to support a substantial increase in the funding for
    schools bearing the responsibility of educating the children of
    military personnel and Federal employees. Current funds are not
    adequate to ably support the education of federally sponsored children
    attending civilian community elementary schools. Beginning with the
    Nixon administration, funding for Impact Aid has decreased
    dramatically. For example, in the current fiscal year the Military
    Impacted Schools Association (MISA) estimates Impact Aid is funded at
    only 60 percent of need according to law. Our children should not be
    denied the best in educational opportunities. Impact Aid provides the
    children of our sailors, marines, coast guardsmen, soldiers, and
    airmen, a quality education. FRA implores Congress to accept the
    responsibility of fully funding the military Impact Aid program. It is
    important to ensure our servicemembers, many serving in harm's way,
    have little to concern with their children's future but more to do with
    the job at hand.
        Morale, Welfare, and Recreation Programs (MWR). FRA can't help but
    believe Congress and even the military services are less concerned with
    MWR programs that are really vital to supporting the servicemember and
    his or her family. The Navy's top enlisted chief, Master Chief Petty
    Office of the Navy (MCPON) Terry Scott U.S. Navy (USN) again this year
    advised a House panel on February 16, 2005, he is particularly troubled
    that current budget decisions will place a greater burden on the
    Service in providing the necessary programs so important in maintaining
    the well-being of its sailors and families. The MWR programs of the
    Navy; Child Care, Fleet/Family Support Program (FFSP), for example,
    include recreation, fitness, social and community support activities,
    spouse employment, personal financial management, counseling, family
    advocacy, safety, transition and relocation--all having a positive
    affect on Fleet Readiness.
        MCPON Scott noted he was concerned that as ``we continue to face
    increased demands on operational costs these MWR programs and the
    sailors they serve will be tempting targets for reduction.'' So it has
    been on many naval installations world-wide. The MCPON knows MWR
    programs are ``crucial to readiness and retention of (the) force.''
    There is no one closer to the enlisted men and women of the Navy than
    their top senior enlisted chief petty officers. They work along side
    enlisted sailors who make up about two-thirds of the naval forces and
    are aware of what affects their subordinates. These senior enlisted
    chiefs, in turn, pass the information along to the MCPON who reads the
    signs that readiness and retention will suffer if Congress fails to
    fund the Navy's MWR programs and services.
        Currently, the shortage of funds is curtailing or closing some of
    the activities while the costs of participating in others have
    increased over the past year or 2. One major problem is in Europe. The
    weakening dollar has caused an increase in child-care rates, movie
    tickets, etc., and placed a hiring freeze on MWR employees.
        The lack of fiscal support for MWR programs is damaging the need to
    provide mental and physical relief to both sailors and families from
    the stress of deployments that have increased dramatically since the
    military downsized in the 1990s. MWR programs build a community spirit
    among those living on or near a military installation, something not
    experienced by those who may seek comfort and well-being from a
    civilian environment. FRA disagrees with the DOD's apparent effort to
    move housing, schools, hobby shops, etc., off-base in order to save
    money for other purposes. MWR facilities should be fully funded and
    include, where and when available, the Guard, Reserve, and retired
    military population residing in the area. One group aids the other. Who
    better to assist, comfort, counsel, and encourage military family
    members concerned with the conflict in Iraq, continuing deployments,
    and other military related activities?
        FRA again recommends a review of the MWR program be undertaken by
    Congress to evaluate its importance to the uniformed services as a
    factor in maintaining the highest in morale, and readiness, relieving
    both operational tempo (OPTEMPO) and personnel tempo (PERSTEMPO), and
    generating a valid incentive for retention. The goal, hopefully, will
    be to restructure fiscal responsibilities for funding and, perhaps,
    restrict (fence) expenditures to MWR exclusively.
        Dislocation Allowance (DLA). Moving households on government orders
    can be costly. Throughout a military career, servicemembers endure a
    number of permanent changes of station. Too often each move requires
    additional expenses for relocating to a new area far removed from the
    servicemembers' current location.
        Dislocation allowances are authorized for military-ordered moves.
    To aid servicemembers in defraying these additional costs, Congress in
    1955 adopted the payment of a special allowance--termed ``dislocation
    allowance''--to recognize that duty station changes and resultant
    household relocations reflect personnel management decisions of the
    Armed Forces and are not subject to the control of individual members.
        Odd as it may appear, servicemembers preparing to retire from the
    Armed Forces are not eligible for dislocation allowances, yet many are
    subject to the same additional expenses they experienced when effecting
    a permanent change of station during the 20 or more years Active Duty
    spent earning the honor to retire. Moving on orders to another duty
    station or to retire are both reflective of a management decision.
    Retiring military personnel after completing 20 years of service is
    advantageous to the Armed Forces. It opens the ranks to much younger
    and healthier accessions. FRA recommends amending 37 USC Sec. 407, to
    authorize the payment of dislocation allowances to members of the Armed
    Forces retiring or transferring to an inactive duty status such as the
    Fleet Reserve or Fleet Marine Reserve who perform a ``final change of
    station'' move of 50 or more miles.
                           the navy's transformation
        Of major concern to FRA is the Navy's transformation program. Under
    the guise of `transformation' the Navy will be saying goodbye to 60,000
    or more officers and sailors by 2011, mothballing one or more aircraft
    carriers, reducing the number of ships and submarines, scrapping a
    number of aircraft squadrons, and cutting back on quality of life
    programs for its personnel. FRA submits that the Navy's
    `transformation' program could become a means to reduce the Sea Service
    to a secondary power in the world's naval services. The United States
    can ill afford to allow the Navy to shrink from unquestionably the
    world's most powerful to perhaps one of the world's best.
        Some of the Navy's recently developed personnel programs appear to
    be harmful to the morale and readiness of a number of its enlisted men
    and women, as well as some of its commissioned officers. FRA conducted
    a survey during September 2004 and noted that 60 percent of the
    respondents said the Navy's proposed reduction in manpower ``will
    significantly have a negative impact on (their) morale.'' Of the 41 who
    participated in the Sea Swap program, 30 agreed it had a negative
    affect on morale and the ability to perform their assigned duties.
        FRA is reminded of the Army's transformation program. It cut the
    size of its forces and is now facing difficulty in providing adequate
    manpower, mobility, armament, and personal safety to fulfill its
    mission in Iraq. Let's not idly sit back in the name of budgetary
    restraint to emasculate the Navy. It plays a major role, along with the
    other Armed Services, in protecting our citizens and preventing the
    enemy from using the contiguous oceans to attack the United States.
        Additionally, FRA is concerned with the effect the Navy's reduction
    program will have on the Marines. The Association believes the Navy
    should not be afforded the opportunity to reduce further its sealift
    capability. As noted by a retired Marine General, a former director of
    naval expeditionary war, ``If we can't get our (Marine) forces to the
    objective area expeditiously and in sufficient quantity to in, then we
    are relegated to a long, protracted attrition type of conflict.'' He
    concluded by saying that, beyond the sealift capability, the Marines
    need the infrastructure offered by amphibious ships to sustain
    prolonged operations.
        FRA urges the subcommittee to closely monitor the Navy's
    ``transformation'' program and urge the DOD and Navy to reassess the
    Navy's future role in the defense of the United States.
                     force size/readiness/optempo/perstempo
        FRA will again simultaneously address force size, readiness,
    OPTEMPO, and PERSTEMPO as one issue. Readiness is achieved at its
    highest if force size is adequate in numbers, OPTEMPO is not too
    excessive, and PERSTEMPO is not adversely affecting the performance of
    individual servicemembers. FRA noted in its fiscal year 2005 statement
    that all four were suffering from a shortage of uniformed members.
    Since then, this subcommittee, in fiscal year 2005, added numbers to
    the uniformed manpower in both the Army and Marine Corps. FRA is
    grateful for the increase and is hopeful the added manpower will be the
    answer to the difficulty experienced by the military in Iraq over the
    past few years. FRA, with The Military Coalition, will continue to
    monitor the situation to ensure the numbers remain sufficient to
    relieve both OPTEMPO and PERSTEMPO brought on by operations in
    Afghanistan and Iraq.
                               reserve component
        Operational Tempo. The increase in the use of Reserve units to
    serve along side Active-Duty components in Iraq, as an example, has
    caused considerable challenges for individual reservists. Not only has
    their mobilization placed a strain on employment and income, but the
    family as well. Employer support, once strong, decreases as more
    essential employees are whisked-off to spend longer periods in uniform
    leaving the employer frustrated with having to find a replacement and,
    at the same time, hold the position open for the reservist's return.
        FRA has always supported the Total Force Policy but is concerned
    that the sustained use of Reserve Forces will eventually harm the
    recruiting and retention of young men and women willing to serve as
    future citizen sailors, marines, and coast guardsmen. The United States
    must maintain a strong Reserve Force at all times in the event a
    greater need than at the present.
        The fiscal year 2005 defense authorization bill established a
    Commission on the National Guard and Reserves. FRA is in hope that it
    will provide recommendations to this subcommittee on what enhancements
    are necessary to recruit and retain the number of reservists required
    for the defense of the United States. There is a possibility the study
    may include recommendations addressing such issues as tax relief,
    healthcare, retirement upgrades, improvements in the Montgomery G.I.
    Bill Select Reserve (MGIB-SR) and family support programs.
        Until the study is released, FRA urges this subcommittee to move
    rapidly in the area of enhancing and improving the following agenda.

             Increase both enlisted and reenlistment bonuses.
             Enhance the MGIB-SR rates for those who choose to
            participate in the program.
             Adopt legislation that would provide academic and
            financial protection to members who are attending an
            institution of higher learning when called to Active-Duty.
             Support and fund programs for families, particularly
            those geographically dispersed and not readily accessible to
            military installations and inexperienced with the military.
             Authorize cost-share access to TRICARE for members of
            the Selected Reserve and their families.

                               retired component
        Survivor Benefit Plan. FRA has experienced a greater concern for
    improving the Survivor Benefit Plan (SBP) than any issue on its Web
    site (www.fra.org). With an average age of 68 on the Association's
    membership roll, the concern is justified. Most convincing is the need
    to continue refining the program. There are many FRA members, and other
    military retirees, age 70 and older, who have been paying into the Plan
    for more than 30 years with the only relief more than 3-plus years into
    the future.
        There are three compelling reasons to amend the Plan. One, the cost
    of participating in SBP has increased from 60 percent for the military
    retiree to more than 80 percent allowing the DOD to renege on its
    original charge to provide 40 percent of the cost. Two, the SBP was
    fashioned from the survivor program for retired Federal employees, yet
    the military retiree on the average will pay more for participating in
    his or her Plan. Three, the military retiree on the average will pay
    into the SBP over a longer period than the Federal retiree. Although
    Congress has adopted a time for SBP participants to halt payments of
    premiums (when payments of premiums equal 30 years and the military
    retiree is 70 years of age) the date is more than 3 years away.
    Military retirees enrolling on the initial enrollment date (1972) will
    this September be paying premiums for 33 years, by 2008, 36 years.
        FRA recommends and urges the subcommittee to adopt an amendment to
    the SBP to restore the value of participating in the program by
    changing the date 2008 to October 31, 2005 when certain participants
    attaining the age of 70 and having made payment to the Plan for at
    least 30 years are no longer required to make such payments.
        Authorize Surviving Spouses a Full Month's Retired Pay for Month in
    which Retirees Die. This is a proposal initiated by FRA based an pleas
    tram surviving spouses caught in the bureaucracy of mammoth rules and
    regulations, absolutely foreign to them. Current regulations require
    survivors of deceased military retirees to return any retirement
    payments received for the month in which the retiree dies. On the
    demise of a retired servicemember  entitled to retired pay, the
    surviving spouse or beneficiary is to notify the DOD of the death. The
    Department's financial arm then stops payment on the retirement check
    or electronic deposit and subsequently recalculates the payment to
    cover the actual days in the month the retiree was alive. In other
    cases where the death is not reported in a timely manner, any payments
    made for the days the retiree was not alive will be recouped.
        Retirement and its related activities are most agonizing if not an
    arduous experience for many military retirees and families
    transitioning to an unfamiliar civilian-lifestyle. For the average
    retiree, most likely an enlisted member, he or she will suddenly
    discover finances now will be more than a principal concern. On leaving
    Active-Duty, the retiree's income will drop 60- to 70-percent of what
    he/she earned while in uniform. The enlisted retiree, unlike his or her
    Active-Duty counterpart, will receive no death gratuity and, in the
    case of many of the older enlisted retirees, would not have had the
    financial resources to purchase adequate insurance to provide a
    financial cushion for the surviving spouse.
        Death is a most traumatic experience for survivors. It is a most
    painful time when the surviving spouse must accept the task of
    arranging for the deceased members' funeral services. The additional
    cast involved constitutes a major output of scarce family dollars only
    amplified by the loss of retirement income when needed the most. A
    final month's retirement payment will go far in helping to sooth the
    strain on the survivor's financial obligations.
        To aid in reducing the cost of the proposal, survivor benefit
    payments may be forfeited for the month in which the retiree dies and,
    in lieu thereof, the survivor receives the retiree's final month's
    check. In the event the retiree's final month's retirement check is
    less than the SBP annuity, the survivor would receive the one most
    favorable.
        FRA recommends that, in consideration of service to the Nation and
    the trauma surrounding the death of a retired servicemember, the
    surviving spouse would be entitled to receive and retain the final
    retired paycheck/deposit covering any month in which the member was
    alive for any 24-hour period.
        Concurrent Receipt. The National Defense Authorization Act (NDAA)
    for Fiscal Year 2003 authorizes a special compensation that establishes
    a beachhead to authorizing full concurrent receipt, a term for the
    payment of both military non-disability retired pay and any VA
    compensation for service-connected disabilities without a reduction in
    one or the other payment. The fiscal year 2004 and 2005 NDAA expanded
    the benefit list. Although FRA is appreciative of the effort of
    Congress to address the issue, it fails to meet the resolution adopted
    by the Association's membership to seek full compensation for both
    length-in-service military retirement and VA compensation. Currently,
    the receipt of VA compensation causes a like reduction to a retired
    servicemember's military retired pay. This leads to the belief, and
    well deserved, that retired servicemembers, earning retired pay as a
    result of 20 years or more of service, are forced to pay for their own
    disablement.
        Most disabilities are recognized after the servicemember retires.
    Some are discovered while the member is still performing Active-Duty or
    as the result of a retirement physical. However, it is to the benefit
    of the DOD to retire the member without compensation for any
    disability. Instead, the member is directed to the DOD for compensatory
    relief for the damages incurred by the member while serving the Nation
    in uniform.
        Prior to 1975, all military disability pay was tax exempt. A
    perception of abuse to the system, mostly in the Armed Forces senior
    officer grades, caused Congress to amend the Internal Revenue Code. The
    Tax Reform Act of 1976 forced the DOD to change the rules so that only
    a percentage of the member's disability retired pay attributable to
    combat-related injuries would be tax-exempt. Subsequently, many
    retiring servicemembers petitioned the VA for relief for service-
    connected injuries.
        Servicemembers, whether in uniform or retired, are considered
    Federal employees subject not only to Title 10, U.S. Code, but Title 5,
    U.S. Code, regulating the conduct and performance of government
    employees, on the job or retired. When retired, servicemembers are not
    entitled to VA compensation payments for their disabilities without
    forfeiting an equal amount of their retired pay with one exception;
    military retirees may go on the Federal employee rolls and subsequently
    retire using military service time to calculate their Federal
    retirement annuity. They, then, may receive veterans' compensation as
    well as Federal civil service retirement payments with no offsets,
    reductions, or limits. Why should current law discriminate against the
    military retiree?
        FRA encourages Congress to take the helm and fully authorize and
    fund concurrent receipt of military non-disabled retirement pay and
    veterans' compensation. Congress should remember that U.S.
    servicemembers, more so than any collective group, not only had a major
    hand in the creation of this Nation, but have contributed for more than
    200 years to the military and economic power of the United States.
    Those who have served in the Armed Forces for 20 years or more years
    certainly deserve the opportunity to have equity with their
    counterparts in the Federal service who can earn both without a penalty
    to one or the other.
        Cost of Living Adjustments (COLA). Recent threats to curtail or
    halt cost of living adjustments have been lobbed in the direction of
    military retired pay and related payments such as survivor benefit
    annuities. Once again, Congress is urged to keep its promise that
    military retired pay will maintain its purchasing power based on
    increases in the Consumer Price Index (CPI).
        One must recall that the wisdom of Congress initiated the COLA
    program in lieu of the ``recomputation'' system. Recomputation was a
    term used to describe adjustments to military retired pay prior to the
    1970s. Military retirees received retirement pay adjustments each time
    Active-Duty pay was increased. This system guaranteed the servicemember
    if he/she retired at a certain percentage of Active-Duty pay, that pay
    would maintain the same percentage factor to Active-Duty pay throughout
    retirement. In 1963, Congress--concerned with a heightened number of
    retired WWII members on the retired roll--decided to switch to the CPI
    method.
        In 1985 the Gramm-Rudman-Hollings Act gave the administration an
    open door policy to ``stop payment'' on COLAs to military retired pay.
    The result was a frontal attack on Congress by military retirees under
    the banner of the newly formed (The) Military Coalition. Congress did
    not include veterans in its sequestration proposing a 3.7-percent COLA
    for veterans and their survivors, so the Coalition used the slogan,
    ``Military retirees are veterans too.'' The Coalition was irate.
        Conversely, COLA protection is the paramount reason military
    retirees make an irrevocable decision to elect significant reductions
    in retired pay to provide surviving spouses and children with an
    annuity following the retiree's death. The most compelling reason for
    the decision is that the guaranteed inflation protection made the SBP a
    superior alternative to life insurance policies. The sequestration of
    COLA funds violate that guarantee and greatly diminishes the value of
    the SBP.
        FRA recommends that Congress--if it reduces the fiscal year 2006
    budget--not target military and Federal retirees' retirement pay. Such
    action is discriminating and contrary to the promise made by Congress
    to maintain the purchasing power of military retirement pay.
        Uniformed Services Former Spouses Protection Act (USFSPA). The
    USFSPA is a statute adopted without hearings on the House side and no
    up-or-down vote in the Senate. As one member of the House said at the
    time, the law will cause more problems than it will solve. How true the
    prediction.
        Since its inception in 1982, more than two-thirds of States have
    adopted community property laws. More have turned to no-fault decisions
    in determining the outcome of divorces. Some of the actions were the
    result of State Courts embracing the USFSPA as a means to automatically
    strip military retirees of their hard-earned retirement pay for the
    payment of alimony to a former spouse who in far too many cases, failed
    to dedicate the same number of years to the marriage and the military.
    Whether serving in war or peace, the military member is credited only
    2\1/2\ percentage points for each year of Active-Duty. It takes at
    least 20 years to receive sufficient credits to qualify for retirement.
    On reaching that plateau the member becomes entitled to 50 percent of
    his or her Active-Duty pay. Fifty percent of the member's Active-Duty
    pay, by the way, is nearer to 30 percent of all pay and allowances
    earned while serving in uniform.
        One of the major problems with USFSPA is it allows state courts to
    consider military retired pay as property that may be divided between
    the retiree and the spouse/former spouse. The court, with little or no
    knowledge of how the retiree earns retired pay, grants the spouse/
    former spouse a portion of that retired pay for the life of the
    retiree, regardless of the number of years of marriage. A lifetime of
    payments to a spouse/former spouse for a period of marriage less than
    20 years during which the retiree was slowly accruing only 2\1/2\
    percent for each of those years is unfair, inequitable, and
    discriminating.
        The spouse/former spouse should not be entitled to more than an
    equal percentage of the retiree's retirement pay for each year of
    marriage and should not be in receipt of that amount for any longer
    than the number of years of marriage. Although the servicemember is not
    entitled to retired pay until the minimum credible time is completed,
    the former spouse can become eligible at any time based on the decision
    of a Civil Court.
        It's a terrible law. Moreover, since State courts have little if
    anything to say about how the military directs its people to serve the
    Nation, and servicemembers agree only to defend the Constitution, why
    does the Federal Government dump its fiscal responsibilities to its
    uniformed members onto the State courts?
        FRA recommends that this subcommittee, Congress, accept the
    responsibility of conducting a review and the possible adoption of
    amendments to the Uniformed Services Former Spouses Protection Act [10
    USC, 1408] to establish a more equitable division of the
    servicemember's retirement pay with a spouse/former spouse upon
    dissolution of a marriage.
        Medical Care Recovery Act. In the summer of 2003 while the new
    Sergeant Major of the Marine Corps was in the process of assuming his
    duty, his wife was nearly killed by a ``wayward driver.'' She spent
    weeks in a Navy hospital the recipient of emergency brain surgery,
    intensive care, military air transportation to Washington, D.C, from
    California, and both occupational and physical therapy. Now the Navy is
    proceeding to recover the returns from the insurance companies of both
    parties, an estimated $100,000.
        The Navy, as with the other Services, cites a 41-year old law,
    Medical Care Recovery Act, as the basis to collect payment for medical
    care administered to uniformed personnel. According to a January 4,
    2004, news article by James W. Crawley in the San Diego Union Tribune,
    the Navy collected $11 million in reimbursements from insurance
    companies in the past year ``that would have gone to sailors, marines,
    and their dependents.''
        Apparently, the law is reasonable. The Navy operates its medical
    facilities with taxpayer funds and it is only right that these
    expenditures be recovered whenever possible. However, the question of
    fairness rises to the front when the process of recovery goes against
    the victim. FRA believes any recovery should come from the insurance of
    the party at fault. In many cases the proceeds from the victim's
    insurance policy will be earmarked for expenses involved in the
    continued care of the victim, babysitting, replacement vehicle, and
    other everyday living requirements not now accomplished on a personal
    basis but by payment or hire.
        The ironic part of this statute is that recovery is only
    collectible through a third party. If a servicemember is injured as a
    result of ``willful and negligent'' acts and in receipt of medical care
    in a military treatment facility (MTF), no claim of recovery can be
    made against the member.
        The law does allow the Secretary concerned to waive a claim of the
    United States. However, it is doubtful that affected servicemembers are
    aware such a waiver may be granted if requested. Such information
    should be disseminated to all servicemembers through the military's
    information program and upon receipt of treatment and care at a MTF.
        FRA recommends a review of the law, 10 USC 1095, and the
    possibility of an amendment authorizing the no-fault victim to retain a
    certain percentage of the proceeds from insurance claims so the no-
    fault victim will not bear a fiscal burden during a time of financial
    need.
                                  other issues
        Predatory Lending and Pension Selling. FRA continues to be vitally
    concerned that there are lending institutions and other predatory
    businesses whose mission appears to be scamming our men and women in
    uniform, particularly those who are young and married. The rates of
    interest charged for loans to servicemembers is ludicrous and should be
    stopped or, at least, required to charge an average percentage
    interest. Current rates are so that servicemembers must keep on paying
    and paying with little hope of getting ahead of the lending
    institutions. Other predators are pursuing retirees, veterans, and
    social security recipients in an effort to ``purchase'' their Federal
    payments. This is against the law but apparently is not being enforced.
        FRA recommends that this subcommittee support the adoption of an
    anti-predatory lending act and an amendment to current law preventing
    the ``purchasing'' or ``selling'' of Federal payments made to military
    retirees, veterans, and social security recipients.
                                   conclusion
        FRA is grateful for the opportunity to present its goals for fiscal
    year 2006. If there are questions or a need for further information,
    please call Matt Schafer, FRA Acting Director of Legislative Programs,
    at 703-683-1400.

        Mr. Strobridge. Ms. Raezer, Ms. Holleman, and I are here
    representing different organizations, but we all work very
    closely together, and we share common goals on the vast
    majority of issues. So to save repetitive testimony, what we
    would like to do is focus our remarks on different subject
    areas, with the understanding that each of us supports the
    other's remarks.
        For my part, I will highlight coalition priorities on
    Active-Duty, Guard, Reserve, and health care issues.
        First, we are grateful to the subcommittee for your
    continued emphasis on restoring military pay comparability with
    the private sector. We certainly support the proposed 3.1
    percent pay raise and the bonus flexibilities that DOD and the
    Services were requesting, but we also believe that additional
    targeted raises are needed for senior enlisted members and
    warrant officers to reflect the salaries for similarly educated
    and experienced people in the private sector.
        Second, we continue to believe that the force is too small
    for its long-term operational missions. We certainly hope the
    subcommittee will provide substantial and permanent end
    strength increases, particularly for the Army and the Marine
    Corps, to ease operational stresses and protect against
    retention and readiness shortfalls. We recognize that that
    poses a recruiting challenge, but to us, we need to devote
    whatever resources it takes to do that to be able to defend the
    country.
        One no-cost benefit that we ask the subcommittee to pursue
    is to provide military members the same health premium
    conversion and flexible spending account benefits that all
    other Federal civilians already enjoy. These programs would
    save many servicemembers thousands of dollars a year by letting
    them pay child care and health care expenses with pre-tax
    dollars, and it would save DOD money as well by reducing its
    payroll tax liability. It does not make sense to us that
    military members are denied savings options that all other
    Federal workers have.
        Next, the coalition believes we must protect wounded
    servicemembers' income by continuing hostile fire and hazard
    pays during periods of hospitalization and rehabilitation.
    Troops who get paid for just incurring the risk should not lose
    their pay for actually incurring the combat wounds.
        Mr. Chairman, we are particularly grateful for your
    personal efforts to secure health coverage for the selected
    Reserve. The first fruits of that labor will be recognized
    later this month, but we believe more remains to be done. Many
    remain without health coverage, and coverage is only temporary
    for those people who do sign up. We expect many will be
    reluctant to enroll their families in a program for which their
    eligibility will expire in only a couple of years. We had that
    very experience with a Federal Employees Health Benefits Plan
    (FEHBP) test program several years ago that the subcommittee
    authorized.
        The requirement to enroll before leaving Active-Duty also
    will inhibit informed consultation with the family members most
    affected by this decision. We share your belief that all
    Selected Reserve members deserve permanent coverage. We believe
    they also deserve the option to have the Government pay the
    premiums or, at least, a share of the premiums for their
    civilian coverage when they are mobilized, just as the DOD
    already does for its own civilian employees.
        On the issue of Reserve retirement, the coalition believes
    some adjustment is necessary to recognize the dramatically
    increased military service demands on this group. They are now
    being told to expect extended mobilizations every 6 years, and
    that could take 25 percent of their working life as long as
    they are in the Reserves. That is going to dramatically reduce
    their expected civilian retirement benefits, 401(k)
    contributions, and so forth, and we believe it is appropriate
    to help offset that with an adjustment to the Reserve
    retirement age.
        The coalition also recommends as a matter of equity that
    members who are activated for more than 30 days should be
    entitled to full military pay, including locality-based housing
    allowances.
        On the defense health program, the coalition remains
    concerned about seemingly annual funding shortfalls that cause
    cutbacks in beneficiary sensitive areas like pharmacy
    formularies. We remain troubled by the lack of seamless
    transition between DOD and VA health care programs for the
    returning wounded. Despite years of effort, we still do not
    have a transferrable electronic medical record or an electronic
    DD Form 214. Despite the subcommittee's guidance, there is
    uneven implementation of the single discharge physical, a
    particular problem at major facilities like Walter Reed and
    Bethesda. We believe an extraordinary Manhattan Project kind of
    effort is required to ensure the kind of leadership focus,
    priority, continuity, and effective delivery that our veterans
    need.
        Finally, we urge the subcommittee's continuing focus on
    ensuring timely access to quality health care for TRICARE
    standard beneficiaries, as well as prime enrollees. The DOD has
    gathered initial survey data on provider availability as the
    subcommittee directed, but it has yet to establish what
    constitutes inadequate availability or what corrective actions
    are required for localities that fall below that standard. We
    ask your support in requiring development of such standards and
    ensuring the survey data is used to improve beneficiary access.
        Mr. Chairman, that concludes my portion of the testimony,
    and Ms. Raezer will now address quality of life concerns.
        [The prepared statement of Mr. Strobridge follows:]
                   Prepared Statement by Steven P. Strobridge
        Mr. Chairman and distinguished members of the subcommittee. On
    behalf of The Military Coalition, a consortium of nationally prominent
    uniformed services and veterans' organizations, we are grateful to the
    subcommittee for this opportunity to express our views concerning
    issues affecting the uniformed services community. This testimony
    provides the collective views of the following military and veterans'
    organizations, which represent approximately 5.5 million current and
    former members of the seven uniformed services, plus their families and
    survivors.

             Air Force Association
             Air Force Sergeants Association
             Air Force Women Officers Associated
             American Logistics Association
             AMVETS (American Veterans)
             Army Aviation Association of America
             Association of Military Surgeons of the United States
             Association of the United States Army
             Chief Warrant Officer and Warrant Officer Association,
            U.S. Coast Guard
             Commissioned Officers Association of the U.S. Public
            Health Service, Inc.
             Enlisted Association of the National Guard of the
            United States
             Fleet Reserve Association
             Gold Star Wives of America, Inc.
             Jewish War Veterans of the United States of America
             Marine Corps League
             Marine Corps Reserve Association
             Military Chaplains Association of the United States of
            America
             Military Officers Association of America
             Military Order of the Purple Heart
             National Association for Uniformed Services
             National Guard Association of the United States
             National Military Family Association
             National Order of Battlefield Commissions
             Naval Enlisted Reserve Association
             Naval Reserve Association
             Navy League of the United States
             Noncommissioned Officers Association
             Reserve Officers Association
             Society of Medical Consultants to the Armed Forces
             The Retired Enlisted Association
             United Armed Forces Association
             United States Army Warrant Officers Association
             United States Coast Guard Chief Petty Officers
            Association
             Veterans of Foreign Wars of the United States
             Veterans' Widows International Network

        The Military Coalition, Inc., does not receive any grants or
    contracts from the Federal Government.
          executive summary--recommendations of the military coalition
    Active Force Issues
        Personnel Strengths and Operations Tempo
        The Military Coalition continues to strongly recommend increased
    Service end strengths to sustain the long-term global war on terrorism
    and fulfillment of national military strategy. The Coalition supports
    increases in recruiting resources as necessary to meet this
    requirement. The Coalition urges the subcommittee to consider all
    possible manpower options to ease operational stresses on Active,
    Guard, and Reserve personnel.
        Pay Raise Comparability and Pay Table Reform
        The Military Coalition urges the subcommittee to restore full pay
    comparability as soon as possible and to reject any request from the
    administration to cap pay raises or provide smaller increases to
    servicemembers in any of the uniformed services, including the U.S.
    Public Health Service or National Oceanic and Atmospheric
    Administration. The Coalition believes all members of the uniformed
    services need and deserve annual raises at least equal to private
    sector wage growth. The Coalition supports ``targeted'' raises to align
    the pay of career servicemembers with earnings in the private sector
    for civilians with comparable experience and education. However, to the
    extent that ``targeted'' raises are needed, the Department of Defense
    (DOD) should define the ultimate objective pay table toward which these
    targeted raises are aimed.
        Combat and Incentive Pays during Hospitalization
        The Military Coalition strongly urges the subcommittee to take
    action to ensure combat-wounded servicemembers do not have their
    compensation reduced during periods of hospitalization and
    rehabilitation. The Coalition believes that such compensation treatment
    is essential for servicemembers who continue to suffer from the
    injuries sustained through combat and other hazardous duty, which these
    compensation incentives were created to recognize.
        Pre-tax Treatment for Health and Child Care Expenses
        The Military Coalition urges the subcommittee to direct the
    Department of Defense to implement for military members the same health
    premium conversion and flexible spending account plans that all other
    government employees already can use to reduce their out-of-pocket
    expenses for health care and dependent care. The Coalition's research
    indicates this can be done within the subcommittee's purview without
    any necessity to change tax laws.
        Commissaries
        The Military Coalition opposes initiatives that would reduce
    benefits or savings for members and strongly supports full funding of
    the commissary benefit to sustain the current level of service for all
    beneficiaries including retirees, Guard and Reserve personnel, and
    their families.
        Family Readiness and Support
        The Military Coalition recommends a family support structure, with
    improved education and outreach programs and increased childcare
    availability, to ensure a high level of family readiness to meet the
    requirements of increased force deployments for active, National Guard
    and Reserve members.
        GI Bill Incentives for the 21st Century Force. Montgomery GI Bill
    (MGIB) education benefits need to be upgraded to support Active and
    Reserve Forces recruitment programs, allow equitable benefit usage on
    Active-Duty, restore proportional benefits for Guard and Reserve
    initial entrants, allow career servicemembers who declined `VEAP' a
    MGIB enrollment opportunity, and other initiatives.
        Basic Allowance for Housing (BAH)
        The Military Coalition urges an adjustment to grade-based housing
    standards to more accurately reflect enlisted members' realistic
    housing options and members' out-of-pocket housing expenses.
        Permanent Change of Station (PCS)
        The Military Coalition urges continued upgrades of permanent
    change-of-station reimbursement allowances including expedited
    implementation of the Families First Program, modifying personal
    property weight allowances for senior enlisted grades (E-7, E-8, and E-
    9), and authorizing shipment of a second POV at government expense to
    Alaska, Hawaii and other overseas accompanied assignments.
    National Guard and Reserve Issues
        Stress on Guard and Reserve Forces
        The Military Coalition urges additional resources for Reserve
    recruitment, retention, and family support to relieve enormous pressure
    on overstressed Guard and Reserve Forces.
        Healthcare for Members of the National Guard and Reserve
        The Military Coalition urges permanent authority for cost-share
    access to TRICARE for all members of the Selected Reserve--those who
    train regularly--and their families in order to ensure medical
    readiness and provide continuity of health insurance coverage. As an
    option for these servicemembers, the Coalition urges authorizing the
    government to pay part or all of private health insurance premiums when
    activation occurs, a program already in effect for reservists who work
    for the Department of Defense.
        Review and upgrade the Reserve Compensation System to Match the New
            ``Contract''
        Develop and implement improvements to Reserve compensation. Restore
    the Selected Reserve Montgomery GI Bill (SR-MGIB) to 50 percent parity
    with the Active-Duty MGIB; authorize retirement credit for all earned
    drill points; increase Reserve bonuses, special and incentive pays;
    simplify the Reserve duty system without compromising the current or
    future value of Reserve compensation; eliminate BAH II; and award full
    veteran status to Guard and Reserve servicemembers who successfully
    complete 20 qualifying years of Reserve service, but do not otherwise
    qualify as veterans under Title 38.
        Guard/Reserve Retirement Upgrade
        The Military Coalition urges lowering the Reserve retirement age
    from 60 to 55 as an option to partially offset loss of civilian
    retirement benefits resulting from greatly increased military service
    requirements.
        Guard/Reserve Family Support Programs
        The Military Coalition urges support and funding for a core set of
    family support programs and benefits that meet the unique needs of
    geographically dispersed Guard and Reserve families who do not have
    ready access to military installations or current experience with
    military life. Programs should promote better communication and enhance
    education for Reserve component family members about their rights and
    benefits and available services.
        Financial Relief for Activated Reservists and Their Employers
        The Military Coalition urges enactment of legislation to relieve
    financial strains on Guard and Reserve members and to recognize their
    employers in a tangible way: tax credits for employers who pay wage
    differentials to activated employees, similar tax credits for hiring
    temporary workers, and authority for penalty free withdrawals and
    reinvestment into civilian retirement plans due to economic pressures
    associated with mobilization.
    Survivor Program Issues
        SBP-DIC Offset
        The Military Coalition strongly recommends that the current dollar-
    for-dollar offset of Survivor Benefit Plan (SBP) benefits by the amount
    of Dependency and Indemnity Compensation (DIC) be eliminated. Indemnity
    payments when the service causes death should be added to--not
    substituted for--retiree-purchased SBP. Active-Duty spouses, many of
    whom have their entire SBP offset by DIC, deserve more than a $993
    monthly annuity, considering police and firefighter survivors often
    receive 100 percent of pay as an annuity in addition to substantial
    lump-sum payments.
        30-Year Paid-Up SBP
        The Military Coalition strongly recommends acceleration of the
    October 1, 2008, implementation date for 30-year paid-up SBP coverage
    to October 1, 2005. A 1972 retiree has already paid almost 20 percent
    more premiums than a 1978 retiree will ever pay. By 2008, they will
    have paid a 34 percent ``Greatest Generation'' tax.
        Death Benefits Enhancement
        The Military Coalition urges the subcommittee to raise SGLI to
    $500,000, with the first $100,000 provided at no cost to the
    servicemember, and to increase the military death gratuity to $100,000.
    The Coalition believes this coverage should be extended to all deaths
    since Oct. 7, 2001 that were in the line of duty, and not just deaths
    caused by combat or other narrowly defined determinations.
        Final Retired Paycheck
        The Military Coalition strongly recommends that surviving spouses
    of deceased retired members should be allowed to retain the member's
    full retired pay for the month in which the member died.
    Retirement Issues
        Concurrent Receipt of Military Retired Pay and Veterans Disability
            Compensation
        The Military Coalition greatly appreciates Congress' action to
    date, but urges subcommittee leaders and members to be sensitive to the
    thousands of disabled retirees who are not yet included in concurrent
    receipt legislation enacted over the past several years. Specifically,
    as a priority, the Coalition urges the subcommittee to expand combat-
    related special compensation to disabled retirees who were not allowed
    to serve 20 years solely because of combat-related disabilities and
    ensure full, immediate compensation for otherwise qualifying members
    rated as ``unemployable.'' The Coalition strongly urges the
    subcommittee to ensure the upcoming Veterans' Disability Benefits
    Commission protects the principles guiding the DOD disability
    retirement program and Department of Veterans' Affairs (VA) disability
    compensation system.
        Former Spouse Issues
        The Military Coalition recommends corrective legislation, including
    the recommendations made by the DOD in their 2001 Uniformed Services
    Former Spouse Protection Action (USFSPA) report, be enacted to
    eliminate inequities in the administration of the USFSPA.
        Pre-Tax Premium Conversion Option
        The Coalition urges the subcommittee to support S. 484 and to seek
    Finance Committee support to provide all Federal and uniformed services
    beneficiaries a tax exemption for premiums or enrollment fees paid for
    TRICARE Prime, TRICARE Standard supplements, the Active-Duty dental
    plan, TRICARE Retiree Dental Plan, FEHBP and Long Term Care.
    Health Care Issues
        Defense Health Program Funding
        The Military Coalition strongly recommends the subcommittee
    continue its watchfulness to ensure full funding of the Defense Health
    Program, including military medical readiness, needed TRICARE Standard
    improvements, and the DOD peacetime health care mission. It is critical
    that the Defense Health Budget be sufficient to secure increased
    numbers of providers needed to ensure access for TRICARE beneficiaries
    in all parts of the country.
        Medical Manpower Transformation
        The Military Coalition urges the subcommittee to provide oversight
    of the implementation of medical manpower transformation plans on
    health care delivery to ensure the plan to shift non-operational care
    to civilian providers does not inadvertently compromise health care
    delivery/beneficiary access, Graduate Medical Education, medical
    professional growth and promotion opportunities, or the assignment
    rotation base.
        Assistance for Wounded Combat Veterans and Others Separating from
            Military Service
        The Military Coalition asks the subcommittee to demand a concerted
    ``Manhattan Project'' kind of effort to ensure full and timely
    implementation of seamless transition activities, a bi-directional
    electronic medical record (EMR), enhanced post-deployment health
    assessments, implementation of an electronic DD214, additional family
    and mental health counseling services, and the single physical at time
    of discharge.
        Implementation of TRICARE Reserve Select
        The Military Coalition urges the subcommittee to provide oversight
    of implementation of the TRICARE Reserve Select benefit, to extend
    eligibility for TRICARE Reserve Select for all Selected Reserve
    members, to take steps to permit members of the Individual Ready
    Reserve (IRR) called to Active-Duty for a contingency operation to
    participate in TRICARE Reserve Select, if they remain in the IRR
    subject to future recall, to address loss of TRICARE Reserve Select
    benefits when members are mobilized during their benefit period and to
    permit beneficiaries to elect TRICARE Reserve Select coverage during
    the 180 days of Transitional Assistance Management Program.
        TRICARE Standard Improvements
        The Military Coalition urges the subcommittee's continued oversight
    to ensure DOD is held accountable to promptly meet requirements for
    beneficiary education and support, establish criteria for evaluation of
    access/provider availability, and follow through with education and
    recruitment of sufficient providers to solve access problems for
    standard beneficiaries.
        Provider Reimbursement
        The Military Coalition requests the subcommittee's support of any
    means to establish and maintain Medicare and TRICARE provider payment
    rates sufficient to ensure beneficiary access, and to support measures
    to address Medicare's flawed provider reimbursement formula.
        TRICARE Transition And Implementation Of New Contracts. The
    Military Coalition recommends that the subcommittee continue to
    strictly monitor implementation of TRICARE contracts, especially the
    ability to meet Prime access standards, and ensure that Beneficiary
    Advisory Groups' inputs are sought in the evaluation process.
        Prior Authorization under TNEX
        The Military Coalition urges the subcommittee's continued efforts
    to reduce and ultimately eliminate requirements for pre-authorization
    for Standard beneficiaries and asks the subcommittee to assess the
    impact of new prior authorization requirements upon beneficiaries'
    access to care.
        Uniform Formulary Implementation
        The Military Coalition urges the subcommittee to ensure the uniform
    formulary remains robust, with reasonable medical-necessity rules and
    increased communication to beneficiaries about program benefits, pre-
    authorization requirements, appeals, and other key information.
        Access to TSRx for Nursing Home Beneficiaries
        The Military Coalition urges the subcommittee to direct DOD to
    reimburse pharmacy expenses at TRICARE network rates to uniformed
    services beneficiaries residing in residential facilities that do not
    participate in the TRICARE network pharmacy program, and who cannot
    access network pharmacies due to physical or medical constraints.
        TRICARE Benefits for Remarried Widows
        The Military Coalition urges the subcommittee to restore equity for
    surviving spouses by reinstating TRICARE benefits for otherwise
    qualifying remarried spouses whose second or subsequent marriage ends
    because of death, divorce or annulment, consistent with the treatment
    accorded CHAMPVA-eligible survivors.
        TRICARE Prime Continuity in BRAC Areas
        The Military Coalition urges the subcommittee to amend title 10 to
    require continuation of TRICARE Prime network coverage for uniformed
    services beneficiaries residing in Base Realignment and Closure (BRAC)
    areas.
                                    overview
        Mr. Chairman, The Military Coalition (TMC) thanks you and the
    entire subcommittee for your continued, unwavering support for the fair
    treatment of Active-Duty, Guard, Reserve and retired members of the
    uniformed services, and their families and survivors. The
    subcommittee's work to greatly improve military pay, eliminate out-of-
    pocket housing expenses, improve health care, and enhance other
    personnel programs has made a significant difference in the lives of
    Active, Guard, and Reserve personnel and their families. This is
    especially true for our deployed servicemembers and their families and
    survivors who are engaged throughout this world in the global war on
    terror.
        The subcommittee's work to enact provisions eliminating the
    military survivor benefit plan ``widows tax'' over the next 3 years
    will provide significantly improved survivor benefits for current and
    future beneficiaries, including survivors of servicemembers fighting
    today in Operations Iraqi and Enduring Freedom (OIF/OEF). These and the
    many other important provisions of the National Defense Authorization
    Act for Fiscal Year 2005 will enhance the quality of life of our
    servicemembers, retirees, and their families and survivors in the years
    ahead.
        Congress has made military compensation equity a top priority, and
    much has been accomplished over the past several years to improve the
    lives of men and women in uniform and their families. But we hear
    recommendations periodically from some in the administration to return
    to the failed policies of the past by capping future military pay
    raises below private sector wage growth. Shortchanging compensation for
    military personnel has exacted severe personnel readiness problems more
    than once in the last 25 years, and the Coalition thanks the
    subcommittee for staying the course to further close the pay
    comparability gap and for enacting provisions to reestablish the pay
    comparability principle in permanent law.
        Despite these improvements in military compensation, we are deeply
    troubled by how much harder troops have to work--and their families
    have to sacrifice--for that compensation.
        Today's reality is simple--servicemembers and their families are
    being asked to endure ever-greater workloads and ever-greater
    sacrifices. Repeated deployments, often near back-to-back, have
    stressed the force to the point where recruiting and retention are real
    concerns for some Services; and, if it weren't for the Services' stop-
    loss policies and massive recalls of Guard and Reserve members,
    readiness would suffer. The subcommittee's work to increase Army and
    Marine Corps end strength sends a clear signal that our forces are
    stretched too thin, but even with these increases, the hard fact is
    that we don't have large enough forces to carry out today's missions
    and still be prepared for any new contingencies that may arise
    elsewhere in the world. In addition, the Coalition is concerned that
    the Navy and Air Force are in the midst of ``transformation''
    initiatives that include reducing their respective end strengths
    despite continuing demanding operational commitments.
        In testimony today, The Military Coalition offers its collective
    recommendations on what needs to be done to address these important
    issues and sustain long-term personnel readiness.
                                budget overview
        The Military Coalition is concerned that some in the executive
    branch are now bemoaning Congress' efforts in recent years to reverse
    military pay shortfalls and correct compensation and benefit inequities
    affecting retired military members, military survivors and Guard and
    Reserve members, contending that the cost those initiatives impinges on
    current defense budget needs, including the ability to support
    compensation initiatives for the current force.
        The Coalition objects strongly to any such efforts to pit one
    segment of the military community against another. Our experience has
    been that this subcommittee has rarely, if ever, turned down Defense
    Department requests for current force funding needs. Congress also has
    had greater sensitivity than the executive branch--regardless of the
    political party of the administration--to the importance of career
    military benefits to long-term retention and readiness.
        Those who complain today about the cost of restoring military pay
    comparability, repealing REDUX retirement penalties, and enacting
    TRICARE For Life apparently do not recall that the Joint Chiefs of
    Staff at the time all told Congress that fixes were needed in these
    areas in order to address the significant retention problems
    experienced in the late 1990s.
        The Coalition is amazed to see some in the Defense Department now
    contending that repairing retiree and survivor benefits doesn't help
    retention, and that if we just give today's soldier a lump sum of cash
    for a pickup truck, that soldier won't care about future retirement
    benefits. To this way of thinking, anyone who is not currently on
    Active-Duty provides no return on investment--which prompts opposition
    to such congressional initiatives as concurrent receipt, health
    coverage for the Selected Reserve, and elimination of the Survivor
    Benefit Plan ``military widows tax.'' It's precisely this kind of
    short-term budget thinking that led to the retention crises of the late
    1970s and late 1990s.
        Congress has been wise enough to see what executive branch
    officials of both parties have not over the past 10 years--that it is
    not enough to just meet the short term desires of the 19 year old new
    enlistee with more cash in hand. Those members get older and have
    families, and their families grow much more concerned at the second and
    third reenlistment points, often after multiple family separations,
    whether the long-term benefits of a military career offset the
    extraordinary and persistent demands and sacrifices inherent in serving
    20 to 30 years in uniform.
        The Military Coalition believes this subcommittee will see past
    penny-wise and pound-foolish efforts to rob one element of the military
    community to pay another, and will continue to recognize the hard-
    learned lessons of the past--that successfully sustaining readiness and
    retention over the long term requires fair treatment for military
    members and families at every stage: Active-Duty, Guard and Reserve,
    retired, and survivors.
        If the administration is concerned about budget shortfalls or
    trade-offs in any area, the Coalition strongly believes that any such
    trade-offs reflect the administration's own choices. They are not the
    fault of the retirees, survivors, or Guard and Reserve members who
    needed and deserved compensation corrections, and they are not the
    fault of Congress that rightly enacted those corrections. If the
    Department will only lay out the current defense requirements that need
    to be met, the Coalition believes firmly that the subcommittee and
    Congress will find an appropriate way to meet those needs.
                              active force issues
        Since the end of the Cold War, the size of the force and real
    defense spending have been cut by more than a third. In fact, the
    defense budget today is 3.8 percent of this Nation's Gross Domestic
    Product--less than half of the share it comprised in 1986. But today
    America's Armed Forces are engaged in a global war on terrorism--a
    campaign that has made constant and repeated deployments a way of life
    for today's servicemembers. There is no question that the stress of
    today's sustained operations is taking a significant toll on our men
    and women in uniform, and their families and survivors, and this is
    being reflected in failure of the Army Guard and Reserve to meet its
    recent recruiting goals. In addition, there are indicators of growing
    challenges in recruiting members of the other Services.
        The subcommittee has taken action to help relieve the stress of
    repeated deployments by increasing Army and Marine Corps end strength
    and by making permanent family separation and danger area pays. These
    are notable and commendable improvements; however, sustaining a quality
    force for the long-term, remains a significant challenge, especially in
    technical specialties. While some Services are meeting retention goals,
    these goals may be skewed by post-September 11 patriotism and by
    Services' intermittent stop-loss policies. This artificial retention
    bubble is not sustainable for the long-term under the current pace of
    operations, despite the reluctance of some to see anything other than
    rosy scenarios.
        From the servicemembers' standpoint, the increased personnel tempo
    necessary to meet continued and sustained training and operational
    requirements has meant having to work progressively longer and harder
    every year. ``Time away from home'' is now a real focal point in the
    retention equation. Servicemembers are enduring longer duty days;
    increased family separations; difficulties in accessing affordable,
    quality health care; deteriorating military housing; less opportunity
    to use education benefits; and significant out-of-pocket expenses with
    each permanent change of station move.
        Intensified and sustained operations in Iraq and Afghanistan are
    being met by servicemembers' patriotic dedication, but there is little
    question that once Service stop-loss policies are lifted, the retention
    of combat-experienced servicemembers is going to be problematic.
        Experienced (and predominantly married) officers, noncommissioned
    officers (NCOs) and petty officers are under pressure to make long-term
    career decisions against a backdrop of a demand for their skills and
    services in the private sector. Many servicemembers and their families
    debate among themselves whether the rewards of a service career are
    sufficient to offset the attendant demands and sacrifices inherent in
    uniformed service. They see their peers going home to their families
    every night, and when faced with repeated deployments to a combat zone,
    the appeal of a more stable career and family life, often including an
    enhanced compensation package with absolutely less demanding working
    conditions, is attractive. When allowed the option, many of our
    excellent soldiers, sailors, airmen, and marines will opt for civilian
    career choices, not because they don't love what they do, but because
    their families just can no longer take the stress.
        On the recruiting front, one only needs to watch prime-time
    television to see powerful marketing efforts on the part of the
    Services. But this strong marketing must be backed up by an ability to
    retain these experienced and talented men and women. This is especially
    true as the Services become more and more reliant on technically
    trained personnel. The subcommittee reacted to retention problems by
    improving military compensation elements, and the Coalition understands
    that you have a continuing agenda in place to address these very
    important problems. But we also understand the pressures to reduce
    spending and the challenges associated with proposed defense budget
    increases. The truth remains that the finest weapon systems in the
    world are of little use if the Services don't have enough high quality,
    well-trained people to operate, maintain and support them.
        The subcommittee's key challenge will be to ease servicemembers'
    debilitating workload stress and continue to build on the foundation of
    trust that you have established over the past 4 years--a trust that is
    being strained by years of disproportional sacrifice. Meeting this
    challenge will require a reasonable commitment of resources on several
    fronts.
    Personnel Strengths and Operations Tempo
        The Coalition has noted with disappointment the Department of
    Defense's resistance to accept Congress' repeated offers to permanently
    increase Service end strength to relieve the stress on today's Armed
    Forces, which are clearly sustaining a wearing operations tempo
    fighting today's global war on terrorism. While we are encouraged by
    the subcommittee's work to increase Army and Marine Corps end strength,
    we are deeply concerned that administration-proposed plans for
    temporary manpower increases rely too heavily on continuation of stop-
    loss policies, unrealistic retention assumptions, overuse of the Guard
    and Reserves, optimistic scenarios in Southwest Asia, and the absence
    of new contingency needs.
        The Department has responded to your offers to increase end
    strength with a continuing intention to transform forces, placing non-
    mission essential resources in core warfighting skills, and
    transferring certain functions to civilians. While the Department's
    transformation vision is an understandable and necessary plan, its
    implementation will take a long time--time that is taking its toll
    after years of extraordinary operational tempo that is exhausting our
    downsized forces.
        The Joint Chiefs testified that their forces were stressed before
    September 11, and end strength should have been increased then. Now,
    almost 4 years later, heavily engaged in two major operations with no
    end in sight, massive Guard and Reserve mobilizations, and broad
    implementation of ``stop-loss'' policies, action to provide substantial
    relief is late and short of the need. Especially noteworthy is a recent
    memorandum detailing serious Army Reserve readiness concerns
    referencing the Reserves as ``rapidly degenerating into a broken
    force.''
        Administration and military leaders warn of a long-term mission
    against terrorism that requires sustained, large deployments to Central
    Asia and elsewhere. The Services simply do not have sufficient numbers
    to sustain the global war on terrorism, deployments, training exercises
    and other commitments, even with the recall of large numbers of Guard
    and Reserve personnel. Service leaders have tried to alleviate the
    situation by reorganizing deployable units, authorizing ``family down
    time'' following redeployment, or other laudable initiatives, but such
    things do little to eliminate long-term workload or training backlogs,
    and pale in the face of ever-increasing mission requirements. For too
    many years, there has always been another major contingency coming, on
    top of all the existing ones. If the administration does not recognize
    when extra missions exceed the capacity to perform them, Congress must
    assume that obligation.
        Earlier force reductions went too far, and end strengths should
    have been increased several years ago to sustain today's pace of
    operations. Deferral of additional meaningful action to address this
    problem cannot continue without risking serious consequences. The
    Military Coalition's concerns in this regard are not limited to the
    Army and Marine Corps. For example, a recent DOD report from the Office
    of the Inspector General (D-2005-024) on ``Management of Navy Senior
    Enlisted Personnel Assignments in Support of Operation Iraqi Freedom''
    states that despite meeting Navy-required readiness levels, senior
    enlisted manning levels are not measured when assessing a unit's
    readiness level, and that visits to 14 units found that four units
    deployed with less than 80 percent of their senior enlisted warfighting
    positions filled. The Services' senior enlisted community is the
    backbone of the Navy and according to the report, ``personnel in those
    units were exposed to a higher level of risk for mishap or injury
    during their deployment.'' The Coalition is concerned that planned
    strength reductions can only exacerbate this problem.
        This is the most difficult piece of the readiness equation, and
    perhaps the most important under current conditions. Pay and allowance
    raises are essential to reduce other significant career irritants, but
    they can't fix fatigue and lengthy, frequent family separations.
        Some argue that increasing end strengths wouldn't help the
    situation, questioning whether the Services will be able to meet higher
    recruiting goals. The Coalition believes strongly that this difficult
    problem can and must be addressed as an urgent national priority, with
    increases in recruiting budgets as necessary.
        Others point to high reenlistment rates in deployed units in
    certain Services as evidence that high operations tempo actually
    improves morale. But much of the reenlistment rate anomaly is
    attributable to tax incentives that encourage members to accelerate or
    defer reenlistment to ensure this occurs in a combat zone, so that any
    reenlistment bonus will be tax-free. Retention statistics are also
    skewed by stop-loss policies. Over the long run, experience has shown
    that time and again that family separation is the single greatest
    retention disincentive. The Military Coalition believes that those who
    ignore this and argue there is no retention problem are ``whistling
    past the graveyard.''

            The Military Coalition strongly recommends additional permanent
            end strength increases to sustain the long-term global war on
            terrorism and fulfill national military strategy. The Coalition
            supports increases in recruiting resources as necessary to meet
            this requirement. The Coalition urges the subcommittee to
            consider all possible manpower options to ease operational
            stresses on Active, Guard, and Reserve personnel.

    Pay Raise Comparability
        The Military Coalition appreciates the subcommittee's leadership
    during the last 7 years in reversing previous practice of capping
    servicemembers' annual pay raises below the average American's. In
    servicemembers' eyes, those previous pay raise caps provided regular
    negative feedback about the relative value the Nation placed on
    retaining their services.
        Unfortunately, this failed practice of capping military raises to
    pay for budget shortfalls may yet rear its head again when those within
    the administration look for ways to trim the budget. In the past, the
    Office of Management and Budget (OMB) advocated capping future military
    pay raises at the level of inflation, rather than keeping military pay
    on par with private sector wage growth. The measure of merit with pay
    raises is not inflation--it's the draw from the private sector, and pay
    comparability with private sector wage growth is a fundamental
    underpinning of the All-Volunteer Force, and it cannot be dismissed
    without dire consequences for national defense.
        When the pay raise comparability gap reached 13.5 percent in 1999--
    resulting in predictable readiness crises--this subcommittee took
    responsible action to change the law. Thanks in large part to your
    efforts and the belated recognition of the problem by the executive
    branch, the gap has been reduced to 4.9 percent in 2005.
        While it would take another 10 years to restore full comparability
    at the current pace, we sincerely appreciate this subcommittee's
    decision to change the prior law that would have resumed capping pay
    raises at below private sector growth and enacting a new law requiring
    all raises, beginning in fiscal year 2007, to at least equal private
    sector wage growth as measured by the Bureau of Labor Statistics
    Employment Cost Index (ECI).

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

              The Military Coalition urges the subcommittee to restore full
            pay comparability on the quickest possible schedule, and to
            reject any request from the administration to cap future pay
            raises for any segment of the uniformed services population.
    Pay Table Reform
        The subcommittee also has supported previous DOD plans to fix
    problems within the basic pay table by authorizing special ``targeted''
    adjustments for specific grade and longevity combinations in order to
    align career servicemembers' pay with private sector earnings of
    civilians with similar education and experience.
        DOD had planned to continue targeted raises, but last year, the OMB
    denied a $300 million request from DOD to continue targeted raises for
    career servicemembers--a decision that deeply disappointed the
    Coalition. The administration has requested another across the board
    pay increase for 2006 rather than additional targeted raises for senior
    enlisted and certain officer grades. We strongly urge this subcommittee
    to authorize continued targeting of additional increases for career
    servicemembers to correct shortcomings in their pay tables.
        However, the Coalition urges the committee to direct DOD to
    identify the ultimate ``objective pay table'' that would actually
    achieve in 2006 the Department's purported goal of establishing
    military pay at the 70th percentile of privates sector pay for
    similarly experienced and educated private sector workers.

            The Military Coalition believes all members need and deserve at
            least a 3.1-percent raise in 2006 to continue progress toward
            eliminating the existing pay raise comparability shortfall. The
            Coalition also believes additional targeted raises are needed
            to address the largest comparability shortfalls for career
            enlisted members and warrant officers vs. private sector
            workers with similar education, experience and expertise.
    Combat and Incentive Pays During Hospitalization
        The Coalition is concerned that current eligibility rules for
    combat zone compensation programs are insensitive to the circumstances
    of wounded members during hospitalization and rehabilitation.
        Members assigned to combat zones, as well as those performing
    hazardous duty elsewhere, are eligible for additional compensation
    because the country recognizes the increased risk to life and limb
    entailed in such duty. Yet the members who are injured or wounded lose
    eligibility for hazardous duty/combat incentive programs during their
    hospitalization and recovery from their injuries. In many cases, this
    recovery can take months, and their families may be subject to
    additional expenses because of their incapacity.
        If we acknowledge that members deserve these extra pays for
    incurring the risk inherent in a combat zone, we should also
    acknowledge an obligation to continue such pays for those who actually
    incur combat injuries until they can be returned to duty, retired, or
    separated.

            The Military Coalition strongly urges the subcommittee to take
            action to ensure servicemembers injured or wounded from
            hazardous duty/combat do not have their compensation reduced
            during periods of hospitalization. The Coalition believes that
            such compensation treatment is essential for servicemembers who
            continue to suffer from the wounds and injuries these incentive
            programs were created to recognize.
    Pre-tax Treatment for Child/Health Care Expenses
        The Military Coalition is perplexed that military members are not
    provided one key benefit that is common in the private sector and
    virtually universal among all large civilian employers--premium
    conversion and flexible spending account plans that allow payment of
    health and child care expenses on a pre-tax basis.
        Military members--and especially in cases where both spouses are
    military members--have child-care needs that are driven by national
    defense requirements. If Federal civilian employees and most private
    sector employees are eligible for tax exemption for their child-care
    expenses, it's extremely inequitable that military members are denied
    comparable treatment.
        These programs save many other government and corporate employees
    thousands of dollars a year, and uniformed servicemembers certainly
    have no less need for them.
        The Coalition's research indicates this could be implemented by
    policy if the administration chose, or otherwise by statutory direction
    that would not require changing the tax code.

            The Military Coalition urges the subcommittee to direct the
            Department of Defense to implement premium conversion and
            flexible spending accounts for pre-tax payment of child and
            health care expenses.
    Commissaries
        The Coalition is committed to preserving the value of the
    commissary benefit--which is widely recognized as the cornerstone of
    quality of life benefits and a valued part of servicemembers' total
    compensation package.
        Recent DOD initiatives included proposals to close a number of
    commissaries, replace the traditional three-star officer serving as
    chairman of the Commissary Operating Board (COB) with a political
    appointee, and require a study on instituting variable pricing for
    commissary products. Two of these proposals were apparently intended to
    save money by ultimately reducing the annual appropriation supporting
    the Defense Commissary Agency (DeCA), which operates 272 commissaries
    worldwide. The COB recommendation was also viewed as another indicator
    of DOD's ongoing interest in eventually privatizing the benefit.
    Subsequently, only a few previously approved closings were completed,
    the COB chairmanship was retained by a senior uniformed officer, and
    the variable pricing concept was dropped following a costly study. In
    addition, Congress enacted new legislation strengthening statutory
    protections for, and defining the purpose of the commissary and
    exchange systems. The Coalition is grateful for the continued strong
    support of this subcommittee in preserving this top rated benefit.
        The Coalition supports cost savings through effective oversight and
    management. However, we are concerned about the unrelenting pressure on
    DeCA to cut spending and squeeze additional efficiencies from its
    operations--despite years of effective reform initiatives and
    recognition of the agency for instituting improved business practices.
        The commissary is a highly valued quality of life benefit not
    quantifiable solely on a dollars appropriated basis.

            The Military Coalition opposes initiatives that would reduce
            benefits or savings for members, and strongly supports full
            funding of the benefit in fiscal year 2006 and beyond to
            sustain the current level of service for all patrons, including
            retirees, Guard and Reserve personnel, and their families.
    Family Readiness and Support
        Today, two-thirds of Active-Duty families and virtually all Guard
    and Reserve families live off military installations, and approximately
    60 percent of these servicemembers are married. A fully funded family
    readiness program to include financial education and benefit
    information has never been a more crucial component to the military
    mission and overall readiness than it is today.
        More needs to be done to ``connect'' servicemembers and their
    families with important resources. A more aggressive outreach effort is
    needed to educate servicemembers and their families on the benefits and
    programs to which they are entitled. A systematic and integrated family
    support system will help families cope with the stresses of deployment
    and the demands of military life. Addressing such issues as childcare,
    spousal employment/education, flexible spending accounts, increases in
    SGLI, and other quality of life concerns will go a long way in
    enhancing family well-being and improving retention and morale of the
    force.

            The Military Coalition urges improved family readiness through
            further education and outreach programs and increased childcare
            availability for servicemembers and their families and
            associated support structure to assist families left behind
            during deployments of Active-Duty, Guard, and Reserve members.
    GI Bill Incentives for the 21st Century Force
        Military transformation and rising pressures on the ``total force''
    point to the need to restructure the Montgomery GI Bill educational
    benefits program for the 21st century. Congress intended the modern
    MGIB program to support military recruitment as well as transition. To
    meet rising pressures on Active and Reserve Force recruitment,
    especially among our ground forces, the Coalition recommends the Armed
    Services Committees actively work with the Veterans Affairs Committees
    to improve the MGIB as a recruiting tool. The Coalition notes with
    appreciation that in recent years Congress enacted increases to MGIB
    benefits for Active-Duty recruits and authorized full access to these
    benefits during Active-Duty. However, the ``laptop generation'' of
    Active-Duty troops gets reduced MGIB benefits compared to veterans, if
    they use them on Active-Duty. Fixing this could stimulate retention.
    Moreover, MGIB benefits--presently $1004 per month for full-time
    study--don't pay for the actual cost of education at a 4-year public
    college or university. In addition, approximately 63,000 career
    servicemembers who entered service during the ``VEAP'' era but declined
    to enroll in that program have been denied a MGIB enrollment
    opportunity. The Coalition continues to support transferability of MGIB
    benefits to family members for long-serving members who agree to
    complete a military career.
        The Military Coalition also believes it's time to reopen debate on
    the need to dock volunteer force recruits $1,200 of their first year's
    pay for the privilege of serving their country on Active-Duty.
    Government college loan programs have no upfront payments; thus, it is
    difficult to accept any rationale for our Nation's defenders to give up
    a substantial portion of their first year's pay for MGIB eligibility.
        The Coalition is also grateful to Congress for a ``down payment''
    on MGIB upgrades for mobilized troops, who now can earn additional MGIB
    entitlement for 90 days or more Active-Duty served in a contingency
    operation. This significant step forward needs to be followed up with
    other Reserve MGIB improvements. Given the erratic and often
    dysfunctional call up practices of 2002-2003, many Guard and Reserve
    troops who have now acquired up to 2 years Active-Duty are not eligible
    for Active-Duty MGIB benefits due to breaks in service. Aggregate
    Active-Duty served since September 11 should be authorized for a
    proportional MGIB entitlement. For Guard and Reserve initial volunteers
    who enlisted for the Reserve MGIB (chapter 1606, title 10), those
    benefits have slipped to about 28 percent parity with the Active-Duty
    program. The benchmark for the Reserve MGIB at its inception and for
    the first 14 years of its existence was nearly 50 percent parity with
    the Active-Duty MGIB (chapter 30, title 38). With worsening Guard and
    Reserve recruitment, the Coalition believes that Congress needs to
    restore Reserve MGIB program parity.

            The Military Coalition recognizes that primary jurisdiction for
            Active-Duty MGIB program is under the Veterans Affairs
            Committee, whereas as the Reserve MGIB remains a Title 10
            program. The Military Coalition urges that the MGIB be
            restructured and improved along the lines described above so
            that it can be restored as a powerful recruitment and retention
            tool for the Active and Reserve Forces.
    Basic Allowance for Housing
        The Military Coalition supports revised housing standards that are
    more realistic and appropriate for each pay grade. Many enlisted
    personnel, for example, are unaware of the standards for their
    respective pay grade and assume that their BAH level is determined by a
    higher standard than they may in reality be entitled to. This causes
    confusion about the mismatch between the amount of BAH they receive and
    the actual cost of their type of housing. As an example, enlisted
    members are not authorized to receive BAH for a 3-bedroom single-family
    detached house until achieving the rank of E-9--which represents only 1
    percent of the enlisted force--yet many personnel in more junior pay
    grades do in fact reside in detached homes. The Coalition believes that
    as a minimum, this BAH standard (single family detached house) should
    be extended gradually to qualifying servicemembers beginning in grade
    E-8 and subsequently to grade E-7 and below over several years as
    resources allow.
        The Coalition is most grateful to the subcommittee for acting in
    1999 to reduce out-of-pocket housing expenses for servicemembers over
    several years. Responding to the subcommittee's leadership on this
    issue, the DOD proposed a similar phased plan to reduce median out-of-
    pocket expenses to zero by fiscal year 2005. Through the leadership and
    support of this subcommittee, this plan has been completed. This
    aggressive action to better realign BAH rates with actual housing costs
    has had a real impact and provided immediate relief to many
    servicemembers and families who were strapped in meeting rising housing
    and utility costs.
        We applaud the subcommittee's action to deliver on this commitment.
    Unfortunately, housing and utility costs continue to rise, and the pay
    comparability gap, while diminished over recent years thanks to the
    subcommittee's leadership, continues. Members residing off base face
    higher housing expenses along with significant transportation costs,
    and relief is especially important for junior enlisted personnel living
    off base who do not qualify for other supplemental assistance.

            The Military Coalition urges the subcommittee to direct gradual
            adjustments in grade-based housing standards to more accurately
            reflect members' actual out-of-pocket housing expenses.
    Permanent Change of Station (PCS) Reimbursements
        The Military Coalition is most appreciative of the significant
    increases in the Temporary Lodging Expense (TLE) allowance authorized
    for fiscal year 2002 and the authority to raise PCS per diem expenses
    to match those for Federal civilian employees in fiscal year 2003. The
    Coalition also greatly appreciates the provision in the fiscal year
    2004 defense bill to provide full replacement value for household goods
    lost or damaged by private carriers during government directed moves,
    and looks forward to the timely implementation of the DOD comprehensive
    ``Families First'' plan to improve claims procedures for servicemembers
    and their families.
        These were significant steps to upgrade allowances that had been
    unchanged over many years. Even with these changes, however,
    servicemembers continue to incur significant out-of-pocket costs in
    complying with government-directed relocation orders.
        For example, PCS mileage rates have not been adjusted since 1985.
    The current rates range from 15 to 20 cents per mile--less than half
    the 2005 temporary duty mileage rate of 40.5 cents per mile for
    military members and Federal civilians. PCS household goods weight
    allowances were increased for grades E-1 through E-4, effective January
    2003, but weight allowance increases are also needed for servicemembers
    in grade E-5 and above, and officers as well, to more accurately
    reflect the normal accumulation of household goods over the course of a
    career. The Coalition recommends modifying weight allowance tables for
    personnel in pay grades E-7, E-8 and E-9 to coincide with allowances
    for officers in grades O-4, O-5, and O-6, respectively. The Military
    Coalition also supports authorization of a 500-pound professional goods
    weight allowance for military spouses.
        In addition, the overwhelming majority of service families own two
    privately owned vehicles, driven by the financial need for the spouse
    to work, or the distance some families must live from an installation
    and its support services. Authority is needed to ship a second POV at
    government expense to overseas' accompanied assignments. In many
    overseas locations, families have difficulty managing without a second
    family vehicle because family housing is often not co-located with
    installation support services.
        With regard to families making a PCS move, members are authorized
    time off for housing-hunting trips in advance of PCS relocations, but
    must make any such trips at personal expense, without any government
    reimbursement such as Federal civilians receive. Further, Federal and
    state cooperation is required to provide unemployment compensation
    equity for military spouses who are forced to leave jobs due to the
    servicemember's PCS orders. The Coalition also supports authorization
    of a dislocation allowance to servicemembers making their final
    ``change of station'' upon retirement from the uniformed services.
        We are sensitive to the subcommittee's efforts to reduce the
    frequency of PCS moves. But we cannot avoid requiring members to make
    regular relocations, with all the attendant disruptions in their
    children's education and their spouse's career progression. The
    Coalition believes strongly that the Nation that requires them to incur
    these disruptions should not be requiring them to bear the resulting
    high expenses out of their own pockets.

            The Military Coalition urges continued upgrades of permanent
            change-of-station reimbursement allowances to recognize that
            the government, not the servicemember, should be responsible
            for paying the cost of government-directed relocations.

                       national guard and reserve issues
        More than 473,000 members of the National Guard and Reserve have
    been mobilized since September 11, 2001, and many thousands more are in
    the activation pipeline. Today, they face the same challenges as their
    Active counterparts, with a deployment pace greater than any time since
    World War II.
        Guard/Reserve operational tempo has placed enormous strains on
    reservists, their family members and their civilian employers alike.
    Homeland defense and war on terrorism operations continue to place
    demands on citizen soldiers that were never anticipated under the Total
    Force policy. The Coalition understands and fully supports that policy
    and the prominent role of the Guard and Reserve Forces in the national
    security equation.
        However, many Guard and Reserve members are facing increased
    financial burdens under the current policy of multiple extended
    activations over the course of a Reserve career. Some senior Reserve
    leaders are rightly alarmed over likely manpower losses if action is
    not taken to relieve pressures on Guard and Reserve troops. The
    Coalition believes that addressing critical Guard and Reserve pay,
    bonuses, benefits and entitlements issues--along with Active-Duty
    manpower increases--are needed to alleviate those pressures and help
    retain these qualified, trained professionals.
        The Coalition greatly appreciates this subcommittee's effort to
    address the increasing needs of our Nation's National Guard and Reserve
    Forces. We believe that more work is required to ensure that Guard and
    Reserve members' and their families' readiness remains a viable part of
    our National Security Strategy. It is clear that our country needs
    these valuable members of our national military team.
        Healthcare for Members of the National Guard and Reserve. The
    Military Coalition is very grateful that Congress established the
    TRICARE Reserve Select health benefit in the National Defense
    Authorization Act for Fiscal Year 2005. This new authority--along with
    permanent pre- and post-activation TRICARE coverage--will help address
    the needs of Guard and Reserve families in the call-up pipeline.
    However, these authorities do not provide the coverage necessary to
    address the long-term readiness issues that will continue with the
    current and future utilization of our Guard and Reserve components.
        With the increasing rate of utilization of all areas our Reserve
    components increasing, we feel that Congress must act to provide
    increased health care benefits for all our country's guardsmen,
    reservists, and their families, to guarantee the Nation can continue to
    call on them. TRICARE officials and DOD never implemented temporary
    TRICARE provisions, and the fiscal year 2005 provisions leave more
    questions unanswered.
        For example, many members are reluctant to drop their permanent
    health coverage for a military program that may only offer them
    coverage for 1 to 4 years. Others will be reluctant to enroll because
    the new guidelines force them to make a decision before departing
    Active-Duty--which means many will be unable to conduct face-to-face
    discussions on this important issue with their spouses, who are the
    ones most affected by family health care issues.
        It is our strong recommendation that we must provide a permanent
    TRICARE program on a cost-share basis for our members of the Guard and
    Reserve components who are being mobilized and deployed at increasing
    rates. Further, coverage should include the Extended Care Health Option
    (ECHO) for members with disabled children, who are currently excluded
    by DOD policy.

            The Military Coalition recommends permanent authorization of
            cost-share access to TRICARE for all members of the Selected
            Reserve and IRR members subject to activation under
            Presidential call-up authority, to support readiness, family
            morale, and deployment health preparedness.
    Civilian Premium Offset
        During mobilization, Reserve families who have employer-based
    health insurance must, in some cases, pick up the full cost of premiums
    during an extended activation. Guard and Reserve family members are
    eligible for TRICARE if the member's orders to Active-Duty are for more
    than 30 days; but many families prefer to preserve the continuity of
    their own health insurance, rather than switching to a TRICARE
    provider. Being dropped from private sector coverage as a consequence
    of extended activation adversely affects family morale and military
    readiness and discourages some from reenlisting. Many Guard and Reserve
    families live in locations where it is difficult or impossible to find
    providers who will accept new TRICARE patients.
        Recognizing these challenges for its own reservist-employees, the
    Department of Defense routinely pays the premiums for the Federal
    Employee Health Benefit Program (FEHBP) when activation occurs. Non-
    Federal employee and their families deserve equal consideration.

            The Military Coalition urges enactment of authority for Federal
            payment of civilian health care premiums (up to the cost of
            TRICARE coverage) as an option for mobilized servicemembers.
    Dental Coverage
        Dental readiness is another key aspect of readiness for Guard and
    Reserve personnel. Currently, DOD offers a dental program to Selected
    Reserve members and their families. The program provides diagnostic and
    preventive care for a monthly premium, and other services including
    restorative, endodontic, periodontic and oral surgery services on a
    cost-share basis, with an annual maximum payment of $1,500 per enrollee
    per year. However, only 5 percent of eligible members are enrolled.
        After September 11, soldiers with repairable dental problems had
    teeth pulled at mobilization stations in the interests of time instead
    of having the proper dental care treatment. Congress responded by
    passing legislation that allows DOD to provide medical and dental
    screening for Selected Reserve members who are assigned to a unit that
    has been alerted for mobilization. Unfortunately, waiting for an alert
    to begin screening is too late. During the initial mobilization for
    OIF, the average time from alert to mobilization was less than 14 days,
    insufficient to address deployment dental standards. In some cases,
    units were mobilized before receiving their alert orders. This lack of
    notice for mobilization continues despite best service efforts, with
    many reservists receiving only short notice before mobilizing.

            The Military Coalition recommends expansion of the TRICARE
            Dental Program to Guard and Reserve servicemembers. This would
            allow all Guard and Reserve members to maintain dental
            readiness and alleviate the need for dental care during
            training or mobilization. Authorization of a premium conversion
            plan would further incentivize enrollment and readiness by
            reducing after-tax costs to members.
    Reserve Retirement Upgrade
        The fundamental assumption for the Reserve retirement system
    established in 1947 is that a reservist has a primary career in the
    civilian sector. But it's past time to recognize that greatly increased
    military service demands over the last dozen years have cost tens of
    thousands of reservists significantly in terms of their civilian
    retirement accrual, civilian 401(k) contributions, and civilian job
    promotions.
        DOD routinely relies on the capabilities of the Reserve Forces
    across the entire spectrum of conflict from homeland security to
    overseas deployments and ground combat. This reliance is not just a
    trend--it's a central fixture in the National Security Strategy. DOD,
    however, has shown little interest adjusting the Reserve compensation
    package to acknowledge this long-term civilian compensation cost to
    Guard and Reserve members. Inevitably, civilian career potential and
    retirement plans will be hurt by frequent and lengthy activations.
        The National Guard missed its recruiting goals by more than 10
    percent in the last 2 years and is now about 13,000-15,000 short of end
    strength. All Reserve components except the U.S. Marine Corps missed
    their recruiting targets in the first quarter of fiscal year 2005
    (September to December 2004).
        The time has come to recognize the Reserve retirement system must
    be adjusted to sustain its value as a complement to civilian retirement
    programs. The future financial penalties of increased military service
    requirements are clear, and should not be ignored by the government
    that imposes them. Failing to acknowledge and respond to the changed
    environment could have far-reaching, catastrophic effects on Reserve
    participation and career retention.

            The Military Coalition urges a reduction in the age when a
            Guard/Reserve component member is eligible for retired pay to
            age 55 as an option for those who qualify for a non-regular
            retirement.
    Review and Upgrade the Reserve Compensation System to Match the New
            ``Contract''
        The Military Coalition thanks Congress for establishing the
    Commission on the National Guard and Reserve to develop and recommend
    improvements to Reserve compensation. The pay and retirement system was
    developed more than a half century ago at a time when members of the
    Guard and Reserve components were truly ``in Reserve.'' This is no
    longer true. Increasing demands on the Guard and Reserve personnel to
    perform national security missions at home and abroad indicates that
    the compensation system may need to be modernized to attract and retain
    those willing to shoulder the additional responsibility this new
    mobilization reality. The Reserve compensation system (Active-Duty
    (AD), Active-Duty training (ADT), Inactive Duty training (IDT) pay and
    allowances, etc.) must adequately reflect the demands of increased
    Reserve service, without creating disproportional incentives that could
    undermine Active Force retention.
        Needed improvements include:

             Selected Reserve Montgomery GI Bill Upgrades.
            Individuals who first become members of the National Guard or
            Reserve are eligible for the SR-MGIB. Chapter 1606 of Title 10
            governs the program. The problem is that the SR-MGIB program
            competes with National Guard and Reserve pay accounts for
            funding. During the first 14 years of the SR-MGIB, benefits
            maintained 47 percent comparability with the basic MGIB. But,
            in the last 5 years, the SR-MGIB has slipped to 28 percent of
            the basic program.

            To support Guard and Reserve recruitment, The Military
            Coalition recommends raising SR-MGIB benefits to 50 percent of
            the MGIB Active-Duty rate. The Coalition also recommends
            transfer of the Reserve SR-MGIB authority from Title 10 to
            Title 38 to permit coordinated benefit management with the
            Active-Duty MGIB.

             Retirement Credit for All Earned Drill Points. The
            role of the Guard and Reserve has changed significantly under
            the Total Force Policy. During most of the Cold War era, the
            maximum number of IDT points that could be credited was 50 per
            year. The cap has since been raised on three occasions to 60,
            75, and most recently, to 90 points. However, the fundamental
            question is why Guard and Reserve members are not permitted to
            credit all the IDT they've earned in a given year toward their
            retirement. Placing a ceiling on the amount of training that
            may be credited for retirement serves as a disincentive to
            professional development and takes unfair advantage of Guard
            and Reserve servicemembers' commitment to mission readiness.

              The Military Coalition recommends lifting the 90-point cap on
            the number of IDT points earned in a year that may be credited
            for National Guard and Reserve retirement purposes.

             Raise Reserve Enlistment Bonuses, Special and
            Incentive Pays. Sharp downturns in Reserve recruiting call for
            increases in Reserve enlistment incentives. In addition, many
            Guard and Reserve members who receive 1/30th of a month's pay
            for many special and incentive pays for each day the duty is
            performed feel cheated. These pays are based upon proficiency,
            not time. The disparity, even if it is only a perceived
            disparity, needs to be addressed.
             Simplify the Reserve Duty System. Initiatives have
            been put forward in recent years to simplify the duty status
            for the Reserve components. One such change would have
            seriously cut the pay of drilling Guard and Reserve members.
            Reducing the paychecks of Guard and Reserve members, especially
            at this time of looming retention and recruiting crises, should
            be unthinkable.
             Eliminate Basic Allowance for Housing (BAH) II. BAH II
            is paid to Guard and Reserve members in lieu of regular BAH who
            are on orders of less than 140 days. BAH II is an antiquated
            standard that no longer bears any relation to real housing
            expenses and is, on average, far less than the BAH rate for any
            given locality. There is an exception to this rule that
            applies, by public law, for those called up for the contingency
            operation. The Coalition believes strongly that any member
            activated for 30 days or more should be eligible for locality-
            based BAH.
             Award full Veteran Status to Guard/Reserve Members.
            Some servicemembers who successfully complete 20 qualifying
            years of Reserve service, do not otherwise qualify as veterans
            under title 38. Such members deserve full veteran status.

    Guard/Reserve Family Support Programs
        The increase in Guard and Reserve operational tempo is taking a
    toll on the families of these servicemembers. These families are
    routinely called upon to make more and more sacrifices as OIF and OEF
    continue. Reserve component families represent communities throughout
    the Nation; and, most of these communities are not close to military
    installations. As a result, these families face unique challenges since
    they do not have access to traditional family support services that are
    available to Active-Duty members on military installations.
        Providing a core set of family programs and benefits that meet the
    unique needs of these families would go a long way in improving morale
    and meeting family readiness challenges.
        These programs would promote better communication with
    servicemembers, specialized support for geographically separated Guard
    and Reserve families, and training (and back-up) for family readiness
    volunteers. Such access would include:

             Expansion of Web-based programs and employee and
            family assistance programs like Military OneSource and Guard
            Family.org;
             Enforcement of command responsibility for ensuring
            that programs are in place to meet the special information and
            support needs of Guard/Reserve families;
             Expanded programs between military and community
            religious leaders to support servicemembers and families during
            all phases of deployments;
             The availability of robust preventative counseling
            services for servicemembers and families and training so they
            know when to seek professional help related to their
            circumstances;
             Enhanced education for Reserve component family
            members about their rights and benefits;
             Innovative and effective ways to meet Reserve
            component community needs for occasional child care,
            particularly for preventative respite care, volunteering,
            family readiness group meetings, and drill time; and,
             A joint family readiness program to facilitate
            understanding and sharing of information between all family
            members, no matter what the service.

        We applaud the support shown to families by DOD and military and
    civilian community organizations. But with the continued and sustained
    activation of the Reserve component, a stronger support structure needs
    to be implemented and sustained

            The Military Coalition urges Congress to focus on military
            family support programs that meet the unique needs of the
            families of mobilized Guard and Reserve component members.

    Financial Relief for Activated Reservists and Their Employers
        The Military Coalition has testified that overuse of the Guard and
    Reserve components will have adverse consequences on the readiness and
    morale of these forces. The Army Guard and Army Reserve have been
    experiencing a sharp downturn in recruitment, and the Chief of the Army
    Reserve has warned that mobilization policies and practices could
    ``break'' that force. In this context, the Coalition urges support for
    financial and tax relief legislation that is under the jurisdiction of
    non-defense committees.
        Dysfunctional call-up policies are taking an enormous toll on
    Reserve pocketbooks, morale, and employers. The General Accountability
    Office reported recently that 41 percent of our Guard and Reserve
    personnel take pay cuts from their civilian jobs when activated. Many
    employers voluntarily help to ease this burden by making up the pay gap
    between military and civilian pay. Employers also need additional
    incentives to fill vacancies left by mobilized reservists with
    temporary rather than permanent workers.

            The Military Coalition supports legislation (e.g., H.R. 1779 in
            the 108th Congress) to permit penalty-free withdrawals from
            reservists' civilian retirement plans; allow activated members
            of the Guard and Reserve to contribute wage gap payments back
            into their employer-sponsored retirement plans, and grant
            employers tax credits for wage differential payments, as well
            as tax credits for hiring temporary workers during the absence
            of a mobilized worker.
                            survivor program issues
        The Coalition thanks the subcommittee for past support of
    improvements to the Survivor Benefit Plan (SBP), especially last year's
    provision in the National Defense Authorization Act for Fiscal Year
    2005 that will phase out the SBP age-62 benefit reduction in the next 3
    years. This victory for military survivors is a major step forward in
    addressing longstanding survivor benefits inequities.
        But two serious SBP inequities remain to be addressed. The
    Coalition hopes that this year the subcommittee will be able to support
    ending the SBP-DIC offset and moving up the effective date for paid-up
    SBP to October 1, 2005.
    SBP-DIC Offset
        Congress should repeal the law that reduces military SBP annuities
    by the amount of any survivor benefits payable from the Veterans'
    Administration Dependency and Indemnity Compensation (DIC) program.
        Under current law, the surviving spouse of a retired member who
    dies of a service-connected cause is entitled to DIC from the VA. If
    the military retiree was also enrolled in SBP, the surviving spouse's
    SBP benefits are reduced by the amount of DIC (currently $993 per
    month). A pro-rated share of SBP premiums is refunded to the widow upon
    the member's death in a lump sum, but with no interest. The offset also
    affects all survivors of members who are killed on Active-Duty. There
    are approximately 53,000 military widows/widowers affected by the DIC
    offset.
        The Coalition believes SBP and DIC payments are paid for different
    reasons. SBP is purchased by the retiree and is intended to provide a
    portion of retired pay to the survivor. DIC is a special indemnity
    compensation paid to the survivor when a member's service causes his or
    her premature death. In such cases, the VA indemnity compensation
    should be added to the SBP the retiree paid for, not substituted for
    it. It's also noteworthy as a matter of equity that surviving spouses
    of Federal civilian retirees who are disabled veterans and die of
    military-service-connected causes can receive DIC without losing any of
    their purchased Federal civilian SBP benefits.
        In the case of members killed on Active-Duty, a surviving spouse
    with children can avoid the dollar-for-dollar offset only by assigning
    SBP to the children. But that forces the spouse to give up any SBP
    claim after the children attain their majority--leaving the spouse with
    less than a $1,000 monthly annuity from the VA.
        The Coalition notes that most large city fire departments continue
    100 percent of pay for survivors of firefighters killed in the line of
    duty, in addition to far larger lump sum payments than military
    members' survivors receive (see below). Military members whose service
    costs them their lives deserve fairer compensation for their surviving
    spouses.
        The Military Coalition strongly supported legislation to repeal the
    SBP-DIC offset introduced by Senator Nelson (D-FL) (S. 185) and
    Representative Brown, (R-SC), respectively. Enactment is a top
    Coalition goal for 2005.

            The Military Coalition recommends eliminating the DIC offset to
            Survivor Benefit Plan annuities, recognizing that the two
            compensations serve different purposes, and one is not a
            substitute for the other. Many military survivors now receive
            annuities of less than $12,000 per year, which falls far short
            of fair compensation for a service-caused death.

    30-Year Paid-Up SBP
        Congress approved a provision in the National Defense Authorization
    Act for Fiscal Year 1999 authorizing retired members who had attained
    age-70 and paid SBP premiums for at least 30 years to enter ``paid-up
    SBP'' status, whereby they would stop paying any further premiums while
    retaining full SBP coverage for their survivors in the event of their
    death. Because of cost considerations, the effective date of the
    provision was delayed until October 1, 2008.
        As a practical matter, this means that any SBP enrollee who retired
    on or after October 1, 1978 will enjoy the full benefit of the 30-year
    paid-up SBP provision. However, members who enrolled in SBP when it
    first became available in 1972 (and who have already been charged
    higher premiums than subsequent retirees) will have to continue paying
    premiums for up to 36 years to secure paid-up coverage.
        The Military Coalition is very concerned about the delayed
    effective date, because the paid-up SBP proposal was initially
    conceived as a way to grant relief to those who have paid SBP premiums
    from the beginning. Many of these members entered the program when it
    was far less advantageous and when premiums represented a significantly
    higher percentage of retired pay. In partial recognition of this
    problem, SBP premiums were reduced substantially in 1990, but these
    older members still paid the higher premiums for up to 18 years. The
    Coalition believes strongly that their many years of higher payments
    warrant at least equal treatment under the paid-up SBP option, rather
    than forcing them to wait 4 more years for relief, or as many retirees
    believe, waiting for them to die off.
        By October 2005, a 1972 retiree will have paid almost 20 percent
    more SBP premiums than a 1978 retiree will ever have to pay. Without
    legislative relief, those 1972 enrollees who survive until 2008 will
    have paid 34 percent more.

            The Military Coalition recommends accelerating the
            implementation date for the 30-year paid-up SBP initiative to
            October 1, 2005.

    Death Benefits Enhancement
        Military insurance and death gratuity fall short of what is needed
    when measured by private sector standards for employees in hazardous
    occupations.
        Most large employers provide lump-sum death benefits, cost-free to
    the employee, of two times salary, capped at some limit between
    $100,000 and $250,000. Police and firefighters killed in the line of
    duty receive a Federal, cost-free Public Safety Officers Death Benefit
    of $267,000 in addition to a typical five-figure death gratuity.
        In today's commercial life insurance markets, insurance coverage
    for many mid-career workers typically exceeds $500,000.

            The Military Coalition urges the subcommittee to raise SGLI to
            $400,000, with $100,000 provided at no cost to servicemembers
            who elect $300,000 coverage, and to increase the military death
            gratuity to $100,000 for all deaths, with the coverage
            increases retroactive to cover all deaths since Oct. 7, 2001
            that were deemed ``in the line of duty.''

    Final Retired Paycheck
        The Military Coalition believes the policy requiring the recovery
    of a deceased member's final retired paycheck from his or her survivor
    should be changed to allow the survivor to keep the final month's
    retired pay payment.
        Current regulations led to a practice that requires the survivor to
    surrender the final month of retired pay, either by returning the
    outstanding paycheck or having a direct withdrawal recoupment from his
    or her bank account. The Coalition believes this is an insensitive
    policy coming at the most difficult time for a deceased member's next
    of kin. Unlike his or her Active-Duty counterpart, the retiree will
    receive no death gratuity. Many of the older retirees will not have
    adequate insurance to provide even a moderate financial cushion for
    surviving spouses. Very often, the surviving spouse has had to spend
    the final retirement check/deposit before being notified by the
    military finance center that it must be returned. Then, to receive the
    partial month's pay of the deceased retiree up to the date of death,
    the spouse must file a claim for settlement--an arduous and frustrating
    task, at best--and wait for the military's finance center to disburse
    the payment. Far too often, this strains the surviving spouse's ability
    to meet the immediate financial obligations commensurate with the death
    of the average family's ``bread winner.''

            The Military Coalition strongly recommends that surviving
            spouses of deceased retired members should be allowed to retain
            the member's full retired pay for the month in which the member
            died.
                               retirement issues
        The Military Coalition is grateful to the subcommittee for its
    historical support of maintaining a strong military retirement system
    to help offset the extraordinary demands and sacrifices inherent in a
    career of uniformed service.
    Concurrent Receipt of Military Retired Pay and VA Disability
            Compensation
        The Military Coalition applauds the subcommittee for all of the
    work that resulted in the landmark provisions in the National Defense
    Authorization Act for Fiscal Year 2004 that expand combat related
    special compensation to all retirees with combat-related disabilities
    and authorizes--for the first time ever--concurrent receipt of retired
    pay and veterans' disability compensation for retirees with
    disabilities of at least 50 percent. The National Defense Authorization
    Act for Fiscal Year 2005 provided additional relief to those with 100
    percent disabilities by immediately authorizing these retirees full
    concurrent receipt, effective January 2005. Disabled retirees
    everywhere are extremely grateful for this subcommittee's action to
    reverse an unfair practice that has disadvantaged disabled retirees for
    over a century.
        While the concurrent receipt provisions enacted by Congress benefit
    tens of thousands of disabled retirees, an equal number are still
    excluded from the same principle that eliminates the disability offset
    for those with 50 percent or higher disabilities. The fiscal challenge
    notwithstanding, the principle behind eliminating the disability offset
    for those with disabilities of 50 percent is just as valid for those
    with 40 percent and below, and the Coalition urges the subcommittee to
    be sensitive to the thousands of disabled retirees who are excluded
    from current provisions. As a priority, the Coalition asks the
    subcommittee to consider those who had their careers cut short because
    they became disabled by combat, or combat-related events, and were
    medically retired before they could complete their careers. For these
    retirees, the disability offset still exists and it is difficult to
    explain to a lengthy career servicemember, disabled in combat, why his
    or her service (perhaps as much as 19 years, 11 months) seems to have
    had no value when a member with 20 years of service and a 10 percent
    disability receives full payment for service and disability.
        The Coalition urges the subcommittee to expand Combat Related
    Special Compensation to members who were medically compelled to retire
    before short of 20 years of service solely because of their combat-
    incurred disabilities, as envisioned in H.R. 1366. This legislation
    would protect service-based retired pay (2.5 percent of high-3 years'
    average basic pay times years of service) from being affected by the
    disability offset. It would avoid the ``all or nothing'' inequity of
    the current 20-year threshold, while recognizing that retired pay for
    those with few years of service is almost all for disability rather
    than for service and therefore still subject to the VA offset.
        The Coalition also urges the subcommittee to resolve inequities
    associated with the implementation of concurrent receipt legislation
    enacted in the fiscal year 2005 National Defense Authorization Act.
    This legislation authorized the immediate restoration of retired pay
    for 100 percent rated disabled retirees; however, the administration
    has yet to extend full payment to those disabled retirees who--because
    their serious disabilities prevent them from working--are paid at the
    100-percent rate because the VA has certified them as ``unemployable.''
    The exclusion of these ``unemployable'' disabled retirees has created
    two classes of 100 percent disabled retirees--a differentiation that is
    not made in any other circumstance, either by the Department of
    Veterans Affairs or in the administration of the Combat-Related Special
    Compensation program by DOD. Accordingly, the Coalition urges the
    subcommittee to ensure unemployable retirees are provided their full
    compensation--by statute if the DOD does not do so administratively.
        We understand that a significant concern among some critics that
    still prevents broader concurrent receipt action is the need for a
    review of the VA disability system. The Coalition believes much of the
    concern is misplaced, and that the VA system should be able to
    withstand reasonable scrutiny. The Coalition stands ready to assist the
    Veterans' Disability Benefits Commission and participate in the debate
    with relevant information and data affecting a full spectrum of
    disabled veterans and their families and survivors. Most importantly,
    the Coalition urges the subcommittee to ensure that the Commission
    remains focused on the fundamental principles that have served as the
    foundation for both the DOD disability retirement and VA disability
    compensation processes--principles of fairness, due process, and the
    unique aspect that military duty is 24/7. We look forward to completion
    of the review and revalidation of the process as important steps toward
    resolving concurrent receipt inequity.

            The Military Coalition greatly appreciates Congress' action to
            date, but urges subcommittee leaders and members to be
            sensitive to the thousands of disabled retirees who are not yet
            included in concurrent receipt legislation enacted over the
            past several years. Specifically, as a priority, the Coalition
            urges the subcommittee to expand combat-related special
            compensation to disabled retirees who were not allowed to serve
            20 years solely because of combat-related disabilities.

            The Coalition also urges the subcommittee to resolve NDAA for
            Fiscal Year 2005 concurrent receipt legislation inequities that
            prevents those disabled retirees rated 100 percent because of
            ``unemployability'' ratings from receiving their full
            restoration of retired pay. Finally, the Coalition strongly
            urges the subcommittee to ensure the Veterans' Disability
            Benefits Commission protects the principles guiding the DOD
            disability retirement program and VA disability compensation
            system.

    Former Spouse Issues
        The Military Coalition recommends corrective legislation to
    eliminate inequities in the USFSPA that were created through years of
    well-intended, piecemeal legislative action initiated outside the
    subcommittee.
        The Coalition supports the recommendations in the DOD's September
    2001 report, which responded to a request from this committee for an
    assessment of USFSPA inequities and recommendations for improvement.
    The DOD recommendations to allow the member to designate multiple SBP
    beneficiaries would eliminate the current unfair restriction that
    denies any SBP coverage to a current spouse if a former spouse is
    covered, and would allow dual coverage in the same way authorized by
    Federal civilian SBP programs.
        The Coalition also supports DOD recommendations to require the
    Defense Finance and Accounting Service (DFAS) to make direct payments
    to the former spouses, regardless of length of marriage; eliminate the
    1-year deemed election period for SBP eligibility; if directed by a
    valid court order, require DFAS to deduct SBP premiums from the
    uniformed services retired pay awarded to a former spouse if directed
    by a court order; and authorize DFAS to garnish ordered, unpaid child
    support payments from the former spouse's share of retired pay.
        Also, DOD recommends that prospective award amounts to former
    spouses should be based on the member's grade and years of service at
    the time of divorce--rather than at the time of retirement. The
    Coalition supports this proposal since it recognizes that a former
    spouse should not receive increased retired pay that is realized from
    the member's service and promotions earned after the divorce.
        The Coalition believes that, at a minimum, the subcommittee should
    approve those initiatives that have the consensus of the military and
    veterans' associations, including the National Military Family
    Association. The Coalition would be pleased to work with the
    subcommittee to identify and seek consensus on other measures to ensure
    equity for both servicemembers and former spouses.

            The Military Coalition recommends corrective legislation be
            enacted to eliminate the inequities in the administration of
            the USFSPA, to include consideration of the recommendations
            made by the Department of Defense in their 2001 USFSPA report.

    Tax Relief for Uniformed Services Beneficiaries
        To meet their health care requirements, many uniformed services
    beneficiaries pay premiums for a variety of health insurance programs,
    such as TRICARE supplements, the Active-Duty dental plan or TRICARE
    Retiree Dental Plan (TRDP), long-term care insurance, or TRICARE Prime
    enrollment fees. For most beneficiaries, these premiums and enrollment
    fees are not tax-deductible because their health care expenses do not
    exceed 7.5 percent of their adjusted gross taxable income, as required
    by the Internal Revenue Service (IRS).
        This creates a significant inequity with private sector and some
    government workers, many of whom already enjoy tax exemptions for
    health and dental premiums through employer-sponsored health benefits
    plans. A precedent for this benefit was set for other Federal employees
    by a 2000 Presidential directive allowing Federal civilian employees to
    pay premiums for their Federal Employees Health Benefits Program
    (FEHBP) coverage with pre-tax dollars.
        The Coalition supports legislation that would amend the tax law to
    let Federal civilian retirees and Active-Duty and retired military
    members pay health insurance premiums on a pre-tax basis. Although we
    recognize that this is not within the purview of the Armed Services
    Committee, the Coalition hopes that the subcommittee will lend its
    support to this legislation and help ensure equal treatment for all
    military and Federal beneficiaries.

            The Coalition urges the subcommittee to support S. 484 to
            provide all uniformed services beneficiaries a tax exemption
            for premiums or enrollment fees paid for TRICARE Prime, TRICARE
            Standard supplements, the Active-Duty dental plan, TRICARE
            Retiree Dental Plan, FEHBP, and Long Term Care.
                           health care testimony 2005
        The Military Coalition is most appreciative of the subcommittee's
    exceptional efforts over several years to honor the government's health
    care commitments to all uniformed services beneficiaries. These
    subcommittee-sponsored enhancements represent great advancements that
    should significantly improve health care access while saving all
    uniformed services beneficiaries thousands of dollars a year. The
    Coalition particularly thanks the subcommittee for last year's
    outstanding measures to provide increased health care access for
    members of the Guard and Reserve components and their families.
        While much has been accomplished, we are equally concerned about
    making sure that subcommittee-directed changes are implemented and the
    desired positive effects actually achieved. Additional initiatives will
    be essential to providing an equitable and consistent health benefit
    for all categories of TRICARE beneficiaries, regardless of age or
    geography. The Coalition looks forward to continuing our cooperative
    efforts with the subcommittee's members and staff in pursuit of these
    common objectives.
    full funding for the defense health budget and manpower transformation
                                     plans
        Once again, a top Coalition priority is to work with Congress and
    DOD to ensure full funding of the Defense Health Budget to meet
    readiness needs--including graduate medical education and continuing
    education, full funding of both direct care and purchased care sectors,
    providing access to the military health care system for all uniformed
    services beneficiaries, regardless of age, status or location. An
    underfunded Defense Health Program inevitably compromises the
    capability to deliver desired levels of quality care and undermines the
    health care benefits military beneficiaries have earned. A fully funded
    health care benefit is critical to readiness and the retention of
    qualified uniformed service personnel.
        The subcommittee's continued oversight of the defense health budget
    is essential to avoid a return to the chronic underfunding of recent
    years that led to execution shortfalls, shortchanging of the direct
    care system, inadequate equipment capitalization, failure to invest in
    infrastructure, curtailed drug formularies, and reliance on annual
    emergency supplemental funding requests as a substitute for candid and
    conscientious budget planning. We are grateful that once again late
    last year, Congress provided $683 million supplemental appropriations
    to meet the last quarter's obligations--but not all of the growing
    requirements in support of the deployment of forces to Southwest Asia
    and Afghanistan in the global war against terrorism.
        The Coalition is hopeful that fiscal year 2006 funding levels will
    not fall short of current obligations. We fear that additional
    supplemental funding will once again be required. Last year, citing
    budgetary restraints, the Air Force made a unilateral decision
    directing removal of certain drugs from military treatment facility
    (MTF) formularies. We appreciate that these are extremely challenging
    budget times for MTF commanders; however, we are greatly concerned that
    this budget-driven action undermined the deliberative process by which
    the Uniform Formulary must be developed.
        In addition, this policy forced increased use of the TMOP and TRRx,
    more costly points of service, and thus increased costs to both DOD and
    beneficiaries; inappropriately made budget considerations the primary
    driver of formulary limits; bypassed any opportunity for Beneficiary
    Advisory Panel inputs; and imposed regrettable interservice disparities
    in pharmacy benefits
        Health care requirements for members returning from the global war
    on terrorism are also expected to continue to strain the military
    delivery system in ways that may not have been anticipated in the
    budgeting process. Similarly, implementation of the TRICARE Standard
    requirements in the National Defense Authorization Act for Fiscal Year
    2004--particularly those requiring actions to attract more TRICARE
    providers--will almost certainly require additional resources that we
    do not believe are being budgeted for. Financial support for these
    increased readiness requirements; TRICARE provider shortfalls and other
    needs will most likely require additional funding.
        At the January 2005 TRICARE Conference, Assistant Secretary
    Winkenwerder said that funding for fiscal years 2006 and 2007 was
    adequate. However, he went on to state, ``looking to the longer term,
    I'm candidly concerned.'' At the same conference Air Force Chief of
    Staff General John Jumper asserted that the health system is facing an
    $11 billion shortfall over the next few years.

            The Military Coalition strongly recommends the subcommittee
            continue its watchfulness to ensure full funding of the Defense
            Health Program, including military medical readiness, needed
            TRICARE Standard improvements, and the DOD peacetime health
            care mission. It is critical that the Defense Health Budget be
            sufficient to secure increased numbers of providers needed to
            ensure access for TRICARE beneficiaries in all parts of the
            country.

    Medical Manpower Transformation
        The Coalition is concerned that over the next few years, the
    military services are reshaping their forces by civilianizing thousands
    of billets now held by uniformed health care personnel. This switch
    from military-to-civilian providers is in conjunction with DOD's
    overall manpower plans to ``transform'' the military by converting
    support billets into civilian positions, thus freeing` personal in
    uniform for jobs tied directly to warfighting.
        The Coalition is well aware of the Nation-wide health care provider
    shortage. This entire plan is predicated on the assumption that there
    are adequate numbers of civilian providers out there readily available
    to work in the military's direct care system. We are also greatly
    concerned about the willingness of civilian providers to accommodate an
    even greater patient load when the remaining uniformed medical
    professionals deploy for contingencies.
        We hear from our members across the country that they already
    encounter difficulty in finding providers who will accept TRICARE
    patients. The Coalition is concerned that this problem will only
    increase if some of those civilian providers now must assume the
    additional caseload previously seen by uniformed medical professionals.
    The Coalition also is concerned that a shift in provider mix may
    compromise DOD's outstanding graduate medical education (GME) programs.
        The Coalition readily acknowledges that we lack the expertise to
    second-guess the number of uniformed positions needed to adequately
    staff the direct care system. We will only know if the plan is
    successful or not from reports of our members who may or may not be
    turned away from the direct care system or who may experience greater
    difficulty finding civilian providers. Access to care for beneficiaries
    will be the ultimate measure of success.
        The Coalition does not think that service leaders are oblivious to
    the Nationwide shortage of health care providers, even if their plans
    sometimes may prove over-optimistic. But we believe that budget
    considerations have been the driving force behind these manpower
    changes rather than beneficiary care requirements.

            The Military Coalition urges the subcommittee to provide
            oversight to the implementation of manpower transformation
            plans on health care delivery for the entire DHP to ensure the
            plan to shift non-operational care to civilian providers does
            not inadvertently compromise health care delivery; beneficiary
            access; or the Graduate Medical Education, career progression,
            and assignment rotation base needs of uniformed medical
            professionals.
                             tricare and va issues
    Assistance for Wounded Combat Veterans and Others Separating from
            Military Service
        In 2003, the President's Task Force (PTF) to Improve Health Care
    Delivery for Our Nation's Veterans final report on DOD-VA collaboration
    focused on the need to improve services and support for separating
    servicemembers to ensure the receipt of timely, quality health care
    benefits. The Coalition urges the subcommittee to continue to work with
    the Veteran's Affairs Committee, DOD, and the Department of Veterans
    Affairs to move forward with greater interagency collaboration. At this
    time when hundreds of thousands of servicemembers are deployed in
    combat operations, the stakes are even higher--putting them at greater
    risk for long-term, service-connected health, and disability problems.
        In a more recent report, January 2005, Vocational Rehabilitation;
    More VA and DOD Collaboration Needed to Expedite Services for Seriously
    Injured Servicemembers, GAO recommends that VA and the DOD collaborate
    to reach an agreement for VA to have access to information to promote
    recovery and return to work for seriously injured servicemembers; and
    to develop policy and procedures for regional offices to maintain
    contact with the seriously injured servicemembers. Without systematic
    data from DOD, the VA cannot reliably identify all seriously injured
    servicemembers or know with certainty when they are medically
    stabilized, when they are undergoing medical evaluation, or when they
    are medically discharged from the military. Patient tracking and
    quality and continuity in medical care then become bigger issues in
    achieving seamless transition goals.
        The Coalition is grateful that the NDAA for Fiscal Year 2005
    directed DOD to do a better job of collecting base line health status
    data through a formal medical readiness tracking and health
    surveillance system. The Coalition applauds the development of a single
    separation physical supporting the transition between the DOD and VA
    health systems. Offering one discharge physical, providing outreach and
    referrals for a VA Compensation and Pension examination, as well as
    following up on claims adjudication and rating is not just more cost
    effective in terms of capital and human resources; it is the right
    thing to do--to ensure that servicemembers receive the benefits they
    have earned and deserve.
        Both agencies are working toward implementing a single separation
    exam at Benefits Delivery at Discharge (BDD) sites for Active and
    Reserve component members within 180 days of separation. The Coalition
    is pleased to learn that the One Exam discharge physical is being
    implemented at several sites. However, we are concerned that
    implementation service wide is lagging. The Coalition is particularly
    concerned about the significant gaps in implementing the program in the
    Washington, DC area. Key MTFs like Walter Reed Army Medical Center and
    National Naval Medical Center do not have a single, systematic process
    in place. This is particularly alarming considering the DOD and
    Department of Veterans Affairs are headquartered in the area. It seems
    reasonable to expect the Washington, DC MTFs to serve as models for
    other DOD and VA medical delivery systems. We ask the subcommittee to
    provide continued oversight to ensure that this important program is
    implemented promptly and effectively at all sites.
        The Coalition believes that both DOD and VA have critical,
    complementary roles in ensuring returning combat veterans, and other
    servicemembers scheduled for separation or retirement, receive prompt,
    comprehensive quality care and services from each agency. But recent
    ``seamless transition'' initiatives have resulted in only modest
    improvements in service delivery. With rising numbers of wounded combat
    veterans and projected large numbers of Guard and Reserve separations,
    we urge the subcommittee to insist on accelerating the PTF's ``seamless
    transition'' initiatives recommended on DOD-VA collaboration--including
    developing an electronic DD 214; an interoperable bi-directional
    electronic medical record and enhanced post-deployment health
    assessments.
        Some of these efforts have been going on for years on end with
    little or no substantive progress, in part because those responsible
    for action have come to have low expectations. Time and again, progress
    has been stymied by a combination of a lack of leadership priority and
    oversight, management turnover, bureaucratic inertia, and technological
    backwardness. The Coalition believes that only an extraordinary kind of
    ``Manhattan Project'' can provide the kind of leadership focus and
    priority needed to finally deliver the broad, timely and effective
    results our servicemembers and veterans so urgently need and deserve.
        Additionally, the Coalition urges Congress to push for the
    availability of robust preventive mental health counseling services for
    servicemembers, families, and survivors, including training programs
    that will help individuals know when to seek professional help by:

             Promoting a smooth transition to TRICARE-covered
            mental health services,
             Expanding access to the full range of mental health/
            family counseling services regardless of the beneficiary's
            location, taking into consideration that the need for services
            to assist servicemembers and families with deployment-related
            issues may be long-term.

        Mental health needs of our servicemembers and families are crucial
    to maintaining a resilient fighting force, and much more should be done
    in this area.

            The Military Coalition asks the subcommittee to demand a
            concerted ``Manhattan Project'' kind of effort to ensure full
            and timely implementation of seamless transition activities, a
            bi-directional electronic medical record, enhanced post-
            deployment health assessments, implementation of an electronic
            DD214, additional family and mental health counseling services,
            and the single physical at time of discharge.
                              tricare improvements
        The Coalition is pleased to report that, thanks to this
    subcommittee's continued focus on beneficiaries, Military Coalition
    representatives remain actively engaged in an Office of the Secretary
    of Defense (OSD)-sponsored action group, the TRICARE Beneficiary Panel.
    This group was formed initially in 2000 to address TFL implementation.
    Subsequently, over the past 5 years the group has broadened its scope
    from refining TFL to tackling broader TRICARE beneficiary concerns.
        We are most appreciative of the positive working relationship that
    has evolved and continues to grow between the Beneficiary Panel and the
    leaders and staff of the TRICARE Management Activity (TMA). This
    collegiality has gone a long way toward making the program better for
    all stakeholders. From our vantage point, TMA continues to be committed
    to implementing TFL and other health care initiatives consistent with
    congressional intent and continues to work vigorously toward that end.
    Selected Reserve TRICARE Eligibility
        For reasons addressed above under Guard and Reserve issues, the
    Coalition places a high priority on extending TRICARE eligibility to
    all members of the Selected Reserve and their families.
    Implementation of TRICARE Reserve Select
        While the Coalition is most appreciative of efforts to extend
    TRICARE Reserve Select (TRS), cost share access to members of the
    Select Reserve (SELRES) and their families, we would like to bring to
    the subcommittee's attention issues that need to be addressed.
        The Coalition is concerned that National Guard members who complete
    90 or more days `homeland security' duty under Title 32 as requested by
    the President will not be eligible to purchase TRS. The Coalition asks
    the subcommittee to extend eligibility for TRS for mobilized SELRES
    members regardless of where they serve their nation during the global
    war on terrorism.
        Recently both the Army and Marine Corps have had to rely upon
    members of the Individual Ready Reserve (IRR) to fill critical
    positions. Under current TRS rules, despite their service and
    sacrifice, these individuals will not be able to take advantage of TRS
    should they return to IRR status post mobilization. The Coalition urges
    the subcommittee to take steps to permit members of the IRR called to
    Active-Duty for a contingency operation to participate in TRS, if they
    remain in the IRR subject to future recall.
        Gray-area reservists have been called out of retirement and are
    precluded from TRS unless they commit to SELRES service after
    mobilization. Their situation is similar to those in the IRR. Again
    these individuals are called to service, but unable to take advantage
    of an earned benefit post mobilization.
        Members must agree to remain in the SELRES for the duration of
    their TRS coverage, yet should they be mobilized during that time, they
    will lose part or all of the remaining coverage they earned. During
    activation, the TRS benefit continues to ``run'' but the benefit is
    superceded because the member and family are covered by Active-Duty and
    TAMP benefits. Once Active-Duty and TAMP coverage are completed, TRS
    resumes with the original termination date. For example, 1 year of
    activation earns 4 years of TRS coverage. If at year two of TRS, the
    member is mobilized again for 6 months followed by 180 days of TAMP
    benefits, the beneficiary will have only 1 year of coverage remaining.
    The Coalition urges the subcommittee to address this inequity by
    permitting members to extend their previously earned TRS eligibility
    periods despite any additional Active-Duty service. That is, the
    running of TRS eligibility ``clock'' should be ``suspended'' during any
    Active-Duty service and restarted thereafter with out loss of benefit.
        Current rules require the member to decide on TRS and the
    commensurate commitment to service before leaving Active-Duty status.
    The Coalition is concerned that this will certainly result in sudden
    decisions at demobilization sites. This is forcing a very important
    decision at a time when a servicemember or their family may not have
    enough information to make an informed decision about their health care
    insurance coverage over 6 months out. Should they separate and make a
    preliminary TRS agreement, their eligibility expires and they and their
    families lose out on an earned benefits. The Coalition believes that
    servicemembers should be able to elect TRS during the 180 days of TAMP
    coverage.

            The Military Coalition urges the subcommittee to provide
            oversight of implementations of the TRICARE Reserve Select
            benefit, to extend eligibility for TRICARE Reserve Select for
            mobilized SELRES members regardless of where they serve during
            the global war on terrorism, to take steps to permit members of
            the IRR called to Active-Duty for a contingency operation to
            participate in TRICARE Reserve Select, if they remain in the
            IRR subject to future recall, to address loss of TRICARE
            Reserve Select benefits when members are mobilized during their
            benefit period and to simplify enrollment procedures permitting
            beneficiaries to elect TRICARE Reserve Select coverage during
            the 180 days of Transitional Assistance Management Program.

    TRICARE Standard Improvements
        The Coalition is most grateful for the subcommittee's extraordinary
    efforts in the NDAA for Fiscal Year 2004 to improve the TRICARE
    Standard program. These provisions will be essential to ensure the 3.2
    million Standard beneficiaries receive the necessary assistance to
    ensure they can find a provider. The Coalition is firmly committed to
    working with Congress, DOD, and the Managed Care Support Contractors
    (MCSCs) to facilitate prompt implementation of these provisions.
        DOD has reported on the initial surveys designed to track provider
    participation (including willingness to accept new patients). Just as
    important as the survey outcomes will be what the government does with
    the data and what resources will be devoted to addressing problems
    identified by the surveys.
        Based on results so far, TMC has concerns on three issues. First,
    OMB limited DOD to asking providers only three questions on the
    participation survey, which provides only limited provider inputs and
    constrains interpretation of the real meaning of the data. Second,
    discussions with members and contractors indicate some likelihood that
    beneficiaries who inquire as to the willingness of providers to accept
    TRICARE may be getting different answers than those provided in the
    survey. In part, this is because of disparities in various parties'
    knowledge of the TRICARE program, and it may also be due to the
    limitations of the DOD survey. Third, there remains no standard of what
    level of provider participation should be considered adequate or
    inadequate. Without a measure of what constitutes a problem, it's
    difficult to establish standards for action. The Coalition is anxious
    to ensure such standards are developed to be better able to assess the
    adequacy of Department plans to assist beneficiaries experiencing
    access problems or other difficulties
        While the Coalition is pleased to learn that DOD has directed MCSCs
    to offer 24/7-telephone access to health care finders, we are
    disappointed to note this service only provides information regarding
    network providers. For those beneficiaries residing where Prime is not
    an option, there will be no network providers for them within easy
    access. We urge the subcommittee to direct DOD, at a minimum, to have
    call center staff assist such beneficiaries by consulting the Web based
    TRICARE Standard provider directory at: www.tricare.osd.mil/
    standardprovider or direct the beneficiaries to that site. While the
    Standard provider website is a very useful tool, it is of little use to
    those without Internet access. The Coalition is eager to learn of other
    options to provide assistance in finding a Standard provider.
        We will continue to work with DOD to implement these activities to
    give Standard a more prominent role in the TRICARE program. These
    improvements take on a greater importance in light of the increased
    demands that will be placed on the Standard program as the NDAA for
    Fiscal Year 2005 authorized Ready Reserve component beneficiaries cost-
    share access to Standard benefits, and the potential for the next round
    of Base Realignment and Closure (BRAC) to limit Prime service areas
    resulting in a subsequent increase in demand for Standard services.
        TRICARE Reserve Select will be an option for thousands of Ready
    reservists and their families. This expansion of the benefit has raised
    the stakes in the need to provide a robust Standard benefit for
    beneficiaries living in all areas--not just those serviced by Prime
    network areas. Beneficiary and provider education will be just as
    important for both existing and new Standard beneficiaries.
        The Coalition is well aware that DOD had a full plate last year
    managing the transition of many new TRICARE contracts and
    implementation of major legislative initiatives, including those for
    the Guard and Reserve components. We are concerned that DOD's resources
    may be stretched thin, and the Standard enhancements may take a low
    priority while other issues are addressed.

            The Military Coalition urges the subcommittee's continued
            oversight to ensure DOD is held accountable to promptly meet
            requirements for beneficiary education and support, and
            particularly for education and recruitment of sufficient
            providers to solve access problems for Standard beneficiaries.

    Provider Reimbursement
        The Coalition appreciates the subcommittee's efforts to address
    provider reimbursement needs in the NDAA for Fiscal Year 2004 (P.L.
    108-136). We recognize that part of the problem is endemic to the
    flawed Medicare reimbursement system, to which TRICARE rates are
    directly tied.
        The Coalition is troubled to note that a flaw in the provider
    reimbursement formula led the Centers for Medicare and Medicaid (CMS)
    to propose cutting Medicare fees in recent years, which were only
    forestalled by last-minute legislative relief. While the Coalition is
    grateful for Congress's temporary fixes, the reimbursement formula
    remains broken.
        Once again, the Coalition wishes to bring to the subcommittee's
    attention that the 2004 report of the Medicare Trustees predicts 5
    percent annual cuts in Medicare reimbursements to providers for 2006
    through 2012. However, MedPAC has recommended raising Medicare's
    physician payment rate by 2.7 percent in 2006, stating that a ``small
    but consistent share'' of beneficiaries have experienced some
    difficulty in accessing providers.
        Cuts in Medicare (and thus TRICARE) provider payments, on top of
    providers' increasing overhead costs and rapidly rising medical
    liability expenses, seriously jeopardizes providers' willingness to
    participate in both these programs. Provider resistance is much more
    pronounced for TRICARE than Medicare for a variety of social, workload,
    and administrative reasons. Provider groups tell us that TRICARE is
    seen as the lowest-paying program they deal with, and often causes them
    the most administrative problems. This is a terrible combination of
    perceptions if you are a TRICARE Standard patient trying to find a
    doctor.
        For patients in Prime, the situation is growing increasingly
    problematic as deployments of large numbers of military health
    professionals continues to diminish the capacity of the military's
    direct health care system. In this situation, more and more TRICARE
    patients have to turn to the purchased care sector--thus putting more
    demands on civilian providers who are reluctant to take an even larger
    number of beneficiaries with relatively low-paying TRICARE coverage.
        The Coalition firmly believes this is a readiness issue. Our
    deployed service men and women need to focus on their mission, without
    having to worry whether their family members back home can find a
    provider. Uniformed services beneficiaries deserve the Nation's best
    health care, not the cheapest.
        Congress did the right thing by reversing the proposed provider
    payment cuts previously planned for March 1, 2003 and January 1, 2004,
    and instead providing 1.6 percent and 1.5 percent payment increases
    respectively. Unless Congress or the administration acts soon,
    effective next year, providers will have to absorb a 5-percent cut for
    TRICARE patients as well as Medicare patients. More importantly, the
    underlying formula needs to be fixed to eliminate the need for
    perennial ``band-aid'' corrections.
        The Coalition is aware that jurisdiction over the Medicare program
    is not within the authority of the Armed Services Committees, but the
    adverse impact of depressed rates on all TRICARE beneficiaries warrants
    a special subcommittee effort to solve the problem.

            The Military Coalition requests the subcommittee's support of
            any means to establish and maintain Medicare and TRICARE
            provider payment rates sufficient to ensure beneficiary access,
            and to support measures to address Medicare's flawed provider
            reimbursement formula.

    TRICARE Transition and Implementation of New Contracts
        The Coalition is grateful that report language in Senate Armed
    Services Committee Report 108-260 in last year's NDAA reinforced the
    expectation for a seamless transition and required GAO monitoring to
    evaluate effectiveness of the new contracts. The Coalition believes
    Defense health officials and the TRICARE contractors are all making a
    sincere effort to work through the problems associated with the
    transition.
        Since the electronic authorization and referral program was not
    ready when the new contracts were implemented last year, a work around
    was put in place. Despite all good intentions, the program continues to
    have delays in authorizations and referrals, causing frustration on the
    part of all stakeholders--providers, patients, contractors and the
    government. Phone calls increase, hold times get longer, and our
    members tell us of lost or delayed referrals for health care.
        One area related to the authorization and referral program that
    continues to raise alarms and has the potential for serous health care
    problems concerns delays in referrals for TRICARE Prime beneficiaries
    that exceed Prime access standards. With the manual system in place the
    Coalition is having difficulty determining when the clock starts for
    the very stringent Prime access standards. When the provider tells the
    beneficiary they need another appointment? Or when the beneficiary
    receives the paper referral up to one week later in the mail? The
    Coalition firmly believes it ought to be when the provider determines
    the need for the referral.
        In late 2004, the National Military Family Association (NMFA)
    conducted a web-based survey of TRICARE Prime enrollees. This self-
    selected survey confirmed the Coalition's concerns that access
    standards are not being met. NMFA has reported:
        Among the 328 survey respondents, there was equal representation
    from each of the three TRICARE regions--approximately 30 percent from
    each region with a 1.6 percent response rate from overseas
    beneficiaries. Sixty percent of the respondents were enrolled in the
    direct care system and 40 percent were enrolled with a civilian network
    provider.

             Twelve percent drive more than 30 minutes to see their
            Primary Care Manager (PCM).
             Over 20 percent were not able to get an urgent care
            appointment within 24 hours.
             More than 27 percent were not able to get a routine
            appointment within 7 days.
             Approximately 14 percent were not able to get a
            wellness appointment within 4 weeks.
             Roughly 23 percent were not able to get a specialty
            care appointment within 4 weeks of PCM referral
             Almost 10 percent of the respondents drove more than
            60 minutes to a specialist appointment.

        Beneficiaries enrolled to a PCM at a MTF reported more difficulties
    in obtaining appointments within the access standards than those
    enrolled to a civilian network PCM. The top three issues reported by
    Prime Enrollees were: lack of providers in the area, problems with
    getting referrals and appointment issues.
        As these contracts are implemented, a seamless transition and
    accountability for progress remains the Coalition's primary concerns.
    The Coalition is sensitive that massive system changes are being
    implemented at a time of great stress for uniformed services
    beneficiaries, especially Active-Duty members and their families.
    Transitions to new contractors, even when the contract design has not
    dramatically changed, have historically been tumultuous for all
    stakeholders, especially beneficiaries. The Coalition believes
    additional effort must be put forth to make current operations less
    disruptive for the beneficiary.
        One concern with awarding different contract functions to a variety
    of vendors is that beneficiaries should not be caught in the middle as
    they attempt to negotiate their way between the boundaries of the
    various vendors' responsibilities. DOD must find ways to ensure
    beneficiaries have a single source of help to resolve problems
    involving the interface of multiple contractors.
        Despite all the changes, the Coalition is hopeful that TRICARE
    beneficiaries will benefit from the new contract structure. By
    streamlining administrative requirements and being less prescriptive,
    we hope DOD will be able to improve service delivery and enhance
    access.

            The Military Coalition recommends that the subcommittee
            continue to strictly monitor implementation of TRICARE
            contracts, especially the ability to meet Prime access
            standards, and ensure that Beneficiary Advisory Groups' inputs
            be sought in the evaluation process.

    Prior Authorization under TNEX
        One area of concern the Coalition has identified in the past that
    we hoped would be addressed by the new contracts deals with Prior
    Authorization. While the TNEX request for proposals purportedly removed
    the requirement for preauthorization for Prime beneficiaries referred
    to specialty care, each TRICARE Regional Managed Care Support (MCS)
    contractor was given great leeway in determining requirements for their
    region.
        Notwithstanding the requirement for all MSCSs to include the six
    TRICARE-mandated prior authorizations, the Coalition is dismayed to
    learn that each region manages preauthorization differently. Two MCSCs
    have instituted the same prior authorization requirements for Standard
    beneficiaries as for Prime, with the third region being far less
    prescriptive.
        The Coalition believes strongly that this lack of uniformity in
    benefit delivery is inequitable and confusing to beneficiaries who have
    family members in different regions (e.g., college students, children
    of divorced parents) or who are reassigned between regions. It also
    undermines longstanding efforts of this subcommittee to simplify the
    system and remove burdens from Standard providers and beneficiaries.
    The Coalition questions the need to make the fee for service program's
    requirements as restrictive as that of the managed care option.
    Continuing these significant preauthorization requirements would seem
    contrary to current private sector business practices, the commitment
    to decrease provider administrative burdens, and the provision of a
    uniform benefit.

            The Military Coalition urges the subcommittee's continued
            efforts to reduce and ultimately eliminate requirements for
            pre-authorization for Standard beneficiaries and asks the
            subcommittee to assess the impact of new prior authorization
            requirements upon beneficiaries' access to care.

    Uniform Formulary Implementation
        The Coalition is committed to work with DOD and Congress to develop
    and maintain a comprehensive uniform pharmacy benefit for all
    beneficiaries. The Coalition expects DOD to establish a robust
    formulary with a broad variety of medications in each therapeutic class
    that fairly and fully captures the entire spectrum of pharmaceutical
    needs of the millions of uniformed services beneficiaries. We believe
    strongly that the uniform formulary should include the drugs in each
    class that are most frequently prescribed for private sector patients.
        The Coalition is grateful to this subcommittee for the role it
    played in mandating a Beneficiary Advisory Panel (BAP) to comment on
    the formulary. Several Coalition representatives are members of the BAP
    and are eager to provide input to the program. While we are aware that
    there will be higher costs and limitations to access for some
    medications, our efforts will be directed to ensuring that the
    formulary is as broad as possible, that prior authorization
    requirements for obtaining non-formulary drugs and procedures for
    appealing decisions are communicated clearly to beneficiaries, and that
    the guidelines are administered equitably.
        The Coalition is particularly concerned that procedures for
    documenting and approving ``medical necessity'' determinations by a
    patient's physician be streamlined, without posing unnecessary
    administrative hassles for providers, patients, and pharmacists.
    Beneficiaries' trust will be violated if the formulary is excessively
    limited, fees rise excessively, and/or the administrative requirements
    to document medical necessity are onerous.
        One of the most problematic issues in the TRICARE pharmacy program
    has been the policy requirement to substitute generic drugs for brand-
    name pharmaceuticals whenever a generic version exists. Last summer the
    Coalition learned from our members that while implementing the new
    pharmacy contract, DOD arbitrarily voided all previous ``medical
    necessity'' approvals that allowed beneficiaries to receive brand-name
    prescriptions despite the existence of a generic substitute. The
    Coalition is grateful that when we raised objection to DOD leadership
    that these patients should have been ``grandfathered,'' DOD health
    leaders agreed. A temporary waiver was put into place until
    beneficiaries could be better informed about the need to obtain a new
    medical necessity requirement.
        On the eve of implementation of the Uniform Formulary, this
    scenario causes the Coalition great alarm. This policy change was never
    discussed in any of DOD's meetings with beneficiary groups. Nor did
    beneficiaries or providers receive any advance notice--learning of the
    brand-name denial at the pharmacy, finding themselves forced into
    accepting a generic or paying the full (often very expensive) cost out
    of their pockets. With the advent of the many anticipated changes
    caused by implementation of the Uniform Formulary, beneficiaries and
    their providers will need to be better informed of changes to their
    benefit.
        DOD must do a better job of informing beneficiaries about the scope
    of the benefit--to include prior authorization requirements, generic
    substitution policy, limitations on number of medications dispensed,
    processes for determining medical necessity, and the need for
    reasonable notice to beneficiaries of any significant program changes
    (such as moving specific drugs to ``non-formulary'' status). The
    Coalition is pleased to note that the department has improved its
    beneficiary education via the TRICARE website. However, we remain
    concerned that many beneficiaries do not have access to the Internet,
    and this information is not available through any other written source.
    As DOD approaches the Uniform Formulary implementation, it will be
    critical to make this information readily available to beneficiaries
    and providers.

            The Military Coalition urges the subcommittee to ensure the
            uniform formulary remains robust, with reasonable medical-
            necessity rules and increased communication to beneficiaries
            about program benefits, pre-authorization requirements,
            appeals, and other key information.

    Access to TSRx for Nursing Home Beneficiaries
        Once again, the Coalition would like to bring to the subcommittee's
    attention the plight faced by TRICARE Senior Pharmacy (TSRx)
    beneficiaries residing in nursing homes who encounter limitations in
    utilizing the TSRx benefit. The Coalition is most grateful for report
    language contained in House Armed Services Committee Report PL 107-436
    regarding waiver of TSRx deductibles. The subcommittee directed the
    Secretary of Defense to implement policies and regulations or make any
    legislative changes to waive the annual deductible for these patients,
    and report to the Armed Services Committees by March 31, 2003.
        The Coalition also is appreciative of the report language in the
    Senate Armed Services Committee Report 108-260 in last year's NDAA
    expressing concern that the Department has been ``unresponsive to the
    concerns'' of those beneficiaries residing in nursing homes who are not
    able to take advantage of TRICARE network pharmacies. The report
    directs the Secretary to develop a way of handling nursing home
    patients' non-network pharmacy claims so that beneficiaries are aware
    of alternatives to the use of non-network pharmacies to avoid
    deductible costs. The Coalition is not aware of any first steps taken
    to develop any plan to provide outreach and education for beneficiaries
    attempting to deem nursing homes or residential treatment facilities as
    TRICARE authorized pharmacy services.
        Because of State pharmacy regulations, patient safety concerns and
    liability issues, the vast majority of nursing homes have limitations
    on dispensing medications from outside sources. In rare cases where the
    nursing home will accept outside medications, some beneficiaries have
    been successful in accessing medications via a local TRICARE network
    pharmacy or the TRICARE Mail Order Pharmacy (TMOP).
        However, the vast majority must rely on the nursing home to
    dispense medications and seek TRICARE reimbursement and this is treated
    as a non-network pharmacy--which means $150/$300 deductible plus higher
    copayments per prescription. The non-network pharmacy policy was
    intended to create an incentive for beneficiaries to use the TMOP/
    retail network pharmacies. However, this policy unintentionally
    penalizes beneficiaries who have no other options.
        One solution is to work with the nursing home to have them to sign
    on as a network pharmacy. But experience indicates that few if any
    nursing homes are willing to become TRICARE authorized pharmacies, thus
    subjecting helpless beneficiaries to deductibles and increased cost
    shares--as if they had voluntarily chosen to use a non-network
    pharmacy.
        The Defense Department's May 2003 report states, ``The use of non-
    network pharmacy services by TRICARE beneficiaries residing in nursing
    homes is not widespread.'' The Coalition strongly disagrees. Because no
    effort has been made to educate beneficiaries or nursing homes about
    this problem, the vast majority of beneficiaries residing in nursing
    homes are not even aware that they have the ability to file paper
    claims for reimbursement.
        The DOD report further states, that when these instances are
    brought to their attention, they have been ``universally'' successful
    in bringing the institution into the network or identifying a network
    pharmacy that can serve the beneficiary. The Coalition takes great
    exception to this unfounded assertion. Our experience with actual
    members indicates a nearly universal lack of success in resolving this
    issue.
        Pharmacy cost shares were established to direct beneficiaries to a
    more cost-effective point of access. However, many of our frail and
    elderly beneficiaries are now residing in institutions where
    circumstances preclude them from accessing the TRICARE pharmacy at
    network cost shares. The Coalition asks the subcommittee to take action
    to ease this financial burden for those who cannot deem their facility
    a network pharmacy, nor avail themselves of the mail order or retail
    network benefit--for those whose circumstances are out of their
    control.

            The Military Coalition urges the subcommittee to direct DOD to
            reimburse pharmacy expenses at TRICARE network rates to
            uniformed services beneficiaries residing in residential
            facilities that do not participate in the TRICARE network
            pharmacy program, and who cannot access network pharmacies due
            to physical or medical constraints.

    TRICARE Benefits for Remarried Widows
        The Coalition believes there is a gross inequity in TRICARE's
    treatment of remarried surviving spouses whose subsequent marriage ends
    because of death or divorce. These survivors are entitled to have their
    military identification cards reinstated, as well as commissary and
    exchange privileges. In addition, they have any applicable SBP annuity
    reinstated if such payment was terminated upon their remarriage. In
    short, all of their military benefits are restored--except health care
    coverage.
        This disparity in the treatment of military widows was further
    highlighted by enactment of the Veterans Benefits Act of 2002. This
    legislation (38 U.S.C. 103(g)(1)) reinstated certain benefits for
    survivors of veterans who died of service-connected causes. Previously,
    these survivors lost their VA annuities and VA health care (CHAMPVA)
    when they remarried, but the Veterans Benefits Act of 2002 restored the
    annuity--and CHAMPVA eligibility--if the second or subsequent marriage
    ends in death or divorce.
        Military survivors merit the same consideration Congress has
    extended and the VA has implemented for CHAMPVA survivors.

            The Military Coalition urges the subcommittee to restore equity
            for surviving spouses by reinstating TRICARE benefits for
            otherwise qualifying remarried spouses whose second or
            subsequent marriage ends because of death, divorce or
            annulment, consistent with the treatment accorded CHAMPVA-
            eligible survivors.

    TRICARE Prime Continuity in BRAC Areas
        In addition to our concerns about current benefits, the Coalition
    is apprehensive about continuity of future benefits as Congress and DOD
    begin to consider another round of base closures this year. Many
    beneficiaries deliberately retire in localities close to military
    bases, specifically to have access to military health care and other
    facilities. Base closures run significant risks of disrupting TRICARE
    Prime contracts that retirees depend on to meet their health care
    needs.
        Under current TRICARE contracts and under DOD's interpretation of
    TNEX, TRICARE contractors are supposed to continue maintaining TRICARE
    Prime provider networks in Base Realignment and Closure (BRAC) areas.
    However, these contracts can be renegotiated, and the contracting
    parties may not always agree on the desirability of maintaining this
    provision.
        The Coalition believes continuity of the TRICARE Prime program in
    base closure areas is important to keeping health care commitments to
    retirees, their families and survivors, and would prefer to see the
    current contract provision codified in law.

            The Military Coalition urges the subcommittee to amend Title 10
            to require continuation of TRICARE Prime network coverage for
            uniformed services beneficiaries residing in BRAC areas.
                                   conclusion
        The Military Coalition reiterates its profound gratitude for the
    extraordinary progress this subcommittee has made in advancing a wide
    range of personnel and health care initiatives for all uniformed
    services personnel and their families and survivors. The Coalition is
    eager to work with the subcommittee in pursuit of the goals outlined in
    our testimony. Thank you very much for the opportunity to present the
    Coalition's views on these critically important topics.

        STATEMENT OF JOYCE WESSEL RAEZER, DIRECTOR, GOVERNMENT
            RELATIONS, NATIONAL MILITARY FAMILY ASSOCIATION

        Ms. Raezer. Mr. Chairman and Senator Nelson, thank you for
    the opportunity to discuss the quality-of-life of
    servicemembers and their families.
        Military families were most grateful to Congress for making
    recent increases in imminent danger pay (IDP) and family
    separation allowance (FSA) permanent. As Mr. Strobridge has
    stated, continued increases in pay and allowances are necessary
    to retain a quality force.
        Among the benefit improvements for which the National
    Military Family Association (NMFA) and The Military Coalition
    ask your help this year is to increase the household goods
    weight allowance for mid-grade and senior enlisted
    servicemembers to more accurately reflect the accumulation of
    goods over the course of a career.
        We ask that you continue your support of a robust
    commissary benefit and your oversight of potential changes in
    the military exchange systems.
        Longer and more frequent deployments are indications that
    the force is stretched thin. Military families are also
    stretched thin. Our message to you today is family support
    programs work, but over the long term, it will take more than
    bonuses to help families deal with the continued mission
    stress.
        We have been impressed by improvements in family support
    provided to Guard and Reserve families through State National
    Guard family assistance centers, expansion of child care
    resources and subsidies, and the many State and local community
    programs that support families who live too far from military
    installations to access services. Programs such as Military
    OneSource make even more assistance available. The increased
    emphasis on family support is making a difference, but it is
    still sporadic. Services continue to refine programs to help
    families deal with deployment and return and reunion, but must
    be able to update those programs to meet families' changing
    needs.
        Preventive mental health resources must be more accessible
    for families and servicemembers over the long term, and special
    care must be taken to support injured servicemembers and their
    families. Families and servicemembers must be assured that,
    should the worst happen, the survivor benefit package will
    ensure the long-term financial stability of the family members
    of all servicemembers who die on Active-Duty, regardless of
    whether or not that death occurs in a combat situation.
        The NMFA has been concerned to hear recently of cutbacks in
    family supported quality-of-life programs at many
    installations. The outlook for future funding of base support
    programs such as child care, family centers, spouse employment
    readiness, and youth and recreation programs seems grim, as the
    Army, for example, has identified a need for an additional $1.2
    billion for base operations support funding for fiscal year
    2006. Cutting bedrock installation support services to fund
    military operations may be penny wise, but it is pound foolish
    if the lack of these services make it more difficult for
    families to deal with the continued high operational tempo.
        A significant element of families' readiness is quality
    education for military children. April is the month of the
    military child. This month and every month, military children
    need you to ensure that both DOD and civilian schools can meet
    the counseling, staffing, and program challenges arising from
    new ongoing and changed missions. We especially ask that you
    authorize DOD funding of at least $50 million to supplement
    Impact Aid for civilian schools educating military children to
    help these districts provide the support children need to
    receive a quality education despite their frequent relocations
    and the stress of deployments. Like Senator Nelson, we believe
    that a plan must be in place soon to assist these districts in
    dealing with surges in enrollment caused by service
    transformation and housing privatization issues, global
    rebasing, or BRAC.
        NMFA asks that you continue your vigilant oversight of the
    defense health system. As Mr. Strobridge indicated, we also
    believe the direct care system faces a multitude of stressors
    that affect patient access to care. We are concerned that some
    military treatment facilities (MTFs) are cutting back on hours
    or services at exactly the time when they are supposed to be
    pulling in more care under the new TRICARE contract. The future
    of successful initiatives such as the family-centered care is
    in jeopardy if the direct care system must divert essential
    resources to other demands.
        Mr. Chairman, the concern you and Senator Nelson have
    expressed today sends an important message to servicemembers
    and their families. Congress understands the link between
    military readiness and the quality-of-life of the military
    community. Strong families ensure a strong force. Thank you for
    your work in keeping our families and our force strong.
        Now Ms. Holleman will talk about retiree and survivor
    issues.
        [The prepared statement of Ms. Raezer follows:]
                   Prepared Statement by Joyce Wessel Raezer
        Mr. Chairman and distinguished members of this subcommittee, the
    National Military Family Association (NMFA) would like to thank you for
    the opportunity to present testimony on quality of life issues
    affecting servicemembers and their families. NMFA is also grateful for
    your leadership in the 108th Congress in:

             Making increases in the Family Separation Allowance
            and Imminent Danger Pay (IDP) permanent.
             Ending the age-62 Survivor Benefit Plan (SBP) offset.
             Providing funding to support the education of military
            children.
             Including quality of life factors in considerations
            regarding commissary closures.
             Allowing the ``Families First'' re-engineering of the
            DOD household goods movement process to continue on schedule.

        As a founding member of The Military Coalition, NMFA subscribes to
    the recommendations contained in the Coalition's testimony presented
    for this hearing. We especially endorse the Coalition's recommendations
    to:

             Eliminate the Dependency and Indemnity Compensation
            (DIC) offset to SBP.
             Enhance education and outreach to improve military
            family readiness and support families of deployed Active-Duty,
            National Guard, and Reserve servicemembers.
             Gradually adjust grade-based housing standards used to
            determine Basic Allowance for Housing (BAH) to a more realistic
            and appropriate level reflecting the responsibilities and
            seniority of each pay grade.
             Increase household goods weight allowances for mid-
            grade and senior enlisted servicemembers and allow the shipment
            at government expense of a second privately-owned vehicle for
            servicemembers on accompanied assignments to overseas locations
            (including Alaska and Hawaii).
             Expand access to the full range of mental health/
            family counseling services regardless of the beneficiaries'
            location
             Allow servicemembers to establish flexible spending
            accounts for pre-tax payment of dependent care and health care
            expenses.
             Fully-fund the commissary benefit and scrutinize
            proposals to close commissaries or combine exchange services.
             Ease the transition of Guard and Reserve families to
            TRICARE when the servicemember is mobilized by providing a
            choice of purchasing TRICARE coverage when in drill status or
            receiving Federal payment of civilian health care premiums when
            the servicemember is mobilized.
             Fully-fund the Defense Health Program budget to
            provide access to quality care for all beneficiaries.
             Authorize full BAH for Guard and Reserve members
            mobilized for more than 30 days.

        In this statement, NMFA will address issues related to military
    families in the following subject areas:

             Family Readiness throughout the Deployment Cycle
             Health Care
             Survivors
             Injured Servicemembers
             Spouse Employment
             Child Care
             Education of Military Children
             Transformation, Global Re-basing, and Base Realignment
            and Closure (BRAC)
                family readiness throughout the deployment cycle
        NMFA is pleased to note the Services continue to refine the
    programs and initiatives to provide support for military families in
    the period leading up to deployments, during deployment, and the return
    and reunion period. Our message to you today is simple: the increased
    emphasis on family readiness is paying off! However, family readiness
    over the long term requires that resources must be directed not just at
    deployment-related support programs, but also to sustain the full array
    of baseline installation quality of life programs. We have visited
    installations that benefited from new and enhanced family programs and
    outreach to families of deployed servicemembers, provided partially
    through wartime appropriations funding. The National Guard Bureau has
    opened additional Family Assistance Centers in areas with large numbers
    of mobilized Guard and Reserve members. The Services are providing
    additional child care for Active-Duty families through their military
    child development centers and Family Child Care providers and
    developing arrangements with child care providers in other locations to
    serve Guard and Reserve families. Families are better able to
    communicate with deployed servicemembers and enhanced Service efforts
    ease servicemembers' return and reunion with their families.
        Increased funding and prioritization given to family support is
    making a difference, but still sporadically. As referenced in its 2004
    analysis report, ``Serving the Home Front: An Analysis of Military
    Family Support from September 11, 2001 through March 31, 2004,''
    consistent levels of targeted funding are needed, along with consistent
    levels of command focus on the importance of family support programs.
    NMFA is very concerned about recent reports from Service leadership and
    from individual installations about potential shortfalls in base
    operations funding and appropriated fund support for morale, welfare,
    and recreation (MWR) and other quality of life programs. While some of
    these cuts may be temporary, in programs and facilities seeing declines
    in patronage due to the deployment of units from the installations,
    others are in services that support families, such as spouse employment
    support, volunteer support, child development center hours, or family
    member orientation programs. These core quality of life programs,
    family center staff, chaplains, other support personnel, MWR, child
    care, commissary and exchange programs make the transition to military
    life for new military members easier and lessen the strain of
    deployment for all families. NMFA does not have the expertise to ferret
    out exact MWR funding levels from Service Operations and Maintenance
    (O&M) budgets. We are concerned about the state of this funding--both
    appropriated and non-appropriated fund support--because of what we hear
    from servicemembers and families, what we read in installation papers
    chronicling cutbacks, and from Service leaders who have identified
    shortfalls in base operations funding in the administration's fiscal
    year 2006 budget request.
        We are also apprehensive about the potential impact of multiple and
    simultaneous initiatives by the Office of the Secretary of Defense
    (OSD) and the military services--including transformation, Global
    Repositioning, Army Modularity, and BRAC--on these essential quality of
    life benefits. NMFA continues to hear that installations or Service
    commands or agencies must divert resources from the basic level of
    installation quality of life programs to address the surges of
    mobilization and return. Resources must be available for commanders and
    others charged with ensuring family readiness to help alleviate the
    strains on families facing more frequent and longer deployments.
        NMFA is particularly troubled by what we see as mixed signals
    regarding DOD's long-term commitment to quality of life services and
    programs. During a recent hearing on recruiting and retention before
    the Personnel Subcommittee of the House Armed Services Committee, an
    official from OSD and the Service Personnel Chiefs emphasized bonuses
    as a priority, making little to no reference to the importance of
    support for military families and quality of life programs in meeting
    recruiting and retention challenges. On the other hand, in a hearing
    last month before the Military Quality of Life and Veterans' Affairs
    Subcommittee of the House Appropriations Committee, the Service Senior
    Enlisted Advisors emphasized the importance of addressing quality of
    life issues for Active, National Guard, and Reserve servicemembers and
    their families. They listed child care and housing as top priorities,
    in addition to pay, health care, and educational opportunities for
    servicemembers and their families. NMFA is concerned that this
    inconsistent emphasis among military leaders may give the perception
    that DOD is not serious about the value of non-pay elements of the
    military benefit package.
    What's Needed for Family Support?
        Family readiness volunteers and installation family support
    personnel in both Active-Duty and Reserve component communities have
    been stretched thin over the past 3\1/2\ years as they have had to
    juggle pre-deployment, ongoing deployment, and return and reunion
    support, often simultaneously. Unfortunately, this juggling act will
    likely continue for some time. Volunteers, whose fatigue is evident,
    are frustrated with being called on too often during longer than
    anticipated and repeated deployments. Family member volunteers support
    the servicemembers' choice to serve; however, they are worn out and
    concerned they do not have the training or the backup from the family
    support professionals to handle the problems facing some families in
    their units. Military community volunteers are the front line troops in
    the mission to ensure family readiness. They deserve training,
    information, and assistance from their commands, supportive unit rear
    detachment personnel, professional backup to deal with family issues
    beyond their expertise and comfort level, and opportunities for respite
    before becoming overwhelmed. NMFA is pleased to note that the Army's
    paid Family Readiness Group assistants are getting rave reviews from
    commanders and family readiness volunteers--more of these positions are
    needed.
        NMFA knows that complicated military operations can result in
    deployments of unexpected lengths and more frequent deployments. But we
    also understand the frustrations of family members who eagerly
    anticipated the return of their servicemembers on a certain date only
    to be informed at the last minute that the deployment will be extended.
    Others hope to enjoy a couple of years of family time with the
    servicemember only to be told that the unit will be deployed again
    within a year or less. Other than the danger inherent in combat
    situations, the unpredictability of the length and frequency of
    deployments is perhaps the single most important factor frustrating
    families today. Because of this unpredictability, family members need
    more help in acquiring the tools to cope. They also need consistent
    levels of support throughout the entire cycle of deployment, which
    includes the time when servicemembers are at the home installation and
    working long hours to support other units who are deployed or gearing
    up their training in preparation for another deployment. As one spouse
    wrote to NMFA:

              This is really starting to take a toll on families out here
            since some families are now on the verge of their third
            deployment of the servicemember to Iraq. Families are not so
            much disgruntled by the tempo of operations as they are at a
            loss for resources to deal with what I've started calling the
            ``pivotal period.'' This is the point where the honeymoon from
            the last deployment is over, the servicemember is starting to
            train again for the next deployment in a few months and is gone
            on a regular basis, the family is balancing things with the
            servicemember coming and going and also realizing the
            servicemember is going to go away again and be in harm's way.
            We have deployment briefs that set the tone and provide
            expectations for when the servicemember leaves. We have return
            and reunion briefs that prepare families and provide
            expectations for when the servicemember returns. These two
            events help families know what is normal and what resources are
            available but there is an enormous hole for that ``pivotal
            period.'' No one is getting families together to let them know
            their thoughts, experiences and expectations are (or aren't)
            normal in those in between months. Deployed spouses have
            events, programs, and free child care available to them as they
            should--but what about these things for the in-betweeners who
            are experiencing common thoughts and challenges?

        As deployments have continued, the Services have refined their
    programs to educate servicemembers and family members about issues that
    may surface after the homecoming and immediate reunion. Efforts to
    improve the return and reunion process must evolve as everyone learns
    more about the effects of multiple deployments on both servicemembers
    and families, as well as the time it may take for some of these effects
    to become apparent. Information gathered in the now-mandatory post-
    deployment health assessments may also help identify servicemembers who
    may need more specialized assistance in making the transition home over
    the long term. Many mental health experts state that some post-
    deployment problems may not surface for several months after the
    servicemembers return. Assessments done at crowded de-mobilization
    sites where servicemembers' primary wish is to complete their
    outprocessing checklist and go home may not capture either the
    immediate needs of the servicemember for counseling services or be an
    accurate predictor of future needs. NMFA applauds the announcement made
    in January by the Assistant Secretary of Defense for Health Affairs
    that DOD would mandate a second assessment at the 4-to-6 month mark
    following the servicemember's return. We urge Congress to ensure the
    military Service medical commands have the personnel resources needed
    to conduct these assessments.
        NMFA is concerned that much of the research on mental health issues
    and readjustment has focused on the servicemember. More needs to be
    done to study the effects of deployment and the servicemembers' post-
    deployment readjustment on family members. Families also tell us they
    need more information and training on how to recognize signs of Post
    Traumatic Stress Disorder (PTSD) in their servicemember and how to
    handle the situations they are told may be common after the
    servicemember's return. While return and reunion training is getting
    better and more families are participating, some family members are
    saying more must be done to support families following the return.
    According to one spouse:

              The problem comes in when it's you and hubby at home and he
            just woke up screaming, or threw an object across the room
            because he's angry or freaks out in a crowd. Yes, they tell you
            it could happen, but what do you do when it does? Where is the
            help when this stuff happens? We don't think the problem is the
            reunion classes, it's the follow-up.

        Return and reunion issues are long-term issues. NMFA believes more
    also needs to be done to ensure proper tracking of the adjustment of
    returning servicemembers. This tracking becomes more difficult when
    servicemembers are ordered to a new assignment away from the unit with
    which they deployed. Post-deployment assessments and support services
    must also be available to the families of returning Guard and Reserve
    members and servicemembers who leave the military following the end of
    their enlistment. Although they may be eligible for transitional health
    care benefits and the servicemember may seek care through the Veterans'
    Administration (VA), what happens when the military health benefits run
    out and deployment-related stresses still affect the family?
        NMFA is pleased that DOD has intensified its marketing efforts for
    Military OneSource as one resource in the support for families
    throughout the entire deployment cycle. Military OneSource provides 24/
    7 access, toll-free or online, to community and family support
    resources, allowing families to access information and services when
    and where they need them. DOD, through OneSource, has committed to
    helping returning servicemembers and families of all Services access
    local community resources and receive up to six free face-to-face
    mental health visits with a professional outside the chain of command.
        While NMFA believes OneSource is an important tool for family
    support, it is not a substitute for the installation-based family
    support professionals or the Family Assistance Centers serving Guard
    and Reserve families. NMFA is concerned that some of the recent cuts in
    family program staff at installations suffering a shortfall in base
    operations funding may have been made under the assumption that the
    support could be provided remotely through OneSource. The OneSource
    information and referral service must be properly coordinated with
    other support services, to enable family support professionals to
    manage the many tasks that come from high operational tempo. The
    Services must also ensure the OneSource contractor has up-to-date
    information on military installation services and military benefits,
    such as TRICARE. The responsibility for training rear detachment
    personnel and volunteers and in providing the backup for complicated
    cases beyond the knowledge or comfort level of the volunteers should
    flow to the installation family center or Guard and Reserve family
    readiness staff. Family program staff must also facilitate
    communication and collaboration between the rear detachment,
    volunteers, and agencies such as chaplains, schools, and medical
    personnel. The OneSource counseling must be provided with an
    understanding of the TRICARE benefit and assist with a smooth handoff
    if the provider determines that the beneficiary needs medical mental
    health services rather than the relationship and ``coping with stress''
    counseling offered by OneSource.
    Guard and Reserve Families
        NMFA appreciates the focus that has been placed on enhancing
    programs for the families of deployed Guard and Reserve members.
    Ongoing training programs for family readiness volunteers and family
    readiness liaisons and rear detachment commanders address the concern
    that was raised in the NMFA analysis report, ``Serving the Home
    Front,'' that all members of the family readiness team train together
    in order to more effectively serve their families. NMFA staff observed
    the effectiveness of this training first hand at a Reserve unit
    training in January where servicemembers training as family readiness
    liaisons or ``frills'' experienced epiphanies as they viewed problems
    and miscommunications from the family side instead of the command side.
    This collaboration can go a long way in bettering communication on all
    sides.
        Geographically-isolated Guard and Reserve families must depend on a
    growing but still patchy military support network. As indicated in the
    NMFA analysis report, one way to effectively multiply resources is an
    increased use of community programs to reach out to those families who
    are geographically dispersed. Countless local and state initiatives by
    government organizations and community groups have sprung up to make
    dealing with deployment easier for Guard and Reserve family members.
    One new initiative that has the potential to network these local
    efforts is the National Demonstration Program for Citizen-Soldier
    Support. This community-based program is designed to strengthen support
    for National Guard and Reserve families by building and reinforcing the
    capacity of civilian agencies, systems, and resources to better serve
    them. Initiated by the University of North Carolina at Chapel Hill,
    with $1.8 million in seed money provided in the fiscal year 2005
    Defense Appropriations Act, the Citizen-Soldier Support Program will be
    coordinated closely with existing military programs and officials in
    order to avoid duplication of effort and to leverage and optimize
    success. Communities want to help. Leveraging this help with Federal
    funding and programs can be a win-win situation. NMFA recommends
    authorization of this program and continued funding to allow it time to
    develop a model that can be replicated in other locations and to set up
    training to achieve this replication.
        NMFA applauds the various initiatives designed to meet the needs of
    servicemembers and families wherever they live and whenever they need
    them and requests adequate funding to ensure continuation both of the
    ``bedrock'' support programs and implementation of new initiatives.
    Higher stress levels caused by open-ended deployments require a higher
    level of community support. We ask Congress to ensure that the Services
    have base operations funding at the level necessary to provide robust
    quality of life and family support programs during the entire
    deployment cycle: pre-deployment, deployment, post-deployment, and in
    that ``pivotal period'' between deployments. Accurate and timely
    information on options for obtaining mental health services and other
    return and reunion support must be provided to families as well as to
    servicemembers. NMFA recommends increased funding for community based
    programs to reach out to meet the needs of geographically dispersed
    servicemembers and their families.
                                  health care
        This year, NMFA is monitoring the after-effects of the transition
    to the new round of TRICARE contracts and the continued transition of
    mobilized Guard and Reserve members and their families in and out of
    TRICARE. We are concerned that the Defense Health Program may not have
    all the resources it needs to meet both military medical readiness
    mission and provide access to health care for all beneficiaries. The
    Defense Health Program must be funded sufficiently so that the direct
    care system of military treatment facilities and the purchased care
    segment of civilian providers can work in tandem to meet the
    responsibilities given under the new contracts, meet readiness needs,
    and ensure access for all TRICARE beneficiaries. Families of Guard and
    Reserve members should have flexible options for their health care
    coverage that address both access to care and continuity of care
                                 tricare prime
        The change to three TRICARE Regions and three regional Managed Care
    Support Contractors (MCSC) did not go as smoothly as expected. The
    large number of Primary Care Manager (PCM) changes, particularly in the
    West Region, created significant angst among beneficiaries. NMFA
    believes that most of these issues have been resolved, but it certainly
    did not make for a hassle free transition for many beneficiaries!
        The most egregious problem that surfaced during the transition was
    the inability of DOD to satisfactorily roll-out its electronic referral
    program. The program was intended to facilitate electronic referrals by
    the PCM to specialists, often while the beneficiary was still in the
    PCM's office. At the last minute, it became apparent that the system
    was not ready for ``prime time'' and, in fact, is still not up and
    running. A date for it to be so has not been determined. In order for
    referrals to be made, both the MCSCs and the military treatment
    facilities (MTF) had to quickly devise a paper process that met the
    contract specifications of ``first refusal'' by the MTF. Some rather
    obvious bottlenecks within the process were identified and have for the
    most part been rectified. Originally some MTFs were holding referrals
    in-house even though they or any other MTF within the drive time Prime
    standard did not have the necessary specialty. While that issue is
    being improved, the time the paper process is taking in most cases
    increases the likelihood that the Prime access standard of 28 days for
    specialty care may be exceeded by anywhere from a week to 2 or 3 weeks.
    The MCSCs were forced to quickly hire and train hundreds of new
    employees in order to facilitate the paper referral process. They, we
    assume, will be reimbursed for their extra expenses by DOD. The MTFs,
    on the other hand, have had to handle the problem without any increase
    in staffing. While the MCSCs are in most cases meeting the 28 day
    standard from the time they receive the referral, the delay appears to
    be in receiving the referral from the MTF. We have had few complaints
    of the 28 day access window being exceeded when the referral was
    totally within the civilian network. The problems seem to be almost
    totally tied to the ``first refusal'' right of MTFs. NMFA has no
    problem with the concept of ``first refusal'' as we support a well-
    utilized direct care system and believe the vast majority of Prime
    enrollees prefer to receive their care in an MTF. We are most
    concerned, however, that the promised access standards for Prime are
    not being met. We believe that just as the enrollee is tied to certain
    contract requirements to receive care, the government should be held
    accountable for its side of the contract that includes promised access
    standards.
        In late 2004, NMFA conducted a voluntary web survey of TRICARE
    Prime access standards. We were disappointed to note that in each
    category where Prime access standards were not being met, beneficiaries
    enrolled at MTFs had higher rates of noncompliance than did those
    enrolled in the civilian network. Most notably, the 1 hour drive time
    for a specialist appointment was exceeded more than 15 times as often
    for those enrolled at an MTF. In addition, four out of ten respondents
    enrolled at an MTF were unable to get an urgent care appointment within
    24 hours and more than one in three enrolled at an MTF were unable to
    get a routine appointment within the one week Prime access standard. We
    were surprised at the number and length of comments provided on the
    survey. Some beneficiaries were most complimentary of the TRICARE
    program. By far the largest number of negative comments referenced
    referrals and difficulty accessing assistance on the toll free numbers
    both in length of time on the phone and ability of the representative
    to answer questions or solve problems.
        The change of PCMs and the convoluted referral and authorization
    process overwhelmed the MCSCs' telephone systems, with long waits for
    beneficiaries who sometimes found their problems remained unresolved
    once they were finally connected. All of the MCSCs have worked hard on
    the problem and the telephone situation has vastly improved. NMFA
    appreciates that both the MCSCs and DOD are working to expedite the
    referral and authorization process. We are concerned about the cost of
    the additional manpower and of the work-around procedures needed in the
    absence of DOD's promised electronic referral system.
        NMFA believes that ``rosy'' predictions when significant contract
    changes are being made are a disservice to both beneficiaries and the
    system. NMFA is appreciative of the intense effort being made to
    improve the referral and authorization process, but is concerned about
    the cost of the work-around and the prospect of a new round of
    disruptions when DOD's electronic referral and authorization system is
    implemented. It is imperative that whatever changes are made, the
    promised Prime access standards must be met.
                                tricare standard
        NMFA is most appreciative of the requirements included in the
    National Defense Authorization Act (NDAA) for Fiscal Year 2004 for
    improving TRICARE Standard. The results of the first survey of market
    areas required in the NDAA have proved disappointing as the Office of
    Management and Budget limited the number of questions to three. ``Are
    you accepting new patients?'' ``Are you accepting new TRICARE Standard
    patients?'' If the answer to the second question was no, then the
    providers were asked ``Why?'' Obviously one cannot tell if the provider
    is accepting new Medicare patients and not new TRICARE Standard
    patients (the reimbursement would be the same in most cases). One
    cannot tell even if the provider was aware of the difference between
    being in the TRICARE network or simply being an authorized TRICARE
    provider. One does not know if the new patients that are being accepted
    are private pay versus insured. One also does not know how long the
    provider has not been accepting new TRICARE Standard patients, so one
    does not know if the more complicated claims process, that no longer
    exists, could be the reason for not accepting TRICARE patients. Perhaps
    the biggest unknown is whether or not the provider previously accepted
    new TRICARE Standard patients and has stopped doing so and the reason
    for the change. In other words, the results gave a piece of the
    picture, but by no means the entire picture.
        Even with this limited information, the survey results show a
    significant difference between providers accepting any new patients and
    those accepting new TRICARE Standard patients. The difference in
    percentages ranged from a low of 4 percent to a high of 35 percent with
    the average for all market areas being 15.5 percent. Without additional
    knowledge, getting to the root cause of the difference is problematic.
    NMFA hopes the DOD surveys of additional market areas will be able to
    include more questions so the picture can be complete.
        DOD has added a Standard provider directory on its TRICARE web site
    to assist beneficiaries in finding physicians. However, the law allows
    providers to decide for each appointment whether or not they will
    accept TRICARE Standard reimbursement. Hence a provider whose name is
    in the directory may not take a particular TRICARE Standard patient or
    may not accept TRICARE reimbursement for all of that patient's care.
        NMFA would like to note that, with the start of the new TRICARE
    contracts, DOD also sent a beneficiary handbook to every household with
    a TRICARE (not TRICARE for Life) beneficiary. Having DOD provide a
    handbook to every beneficiary has long been a goal for NMFA. We are
    exceedingly grateful that this action was taken! We note, however, that
    more needs to be done to educate Standard beneficiaries about their
    benefit and any changes that might occur to that benefit--they should
    not have to wait for the next contract turnover to receive another
    handbook!
        NMFA believes ending the TRICARE Standard access problem that is a
    constant complaint of beneficiaries cannot be accomplished if the
    reasons providers do not accept TRICARE Standard cannot be ascertained.
                      guard and reserve family health care
        Despite increased training opportunities for families, the problem
    still persists of educating Guard and Reserve family members about
    their benefits. New and improved benefits do not always enhance the
    quality of life of Guard and Reserve families as intended because these
    families lack the information about how to access these benefits. NMFA
    is closely watching the impending implementation of the TRICARE Reserve
    Select health care benefit for the Reserve component. We have several
    concerns about the implementation of this program, especially regarding
    beneficiary education on the new benefit. Presently, when Guard or
    Reserve members are mobilized, their families have the option of
    enrolling in TRICARE Prime or TRICARE Prime Remote. Under TRICARE
    Reserve Select, families will only be allowed to use the TRICARE
    Standard option. The rules governing the program state that the
    servicemember must declare his/her intention to commit to further
    service in the Reserve component and sign up for Reserve Select before
    leaving Active-Duty. Both the servicemember and the family need to
    understand the coverage provided under Reserve Select, the costs, and,
    most importantly, how Reserve Select differs from the TRICARE Prime or
    Prime Remote benefit the family used while the servicemember was on
    Active-Duty. We do not want servicemembers to believe they are signing
    up for a TRICARE Prime-like benefit when they are, in reality, signing
    up for TRICARE Standard.
        NMFA is grateful to Congress for its initial efforts to enhance the
    continuity of care for National Guard and Reserve members and their
    families. Unfortunately, these improvements, including Reserve Select,
    are not all that is needed. Information and support are improving for
    Guard and Reserve families who must transition into TRICARE; however,
    NMFA believes that going into TRICARE may not be the best option for
    all of these families. Guard and Reserve servicemembers who have been
    mobilized should have the same option as their peers who work for the
    Department of Defense: DOD should pay their civilian health care
    premiums. The ability to stay with their civilian health care plan is
    especially important when a Guard or Reserve family member has a
    special need, a chronic condition, or is in the midst of treatment.
    While continuity of care for some families will be enhanced by the
    option to allow Guard and Reserve members to buy into Reserve Select
    after they return from a deployment, it can be provided for others only
    if all Selected Reserve are allowed buy into TRICARE or to choose to
    remain with their civilian health insurance while receiving a subsidy
    from DOD.
        NMFA also believes it is time to update the Transitional Assistance
    Management Program (TAMP) health care benefit to reflect recent changes
    in the TRICARE Prime benefit. Currently, servicemembers who have been
    demobilized and their families are eligible for 180 days of TAMP health
    care benefits. If TRICARE Prime is available, they may re-enroll in
    Prime during the TAMP benefit period. Servicemembers and families who
    live in areas where there is no Prime network were eligible for TRICARE
    Prime Remote when the servicemember was on Active-Duty. During the TAMP
    benefit period, they are no longer eligible for Prime Remote because
    the servicemember is no longer on Active-Duty. In some cases, the
    family must find another provider, thus disrupting continuity of care.
    Families formerly in Prime Remote must revert to Standard, with its
    higher cost shares and deductibles. NMFA believes that the legislative
    language governing the TAMP benefit should be updated to reflect the
    availability of TRICARE Prime Remote and that servicemembers and
    families in TAMP be allowed to remain in Prime Remote.
        Emphasis must continue on promoting continuity of care for families
    of Guard and Reserve servicemembers. NMFA's recommendation to enhance
    continuity of care for this population is to allow members of the
    Selected Reserve to choose between buying into TRICARE when not on
    Active-Duty or receive a DOD subsidy allowing their families to remain
    with their employer-sponsored care when mobilized. NMFA also recommends
    that the rules governing health care coverage under TAMP be updated to
    allow the servicemember and family to remain eligible for TRICARE Prime
    Remote.
    Alarming Discovery
        Over the years, NMFA has received anecdotal information from family
    members that providers are not accepting them as TRICARE patients
    because the TRICARE reimbursement level was below that provided by
    Medicaid. Needless to say, family members have been outraged! However,
    since TRICARE reimbursement is tied by law to Medicare reimbursement,
    NMFA has believed the problem far larger than the military health care
    system.
        Alarm bells resounded, however, when NMFA was recently informed of
    the situation in the Hampton Roads area of Virginia. Medicaid
    reimbursement for a normal pregnancy, including prenatal care, delivery
    and post partum care is $2,200 in that area. The maximum TRICARE
    allowance is $1,500. The largest network provider group in the area has
    therefore dropped out of the Prime network. Some of its providers are
    refusing to accept TRICARE at all, and others will only take TRICARE
    Standard patients if the patients pay the allowed 15 percent above the
    TRICARE allowable. NMFA cannot even imagine the reaction of a deployed
    servicemember when his spouse reports that she cannot go back to her
    usual obstetrician for the baby that will be delivered while the member
    is in Iraq, because TRICARE reimbursement rates are $700 less than
    Medicaid! Since learning of the situation in Virginia, NMFA has learned
    of other locations where the Medicaid reimbursement for obstetrical or
    pediatric procedures exceeds that of TRICARE. NMFA believes the people
    of this country would not feel comfortable with these statistics.
        NMFA does not know how prevalent this problem may be across the
    country and urgently requests that Congress require DOD to compare the
    reimbursement rates of Medicaid with those of TRICARE. We are
    particularly concerned with the rates for pediatric and obstetrical/
    gynecological care where Medicare has little experience in rate
    setting.
                                   survivors
        NMFA believes that the government's obligation as articulated by
    President Lincoln, ``to care for him who shall have borne the battle
    and for his widow and his orphan,'' is as valid today as it was at the
    end of the Civil War. As seen in media reports and in questions we hear
    from military families and others concerned about military families,
    there is a lot of misinformation and confusion about what the complete
    benefit is for those whose servicemembers have made the ultimate
    sacrifice. We know that there is no way to compensate them for their
    loss, but we do owe it to these families to help ensure a secure
    future.
        NMFA strongly believes that all servicemembers' deaths should be
    treated equally. Servicemembers are on duty 24 hours a day, 7 days a
    week, 365 days a year. Through their oath, each servicemember's
    commitment is the same. The survivor benefit package should not create
    inequities by awarding different benefits to families who lose a
    servicemember in a hostile zone versus those who lose their loved one
    in a training mission preparing for service in a hostile zone. To the
    family, the loss is the same.
        After the death of the servicemember, the spouse encounters a
    confusing array of decisions that must be made, the consequences of
    which will influence his or her life and the lives of the children for
    years to come. NMFA has heard surviving spouses say ``My husband told
    me I'd be well taken care of if something were to happen to him. I
    don't feel that he would be happy with the way things have been
    handled''. These spouses feel betrayed and poorly served as they
    transition from Active-Duty status to the confusing status of widow or
    widower. What should be a seamless transition is often complicated by
    unnecessary hurdles presented when people who are supposed to help the
    survivors do not understand the nuances of the survivor benefits, from
    the widow whose SBP payment was delayed because ``her husband was too
    young to retire'' to the pharmacy that charges a widow to fill
    prescriptions because they believe she is no longer eligible for the
    TRICARE benefit.
        NMFA believes the benefit change that will provide the most
    significant long term protection to the family's financial security
    would be to end the DIC offset to the SBP. The DIC is a special
    indemnity (compensation or insurance) payment that is paid by the VA to
    the survivor when the servicemember's service causes his or her death.
    It is a flat rate payment, which for 2005 is $993 for the surviving
    spouse and $247 for each surviving child. The SBP annuity, paid by the
    DOD, reflects the longevity of the service of the military member. It
    is ordinarily calculated at 55 percent of retired pay.
        Two years ago, surviving spouses of all servicemembers killed on
    Active-Duty were made eligible to receive SBP. The amount of their
    annuity payment is calculated as if the servicemember was medically
    retired at 100 percent disability. The annuity varies greatly,
    depending on the servicemember's longevity of service. As the law is
    currently written, if the amount of SBP is less than $993, the
    surviving spouse receives only the DIC payment of $993 per month. If
    the amount of SBP is greater than $993, the surviving spouse receives
    the DIC payment of $993 per month (which is non-taxable) plus the
    difference between the DIC and the SBP. For example, if the SBP is
    $1,500, the surviving spouse receives $993 from DIC (non-taxable) and
    $507 from SBP that is subject to tax each month. The DIC payment of
    $247 for each child is not offset.
        Surviving Active-Duty spouses have the option of several benefit
    choices depending on their circumstances and the ages of their
    children. Because SBP is offset by the DIC payment, the spouse whose
    SBP payment would be less than the amount of DIC may choose to waive
    her SBP benefit and select the ``child only'' option. In this scenario,
    the spouse would receive the DIC payment and her children would receive
    the full SBP amount until the last child turns 18 (23 if in college),
    as well as the individual child DIC until each child turns 18 (or 23 if
    in college). Once the children have left the house, the spouse who has
    chosen this option will be left with an annual income of $11,916 (in
    2005 dollars). If there are no dependent children, the surviving spouse
    whose SBP benefit is less than the $993 DIC payment will experience
    this income decline just 6 months following the servicemember's death.
    In each case, this is a significant drop in income from what the family
    had been earning while on Active-Duty. The percentage of income loss is
    even greater for survivors whose servicemembers had served longer on
    Active-Duty. Those who give their lives for their country deserve
    fairer compensation for their surviving spouses.
        As we have described, the interaction between SBP and DIC is a
    complex procedure to understand. Consider trying to make decisions
    about this payment distribution a month after losing your spouse, while
    still in a state of shock and denial. The military service casualty
    assistance officer (CAO) has received training to help the family
    through these difficult times. This assistance, however, is often
    performed as an extra duty and the officer is not an expert in survivor
    issues or financial counseling. Understanding all the benefits and
    entitlements is a complex process. We have heard from surviving
    families that they greatly appreciated the help and support provided by
    the CAO in those first days as he or she served as a representative of
    their parent service. The presence of the CAO demonstrates to the
    family that ``we take care of our own'' and can be a great comfort to
    the family as they go through the military funeral and honors.
    Sometimes, however, training for this extra duty can be hurried or
    incomplete and may result in misinformation or a missed step in a
    procedure that is not discovered until months down the road with
    consequences that are irrevocable.
        NMFA recommends the following changes to support surviving family
    members of Active-Duty deaths:

             Treat all Active-Duty deaths equally. The military
            services have procedures in place to make ``line of death''
            determinations. Do not impose another layer of deliberation on
            that process.
             Eliminate the DIC offset to SBP. Doing so would
            recognize the length of commitment and service of the career
            servicemember and spouse. Eliminating the offset would also
            restore to those widows/widowers of those retirees who died of
            a service-connected disability the SBP benefit that the
            servicemember paid for.
             Improve the quality and consistency of training for
            CAOs and family support providers so they can better support
            families in their greatest time of need.
             In cases where the family has employer sponsored
            dental insurance treat them as if they had been enrolled in the
            TRICARE Dental Program at the time of the servicemember's
            death, thus making them eligible for the 3-year survivor
            benefit.
             Update the TRICARE benefit provided in 3-year period
            following the servicemember's death in which the surviving
            spouse and children are treated as their Active-Duty family
            members and allow them to enroll in TRICARE Prime Remote.
             Allow surviving families to remain in government or
            privatized family housing longer than the current 6-month
            period if necessary for children to complete the school year,
            with the family paying rent for the period after 6 months.
             Expand access to grief counseling for spouses,
            children, parents, and siblings through Vet Centers, OneSource,
            and other community-based services.
             To provide for the long-term support of surviving
            families, establish a Survivor Office in the Department of
            Veterans' Affairs.
                  wounded servicemembers have wounded families
        Post-deployment transitions could be especially problematic for
    servicemembers who have been injured and their families. NMFA asserts
    that behind every wounded servicemember is a wounded family. Wounded
    and injured servicemembers and their families deserve no less support
    than survivors. Spouses, children, and parents of servicemembers
    injured defending our country experience many uncertainties. Fear of
    the unknown and what lies ahead in the weeks, months, and even years,
    weighs heavily on their minds. Other concerns include the injured
    servicemember's return and reunion with their family, financial
    stresses, and navigating the transition process to the VA.
    Comprehensive Support and Assistance
        Support, assistance, and above all, counseling programs, which are
    staffed by real people who provide face to face contact, are needed for
    the families of wounded/injured servicemembers. Whenever feasible,
    Military OneSource should be used as a resource multiplier. Mental
    health services and trained counselors need to be available and easily
    accessible for all servicemembers and their families who may suffer
    ``invisible'' injures like PTSD. Distance from MTFs or VA Centers
    should not preclude servicemembers and their families from seeking and
    receiving care. Even those families of servicemembers who are not
    considered severely disabled could have difficulties in making the
    transition from Active-Duty to civilian life and should have safety net
    programs available. Respite care options should be provided and
    accessible for family members who care for the seriously wounded.
        The transition between the DOD and the VA health system can be
    confusing for servicemembers and their families. Transition time lines
    and available services extended to wounded servicemembers sometimes
    vary by Service. Each military Service has developed unique programs
    for treating seriously injured servicemembers: the Army Disabled
    Soldier Support System (DS3), the Marine For Life (M4L) and the Air
    Force Palace HART. These programs do not offer the same support
    services for the injured servicemember. NMFA has been told that the new
    DOD Military Severely Injured Joint Operations Center can only provide
    assistance when the parent Service requests it for an injured
    servicemember. The role of the DOD and the VA should be clearly
    explained and delineated and joint efforts between all the Services and
    the VA in support of the servicemember and family must be the priority.
    In the case of severely disabled, there should be an individual written
    transition plan that is explained in full to the supporting family
    members. Robust transition, employment and training programs for
    wounded/injured servicemembers and their family members are also
    important for seamless transition to occur.
    Providing for family financial stability
        Both immediate and long-term financial pressures affect the family
    of a wounded/injured servicemember. The initial hospitalization and
    recovery period often requires the servicemembers' family to leave work
    for an extended period of time in order to be with their loved one,
    thus potentially losing a source of income and incurring tremendous
    travel expenses, childcare costs and other unexpected living expenses
    during an already stressful time. Although servicemembers continue to
    draw basic pay and some other allowances during their hospitalization,
    some families need financial assistance in the immediate period
    following the injury or during the critical transition until
    eligibility for VA benefits and disability compensation programs is
    established or until the servicemember is returned to Active-Duty. NMFA
    encourages Congress to consider initiatives to provide additional
    compensation to the servicemember during hospitalization and recovery.
    Possible solutions would be to continue the servicemember's combat pays
    and eligibility for the combat zone tax exclusion during the recovery
    period; provide a disability ``gratuity'' to the severely injured; or
    establish a premium-based Servicemember Group Disability Insurance
    Program as a rider on the Servicemembers' Group Life Insurance (SGLI)
    Program, to provide a lump sum or monthly payment while the
    servicemember is recovering.
        NMFA also recommends extending the same 3-year medical and dental
    benefit now provided to survivors of those killed on Active-Duty to the
    servicemembers who have been medically retired and his/her family.
    MTF Family Assistance Centers
        Family Assistance Centers (FACs) established at Walter Reed and
    other major medical centers have proved invaluable in assisting
    families of wounded servicemembers and in providing a central location
    to filter community offers of help. NMFA believes these centers are
    urgently needed in every MTF that treats injured servicemembers. In
    addition to the recreation, travel and emergency support that these
    centers already provide, part of the mission of these centers should be
    to prepare the family for the servicemember's transition back home.
        Because ``wounded servicemembers have wounded families,'' NMFA
    recommends the following changes to support wounded and injured
    servicemembers and their families:

             Direct the military services, OSD, and the VA to
            improve their coordination in support of the wounded
            servicemember and family.
             Consider initiatives to enhance the short term
            financial stability of the wounded servicemember's family, such
            as: continuing combat pays and tax exclusion, creating a
            disability gratuity, or implementing a Servicemember Group
            Disability Insurance Program.
             Extend the 3-year survivor health care benefit to
            servicemembers who are medically retired and their families.
             Enhance servicemember and spouse education benefits
            and employment support.
             Establish a Family Assistance Center at every MTF
            caring for wounded servicemembers.
                        education for military children
        A significant element of family readiness is an educational system
    that provides a quality education to military children, recognizing the
    needs of these ever-moving students and responding to situations where
    the military parent is deployed and/or in an armed conflict. Children
    are affected by the absence of a parent and experience even higher
    levels of stress when their military parent is in a war zone shown
    constantly on television. The military member deployed to that
    dangerous place cannot afford to be distracted by the worry that his or
    her child is not receiving a quality education. Addressing the needs of
    these children, their classmates, and their parents is imperative to
    lowering the overall family stress level and to achieving an
    appropriate level of family readiness. But it does not come without
    cost to the local school system.
        NMFA is pleased to report that most schools charged with educating
    military children have stepped up to the challenge. They are the
    constant in a changing world and the place of security for military
    children and their families. The DOD is supporting this effort in
    several significant ways. It has an education website
    (www.militarystudent.org) to provide information on a variety of
    education topics to parents, students, educational personnel, and
    military commanders. NMFA is also pleased to report that other Services
    are following the Army's lead and hiring fulltime School Liaison
    Officers at certain installations. The Army not only has School Liaison
    Officers at all locations, but has also expanded to provide these
    information services to the Reserve components, recruiters and other
    remotely-assigned personnel and their families.
        NMFA is appreciative of the support shown by Congress for the
    schools educating military children. It has consistently supported the
    needs of the schools operated by the DOD Education Activity (DODEA),
    both in terms of basic funding and military construction. Congress has
    also resisted efforts by a series of administrations to cut the Impact
    Aid funding so vital to the civilian school districts that educate the
    majority of military children. NMFA is also appreciative of the
    approximately $30 million Congress adds in most years to the Defense
    budget to supplement Impact Aid for school districts whose enrollments
    are more than 20 percent military children and for the additional
    funding to support civilian school districts who are charged with
    educating severely disabled military children. NMFA does not believe,
    however, that this amount is sufficient to help school districts meet
    the demands placed on them by their responsibilities to serve large
    numbers of military children. Additional counseling and improvements to
    security are just 2 needs faced by many of these school districts. NMFA
    requests asks this subcommittee for its assistance in securing an
    increase in the DOD supplement to Impact Aid to $50 million so that the
    recipient school districts have more resources at their disposal to
    educate the children of those who serve.
    DODEA
        Department of Defense schools are located in overseas locations
    (DODDS) and on a small number of military installations in the United
    States (DDESS). The commitment to the education of military children in
    DOD schools between Congress, DOD, military commanders, DODEA
    leadership and staff, and especially military parents has resulted in
    high test scores, nationally-recognized minority student achievement,
    parent involvement programs and partnership activities with the
    military community. This partnership has been especially important as
    the overseas communities supported by DODDS and many of the
    installations with DDESS schools have experienced high deployment
    rates. DOD schools have responded to the operations tempo with
    increased support for families and children in their communities. We
    ask that Congress work with DOD to ensure DOD schools have the
    resources they need to handle their additional tasks.
        NMFA also asks this subcommittee to understand the importance
    military parents attach to schools that educate their children well.
    DOD recently released the findings of a congressionally-requested study
    to determine whether it could turn some DDESS districts over to
    neighboring civilian education agencies. While NMFA did not object to
    the concept of a report to determine whether school systems are
    providing a quality education, using tax dollars well, or are in need
    of additional maintenance or other support funding, we are concerned
    about the timing of the study and the reaction it has caused in
    communities already dealing with the stress of the war and deployments.
    Families in these communities wonder why something that works so well
    now seems to be threatened. We were relieved that DOD officials
    announced they would suspend any consideration of the recommendations
    in the report until after the selection of installations affected by
    BRAC. We encourage Members of Congress to study those recommendations
    closely before making any decision that could damage the educational
    success the DDESS schools have achieved.
        Schools serving military children, whether DOD or civilian schools,
    need the resources available to meet military parents' expectation that
    their children receive the highest quality education possible. Because
    Impact Aid from the Department of Education is not fully funded, NMFA
    recommends increasing the DOD supplement to Impact Aid to $50 million
    to help districts better meet the additional demands caused by large
    numbers of military children, deployment-related issues, and the
    effects of military programs and policies such as family housing
    privatization. Initiatives to assist parents and to promote better
    communication between installations and schools should be expanded
    across all Services.
                               spouse employment
        Today's military is comprised of predominantly young adults under
    the age of 35. Sixty-nine percent of all military spouses and 86
    percent of junior enlisted spouses are in the labor force. For many
    families this second income is a critical factor in their financial
    well being. However, a 2003 RAND study found that the husband-and wife-
    earnings of a military family were $10,000 a year less than similar
    civilian families largely due to military wives' lower income potential
    because of frequent moves. With such statistics and a concern that
    spouses desiring better careers will encourage servicemembers to leave
    the military, DOD is paying much-needed attention to spouse employment.
        In the DOD Report of the 1st Quadrennial Quality of Life Review:
    ``Families also Serve,'' numerous initiatives were outlined that
    support military spouses career aspirations. DOD initiatives include:

             Milspouse.org: A military spouse employment web page,
            created in partnership with the Department of Labor, that
            provides easy access to employment and education opportunities.
             Military Spouse Corporate Employment Opportunities
            (MSCEO). Currently 15 corporations and 3 government entities
            have partnerships with MSCEO, an Army initiative.
             A no-cost partnership with the ADECCO Group, one of
            the world's largest employment and staffing agencies, to
            provide job skills assessments and temporary and permanent
            placements for spouses.
             Impact Jobs/Employment for Military Spouses (JEMS).
            Pilot program at Scott Air Force Base, IL, that provides
            placement services with links to 187 employers with a wide
            range of full- and part-time job opportunities.

        DOD is also planning a partnership with Monster.com to promote
    spouse employment. Spouses can also receive career counseling through
    Military OneSource.
        With 700,000 Active-Duty spouses, the task of enhancing military
    spouse employment is too big for DOD to handle alone. Improvements in
    employment for military spouses and assistance in supporting their
    career progression will require increased partnerships and initiatives
    by a variety of government agencies and private employers. NMFA
    encourages more private employers to step up to the plate and form
    partnerships with local installations and DOD. One such initiative is
    the Military Spouse Corporate Career Network (MSCCN), which is a not
    for profit organization sponsored by Concentra, Inc. The MSCCN is in
    the process of launching a web portal that will provide military
    spouses opportunities to apply for employment with Concentra and its
    corporate partners.
        Despite greater awareness of the importance of supporting military
    spouse career aspirations, some roadblocks remain. State laws governing
    unemployment compensation vary greatly. At this time very few states
    generally grant unemployment compensation eligibility to military
    spouses who have moved because of a servicemember's government ordered
    move. Although reimbursed for many expenses, military families still
    incur significant out-of-pocket expenses when the servicemember is
    ordered to a new assignment. Lacking the financial cushion provided by
    the receipt of unemployment compensation, the military spouse must
    often settle for ``any job to pay the bills'' rather than being able to
    search for a job commensurate with his or hers skills or career
    aspirations. NMFA has been pleased to note, however, that some states
    are examining their in-State tuition rules and licensing requirements.
    These changes ease spouses' ability to obtain an education or to
    transfer their occupation as they move. NMFA is appreciative of the
    efforts by DOD to work with states to promote the award of unemployment
    compensation to military spouses, eligibility for in-state tuition, and
    reciprocity for professional licenses. Its website,
    usa4militaryfamilies.org, provides details on these state initiatives.
        NMFA is currently collecting input from spouses on this issue
    through a Spouse Employment Survey on its website that it hopes will
    provide additional insights to the career needs and goals of military
    spouses and the type of employment support they need. NMFA also
    recognizes that educational opportunities must be expanded for spouses
    and, with the support of corporate donors, has established a military
    spouse scholarship program. The program is in its second year. The
    1,850 applications we have received for fewer than 40 scholarships
    attest to the need for more support for spouse education.
        We ask Congress to promote Federal and State coordination to
    provide unemployment compensation for military spouses as a result of
    Permanent Change of Station (PCS) orders. State governments should be
    encouraged to look at ways that college credits and fees are more
    easily transferable and also create a combined task force to explore
    paths towards national standards for licensing and professional
    certification. DOD and private sector employers who protect employment
    flexibility of spouses and other family members impacted by deployment
    should be applauded and used as role models for others to follow. Last,
    but not least, military spouses should be encouraged to use the current
    resources available to educate themselves about factors to consider
    regarding employment benefits, to include investments, health care,
    portability, and retirement.
                                   child care
        On a recent visit to Europe, President and Mrs. Bush stopped at
    Ramstein Air Base, Germany, to thank the troops for their service and
    dedication to our Nation. While visiting with families there, Mrs. Bush
    was made aware of a situation that is getting worse as time goes on:
    the lack of child care providers and options to meet the needs of
    military families in the community. This information is not new to
    NMFA. We have been hearing from our field representatives that this is
    an ongoing problem, especially outside the continental United States
    (OCONUS) where child care options are limited. As one of our members in
    Germany stated:

            Drawing from the pool of military spouses is no longer working
            over here. Big shortages. They are asking too much of the
            spouses as it is.

        A recent online survey conducted by NMFA further outlines the need
    for more child care. Among survey respondents:

             71 percent needed hourly or nights and weekends child
            care.
             57.1 percent of Guard and Reserve needed full time
            care.
             Only 18 percent of all respondents and 14 percent of
            Guard and Reserve respondents stated that they have been
            offered free or low cost respite care.
             Almost 60 percent of respondents felt they did not
            have enough information about child care options.
             More than 30 percent of the respondents use word of
            mouth as their main source of information about child care.
            Eighteen percent use the military units or volunteer groups and
            6 percent have used Military OneSource.

        Of special interest in the survey results was the frustration from
    dual military parents. Dealing with deployments, drill weekends and
    lack of child care facilities were of great concern. Families also
    cited concerns about finding child care after relocating to a new area.
    Because the servicemember is often quickly deployed after relocation,
    the spouse must deal with the added stress as he/she looks for
    employment and childcare in the new location.
        Senior military leaders are also taking note of these child care
    concerns. At the first meeting of the new Military Quality of Life and
    Veterans' Affairs Subcommittee of the House Appropriations Committee,
    three of the four Service Senior Enlisted Advisors cited child care as
    their number one concern for their servicemembers and families. The
    advisors spoke of lost duty time by servicemembers unable to find child
    care. DOD officials estimate that the Department needs at least 38,000
    more slots. According to the Enlisted Advisors, the need may be
    greater: all spoke of waiting lists stretching into the thousands.
        DOD is expanding partnerships to meet the demand described by the
    NMFA survey respondents and the Senior Enlisted Advisors. The National
    Association of Child Care Resource and Referral Agencies (NACCRRA)
    initiated a program entitled Operation Child Care. The initiative
    provides donated short term respite and reunion child care for members
    of the National Guard and Reserve returning from Operation Enduring
    Freedom/Operation Iraqi Freedom for the 2-week Rest and Recreation
    leave period. Another initiative through Military OneSource offers 10
    hours of free childcare to each servicemember returning on R&R leave.
    NACCRAA is also partnering with DOD on ``Operation Military Child
    Care,'' which will help provide much needed government-subsidized, high
    quality child care for mobilized and deployed military parents who
    cannot access a military child development center. Other partnerships
    are being initiated in local communities with local bases and
    Installations.
        NMFA asks Congress and DOD to consider authorizing military
    members' participation in Flexible Spending Accounts (FSAs) for child
    care. Ninety percent of private sector employers, plus the Federal
    civil service, allow their employees to pay dependent and health care
    expenses on a pre-tax basis through these accounts. Exempting military
    members from Federal and State income tax and payroll taxes saves
    employees 15-40 percent or more, depending on tax rates.
        More must be done to meet the Active-Duty and Reserve component
    requirement for full time child care, as well as innovative and
    effective ways to meet increased demand due to deployments and
    servicemember work schedules, regardless of the location of the family
                   transformation, global rebasing, and brac
        As the BRAC Commission prepares to receive DOD's list of
    installations recommended for realignment and closure, military
    beneficiaries are looking to Congress to ensure that key quality of
    life benefits and programs remain accessible. Members of the military
    community, especially retirees, are concerned about the impact base
    closures will have on their access to health care and the commissary,
    exchange, and MWR benefits they have earned. They are concerned that
    the size of the retiree, Guard, and Reserve populations remaining in a
    location will not be considered in decisions about whether or not to
    keep commissaries and exchanges open.
        In the case of shifts in troop populations because of Service
    transformation initiatives, such as Army modularity, or the return of
    servicemembers and families from overseas bases, community members at
    receiving installations are concerned that existing facilities and
    programs may be overwhelmed by the increased populations. NMFA does not
    have a position on whether or not downsizing overseas should occur or
    how or where troops should be based. Our interest in this discussion is
    in raising awareness of the imperative that military family and quality
    of life concerns be considered by policymakers in their decisionmaking
    process and in the implementation of any rebasing or transformation
    plans.
        Quality of life issues that affect servicemembers and families must
    be considered on an equal basis with other mission-related tasks in any
    plan to move troops or to close or realign installations. The quality
    of life infrastructure needed to support the military community
    includes housing, quality schools, commissaries, exchanges, child and
    youth programs, MWR facilities, family centers, chaplains' programs,
    and medical care. Maintaining this infrastructure cannot be done as an
    afterthought. Planning must include the preservation of quality of life
    programs, services, and facilities at closing installations as long as
    servicemembers and families remain AND the development of a robust
    quality of life infrastructure at the receiving installation that is in
    place before the new families and servicemembers arrive.
        Ensuring the availability of quality of life programs, services,
    and facilities at both closing and receiving installations and easing
    servicemembers and families' transition from one to another will take
    additional funding and personnel. DOD must program in the costs of
    family support and quality of life as part of its base realignment and
    closure calculations from the beginning, ask for the resources it
    needs, and then allocate them. It cannot just program in the cost of a
    new runway or tank maintenance facility; it must also program in the
    cost of a new child development center or new school, if needed.
        NMFA will closely monitor the Army's plan for stabilizing families
    and servicemembers at one installation for longer assignments. While
    stabilization has the potential to offer families more stability and a
    better quality of life, we know that the success of the program depends
    on the implementation and on the plan for European bases. Families are
    quick to note that, while they will stay put for a longer time under
    the plan, the servicemember will still deploy, perhaps frequently, and
    in many cases to Europe. Concerned about the constant routine of
    deployment and related family separations on their morale and quality
    of life, families point out that a deployment to a bare bones
    installation in Eastern Europe is still a deployment: the servicemember
    is still gone!
        Additionally, NMFA would like to know what consideration has been
    given to the single soldier. The housing and support service needs will
    increase for the single soldier if they are expected to stay in one
    area for 6 to 7 years.
        The early moves connected with the Army transformation are causing
    some upheaval at some installations and in the surrounding communities.
    The world in which the American overseas downsizing occurred a decade
    ago no longer exists. Troop movements and installation closings and
    realignments today occur against the backdrop of the ongoing war on
    terrorism and a heavy deployment schedule. The military of today is
    more dependent on contractors and civilian agencies to perform many of
    the functions formerly performed by uniformed military members. Changes
    in military health care delivery and the construction and operation of
    military family housing will have an impact on the ability of an
    installation to absorb large numbers of servicemembers and families
    returning from overseas. Increased visibility of issues such as the
    smooth transition of military children from one school to another and a
    military spouse's ability to pursue a career means that more family
    members will expect their leadership to provide additional support in
    these areas. Army transformation is already having an impact at some
    continental United States (CONUS) installations. Installations such as
    Fort Drum, Fort Campbell, and Fort Lewis and their surrounding
    communities expect strains on housing availability--both on and off-
    base--health care access, and school capacity. The DOD must ensure that
    communities have the resources to support increased populations before
    they arrive.
        NMFA urges that every effort be made to preserve the availability
    of health care, commissaries, exchanges, and MWR programs during shifts
    in troop populations because of a CONUS BRAC or realignment of troops
    from overseas. The size of the military retiree, National, Guard and
    Reserve population in the vicinity of a closing installation and the
    impact of closure on these beneficiaries should be considered before
    decisions are made to close commissaries and exchanges. We look to
    Congress to ensure DOD's plans for these troop shifts will maintain
    access to quality of life programs and support facilities until the
    last servicemember and family leaves installations to be closed. In the
    same manner, we ask you to ensure that houses, schools, child
    development and youth programs, and community services are in place to
    accommodate the surge of families a community can expect to receive as
    a result of the movement of troops to a new location.
                     strong families ensure a strong force
        Mr. Chairman, NMFA is grateful to this subcommittee for ensuring
    funding is available for the vital quality of life components needed by
    today's force. As you consider the quality of life needs of
    servicemembers and their families this year, NMFA asks that you
    remember that the events of the past 3\1/2\ years have left this family
    force drained, yet still committed to their mission. Servicemembers
    look to their leaders to provide them with the tools to do the job, to
    enhance predictability, to ensure that their families are cared for,
    their spouses' career aspirations can be met, and their children are
    receiving a quality education. They look for signs from you that help
    is on the way, that their pay reflects the tasks they have been asked
    to do, and that their hard-earned benefits will continue to be
    available for themselves, their families, and their survivors, both now
    and into retirement.

        STATEMENT OF DEIRDRE PARKE HOLLEMAN, ESQ., CO-DIRECTOR,
                NATIONAL MILITARY AND VETERANS ALLIANCE

        Ms. Holleman. Mr. Chairman, I too on behalf of the
    Alliance, want to thank you very much for allowing us to
    testify on these crucial issues.
        I would also ask that one of our member group's, the
    Reserve Officers Association, full written statement be made a
    part of the record.
        Senator Graham. Absolutely.
        [The prepared statement of General McIntosh follows:]
         Prepared Statement by Major General (Ret.) Robert A. McIntosh
                                  introduction
        The Reserve Officers Association (ROA) applauds the efforts by
    Congress to address recruiting and retention with several provisions in
    the National Defense Authorization Act (NDAA) for Fiscal Year 2005. An
    increase in bonus authorities for Active and Reserve components was
    passed along with an across the board pay raise of 3.5 percent. Other
    benefits and compensation changes were targeted towards mobilized
    reservists.
        These changes included TRICARE for Selected Reserve offering
    medical coverage based of 1 year for every 90 days served and
    authorizing a percentage of Montgomery G.I. Bill (MGIB). Both of these
    changes provided benefits after mobilized service. Congress also made
    permanent the temporary authority for care on the date of issuance of a
    delayed-effective date Active-Duty order or 90 days before the date on
    which the period of Active-Duty commences, whichever is later, for
    Reserve component members called to Active-Duty for a period of more
    than 30 days in support of a contingency. Another temporary authority
    was made permanent by authorizing 180 days of transitional health care
    coverage to certain Active and Reserve members.
        Over a decade ago when the country first engaged with Iraq in
    Operations Desert Shield and Desert Storm there were several military
    personnel problems identified in mobilizing the Guard and Reserve.
    These problems included: medical, pay, education, employment, training,
    equipment and family support. The mobilization for Iraq ended quickly
    and with the end of one administration and the beginning of another,
    the scrutiny and interest in fixing the identified problems shifted to
    events in Somalia, Haiti, and Bosnia. Unfortunately, the problems
    didn't go away, they just faded to the background until the war on
    terrorism began with Operations Iraqi Freedom (OIF) and Enduring
    Freedom (OEF). As discussed above Congress is now working again on
    those problems.
              recruiting, retention and military personnel policy
        There are several challenges facing the services with recruiting,
    retention and military personnel policy. The Naval Reserve (USNR)
    recruiting is softer than many of the Navy's leadership would like to
    admit. The USNR has been slow to implement recruiting bonuses and the
    result is that the USNR is behind the power curve when compared to the
    other Services with recruiting incentives for prior servicemembers. The
    combined recruiting command has falling short of U.S. Navy (USN) and
    USNR goals, and its Reserves are receiving short shrift for recruiting
    priorities. Even though the Navy is supporting deep cuts for its Naval
    Reserve (10,300 in fiscal year 2006) the need to recruit for the USNR
    has not lessened. To meet its shortcomings, the USNR is turning to
    activating drilling reservists to fill the recruiter gap. When a
    problem exists, you call up the Reserves.

             Prior Service Availability: In a 10-year period the
            Air Force Reserve went from accessing 50,507 in 1992 to 14,564
            in 2002 and this trend has continued for the past 3 years. All
            of the Services are experiencing this trend as the Guard and
            Reserve have gradually shifted to an operational force. The
            significance of recruiting fewer prior service personnel is
            lower average levels of experience residing in the Reserve
            components and loss of investment in specialty training.
            According to the Air Force Reserve the most frequent reasons
            ADAF separatees give for not joining Air Force Reserve
            component (AFRC) are:

                     Want to wait and see what happens (with world
                    events)
                     Have seen reservists deployed and don't want
                    to risk same
                     Done my time, not interested in continuing
                     Have been told reservists are first to be
                    deployed
                     Concerned Reserve status will negatively
                    impact civilian employment
                     Negative feedback from activated individual
                    mobilization augmentees (IMA)
                     Bad press coverage--impression Active Forces
                    place reservists and guardsman on front lines

             Recruiting Non-Prior Service Personnel: A decrease in
            prior service means an increase in the need for non-prior
            service personnel to meet recruiting goals. A corresponding
            increase in the need for training dollars results at a time
            when the administration wants to decrease budgets. The use of
            non-prior service also results in less availability of forces
            as they move through the training pipeline. Once formal
            professional military education is completed training continues
            in a member's specialty, which means it can take between 1 to 2
            years before an individual can perform duty somewhat
            independently.
             Mobilization/Demobilization Impacts: The impact of
            mobilization and demobilization does not rest just with the
            military member; it also affects their families and employers.
            This is important to note because they in turn factor in an
            individuals decision on whether or not to stay in the military.
              Two of the biggest problem areas that ROA members continue to
            share information on are with medical and pay problems.
              Comment: I am a mobilized Reserve colonel at Walter Reed with
            post-traumatic stress disorder (PTSD). The problem I see that
            reservists and guardsmen are seeing is that the burden of proof
            for absence of preexisting is on us. I have seen soldiers with
            severe PTSD (suicidal/homicidal) be valued by the board here at
            Walter Reed with 0 percent because they concluded he was
            bipolar when he entered service, never mind the war
            exacerbating the condition. I am seeing extremely low
            valuations of disabilities for loss of limb and other traumatic
            wounds.
              Comment: Here's the issue in a nutshell: soldiers, according
            to the Army Reserve Magazine, are eligible for TRICARE benefits
            90 days prior to mobilization. We have a group order from First
            Army. When soldiers call TRICARE they are told that they cannot
            be enrolled in TRICARE without an individual order. Soldiers
            are eligible for this insurance but cannot get it. Individual
            orders will not come until soldiers arrive at the mobilization
            station. Basically, we're eligible, but there is no vehicle to
            provide this insurance. One example, our new officer's wife may
            be pregnant. (the 2LT type) They currently have no medical
            coverage. He is covered while on 29 day orders, but his wife
            has no coverage. According to the Army Reserve Magazine, he
            should be covered. This is a wonderful benefit, but de facto
            nothing has changed since individual orders, which are required
            to get coverage, don't come until the Active-Duty period
            commences.
              Comment: Just wanted you to know that DEERS has dropped my
            family from TRICARE dental for the 4th or 5th time.
              Comment: Well, today is Day 12 of 12 in a row, with a 3-day
            weekend ahead to recover. Of note, however--and I really hate
            to continue to bring up pay issues, but I (and hundreds of
            other recently demobilized reservists) have not been paid our
            accrued pay--and it's been over 3 months now. Someone has to do
            something to force DFAS to pay us . . . but who? I'm convinced
            no one cares or they simply can't fight the bureaucracy. I am
            owed over $6,000 (after taxes) . . . the issues with DFAS
            continue--that organization needs to be seriously investigated
            and heads need to roll! I will have to take out a loan rather
            than pay with the cash that I earned--how sad is that?
              Comment: I just wanted to touch base with you prior to
            leaving Active-Duty. I wanted to check on the status of any
            potential article that was being written and also any help from
            the ROA regarding the way that reservists (especially Army
            reservists) have been treated with regard to reimbursements and
            pay. Since October 1st, I have been receiving only one third of
            my normal paycheck. Fortunately, I will be demobilizing on
            November 2004. Regardless, a large portion of any article
            written must include how DFAS (Indianapolis office) made
            multiple errors and, yet, reservists (and their families) are
            paying for their mistakes daily.
              Comment: In late September I received a letter from DFAS
            stating that I had received per diem in error and now owed the
            government $11,696. I contacted an individual at DFAS and he
            said that the Army had decided to use Department of Defense
            (DOD) Directive 4515.14 as a guide to determine payment of per
            diem for soldiers in the Washington DC area. He also told me
            that there were lots of other soldiers in the same situation
            and everyone had been assessed with a debt for travel advances
            paid. I asked what could be done and he said that he will
            submit a request for waiver of debt for me to DFAS Denver. A
            few months later we learned that DFAS Denver had denied waivers
            close to 900 soldiers in this situation. We attempted to find
            out from DFAS Denver how to file an appeal of their decision to
            the Defense Office of Hearings and Appeals (DOHA) and received
            no help. October 1, I checked my bank account and discovered
            that my direct deposit was only $548, I quickly determined that
            amount to be approximately 1/3 of my usual deposit and guessed
            that DFAS had decided to collect on the debt in the punitive
            manner of 2/3 confiscation. With no warning from DFAS or the
            Army that this was about to occur I was placed immediately in a
            dire financial situation. I sought help from Army Community
            Services by applying for a no interest loan from Army Emergency
            Relief only to be denied a loan because I only had 35 days left
            on Active-Duty, which would not guarantee loan repayment.
             Force Shaping: The U.S. Naval Reserve has become a
            test bed for Active and Reserve Integration (ARI) and Zero
            Based Review (ZBR). While these two policies make for good
            endorsements on transformation, the impact of these policies
            will have a negative impact on retention.
              The bottom line of these new policies has been a
            recommendation within the Presidential budget of a cut of
            10,300 to the USNR in fiscal year 2006. Many within the Naval
            Reserve question the validity of these recommendations. The
            near term plan for the USNR is to force shape to Army support;
            which isn't necessarily preparing the force for the next at sea
            battle.
              The force being fashioned by Iraq is a USNR made up of
            SeaBee's, security forces, port security, custom agents and
            intelligence. This will be a more junior force. While the gain
            may be less in pay and compensation; the cost will be to
            experience and skillsets.
              These cuts and force shaping are based on an ARI which has
            been more a vision with an accelerated timetable rather than a
            detailed plan with a time line. In large part it was generated
            by polling Active-Duty commands for their time-phased force
            deployment (TPPFD) requirements. Demand for reservists out
            stripped TPPFD immediately after September 11.

        The ZBR which has recommended cutting the Naval Reserve from an end
    strength of 84,300 to about 64,000 members did not include all of the
    roles, missions, and demands for reservists. Among the roles left out
    of this calculation were joint and homeland security requirements.
        Ironically, as Congress is being asked to cut the USNR to 70,000 by
    the USN, the Naval Reserve leadership is telling its Reserve component
    members that a future increase in end strength may be recommended by
    the next ZBR in another 4 to 5 years. RIFF and rehire is a failed
    corporate practice.
        The combination of proposed cuts to the USNR and conflicting
    explanations of future end strength is having negative impact on
    retention. While naval reservists want to make a contribution and fight
    the fight, they also feel that advocacy, for USNR roles, is not as
    comprehensive as it could be. If given a choice between working for the
    Navy as a Kelly Girl warrior, or in their civilian capacity; the trend
    will be USNR members will choose careers, as civilians. Promised
    predictability, periodicity, pay and benefits, reservists are seeing a
    slow down in promotions, longer periods in non-pay, and benefits that
    are perceived as not being at parity with the Active-Duty Force. Many
    junior reservists even question whether they will be allowed to reach
    retirement.
        To reverse a growing trend ROA recommends that we need to:

             Slow down and reduce the cuts planned for fiscal year
            2006; at a minimum the cut of 10,300 should be spread out over
            4 to 5 years.
             Determine what future roles the USNR will be
            supporting which could lead to increases in end strength, and;
             Redo the USNR Zero Based Review to include joint and
            homeland defense requirements. This ZBR should be ongoing
            rather than periodic.
                       benefits and compensation overview
             Cost of a Reserve Component Member: Currently
            attention is being focused on the personnel costs of
            maintaining a military force. The Reserve components remain a
            cost effective means for meeting operational requirements. Most
            pay and benefits are given on a participating base only. When
            health care has been extended beyond a participating base it is
            established with Guard and Reserve members sharing the cost by
            paying premiums. Retirement costs are also typically only one-
            fourth of an Active-Duty retirement. While much has been made
            of the non-pay benefits provided to military members the cost
            estimates for a Reserve component member have not factored in
            non-pay costs that they bring to the table. The military
            benefits from the civilian employment training and experience.
             Targeting Mobilized Members: As shown in last year's
            NDAA several of the authorization provisions were targeted
            towards mobilized members. The language did not take into
            account that support for the war on terrorism includes a
            population of Guard and Reserve serving in a voluntary status.
            The DOD has stated on several occasions that the need for
            volunteers to meet operations will increase.
                              proposed legislation
        ROA crafted this year's legislative agenda to address recruiting,
    retention, and mobilized issues. Consideration was given to budget
    concerns and the acknowledgement that there could be non-pay solutions.

             Retirement: Several years ago Congress proposed
            legislation to lower the retirement age. Twice during the 108th
            the Senate offered this legislation as amendments to other
            bills and twice they voted it down. ROA reported to their
            members that the vote was for a budget technicality and not for
            the legislation per se but quite honestly they didn't care for
            the packaging. The members saw two things in 2004: the Senate
            did not support the legislation and DOD made statements against
            the legislation.
              The Reserve components have seen a gradual increase in their
            peacetime participation and Congress recognized this by
            increasing the number of points allowed. The Air Force Guard
            and Reserve increased their participation significantly when
            the Air Expeditionary Force concept was put into place. The
            Army recognizes an increased participation as their new reality
            and is considering a similar program. A mobilization
            requirement up to 2 years makes further demands. ROA members
            have stated they feel that military personnel programs need to
            change in response to this new reality, specifically by
            reducing the retirement age. ROA encourages Congress to pass
            reduced retirement legislation while also considering force
            management options by extending mandatory retirement/separation
            dates.
              Active-Duty, Guard, and Reserve are experiencing medical
            disabilities with their service in Iraq and Afghanistan. In
            2003 and 2004 Congress addressed the issue of concurrent
            receipt of uniformed services pay and VA disability
            compensation. As with all legislation, further adjustments of
            concurrent receipt needs to be addressed to ensure military
            members are not penalized for receiving disabilities. This
            matter includes repealing the Survivor Benefit(SBP)/Dependency
            Indemnity Clause (DIC) offset. ROA encourages Congress to
            continue refining concurrent receipt legislation to include all
            disability categories.
             Healthcare: The legislation to extend permanent
            authorization for 180-day transitional health care coverage
            overlooked the need to include dental transition assistance.
            When military members are mobilized they do not necessarily
            have the time or facilities to take care of needed dental care
            until after they are demobilized. ROA encourages Congress to
            extend 180-day transitional dental care.
              TRICARE Select Reserve extended military care to demobilized
            members but did not address the requirement to meet medical
            standards for worldwide duty before mobilization. ROA
            encourages Congress to extend TRICARE coverage as an option for
            Reserve component members during all phases of their service to
            include consideration for a civilian healthcare premium offset.
             Education: To assist in recruiting efforts for the
            Marine Reserve ROA urges Congress to reduce the obligation
            period from 6 years in the Selected Reserve to 4 years in the
            Selected Reserve and 4 years in the Individual Ready Reserve,
            thereby remaining a mobilization resource for 8 years.
              An area that affects both education and employment is the
            problem surfacing when Reserve component members demobilized.
            If their employment is contingent on maintaining special
            licensing or continuing education requirements, military duty
            beyond 1 year means they have not maintained their requirements
            and can no longer be employed. ROA urges legislation that
            provides a reasonable period to meet State or Federal
            professional license or certifications.
              Comment: I would appreciate your comments on the following
            situation. The grace period for renewal of my professional
            license as a merchant marine officer lapsed during my
            mobilization for Operation Enduring Freedom (OEF). I was
            mobilized from February 2003 through November 2004. The license
            expired in June 2003 and the 12 month grace period for renewal
            lapsed in June 2004. In this situation the U.S. Coast Guard
            normally requires the individual to retake the entire license
            examination (a 5 day affair) in order to have the license
            reinstated. I am seeking an extension or waiver from the 12
            month grace period so I can renew the license. I cannot find
            any provision within Uniformed Services Employment and
            Reemployment Rights Act (USERRA) or the SSCRA that addresses
            the continuation of professional licenses that lapse during the
            period of mobilization.
              Comment: I have been a licensed real estate agent for several
            years. I work through only one real estate firm, but the firm
            considers me to be an ``independent contractor'' and not an
            ``employee.'' I receive no salary--only commissions on the
            sales that I arrange. The company does not withhold State and
            Federal income tax from my commissions. I am licensed by the
            State, and to keep my license current I must complete a
            substantial continuing professional education requirement. My
            5-year license expired in November 2004, while I was on Active-
            Duty in Iraq. I was recalled to Active-Duty in January 2003 and
            did not leave Active-Duty until January 2005. After I was
            released from Active-Duty, I sought to return to work selling
            real estate. The real estate firm told me that I must not do
            that because my license has expired and both the firm and I
            would be in violation of State law if I sold real estate. Now,
            I am in a real ``Catch 22'' situation. The real estate courses
            are expensive. Without income coming in, I cannot afford to
            take the courses necessary to renew my license. But without my
            license, I cannot earn income. All of these problems relate to
            my mobilization. If I had not been mobilized, I would easily
            have completed the professional education classes in time to
            renew my license in November 2004. All I am asking for is some
            time to be allowed to sell real estate while catching up on my
            professional education requirement.
             Spouse Support: ROA continues to receive feedback on
            difficulties spouses and caregivers face with employers during
            mobilization. Extended mobilization has not been an issue since
            Korea and since that time society has seen an increase in
            spouse employment. Legislation is needed to respond to the
            current world situation. ROA urges Congress to update the
            Family Military Leave Act to include mobilization and consider
            employment protections similar to USERRA.
              Congress and the Services responded to the needs of families
            during Operations Desert Shield/Desert Storm by extending
            Family Support to the Guard and Reserve. The war on terrorism
            is the first true challenge of this program. ROA encourages
            Congress to continue supporting and providing oversight to
            Family Support.
              Comment: I am a Lieutenant Colonel in the Air National Guard
            and scheduled to deploy in support of OEF from January to May
            2005. My wife works part time at a bank and was denied a leave
            of absence while I'm gone because, ``She is not the one
            deploying.'' We have two children, 4 and 8, and she wanted the
            leave of absence since I wouldn't be there to watch them while
            she is at work. He supervisor told her that if she needed to
            stay home and watch the kids, then she should quit her job. She
            has been working at the bank for over 9 years.
              Comment: My husband will be returning from a 120 day
            deployment to Iraq--I am aware of the laws regarding his 14 day
            readjustment to civilian life prior to returning to work, is
            there any such laws for spouses to give them the ability to
            reconnect with their servicemember?
              Comment: My questions is this, my husband has been called to
            Active-Duty status with the Texas Army National Guard. As of
            September 1, I will be on TRICARE Health Insurance. Without a
            lengthy story, I have decided not to continue my employer
            sponsored health insurance. This was a decision I made to save
            on the premium cost. My employer has decided to drop my hours
            below 1,000/yr so that I am not even eligible for the
            insurance. When my husband returns from his 18 month tour in
            Iraq, I would like to pick up the health insurance from my
            employer, unfortunately, that would require a vote from the
            board and since his return is after the first of the year they
            may require me to wait until the following year to pick my
            hours up again.
              Comment: Recently my wife was fired from her job for
            ``excessive tardiness.'' The termination occurred shortly after
            my return from a 3 week overseas as TDY. When I am home I would
            take my daughter to daycare which opens at 7 a.m. My wife's job
            started at 7 a.m. which is why I would take her in. Because I
            was deployed my wife had to take my daughter in to day care
            which meant she was approximately 30 minutes late to work
            everyday. On some occasions her boss would be waiting in the
            parking lot waiting for her to arrive. On another occasion her
            boss said to her ``why don't you just quit instead of me
            forcing to fire you.'' Her boss was informed a head of time
            about the impending family hardship due to my upcoming
            deployment. A few weeks after I returned from overseas she was
            fired.
             Employer Support: ROA continues to see an increase in
            employment issues for Guard and Reserve members. For years ROA
            has supported employer tax credits as a way to help offset
            costs associated with Reserve participation as a way to
            encourage continued employment. ROA encourages Congress to
            support tax credits for employers and continue exploring other
            means with which employers could be supported.
              Comment 1: While I cannot provide concrete evidence, there's
            a pervasive consensus among U.S. Army Reserve soldiers that
            civilian employers are reluctant to hire them out of concern
            over potential mobilization. Some return from deployments to
            find their positions eliminated or outsourced while they were
            away. A concern of others is the possibility of getting
            ``blacklisted'' if such a situation is contested and the
            soldier wins. (Indeed, you'll only win a fight like this once.)

             Pay and Benefits: ROA understands that DOD has taken a
            position that they do not want the Reserve component to look
            like Active-Duty which if you think about it could not be done
            because they are not a full-time force. Regardless they are
            reluctant to give the Reserve components the same pay and
            benefits. There are certain instances though where what has
            been put in place is not understandable.

                     Delete Basic Allowance for Housing II (BAH II)
                    for Reserve components and ensure parity with the
                    standard Basic Allowance for Housing (BAH I). This pay
                    is only given when a member performs duty. To date ROA
                    has not been able to find out why this disparity
                    exists.
                     Authorize a housing allowance for Reserve
                    component members without dependents when provided
                    government housing during short periods of Active-Duty
                    or full-time National Guard duty. This is a reflection
                    that Guard and Reserve members do not maintain on-base
                    quarters full-time and have homes off-base that they
                    are responsible for regardless of their duty status.
                     Remove the 90-point Inactive-Duty per
                    retirement/retention cap. A research of historical
                    files fails to find why the Reserve components are
                    discriminated against in receiving accounting for duty
                    they perform.
                     Delete the 1/30th rule for Aviation Career
                    Incentive Pay, Diving Special Pay, Career Enlisted
                    Flyers Incentive Pay, Hazardous Duty Incentive Pay and
                    Special Duty Assignment Pay. Guard and Reserve have
                    never been able to receive this pay even though they
                    maintain the same standard as Active-Duty because it
                    was typified as incentive pay. With recruiting and
                    retention goals slipping now may be the time to
                    consider granting authority for award of this pay
                    monthly to the Reserve components.

             USERRA: In 2004 a USERRA regulation was posted in the
            Federal Register but to date it has not yet been published. ROA
            continues to be contacted on problems between military members
            and their employers and after publication believe many of these
            cases will be taken care of in the future at the local level
            once the USERRA regulation is available to employers. There are
            still many areas not addressed in the regulations:

                     Allow the employee who is absent for service
                    an imputed evaluation (and the pay raise that goes with
                    it) based on his/her average evaluation for the last 3
                    years before the military-related absence. If the
                    person is a new employee of that employer, the person
                    should receive a catch-up pay raise 3 years after
                    returning to work.
                     Exempt from age restrictions for Federal law
                    enforcement when deployment causes the member to miss
                    completion of the application and they agree to buy
                    back retirement eligibility. (100-238)
                     Exempt employees from penalties when their
                    insurance lapses if their motor carrier license expires
                    while mobilized (i.e. the Federal Motor Carrier Safety
                    Administration).
                     Amend 38 U.S.C. 4323(d)(1)(C)--the
                    ``liquidated damages'' provision in the amount of
                    $20,000 or the amount of the actual damages, whichever
                    is greater. Provide a provision in section 4324--for
                    Federal executive agencies provision such as found in
                    section 4323--it applies to States, political
                    subdivisions of States, and private employers.
                     Devise a method to tie the escalator principle
                    to merit pay systems.
                     Update the attorney's fee provision to induce
                    private counsel to take these cases.
                     Include the National Oceanic and Atmospheric
                    Administration (NOAA) commissioned corps in the USERRA.
                                   conclusion
        DOD, as we all know, is in the middle of executing a war--the
    global war on terrorism and operations in Iraq are directly associated
    with that effort. For the Department, worries have emerged about
    additional spending during these military actions. Almost every
    initiative to include proposed changes to personnel practices and
    improvements in compensation programs are quickly placed under a ``what
    will it cost?'' scrutiny. It is ROA's view that this scrutiny is too
    often oriented toward immediate costs with a lack of appropriate regard
    for long-term benefit versus life cycle costs. This is not to say that
    prudent, fiscal personnel and budget policies and processes should be
    ignored. At all times what is being achieved should respectfully be
    balanced with how something is being achieved.
        From a positive aspect, I believe that DOD's work to change and
    transform are admirable. Although many issues effecting reservists are
    difficult and complex, the Departments of Defense, Homeland Security,
    Health and Human Services have all accomplished much in streamlining
    and updating mobilization and demobilization and in working health care
    challenges of wounded military members. Proposed improvements in
    personnel policies and in Reserve training constructs look promising--
    as long as consideration for Reserve readiness is protected.

        Ms. Holleman. As Ms. Raezer said, my subjects are going to
    be survivor and military retiree benefits.
        Of course, we are all aware that this session of Congress
    has already focused on two important survivor issues, the death
    gratuity and Servicemembers' Group Life Insurance (SGLI), the
    military life insurance plan. The Alliance is very grateful for
    your efforts to improve both programs and, indeed, to include
    both in this year's supplemental. We do urge, however, that the
    increase in the death gratuity apply to all in the line of
    Active-Duty deaths, as that term is presently defined. As my
    learned colleague already said, all of these losses should be
    treated in the same manner. Different treatment would cause
    great discontent. We hope that in conference, this language
    will be clarified to acknowledge that the loss and financial
    needs that all these families suffer are the same and should
    all be compensated at the same level.
        As to SGLI, we simply want to thank you for the changes,
    and we hope and expect that they will be made permanent.
        Our main legislative focus for this session of Congress in
    the area of survivor benefits, as it was last year, is to
    correct and improve the Survivor Benefit Plan (SBP). Last year,
    Congress ended the drop of SBP benefits from 55 to 35 percent
    when the beneficiary reaches the age of 62 in a 3\1/2\-year
    phase-out. The alliance is very grateful to you for this
    important change, which will markedly improve the lives of a
    quarter of a million military widows. But two problems with SBP
    still remain.
        The first is the SBP-Dependency and Indemnity Compensation
    (DIC) offset. It is a complicated plan, because it is a
    complicated mesh of two programs. Mr. Strobridge's Military
    Officers Association of America (MOAA) has created a beautiful
    publication that will explain in detail the finances involved,
    and which will save you from me speaking of today. But we
    strongly hope that this Congress will end this offset. This
    takes $1 of SBP payment for every dollar a survivor receives
    from the VA's DIC payments. This offset badly disadvantages two
    types of military widows.
        The first type is a woman or a man whose spouse served a
    full career in the military, paid 6.5 percent of his or her
    retired pay to buy SBP to provide for their survivors and then
    died of a service-connected disability. This use of the SBP is
    the sort of behavior that society wishes to encourage. However,
    all that planning and sacrifice is made totally ineffective due
    to this offset.
        The second group of widows are those covered by the new
    Active-Duty SBP benefit. This newly created benefit is a hollow
    one for the vast number of widows or widowers from the present
    war. Most of the people we are losing during this war are young
    and in the lower grades, and the DIC payment of $993 a month
    completely eats up any SBP payment. Meanwhile, the families of
    the more senior members who are lost are left with much less
    monthly income to pay for normally more substantial and
    established debts. It is clear that this offset makes it
    impossible for the Federal Government to compensate and
    acknowledge the longer service given by these servicemembers.
        Congress obviously intended to help these families when it
    created this benefit. The offset makes the law ineffective. It
    should be changed.
        The last correction that we would suggest for SBP is moving
    up the paid-up provision to October 1, 2005. When you created
    the paid-up provision for SBP, you decided that military
    retirees who are at least 70 years old and have paid into the
    program for 30 years could still be covered while paying no
    additional premium. However, this provision will not go into
    effect until October 1, 2008. Since SBP started in 1972, we
    have numerous retirees who reached the 30 years of payments and
    the age requirement and are still paying. Most of these couples
    are in their 70s and 80s. This 6.5 percent of the retired pay
    they are still contributing could make these elderly couples'
    lives much more comfortable. This change will be an enormous
    help to these people, and we hope that you can move up the
    effective date.
        While focusing on retired families, we hope that you can,
    once again, look at concurrent receipt or, as it is now called
    concurrent retirement and disability payment. Again, I must
    first thank you for all the steps you have taken to end this
    unfair offset. I know you will not be surprised that there is
    more to do.
        First, there have been difficulties in implementing last
    year's accelerated payments for all 100 percent disabled
    retirees. You may have read in yesterday's Washington Post that
    the VA's 100 percent unemployables are not being included in
    these payments. They were included in the basic concurrent
    receipt phase-out for those 50 percent or more disabled. These
    are some of the people last year's change was intended to help,
    the service-connected, seriously disabled who cannot work.
    Hopefully, this problem will be solved before too long.
        We would also like to briefly include for your
    consideration enlarging the combat-related, special
    compensation to include medical retirees with less than 20
    years of service. These loyal servicemembers are not able to
    serve a full career due to their combat injury, but because of
    this great sacrifice, they take the full brunt of concurrent
    receipt. To obtain the normally greater VA disability pay, they
    must waive their entire or substantial part of their military
    retired pay. Again, hopefully Congress will be able to look at
    this inequity.
        We know that the House will be having a full hearing later
    this week on morale, welfare, and recreation (MWR), including
    commissaries and exchanges. As Ms. Raezer has said, this is a
    very important benefit, and it is also important to the
    retirees and survivors. Not only does it mean a great deal of
    financial savings for them, but it also helps keep their ties
    to the military world and culture that they love and have
    dedicated their lives to.
        Finally, we request that this subcommittee consider
    scheduling a hearing on the Former Spouses' Protection Act
    during this session of Congress. As an attorney who practiced
    matrimonial law for years, I certainly know that there are
    strongly held different opinions on how this act has been
    working out, but a full hearing of the different points of view
    would, we believe, be helpful to all concerned parties.
        Again, thank you very much for the opportunity to speak to
    you on these issues. I would be happy to try and answer any
    questions you may have.
        [The prepared statement of Ms. Holleman follows:]
                  Prepared Statement by Deirdre Parke Holleman
        Mr. Chairman and distinquished members of the subcommittee. On
    behalf of the National Military and Veterans Alliance (NMVA) we are
    very grateful to the subcommittee for this opportunity to appear before
    you and express our members' views on current issues affecting members
    of the uniformed services, their families, and survivors.
        The NMVA was founded in 1996 as an umbrella organization to be
    utilized by the various military and veteran associations as a means to
    work together towards their common goals. Each individual association's
    membership interests and requirements are represented, understood and
    promoted within/by NMVA.
        The Alliance expands the military and veteran communities ability
    to present a united front to the Department of Defense (DOD),
    Department of Veterans Affairs (VA), Congress, and the White House. By
    working together, the larger voice of the combined associations'
    memberships and their families help to promote the objectives
    concerning a wide-range of military quality of life pay, personnel,
    medical, survivor benefits, military housing and education, veterans,
    and military retiree issues and legislation.
        The NMVA represents almost 5 million members. Collectively, our
    organizations represent some 80 million Americans--those who serve or
    have served their county and their families.

      American Logistics Association            National Gulf War Resource
                                                 Center
      American Military Retirees Association    Naval Enlisted Reserve
                                                 Association
      American Military Society                 Naval Reserve Association
      American Retirees Association             Paralyzed Veterans of
                                                 America
      American WWII Orphans Network             Reserve Enlisted Association
      AMVETS                                    Reserve Officers Association
      Association of Old Crows                  Society of Military Widows
      Catholic War Veterans                     The Retired Enlisted
                                                 Association
      Class Act Group                           TREA Senior Citizen League
      Gold Star Wives of America                Tragedy Assistance Program
                                                 for Survivors
      Korean War Veterans                       Uniformed Services Disabled
                                                 Retirees
      Legion of Valor                           Veterans of Foreign Wars
      Military Order of the Purple Heart        Vietnam Veterans of America
      Military Order of the World Wars          Women in Search of Equity
      National Association for Uniformed
       Services

        The NMVA receives no grants or contracts from the Federal
    Government.
                                  introduction
        In this time of war the burdens that are being placed on all
    members of the uniformed services and their families have grown
    enormously. At the same time the needs of the uniformed services
    retired and survivor community are growing. The retiree needs and how
    our government is responding to them are being studied by our present
    Active-Duty and Guard and Reserve families as well as the American
    public at large. While our citizenry is concerned about our National
    Defense and about those who are now or who have protected our way of
    life in the past we should move to make improvements in several crucial
    programs. This is the time that progress can be made.
                           national guard and reserve
        More than 437,000 Guard and Reserve members have been mobilized
    since September 11, 2001. This operational tempo has placed enormous
    strains on reservists, their family members, and their civilian
    employers. This, the Alliance is well aware, is inevitable in a Total
    Force structure, but we believe that the National Guard and Reserve's
    pay, bonuses, benefits, and retirement should reflect these added
    obligations, multiple activations and increased training requirements.
    The following briefly outline some of our suggestions for improvements
    that would make the added obligations of our Guard and Reserve members
    easier to bear and maintain.
    Health Care
        The NMVA appreciates the steps you took in the last session of
    Congress by establishing the TRICARE Reserve Select program and the
    permanent pre- and post-activation TRICARE coverage. However, these
    authorities do not provide the coverage necessary to address long-term
    readiness issues that will continue with the current and future use of
    our Guard and Reserve members. We still have approximately 20 percent
    of Guard and Reserve members--40 percent of our junior enlisted force--
    without health care coverage in their civilian lives. It is our strong
    recommendation that we provide permanent access to TRICARE, on a cost-
    share basis, to all Selected Reserve members and their families. We are
    extremely grateful to Chairman Lindsey Graham's (R-SC) championship of
    this proposal. S337 would provide the opportunity for all our Guard and
    Reserve members and their families to purchase a first rate subsidized
    health care plan. This opportunity would ensure our Nation that our
    Guard and Reserve members would be medically ready when they are needed
    while also providing continuity of care for them and their families and
    a powerful recruiting tool for the Services.
        We also believe that Federal payment of civilian health care
    premiums should be an option for mobilized Guard and Reserve members.
    Many families prefer to preserve the continuity of their own health
    insurance rather than switching to TRICARE and frequently pick up the
    cost of those premiums. The DOD pays the Federal Employees Health
    Benefits Plan (FEHBP) premiums for its own reservist-employees when
    they are activated, and we believe that non-Federal employees deserve
    the same consideration.
    Retirement System
        When the Reserve Force retirement system was established in 1947,
    it was assumed that a Guard or Reserve member has a primary career in
    the civilian sector. The changing and increasing demands on Reserve
    Forces over the past 14 years have cost tens of thousands of Guard and
    Reserve members significantly in terms of their civilian retirement
    accrual, civilian 401(K) contributions and civilian job promotions.
        The Reserve retirement system must be adjusted to sustain its value
    as a complement to civilian retirement. Failing to acknowledge and
    respond to the changed environment that Guard and Reserve members face
    will have far reaching effects on Reserve participation and career
    retention. Again, Chairman Graham's S337 would correct this growing
    inequity. Depending on years of service and age a member of the Guard
    and Reserve could start receiving his or her retired pay at age 55.
    Again in addition to the simple fairness of acknowledging the changed
    situation this would be another power recruiting and retention tool for
    the Services to have.
    Compensation
        Increasing demands on Guard and Reserve members call for changes in
    their compensation so that the Reserve component can continue to
    attract and retain those willing to shoulder the added
    responsibilities.

             Needed improvements include increasing Selected
            Reserve Montgomery GI Bill (SR MGIB) benefits to 50 percent of
            the Active-Duty Montgomery GI bill rate. Recently, the value of
            the benefit has slipped to 28 percent of the basic program. The
            Selected Reserve benefit needs to keep pace with the Active-
            Duty benefit.
             We also recommend lifting the cap on Inactive-Duty
            points that can be earned annually by a Guard or Reserve
            member. A limit on the amount of training that can be credited
            for retirement purposes creates a disincentive to professional
            development.
             Special and incentive pays need to be increased. Many
            Guard and Reserve members feel cheated when they receive 1/30th
            of a month's pay for each day duty is performed for many
            special and incentive pays. These pays are based upon
            proficiency, not time. The disparity, even if it is only a
            perceived disparity, needs to be addressed.
             Changes to the Reserve Duty system need to be
            considered carefully. We understand why the DOD would wish
            simplify the duty status for Reserve component members, but any
            change that would result in the loss of pay must not be
            implemented.
             Another compensation issue that should be addressed is
            Basic Allowance for Housing II (BAH II). BAH II is paid to
            Guard and Reserve members on Active-Duty for less than 140 days
            instead of the standard, locality-based BAH. BAH II is far less
            than BAH in most localities and doesn't have anything to do
            with real housing costs. BAH should be authorized for anyone
            activated for 30 days or more.
             We believe that full veteran status should be awarded
            to Guard and Reserve retirees who do not otherwise qualify.
            Their 20 years of service make them deserving of veterans
            status.

    Stress on Guard and Reserve Forces
        The Alliance urges that Congress provides additional resources for
    Reserve recruitment, retention, and family support to relieve enormous
    pressure on overstressed Guard and Reserve Forces, as well as a
    moratorium and review of any manpower draw-downs at this time--when we
    are calling on these critically important assets to fight our Nation's
    wars.
    Guard/Reserve Family Support Programs
        We urge support and funding for a core set of family support
    programs and benefits that meet the unique needs of geographically
    dispersed Guard and Reserve families who do not have ready access to
    military installations or current experience with military life.
    Programs should promote better communication and enhance education for
    Reserve component family members about their rights and benefits and
    available services.
                           survivor benefit programs
        The Alliance wishes to deeply thank this subcommittee for your
    championship of improvements in the myriad of survivor programs. The
    Survivor Benefit Plan (SBP), the Death Gratuity, and the
    Servicemembers' Group Life Insurance (SGLI) plan (though administered
    through the VA) are all programs under DOD's auspices. Substantial
    improvements have been made in the last few years. Last year's total
    abolition of the SBP age 62 benefit reduction in a 3\1/2\ year phase
    out will create a wonderful improvement in the lives of the survivors
    of the military retirees who dedicated the best years of their lives to
    a career with our military. However, there are still two remaining
    issues to deal with to make SBP the program Congress always intended it
    to be: ending the SBP/Dependency Indemnification Compensation (DIC)
    offset and moving up the effective date for paid up SBP to October 1,
    2005. Senator Bill Nelson's bill S185 would correct both issues. The
    Alliance urges this committee to support this bill and correct both
    inequities. As this committee well knows there has already been a
    substantial push on the Hill this year to increase and improve the
    death gratuity and SGLI programs. The Alliance hopes that this is the
    session of Congress when all these problems can be solved.
    SBP-DIC Offset
        In last year's testimony the Alliance respectfully requested this
    subcommittee to end the SBP/DIC offset and we are here to again ask you
    to support this improvement. There are two types of families that are
    affected by this offset. The first group is the family of a retired
    member of the uniformed services. At this time the SBP annuity he or
    she has paid for is offset dollar for dollar for the DIC survivor
    benefits paid through the VA, This puts a disabled retiree in a very
    unfortunate position. If he or she is leaving the service disabled it
    is only wise for him or her to enroll in the Survivor Benefit Plan
    (indeed he may very well not be insurable in the private sector). After
    all he or she may die from a cause that has nothing to do with his or
    her military service. But if he or she does die of his service
    connected diagnosis then again his survivor looses dollar for dollar
    for what the DIC pays. This is not logical. SBP is a purchased annuity,
    an earned employee benefit. This is a retirement plan. DIC's name makes
    clear that it was created for a very different reason. It is an
    indemnity program to compensate a family for the lose of a loved one
    due to his or her military service. They are different programs created
    to fill different purposes and needs. The survivor does receive a pro-
    rated share of the paid SBP premiums back without interest and taxable
    in a lump sum. But that cannot make up for the cost and difficulty
    paying those premiums all those years of retirement caused. If a
    disabled veteran earns a civilian pension as a Federal civil servant
    the family will never lose either their survivor payment or their DIC
    to any offset. The servicemember did what he could to provide for his
    spouse. This is behavior the Federal Government wishes to encourage.
    This offset makes his attempts a failure. The offset should be
    abolished.
        The second group affected by this dollar for dollar offset is made
    up of families whose servicemember died on Active-Duty. Recently
    Congress created Active-Duty SBP. These servicemembers never had the
    chance to pay into the SBP program. But clearly Congress intended to
    give these families a benefit. With the present off-set in place the
    vast majority of families receive NO benefit from this new program.
    That is because the vast number of our losses are young men or women in
    the lower ranks. They will get no benefit whatsoever. The other
    families affected are servicemembers who have already served a
    substantial time in the military. Their widow is, if anything left in a
    worse financial position than the younger widow. (There is no way to
    estimate the emotional loss to either group of women.) The older
    widow's will normally not be receiving benefits for her children from
    either Social Security or the VA and will normally have more
    substantial financial obligations (mortgages etc.). They also have less
    time to adjust their financial situation. This woman (or man) is very
    dependent on the SBP and DIC payments and should be able to receive
    both. Congress did not mean to give a hollow benefit to either group of
    people. By ending this off-set the intention of your law can be
    accomplished.
    30 Year Paid Up SBP
        In the National Defense Authorization Act for Fiscal Year 1999,
    Congress created a simple and fair paid up provision for the SBP. A
    member who had paid into the program for 30 years and reached the age
    of 70 could stop paying premiums and still have the full protection of
    the plan for his or her spouse. However, the effective date of this
    provision is October 1, 2008.
        This means that many retirees who signed up for SBP when it first
    started in 1972 and are well over 70 are still paying premiums to cover
    their spouses. Moving the effective date back to October 1, 2005 would
    be an act of simple fairness. Most of the couples affected by this date
    are both elderly and will never draw anything like they have paid into
    SBP. Additionally, until all these retirees were paying 10 percent of
    their retired pay rather than the present 6\1/2\ percent today. Moving
    up this effective date would allow these couples to live in more
    comfort and ease for the next 3 years.
    Death Gratuity Improvement
        Since the beginning of this session Congress has been working very
    hard to improve the immediate death benefits. Presently there are
    provisions in both the Senate and House supplemental to raise the death
    gratuity from the present $12,400 to $100,000. However the language in
    the legislation states that this will apply to those who die ``in the
    line of duty'' but the definition of that is left to be determined by
    the Secretary of Defense. Clarity is crucial at such a traumatic time.
    It would be a great help if all families whose servicemember relation
    dies on Active-Duty would be granted this increased benefit. Hopefully,
    such language may be agreed to during the supplement's conference
    meetings.
    Life Insurance
        The fiscal year 2006 Supplemental Budget also includes a provision
    to raise the limit of available SGLI coverage from $250,000 to
    $400,000. This is a wonderful improvement and the Alliance urges that
    present language be retained.
        Again, the Alliance is very grateful to both the Senate and the
    House for their early focus on survivor issues.
                               retirement issues
        Retirement issues is a varied category because it covers everything
    in a persons' life. This includes money, health care where they shop
    and the state of their marriage. The uniformed services is a way of
    life and a community that does not end when someone retires. This is
    still the retirees' world and why these issues are essential
    Concurrent Receipt of Military Retired Pay and VA Disability
            Compensation
        All the Retiree and Military Organizations in the Alliance are very
    grateful for the historic movement in ending the 100 year long unfair
    denial of a military retiree being allowed to collect both his or her
    retired pay and their service connected disability pay. This dollar for
    dollar offset will be phased out in 10 yearly steps for those with 50
    percent or greater service connected disabilities. Additionally,
    Congress has ended concurrent receipt completely for longevity retirees
    with combat related service connected disabilities. These are wonderful
    steps. But concurrent receipt is as unfair for those who are 10
    percent-40 percent disabled as for those whose disabilities are 50
    percent and higher. Senator Tim Johnson's bill would cover longevity
    military retirees with the lower disability ratings. The Alliance urges
    this subcommittee to support this bill.
        The Alliance also strongly urges Congress to correct by statute if
    necessary the unfair distinction being made in the implementation of
    last year's immediate restoration retired pay for 100 percent service
    connected disabled longevity retirees. Again, the Alliance was very
    pleased with your decision last year to do this. However at this date
    military longevity retirees who are paid at 100 percent service
    connected disables because if a determination by the VA of unemployable
    (IU) are not being included in this speed up. In the VA the two groups
    of 100 percent disabled are treated exactly the same. They should be
    treated the same way under this benefit. We have been told that the
    administration is still studying this question. If the DOD does not act
    to include this group we hope that Congress will.
    Military Health Care
        It has been wonderful to see the improvements you have made in the
    last several years in the health care benefit available to the men and
    women and their families and survivors who have spent the best years of
    their lives defending our country. TRICARE for Life and the pharmacy
    program has greatly improved the life of tens of thousands of retirees.
    Still there are some problems that should be dealt with. The greatest
    problem facing all of TRICARE today is reimbursement rates. While this
    is clearly a matter that is overseen by other committees the provider
    reimbursement rate for Medicare, which TRICARE is tied to is well known
    to be insufficient. The problem of finding a civilian health care
    provider willing to accept TRICARE is more and more difficult. The
    problem is particularly acute when retirees are not near a TRICARE
    network. Improving the reimbursement rates for TRICARE health care
    providers would greatly ameliorate this problem. The Alliance hopes
    this can be accomplished during the 109th session of Congress.
    Uniformed Services Former Spouse Protection Act (USFSPA)
        The USFSPA has caused great discontent and inequity for over 20
    years. This discontent is above and beyond the normal disappointment
    and anger caused by any divorce. It is time for a complete study and
    overhaul of this statute.
        The Alliance strongly urges the Senate Armed Services Committee to
    hold a full hearing on this issue. This hearing could be the basis of a
    complete analysis of this statute and a consensus might be reached on
    needed improvements including requiring amount of payments to be linked
    to the servicemember's rank at the time of the divorce.
    Commissary and Exchange Benefits
        The Alliance is well aware that this subcommittee will be holding a
    full hearing this week on morale, welfare, and recreation (MWR) issues
    including Commissaries and Exchanges. In this present testimony we wish
    to note that the Commissary and Exchange benefits are vitally important
    to military retirees, their families and survivors as well as to the
    active Duty, the Guard and Reserve and their families. The Commissary
    and Exchange benefits need to remain fully funded and strong for all
    the members of the Uniformed Services and their families. Additionally
    the Alliance hopes that Congress encourages the DOD and the Department
    of State to negotiate agreements with host nations under FOPHA to
    permit U.S. military retirees to shop at our Commissaries and Exchanges
    at all overseas locations.
                                   conclusion
        This is a time that tries men's souls. There are great and growing
    requirements being placed upon the Active-Duty and their families, upon
    the National Guard and Reserve members and their families, upon the
    uniformed services retirees and their families and upon all their
    survivors. They have happily taken up or continued these duties. It is
    also true that great calls are presently being placed upon the Federal
    Government. The National Military and Veterans Alliance is enormously
    grateful for the tremendous progress we have made over the last several
    years in the areas of retiree, National Guard and Reserve and Reserves,
    and survivor benefits. These programs are far better at doing their
    jobs than they were several years ago. But we believe that these
    programs can be greatly improved by following the suggestions we have
    made in this testimony. Thank you so much this chance to testify on the
    Alliances concerns and for the focus and support that all of you have
    always given to the uniformed services and their families.

        Senator Graham. Well, thank you all again. Ask and you
    shall receive. You all have been very good about telling us
    what we can do to improve quality-of-life, and we will do the
    best we can. This war is wearing on our people, and it is
    wearing out our equipment. Our country has $40 trillion
    underfunded Medicare, Medicaid, and Social Security, and we
    have to work all this puzzle together. We will take all of your
    counsel and advice and do the best we can and get these
    proposals scored.
        Ms. Raezer you testified before the Veterans' Affairs
    Committee. One thing I think we can do, as quickly as possible,
    is to make sure that when bad things happen to military people,
    that that experience is not worsened. It is blunted the best
    that we can blunt it. When you talk about recruiting, I think
    it matters about what people hear. There are a lot of stories
    out there right now about people feeling less than satisfied
    about what happens to their family when bad things come from
    military service. If you want to turn recruiting around, I
    think that is one of the good places to start.
        Could you reinforce or restate what you see to be the
    problem with the casualty assistance program and, for our
    edification, what we could do to make it better?
        Ms. Raezer. Yes, sir. Actually it was my deputy who
    testified before that committee on behalf of our association.
        But we do believe that there needs to be more consistent,
    high quality training for the casualty assistance officers
    (CAOs) and better connections for the survivors at places where
    they have to access their survivor benefits. Many military
    families have issues with TRICARE when they move. Survivors who
    move and have trouble accessing their TRICARE benefit will
    interpret that problem as a problem because they are a survivor
    and not simply this is a problem with the TRICARE system.
        So what we need to see are folks who are educated about
    survivor benefits working for the TRICARE contractors,
    available to help the military treatment facilities in the case
    of TRICARE, help in the housing arena, if there are issues, so
    that people know what the survivor benefit is in terms of
    permission to stay in housing or receipt of a housing
    allowance. Some of that starts with the CAO, but some of these
    issues are beyond the scope of what we should expect from a
    CAO, and the whole system needs to support that.
        Senator Graham. For people who are not aware, usually the
    CAO responsibility is an additional duty for an Active-Duty
    person.
        Ms. Raezer. Yes, exactly.
        Senator Graham. I have actually had that task at one time
    when I was a Judge Advocate General (JAG) Corps officer.
    Counseling by the casualty assistance officer--it is really
    hard. So what we are proposing in the Veterans' Committee, and
    maybe we will try to build on here, is trying to get more of an
    institutional component because the Active-Duty person has TDY
    commitments. They have military education commitments. They
    have PCS commitments. We will try to make this more civilian-
    based. The military involvement is indispensable. Having
    someone in the unit, someone on base, providing grief
    counseling and support is indispensable, but on the benefits
    side, I think you will see an effort to institutionalize this
    to get better information out, somebody who is going to be
    there in a more continuous fashion.
        Ms. Raezer. Yes, thank you, sir. I think the long-term
    issue is very important in that support, and that is why we
    have recommended a survivors office in the VA, because with
    these young families, you are going to see survivor questions
    and issues over a very long time. So that long-term support
    needs to be somewhere, and we believe perhaps a survivors
    office in the VA would help that.
        Senator Graham. Mr. Strobridge, you are obviously very
    connected to military people. Do you believe that the problems
    we are seeing in recruiting and somewhat retention are chronic
    or acute?
        Mr. Strobridge. I definitely think they are chronic, sir.
    From your discussion, it sounded like we share very common
    views. I think these things do not happen overnight. What has
    happened is we have extracted more and more service from the
    folks in uniform in the hope that we will be able to stop at
    some point, and it has not stopped. At some point, that starts
    to wear on people, and stories get into the newspapers, and
    once that happens, you get--I do not like to use the word
    ``downward spiral'' because I do not think we are there, but
    there is this self-reinforcing issue, where the more problems
    people have, the more stories you hear about it, the more news
    gets out, and then people do not want to join and it is harder
    to get people to stay.
        We may talk about how the troops who deploy are the most
    satisfied troops, and that may be true once. It may be true on
    the second time. But the third time, their family starts to be
    very dissatisfied, and then you either have a divorced force or
    a gone force.
        Senator Graham. I think you are absolutely right. Being a
    military lawyer to a unit that deployed in a Reserve
    environment, you really have to make this up as you go. There
    is no family counseling service on base because usually there
    is no base. There is no day care center. You have to make this
    up as you go, and we are doing better with it.
        But you see pressure from the equipment being over-utilized
    and a lot of the money that we are trying to extract to go into
    the capital accounts, particularly in the Navy by reducing
    personnel and benefits and services. I think we need to
    understand that that is not the way to fund your capital
    accounts because it does have a consequence.
        This whole idea about how offsets work and how retirees
    have access to military care is very important to me, because I
    think it is a word of mouth problem. You want to be fair and
    you want to make sure that benefit fairness is achieved. But I
    do not want to leave you with a false impression. I am very
    much in the reform mold. I am doing all I can for Social
    Security to put some new ideas and hard choices out there. For
    the force in the future, we may have to look at these benefit
    packages anew and let people know when they come in that the
    deal may be different, but we are not going to change the deal
    for anybody that is already in.
        Anybody else have anything you would like to share with us?
        Mr. Strobridge. Sir, I would just add one comment about
    your last observation, and I think that is perfectly
    legitimate. Any program should be able to stand up to scrutiny
    in my view, but I get concerned, very frankly. I have been in
    the compensation business since the mid-1970s when things were
    really terrible. I have been through two down cycles where the
    Services could not keep enough people and saw that we had to go
    back and change things. There is a great interest in becoming
    more efficient. There is a great interest in saying, as we did
    in the 1986 ``Redux'' retirement system--there was a big deal
    at the time--we are not going to change any rules on the people
    who are already in, but we are going to change them for the
    people who come in in the future.
        At the time we warned folks, if you reduce the incentives
    for people to stay for a career, the sacrifices of a career do
    not change. Because civilian retirement changes, the sacrifices
    of a military career do not change. If we reduce the incentives
    for people to stay for a career, then fewer people are going to
    stay.
        Senator Graham. I guess what I am saying is we need to
    logically manage the force from start to bottom and not make
    false promises that we cannot afford.
        The last question is for each of you. We are making a real
    Yeoman effort, thanks to you and others, to upgrade the benefit
    packages and upgrade the services. I would like some feedback
    from your point of view. Offering TRICARE to the Guard and
    Reserves I think--obviously, I am biased because I wrote the
    bill--is paying dividends. I think the things that we are
    talking about with the CAOs and changing the offset rules do
    matter. Is it penetrating the force out there? I know you
    represent people maybe not on Active-Duty completely, but is
    the word getting out? Is it helping?
        Mr. Strobridge. I think it is, sir. I think people are very
    conscious of the things that the committee has done. We are
    always a little bit sensitive to that too because there are
    always additional things to be addressed, and sometimes I fear
    we do not express our appreciation enough for all the great
    things the committee has done.
        Senator Graham. Before we go to the next topic, we need to
    get everybody focused on what is available.
        Mr. Strobridge. In terms of the health care for the Guard
    and Reserve, we go out and make a conscious effort to go visit
    the State adjutants general and ask them what their problems
    are. Invariably to a man, they say the single best thing you
    could do is extend health care to all Guard and Reserve.
        Senator Graham. More than incentive pays?
        Mr. Strobridge. Yes, sir. Well, maybe I ought to qualify
    that. The incentive pays are very important. There is a
    difference between the cash and the non-cash kinds of benefits.
        Senator Graham. Well, security versus immediate
    gratification. Security trumps that.
        Mr. Strobridge. There is a sense the institution is going
    to look out for you.
        Ms. Raezer. What we hear from families is a plea for
    continuity of care. This is not a one-size-fits-all population.
    For some, the ability to have TRICARE when the servicemember is
    mobilized or with the Reserve Select to be able to stay in it
    once that servicemember has demobilized may be a solution. For
    a lot of other Guard and Reserve families, the solution would
    be for a subsidy to remain in the employer-sponsored insurance
    because some families are looking for access to insurance, but
    a lot more, because a lot more have some kind of insurance
    through their employer, are just looking for continuity. The
    switch between their employer-sponsored insurance and TRICARE
    and then back to the employer-sponsored insurance is very
    difficult for some of these folks. So families look for
    continuity of care and there is not just one way to get that.
        Senator Graham. Senator Nelson.
        Senator Ben Nelson. Thank you. I am sorry I had to step out
    a couple of times. I have constituents in town that think that
    they need to see me, and I know I need to see them. [Laughter.]
        You were here, I believe, and heard the questions I asked
    about adoption leave as opposed to maternity leave. I wondered
    if you had any thoughts on that kind of a program. If we are
    really going to push for a family-friendly military, child
    care, whether it is maternity oriented or adoption oriented,
    seems to me to be a high priority.
        Ms. Raezer. Mr. Nelson, one of the top issues that brings
    phone calls to our association is the adoption issue. A lot of
    military families want to adopt. They have a lot of
    difficulties because, as you referenced, they move around. One
    of the complaints we get is that for some folks it is very hard
    to convince a commander that having some adoption leave is
    essential even if they have the leave accumulated. To get that
    leave at the time when they need it is very difficult. So I
    would agree with General Osman who said having that in law or
    in a regulation or some kind of requirement that, yes, you will
    get adoption leave may be very helpful.
        Now, given the high operational tempo and deployment, you
    are going to have to work out how that is going to work, if the
    expectation will be that this is a guarantee even if someone is
    deployed or on a ship. That is something that will have to be
    worked out because certainly if it is in law, there will be an
    expectation that people will get this. As you point out, you
    cannot always time when you need the leave.
        Senator Ben Nelson. Moving on to the education requirements
    and the Impact Aid issue for our schools that are providing, in
    many cases, excellent educational opportunities and others
    perhaps in improving the educational environment. Do you have
    any thoughts about what we could do to make sure that the money
    follows the impact on the school system where you have
    transfers in and out because the money does not always follow
    exactly, and certainly the time frame is not consistent with
    the poor school's budget.
        Ms. Raezer. As I referenced in my oral statement--and you
    were out of the room--we agree with you wholeheartedly that
    this is a very serious issue, and we believe this is something
    that Congress will need to deal with sooner rather than later.
    We are already seeing some impact in some communities because
    of the movements associated with Army modularity. We have seen
    problems with housing privatization where there have been
    significant increases in the housing stock because of the
    privatization efforts.
        We are hearing from school districts serving some
    installations who believe they are going to get some of those
    folks coming from Europe, and they are very concerned about
    school construction, hiring teachers, and having the money
    ahead of time. So we would ask you to help come up with a plan.
    Whatever input we can provide to help with that, we would be
    glad to work on that because we do see a very significant need.
    Thank you for raising attention to that.
        Senator Ben Nelson. Well, let me turn to something that is
    a bit different but important as well. Repeated and lengthy
    deployments obviously are taking a toll on the military
    members, both Active and Reserve, as well as their families. Of
    course, mental health and family counseling are vital sources
    for families. In your prepared statement, Ms. Raezer, you
    endorse efforts to expand access to the full range of mental
    health and family counseling services regardless of the
    beneficiaries. Do you have thoughts about how we might expand
    the services available to make those available to our families
    and to the members?
        Ms. Raezer. We believe this is another one of those
    national efforts. The Military OneSource counseling that
    provides up to six free sessions for relationship issues, just
    normal return and reunion, or deployment-related adjustments,
    is one piece of that. We have been pleased to hear that the VA,
    through the veterans centers, are providing more bereavement
    counseling for survivors, but also some counseling for folks
    who cannot access a military facility. We believe that more
    needs to be done to entice mental health care providers into
    the TRICARE network. This gets difficult in some places,
    because there are certain fields and certain areas where there
    is just a shortage of mental health providers. There is a
    national shortage of adolescent mental health care, and if we
    have military children who need these services, that is even
    worse. So we believe it has to be a combined effort between the
    DOD, the VA, and civilian communities. We are all working
    together on behalf of these families.
        Senator Ben Nelson. Ms. Holleman, in your prepared
    statement, you were urging support and funding for family
    support programs and benefits which obviously are as critical
    to families as the mental health care and support is as well.
    We obviously have the geographically challenged in dispersed
    Guard and Reserve, particularly the families of the Guard and
    Reserve because of the way in which they are not necessarily
    located near a military facility where it is otherwise
    available to them.
        Do you have any programs in mind that would help us go
    through this so we can get better congressional support for
    providing for those isolated families that are away from the
    support system?
        Ms. Holleman. Well that, of course, is the problem of all
    of Guard and Reserve and all the benefits. People are scattered
    and non-centralized.
        As in all things of the day, the immediate answer we all
    give is computers, or having everything be computerized. Well,
    it is better than nothing. It gives you information. It gives
    you quick information. It answers questions.
        But the military is a way of life. It is a community. The
    ability to talk to other people in your situation is crucial
    and something that the Active-Duty family has. Ms. Raezer's
    organization is helping with the Sears Corporation to have a
    program to have camps for children in this situation, which I
    think is a marvelous thing. It is wonderful of Sears to have
    done it.
        A lot of this has to be help within communities. It has to
    be help, unfortunately, in broader communities because you have
    to bring people in because they are scattered.
        Obviously, what Congress could do and what the military
    could do is help them financially.
        But particularly with the Guard and Reserve scattered
    about, this is a real problem. They need the sociability. They
    need to talk to people who are looking at the situation they
    have.
        I am sure Ms. Raezer has something to add to that too.
        Ms. Raezer. I agree. The programs that have been put in
    place since September 11 to support Guard and Reserve families
    are light years ahead of what was available in the first Gulf
    War and earlier, but the geographic problems still do cause
    some isolation. So efforts to improve child care, improve
    support for those volunteers who need to be encouraged and
    continuing as Ms. Holleman said, looking at the community for
    support.
        There are several initiatives that are springing up in
    communities to bring resources together, identify resources to
    then get that information to Guard and Reserve families where
    they can go for assistance on various issues. We need more of
    that. We need more community resources through schools, health
    care, churches, and civic organizations pulling together to
    support those families to provide that sense of community that
    a military installation provides many of the Active-Duty
    families who live there.
        Those kinds of community efforts would also help another
    population under a lot of stress right now, the recruiters and
    their families who are out there in the hinterlands.
        Senator Ben Nelson. They can be isolated as well.
        Ms. Raezer. Yes, very.
        Senator Graham. Thank you all very much. I appreciate it.
        We have a statement from the American Legion I believe. Any
    other organizations that would like to provide a written
    statement will be allowed to do so, and we will insert them
    into the record.
        [The prepared statement of Dennis Michael Duggan follows:]
                  Prepared Statement by Dennis Michael Duggan
        Mr. Chairman: The American Legion is grateful for the opportunity
    to present its views on defense appropriations for fiscal year 2006.
    The American Legion values your leadership in assessing and authorizing
    adequate funding for quality of life features of the Nation's Armed
    Forces to include the Active, Reserve, and National Guard Forces and
    their families, as well as quality of life for military retirees and
    their dependents.
        Since September 2001, the United States has been involved in the
    war against terrorism in Operations Iraqi Freedom (OIF) and Enduring
    Freedom (OEF). American fighting men and women are again proving they
    are the best-trained, best-equipped, and best-led military in the
    world. As Secretary of Defense Donald Rusted has noted, the war in Iraq
    is part of a long, dangerous global war on terrorism. The war on
    terrorism is being waged on two fronts: overseas against armed
    insurgents and at home protecting and securing the homeland. Casualties
    in the shooting wars, in terms of those killed and seriously wounded,
    continue to mount daily. Indeed, most of what we as Americans hold dear
    is made possible by the peace and stability that the Armed Forces
    provide by taking the fight to the enemy.
        The American Legion adheres to the principle that this Nation's
    Armed Forces must be well-manned and equipped, not just to pursue war,
    but to preserve and protect the peace. The American Legion strongly
    believes past military downsizing was budget-driven rather than threat
    focused. Once Army divisions, Navy warships and Air Force fighter
    squadrons are downsized, eliminated or retired from the force
    structure, they cannot be reconstituted quickly enough to meet new
    threats or emergency circumstances. The Marine Corps, Army National
    Guard, and the Reserves have failed to meet their recruiting goals and
    the Army's stop-loss policies have obscured retention and recruiting
    needs. Clearly, the Active Army is struggling to meet its recruitment
    goals. Military morale undoubtedly has been adversely affected by the
    extension and repetition of Iraq tours of duty.
        The administration's fiscal year 2006 budget requests $419.3
    billion for defense or about 17 percent of the total budget. The fiscal
    year 2006 defense budget represents a 4.8 percent increase in defense
    spending over current funding levels. It also represents about 3.5
    percent of our Gross National Product. Active-Duty military manpower
    end strength is now over 1.388 million. Selected Reserve strength is
    about 863,300 or reduced by about 25 percent from its strength levels
    during the Gulf War of 14 years ago.
        Mr. Chairman, this budget must advance ongoing efforts to fight the
    global war on terrorism, sustain and improve quality of life and
    continue to transform the military. A decade of over use of the
    military and past underfunding, necessitates a sustained investment.
    The American Legion believes the budget must continue to address
    increases in Army end strengths, accelerate improved Active and Reserve
    components quality of life features, provide increased funding for the
    concurrent receipt of military retirement pay and Department of
    Veterans' Affairs (VA) disability compensation (``Veterans Disability
    Tax''); and elimination of the survivors benefit plan (SBP) and
    Dependency and Indemnity Compensation (DIC) that continues to penalize
    military survivors.
        If we are to win the war on terror and prepare for the wars of
    tomorrow, we must take care of the Department of Defense's (DOD)
    greatest assets--the men and women in uniform. They do us proud in
    Iraq, Afghanistan and around the world. They need help.
        In order to attract and retain the necessary force over the long
    haul, the Active-Duty Force, Reserves, and National Guard continue to
    look for talent in an open market place and to compete with the private
    sector for the best young people this Nation has to offer. If we are to
    attract them to military service in the Active and Reserve components,
    we need to count on their patriotism and willingness to sacrifice, to
    be sure, but we must also provide them the proper incentives. They love
    their country, but they also love their families--and many have
    children to support, raise and educate. We have always asked the men
    and women in uniform to voluntarily risk their lives to defend us; we
    should not ask them to forego adequate pay and allowances, adequate
    health care and subject their families to repeated unaccompanied
    deployments and substandard housing as well. Undoubtedly, retention and
    recruiting budgets need to be substantially increased if we are to keep
    and recruit quality servicemembers.
        The President's fiscal year 2006 defense budget requests over $105
    billion for military pay and allowances, including a 3.1 percent
    across-the-board pay raise. It also includes billions to improve
    military housing, putting the Department on track to eliminate most
    substandard housing by 2007--several years sooner than previously
    planned. The fiscal year 2005 budget further lowered out-of-pocket
    housing costs for those living off base. The American Legion encourages
    the subcommittee to continue the policy of no out-of-pocket housing
    costs in future years.
        Together, these investments in people are critical, because smart
    weapons are worthless to us unless they are in the hands of smart,
    well-trained soldiers, sailors, airmen, marines, and Coast Guard
    personnel.
        The American Legion National Commanders have visited American
    troops in Europe, the Balkans, and South Korea as well as a number of
    installations throughout the United States, including Walter Reed Army
    Medical Center and Bethesda National Naval Medical Center. During these
    visits, they were able to see first hand the urgent, immediate need to
    address real quality of life challenges faced by servicemembers and
    their families. Severely wounded servicemembers who have families and
    are convalescing in military hospitals clearly need to have their
    incomes increased when they are evacuated from combat zones. Also, the
    medical evaluation board process needs to be expedited so that military
    severance and disability retirement pays will be more immediately
    forthcoming. Our National Commanders have spoken with families on
    Women's and Infants' Compensation (WIC), where quality of life issues
    for servicemembers, coupled with combat tours and other operational
    tempos, play a role in recurring recruitment and retention efforts and
    should come as no surprise. The operational tempo and lengthy
    deployments, other than combat tours, must be reduced or curtailed.
    Military missions were on the rise before September 11 and deployment
    levels remain high. The only way to reduce repetitive overseas tours
    and the overuse of the Reserves is to increase Active-Duty and perhaps
    Reserve end strengths for the Services. Military pay must be on a par
    with the competitive civilian sector. Activated reservists must receive
    the same equipment, the same pay, and timely health care as Active-Duty
    personnel. If other benefits, like health care improvements,
    commissaries, adequate quarters, quality child care and impact aid for
    DOD education are reduced, they will only serve to further undermine
    efforts to recruit and retain the brightest and best this Nation has to
    offer.
        To step up efforts to bring in enlistees, all the Army components
    are increasing the number of recruiters. The Army National Guard sent
    1,400 new recruiters into the field last February. The Army Reserve is
    expanding its recruiting force by about 80 percent. If the recruiting
    trends and the demand for forces persist, the Pentagon under current
    policies could eventually ``run out'' of Reserve Forces for war zone
    rotation, a Government Accountability Office (GAO) expert warned. The
    Pentagon projects a need to keep more than 100,000 reservists
    continuously over the next 3 to 5 years. The Defense Appropriations
    bill for fiscal year 2005 provides the funding for the first year force
    level increases of 10,000. The Army's end strength increased 30,000 and
    the Marine Corps end strength increased 3,000.
        Army restructuring will increase the number of Active Army maneuver
    brigades by 30 percent by fiscal year 2007. The Army National Guard
    will reach 34 brigades. The Marine Corps will increase by two
    battalions.
        The budget deficit is projected to be $427 billion; the largest in
    U.S. history and it appears to be heading higher perhaps to $500
    billion. National defense spending must not become a casualty of
    deficit reduction.
                         force health protection (fhp)
        As American military forces are again engaged in combat overseas,
    the health and welfare of deployed troops is of utmost concern to The
    American Legion. The need for effective coordination between the VA and
    the DOD in the force protection of U.S. forces is paramount. It has
    been 14 years since the first Gulf War, yet many of the hazards of the
    1991 conflict are still present in the current war.
        Prior to the 1991 Gulf War deployment, troops were not
    systematically given comprehensive pre-deployment health examinations
    nor were they properly briefed on the potential hazards, such as
    fallout from depleted uranium munitions they might encounter. Record
    keeping was poor. Numerous examples of lost or destroyed medical
    records of Active-Duty and Reserve personnel were identified. Physical
    examinations (pre- and post-deployment) were not comprehensive and
    information regarding possible environmental hazard exposures was
    severely lacking. Although the government had conducted more than 230
    research projects at a cost of $240 million, lack of crucial deployment
    data resulted in many unanswered questions about Gulf War veterans
    illnesses.
        The American Legion would like to specifically identify an element
    of FHP that deals with DOD's ability to accurately record a
    servicemember's health status prior to deployment and document or
    evaluate any changes in his or her health that occurred during
    deployment. This is exactly the information VA needs to adequately care
    for and compensate servicemembers for service-related disabilities once
    they leave Active-Duty. Although DOD has developed post-deployment
    questionnaires, they still do not fulfill the requirement of
    ``thorough'' medical examinations nor do they even require a medical
    officer to administer the questionnaires. Due to the duration and
    extent of sustained combat in Operations Iraqi Freedom and Enduring
    Freedom, the psychological impact on deployed personnel is of utmost
    concern to The American Legion. VA's ability to adequately care for and
    compensate our Nation's veterans depends directly on DOD's efforts to
    maintain proper health records/health surveillance, documentation of
    troop locations, environmental hazard exposure data and the timely
    sharing of this information with the VA.
        The American Legion strongly urges Congress to mandate separation
    physical exams for all servicemembers, particularly those who have
    served in combat zones or have had sustained deployments. DOD reports
    that only about 20 percent of discharging servicemembers opt to have
    separation physical exams. During this war on terrorism and frequent
    deployments with all their strains and stresses, this figure, we
    believe, should be substantially increased.
                            military quality-of-life
        Our major national security concern continues to be the enhancement
    of the quality-of-life issues for Active-Duty servicemembers,
    reservists, guardsmen, military retirees, and their families. During
    the last congressional session, President Bush and Congress made marked
    improvements in an array of quality-of-life issues for military
    personnel and their families. These efforts are vital enhancements that
    must be sustained.
        Mr. Chairman: During this period of the war on terrorism, more
    quality-of-life improvements are required to meet the needs of
    servicemembers and their families as well as military retiree veterans
    and their families. For example, the totally inadequate $12,000 death
    gratuity needs to be increased to $100,000 and the Servicemembers'
    Group Life Insurance (SGLI) needs to be increased to at least $400,000;
    the improved Reserve MGIB for education needs to be completely funded
    as well; combat wounded soldiers who are evacuated from combat zones to
    military hospitals need to retain their special pay (combat pay, family
    separation pay, etc) and base pay and allowances during the period of
    their convalescence continued at the same level to not jeopardize their
    families financial support during recovery. Furthermore, the medical
    evaluation board process needs to be expedited so that any adjudicated
    military severance or military disability retirement payments will be
    immediately forthcoming; recruiting and retention efforts, to include
    the provision of more service recruiters, needs to be fully funded as
    does recruiting advertising. The Defense Health Program and in
    particular the Uniformed Services University of the Health Sciences
    must also be fully appropriated.
        Likewise, military retiree veterans as well as their survivors, who
    have served their Country for decades in war and peace, require
    continued quality-of-life improvements as well. First and foremost, The
    American Legion strongly urges that full concurrent receipt and Combat-
    Related Special Compensation (CRSC) be authorized for disabled retirees
    whether they were retired for longevity (20 or more years of service)
    or military disability retirement with fewer than 20 years. In
    particular, The American Legion urges that disabled retirees rated 40
    percent and below be authorized CRPD and that disabled retirees rated
    between 50 percent and 90 percent disabled be authorized non-phased-in
    concurrent receipt. Additionally, The American Legion strongly urges
    that all military disability retirees with fewer than 20 years service
    be authorized to receive CRSC and VA disability compensation provided,
    of course, they're otherwise eligible for CRSC under the combat-related
    conditions.
        Second, The American Legion urges that the longstanding inequity
    whereby military survivors have their SBP offset by the DIC be
    eliminated. This ``Widows' Tax'' needs to be eliminated as soon as
    possible. It is blatantly unfair and has penalized deserving military
    survivors for years. A number of these military survivors were nearly
    impoverished because of this unfair provision. As with concurrent
    receipt for disabled retirees, military survivors should receive both
    SBP and DIC. They have always been entitled to both and should not have
    to pay for their own DIC. The American Legion will continue to convey
    that simple, equitable justice is the primary reason to fund full
    concurrent receipt of military retirement pay as well as the SBP and
    DIC for military survivors. Not to do so merely continues the same
    inequity. Both inequities need to be righted by changing the unfair law
    that prohibits both groups from receiving both forms of compensation.
        Mr. Chairman: The American Legion as well as the Armed Forces and
    veterans continue to owe you and this subcommittee a debt of gratitude
    for your support of military quality-of-life issues. Nevertheless, your
    assistance is needed in this budget to overcome old and new threats to
    retaining and recruiting the finest military in the world.
    Servicemembers and their families continue to endure physical risks to
    their well-being and livelihood as well as the forfeiture of personal
    freedoms that most Americans would find unacceptable. Worldwide
    deployments have increased significantly and the Nation is at war. The
    very fact that over 300,000 guardsmen and reservists have been
    mobilized since September 11, 2001 is first-hand evidence that the
    United States Army desperately needs to increase its end strengths and
    maintain those end strengths so as to help facilitate the rotation of
    Active and Reserve component units to Active combat zones.
        The American Legion congratulates and thanks congressional
    subcommittees such as this one for military and military retiree
    quality-of-life enhancements contained in past National Defense
    Appropriations Acts. Continued improvement however are direly needed to
    include the following:

             Completely Closing the Military Pay Gap with the
            Private Sector: With U.S. troops battling insurgency and
            terrorism in Iraq and Afghanistan, The American Legion supports
            the proposed 3.1 percent military pay raise as well as
            increases in Basic Allowance for Housing (BAH).
             Commissaries: The American Legion urges Congress to
            preserve full Federal subsidizing of the military commissary
            system and to retain this vital non-pay compensation benefit
            for use by Active-Duty families, reservist families, military
            retiree families and 100 percent Service-connected disabled
            veterans and others.
             DOD Domestic Dependents Elementary and Secondary
            Schools (DDESS): The American Legion urges the retention and
            full funding of the DDESS as they have provided a source of
            high quality education for military children attending schools
            on military installations.
             Funding the Reserve Montgomery GI Bill (MGIB) for
            Education.
             Increasing the death gratuity to $100,000 and $400,000
            for SGLI for all Active-Duty or activated reservist who are
            killed or who dies while on Active-Duty after September 11,
            2001 during the war on terrorism.
             Improving the pay of severely wounded servicemembers
            and expediting the medical evaluation board process.
             Providing full concurrent receipt of military
            retirement pay and VA disability compensation for those
            disabled retirees rated 40 percent and less; providing non-
            phased concurrent receipt for those disabled retirees rated
            between 50 percent and 90 percent disabled by the VA; and
            authorizing those military disability retirees with fewer than
            20 years service to receive both VA disability compensation and
            CRSC.
             Eliminating the offset of the SBP and DIC for military
            survivors.
                       other quality-of-life institutions
        The American Legion strongly believes that quality-of-life issues
    for retired military members and their families are augmented by
    certain institutions which we believe need to be annually funded as
    well. Accordingly, The American Legion believes that Congress and the
    administration must place high priority on insuring these institutions
    are adequately funded and maintained:

             The Uniformed Services University of the Health
            Sciences (USUHS): The American Legion urges Congress to resist
            any efforts to less than fully fund, downsize, or close the
            USUHS through the Base Realignment and Closure (BRAC) process.
            It is a national treasure, which educates and produces military
            physicians and advanced nursing staffs. We believe it continues
            to be an economical source of career medical leaders who
            enhance military health care readiness and excellence and is
            well-known for providing the finest health care in the world.
             The Armed Forces Retirement Homes: The United States
            Soldiers' and Airmen's Home (USSAH) in Washington, DC and the
            United States Naval Home in Gulfport, Mississippi, are under
            funded as evidenced by the reduction in services to include
            onsite medical health care and dental care. Increases in fees
            paid by residents are continually on the rise. The medical
            facility at the USSAH has been eliminated with residents being
            referred to VA Medical Centers or Military Treatment Facilities
            (MTFs) such as Walter Reed Army Medical Center. The American
            Legion recommends that Congress conduct an independent
            assessment of these two facilities and the services being
            provided with an eye toward federally subsidizing these two
            Homes as appropriate. Both facilities have been recognized as
            national treasures until recent years when a number of mandated
            services have been severely reduced and resident fees have been
            substantially increased.
             Arlington National Cemetery: The American Legion urges
            that the Arlington National Cemetery be maintained to the
            highest of standards. We urge also that Congress mandate the
            eligibility requirements for burial in this prestigious
            Cemetery Reserved for those who have performed distinguished
            military service and their spouses and eligible children.
             2005 Defense Base Realignment and Closure Commission:
            The American Legion urges that certain base facilities such as
            military medical facilities, commissaries, exchanges, and
            training facilities and other quality-of-life facilities be
            preserved for use by the Active and Reserve components and
            military retirees and their families.
                   the american legion family support network
        The American Legion continues to demonstrate its support and
    commitment to the men and women in uniform and their families. The
    American Legion's Family Support is providing immediate assistance
    primarily to activated National Guard families as requested by the
    Director of the National Guard Bureau. The American Legion Family
    Support Network has reached out through its Departments and Posts to
    also support the Army Disabled Soldier Support System (DS3). Many
    thousands of requests from these families have been received and
    accommodated by the American Legion Family across the United States.
    Military family needs have ranged from requests for funds to a variety
    of everyday chores which need doing while the ``man or woman'' of the
    family is gone. The American Legion, whose members have served our
    Nation in times of adversity, remember how it felt to be separated from
    family and loved ones. As a grateful Nation, we must ensure than no
    military family endures those hardships caused by military service, as
    such service has assured the security, freedom and ideals of our great
    country.
                                  conclusions
        Thirty-two years ago, America opted for an All-Volunteer Force to
    provide for the national defense. Inherent in that commitment was a
    willingness to invest the needed resources to bring into existence and
    maintain a competent, professional and well-equipped military. The
    fiscal year 2006 defense budget, while recognizing the war on terrorism
    and homeland security, represents another good step in the right
    direction. Likewise our military retiree veterans and military
    survivors, who in yesteryear served this Nation for decades, continue
    to need your help as well.
        Mr. Chairman, this concludes our statement.

        Ms. Raezer. Thank you very much.
        Ms. Holleman. Thank you, Mr. Chairman.
        Mr. Strobridge. Thank you.
        Senator Graham. Thank you very much. Thank you for your
    testimony.
        The hearing is adjourned.
        [Questions for the record with answers supplied follow:]
                 Questions Submitted by Senator Saxby Chambliss
       domestic dependent elementary and secondary schools transfer study
        1. Senator Chambliss. Dr. Chu, the Domestic Dependent Elementary
    and Secondary Schools (DDESS) Transfer Study that was recently released
    recommended transferring most of Department of Defense Education
    Activity (DODEA) Schools in the United States, to include all of these
    schools in Georgia, to local school districts. The transfer of these
    high-quality schools raises concerns within the military and with the
    local school districts that would have to absorb the additional
    students.
        At Fort Benning, the local school districts have already expressed
    their concern about the influx of new students based on the activation
    of a new brigade there under the Army's Modularity Initiative and the
    delay in receiving Federal Impact Aid funding in advance. Now this
    report recommends increasing the student population in the
    Chattahoochee School District outside Fort Benning from under 500
    students to over 3,500 students. To say that this change would be
    significant is an understatement. The report also notes that the
    transfer of the Linwood Elementary School at Robins Air Force Base in
    2001 resulted in the school going from a ``National Blue Ribbon School
    of Excellence'' to a school rated as ``Not Making Adequate Yearly
    Progress Under the No-Child Left Behind Act.'' So, I think a great deal
    of the concern is very justified.
        What does the Department of Defense (DOD) plan to do with this
    study, and what are the DOD's plans in terms of transferring these
    schools?
        Dr. Chu. Your concerns regarding the recommendations pertaining to
    the DDESS schools at Fort Benning are appreciated. As you are aware,
    these recommendations were made by a National Panel of Experts as one
    part of a three-phase study of all DDESS schools in the continental
    United States. The overarching purpose of the study was to determine
    how best to provide quality education to military dependents while
    balancing the stewardship of taxpayers' dollars. It should be noted
    that the study was begun prior to Operation Iraqi Freedom as well as
    prior to planned overseas basing changes, major force structures
    planned by the Services, and domestic base closures. Based on these
    activities, the DOD has not formulated a response to the
    recommendations and took specific action to suspend all deliberations
    on the study until the Base Realignment and Closure (BRAC)
    recommendations take legal effect. Further discussions will take place
    with Congress before any decision is implemented that would transfer
    students to local education authorities. DOD continues to be committed
    to assuring that our students receive a quality education and would not
    transfer students to a local education agency (LEA) if there were any
    questions regarding the quality of education or their commitment to
    students.
        With respect to your comments regarding the Linwood Elementary
    School, the DDESS Transfer Study does not report on the school's status
    with respect to the No Child Left Behind Act after being transferred to
    Houston County Schools as the result of a housing privatization
    initiative. However, in an April 4, 2005, article in the Army Times,
    Houston County officials state that the rating of failing to make
    ``adequate yearly progress'' was due to a mistaken assessment by State
    education officials, and that upon appeal, the rating was amended.

                             tricare reserve select
        2. Senator Chambliss. Dr. Chu, as you begin implementing TRICARE
    Reserve Select (TRS) for reservists, I will be closely following your
    assessments on how TRS impacts on the readiness and retention of our
    reservists. I do continue to have some concerns with the medical
    readiness of our reservists, and I'm studying the best way to address
    their health readiness issues. I'm not sure that providing every
    reservist and family member with health care coverage regardless of
    mobilization status is financially feasible. However, every year, our
    reservists undergo an annual health assessment that identifies
    conditions that would potentially make a reservist medically non-
    deployable. What are your views on whether we could devise a method to
    treat reservists for conditions identified during their annual
    screening that would hinder them from deploying?
        Dr. Chu. The Department is in the process of revising its periodic
    health assessment program for the Total Force, with specific focus on
    how it might best be implemented within the Reserve components. This
    revised program calls for an annual age and gender specific evidence-
    based Periodic Health Assessment (PHA) to assess individuals for
    occupational, familial and behavioral health risk factors and to
    conduct, as required, specified arid/or directed physical examinations
    and laboratory testing. The PHA is optimized when it is combined with a
    review of the individual's records of medical care. As a condition of
    continued employment, DOD considers every servicemember, whether Active
    or Reserve component, personally responsible for taking initiatives to
    meet DOD's individual medical readiness and fitness standards. The
    annual PHA assessment will identify necessary actions on the part of
    the individual and the medical community to sustain medical readiness.
    Resourcing of medical readiness for Reserve component servicemembers is
    currently the responsibility of the six Reserve components.
        Offering medical and dental insurance does not assure that even
    those who subscribe to the insurance will use it to maintain good
    health and to seek medical attention early for problems, which are
    perceived as minor.
        TRICARE Reserve Select will not provide a complete picture of
    medical readiness status because reservists' civilian clinical records
    are not available to the Department to make a more comprehensive
    assessment.

              servicemembers group life insurance spousal consent
        3. Senator Chambliss. Dr. Chu, I think that many of the steps we
    have taken in Congress and in the President's budget proposal to
    increase the benefits for those servicemembers that are killed in
    action or die on Active-Duty in the global war on terrorism are all
    positive steps in the right direction. I think raising the value of
    Servicemembers' Group Life Insurance (SGLI) is the least we could do to
    honor those who have lost their lives in service to our Nation.
        There has been some debate about whether a servicemember's spouse
    should be involved in the servicemember's decision to pay for a reduced
    amount, or to name someone other than the servicemember's spouse as the
    beneficiary. This process would be similar to the consent provisions of
    the Survivors Benefit Plan (SBP).
        What are your thoughts about how and whether or not the consent
    provisions should apply to SGLI?
        Dr. Chu. The Department favors requiring spousal consent when
    members elect to reduce or decline the amount of SGLI provided or
    designate any other person as a beneficiary. Additionally, the
    Department prefers spousal/designee notification be required when
    members elect to reduce or decline the amount of insurance applicable
    to such member.
                                     ______

                 Questions Submitted by Senator Daniel K. Akaka
                    defense language transformation roadmap
        4. Senator Akaka. Dr. Chu, I am pleased to see that the DOD has
    taken great efforts to improve the recruitment, retention, and training
    of individuals with foreign language skills. For example, the Defense
    Language Transformation Roadmap proposes requiring junior officers to
    complete language training and making foreign language ability a
    criterion for general officer and flag officer advancement.
        How will the DOD fund these proposals and provide the language
    teachers needed to make this goal a reality?
        Dr. Chu. Language Transformation in the Department is a long-term
    initiative and we will work closely with the Services to explore the
    best ways to reach the Roadmap's desired goals. We have been and will
    continue to work with the members of the Defense Foreign Language
    Steering Committee (DFLSC) to present various approaches. As to the
    requirement that junior officers complete language training, we are
    currently formulating plans to address this action. Funding will be
    addressed as part of the approval process for the plans.
        To improve language proficiency and provide for language teacher
    training and development, we have worked with Army, which is the
    executive agent for the Defense Language Institute Foreign Language
    Center (DLIFLC). We increased DLIFLC funding by $56 million in fiscal
    year 2005 to fund critical requirements, training development, ``crash
    courses'' for deployed forces, and kick off the Proficiency Enhancement
    Program. For fiscal year 2006, we have included a request for an
    additional $44.7 million in our budget submission. This will fund
    critical requirements and continue proficiency enhancement in support
    of the Intelligence Community needs. In all, we have programmed $362
    million over the Fiscal Year Defense Plan (fiscal year 2006-2010) for
    the DLIFLC to teach to advanced level of proficiency.

        5. Senator Akaka. Dr. Chu, how long will it take to implement this
    proposal?
        Dr. Chu. Language transformation is a long-term initiative
    involving significant changes to our core competency. Roadmap actions
    extend through 2010. The Defense Language Transformation Roadmap
    outlines our plan and we are currently gathering the milestones for
    each action to track our progress. However, we have already made great
    strides. We have: (1) assigned responsibility for language to Personnel
    and Readiness, (2) established Senior Language Authorities at the
    general/flag officer and Senior Executive Service level in the
    Services, agencies, and combatant commands, (3) created a Defense
    Language Office in Personnel and Readiness (P&R), (4) revised our
    Foreign Area Officer Directive to develop a more robust corps of these
    elite officers, (5) initiated the Army 09L program to recruit heritage
    speakers of Arabic, Dari, and Pashto into the Individual Ready Reserve,
    (6) conducted a study of language and regional expertise in
    Professional Military Education, and (7) increased funding for the
    DLIFLC to fund critical requirements and proficiency enhancement.

        6. Senator Akaka. Dr. Chu, is the DOD prepared to provide support
    to the education community in order to generate individuals who have
    studied foreign languages and other cultures to a degree of competency
    so that the DOD has an applicant pool with the critical skills needed
    from which to recruit?
        Dr. Chu. We recognize that support to the education community is
    essential to generate individuals who have studied foreign languages.
    In fact, one of the reasons DOD hosted the ``National Language
    Conference: A Call for Action'' in June 2004 was to focus on the need
    to build a language competent nation. At this conference more than 300
    representatives identified a number of areas in need of national
    leadership and presented some recommendations. We hosted a luncheon
    with other Federal agencies on April 25 to discuss some ``ways ahead''
    in the Federal sector. We are pleased with the interest of our Federal
    partners and plan to pursue this further.
        One asset to the education system is the National Security
    Education Program (NSEP), created by the ``David L. Boren National
    Security Education Act of 1991,'' which provides scholarships to
    outstanding U.S. undergraduate and graduate students to study languages
    and cultures critical to DOD, the Intelligence Community, and the
    Nation. Recipients of NSEP scholarships incur a service obligation to
    seek employment in the national security community. NSEP, through their
    National Flagship Language Initiative (NFLI), has partnered with U.S.
    colleges and universities to implement programs of study to expand
    opportunities to graduate students at the superior levels of foreign
    language skills. Just recently, NSEP issued a request for proposals
    seeking a university to host a new NFLI program: Chinese K-16 Flagship.
    The selected university will work with an elementary, middle and
    secondary school system to establish a program that will allow students
    to pursue Chinese as an integral component of their studies. The
    contract will be awarded this fall.
        While the U.S. education system will serve as the primary source of
    these language skills, parents, school counselors, and business leaders
    must encourage students to study more difficult languages. Such changes
    in our education system will require the involvement of State
    governments and other concerned government organizations and
    institutions. We believe that our heritage communities are national
    assets waiting to be developed. Only by pursuing a nation-wide
    resolution to the growing demand for language skills will the U.S. be
    able to meet the complex national security needs of a changing world.

        7. Senator Akaka. Dr. Chu, the Defense Language Transformation
    Roadmap notes the DOD's plan to coordinate with the NSEP to focus on
    attracting university students possessing foreign language skills to
    the DOD. Please provide additional information on the DOD's efforts to
    recruit individuals with foreign language skills.
        Dr. Chu. DOD is exploring innovative ways to guarantee job
    placement for National Security Education Program graduates. DOD
    determined that employment with contractors working in direct support
    of DOD missions could qualify as part of the statutory service
    requirement for NSEP graduates. This decision resulted in immediate
    placement of some NSEP graduates in important positions. We are
    exploring other flexible personnel approaches that would allow Defense
    and Intelligence agencies to benefit immediately from graduates'
    knowledge, to include direct hire authorities.

        8. Senator Akaka. Dr. Chu, the Defense Language Transformation
    Roadmap also notes Departmental efforts to improve language training
    through study abroad programs and the incorporation of regional area
    content into language training in order for students to better
    understand different cultures. Please describe the study abroad
    opportunities cited in the report.
        Dr. Chu. The Roadmap requires the Services to ``Exploit `study
    abroad' opportunities to facilitate language acquisition.'' Immersion
    is a very effective way to acquire and enhance both foreign language
    and cultural knowledge because the student lives in the culture and is
    required daily to utilize foreign language and cultural skills.
    Currently, study abroad opportunities exist in Service academies;
    Personnel Exchange Programs, where military personnel from two
    countries swap positions for an assignment; the Olmsted Scholar
    Program, which is a privately funded opportunity for military personnel
    to study abroad; the NSEP, which provides funding for study of less
    commonly taught languages; and the Air Force Language and Area Studies
    Immersion Program, which gives opportunities to Air Force members to
    study and travel abroad. Interest in these programs is increasing and
    we intend to expand these programs.

        9. Senator Akaka. Dr. Chu, how much funding will be set aside for
    this program?
        Dr. Chu. Interest in foreign language. and study abroad is
    increasing. The number of graduates majoring in a foreign language at
    the U.S. Military Academy is increasing, as is the number of
    participants in their study abroad program. However, language
    transformation is a new initiative and will take a concerted effort and
    much time. The Defense Language Transformation Roadmap outlines our
    goals for this implementation. The Services, Joint Staff, and offices
    within the Office of the Secretary of Defense are currently formulating
    plans to meet the required actions. Because these plans are still being
    developed, full costs cannot be cited at this time.

        10. Senator Akaka. Dr. Chu, please provide additional information
    on how DOD employees will gain cultural understandings as well as
    language proficiency.
        Dr. Chu. DOD employees who attend professional military education
    currently have the option of taking courses that focus on regional
    studies. Additionally, DOD civilians may attend special courses on
    regional knowledge at the Joint Special Operations University, Joint
    Military Intelligence College, and the Foreign Service Institute.
    Outside of the Federal system, civilian colleges and universities also
    offer many courses specializing in regional studies. We intend to
    encourage more DOD civilians to participate in these opportunities. We
    also hope to partner with other Federal agencies to identify and share
    training resources.

        11. Senator Akaka. Dr. Chu, the Roadmap also states that civilian
    job applications will permit individuals to identify their language
    skills and regional expertise on job application forms. What weight
    will the identification of these skills on the application form have on
    the hiring of the individual and how will the DOD verify these skills?
        Dr. Chu. Several standard questions are asked on civilian job
    applications, such as, are you a veteran or what is your education
    level. Asking about language skills is just one other piece of
    information that we would like to collect, so we could have a database
    with civilians possessing language skills in case of an emergency
    situation. If we needed the civilians for their language capability, we
    would test them at that time. If a job required language skills, then
    DOD would weight these skills. In those cases, the applicant would be
    tested on their language capability before employment was offered.

        12. Senator Akaka. Dr. Chu, given the flexibility under the
    National Security Personnel System (NSPS), what special authorities, in
    the areas of hiring, classification, and pay, are you considering to
    improve the recruitment and retention of individuals possessing
    critical language skills?
        Dr. Chu. NSPS provides flexibilities to improve the hiring process,
    attract high-quality applicants, and enhance the Department's ability
    to meet critical mission requirements, while preserving principles of
    merit and veterans' preference. This provides the Department with an
    expanded set of tools for assigning and reassigning employees in
    response to mission changes and priorities. The direct hire authority
    for severe shortages or critical needs, such as critical languages, is
    vested with the Secretary and DOD will be able to improve and
    streamline examining procedures to speed up the hiring process. By
    using new hiring mechanisms and pay setting flexibilities, Department
    managers will have a greater ability to acquire, advance, and shape
    their workforce in response to organizational needs and to compete for
    the best talent.

        13. Senator Akaka. Dr. Chu, does the DOD believe a scholarship for
    service program, similar to the one detailed in S.589 in the 108th
    Congress and included in the Intelligence Reform Act of 2004 for
    employees in the Intelligence Community, would be helpful to recruit
    individuals with critical language skills?
        Dr. Chu. Yes, we do think it would be helpful to have a scholarship
    for service program to recruit individuals with critical language
    skills. It would also be helpful to have provisions in place to
    expedite hiring and non-competitive placement of these individuals. We
    will look carefully at the provisions of the Intelligence Community
    program as a model for development of a program to meet DOD's specific
    requirement.

        14. Senator Akaka. Dr. Chu, the draft White Paper from the National
    Language Conference hosted by the DOD last June called for national
    language leadership; the development of cross-sector language and
    cultural competency; the engagement of Federal, Sate, and local
    Governments in solving the Nation's language deficiency; the
    integration of language training across career fields; the development
    of critical language skills; strengthened teaching capabilities in
    foreign languages and cultures; the integration of language into
    education system requirements; and the development and distribution of
    instructional materials and technological tools for language education.
    What progress has been made in reaching these goals and what has been
    or will be the DOD's role?
        Dr. Chu. First, if I may, let me clarify that the White Paper from
    the National Language Conference did not set goals. The White Paper
    presents recommendations requiring long-term partnerships and
    collaboration between public, private, and government sectors of
    society to increase foreign language and cultural capabilities and
    proficiency. The document highlights the need for strong, focused,
    visionary national leadership to move the Nation forward in this
    important arena. It reflects the thoughts of more than 300 leaders and
    experts from Federal, state and local government, academia,
    international institutions, language associations and business who
    participated in the June 2004 Conference.
        I am delighted to report that, in agreement with several Federal
    departments and agencies, my office published the White Paper on April
    26, 2005. DOD published the White Paper with the hope of creating
    dialogue about the issues involved in expanding language capabilities
    and cultural understanding throughout the United States. We have sent
    the document to Congress, Governors, State school superintendents,
    CEOs, language associations, and the conference participants
    encouraging them to engage this national need.
        The Federal sector is already taking on this issue. The Chief Human
    Capital Officers of several Federal departments have started meeting to
    fully scope the need for these skills within the workforce and to build
    collaborative actions and recommendations. The group includes the
    Departments of State, Labor, Justice, Commerce, Central Intelligence
    Agency, Education, Health and Human Services, Homeland Security, the
    Office of Personnel and Management, and the Office of Management and
    Budget. While I convened the first meeting, the State Department, in
    the true sense of partnership, will host the second gathering. This is
    the start of what we hope will be a strong partnership, as recommended
    by the White Paper.

                          equal employment opportunity
        15. Senator Akaka. Dr. Chu, the Floyd D. Spence National Defense
    Authorization Act for Fiscal Year 2001, Public Law 106-398, included a
    provision permitting the Department to implement pilot programs to
    improve the process for the resolution of Equal Employment Opportunity
    (EEO) complaints. What is the current status of implementing this
    provision?
        Dr. Chu. Pilots were approved in August 2004 for implementation in
    three DOD components: (1) Department of the Air Force, (2) Defense
    Commissary Agency (DeCA), and (3) Defense Logistics Agency (DLA). All
    three pilots are currently operational and will run through August
    2006. If, at the end of the pilot period the pilot cannot be properly
    assessed because an insufficient number of complaints had been
    processed under the pilot, an extension of 1 year can be granted.

        16. Senator Akaka. Dr. Chu, how do the pilot programs differ from
    the current EEO Federal sector process?
        Dr. Chu. The Department of the Air Force has adopted the name
    Compressed Orderly Rapid Equitable (CORE) for its pilot. CORE differs
    from the existing Federal sector process in that increased emphasis is
    placed upon the use of Alternative Dispute Resolution (ADR); an
    independent factfinding session conducted by a CORE-trained
    investigator will replace the current investigation phase; the CORE-
    trained investigator will draft a proposed agency final decision upon
    completion of the factfinding investigation; and the opportunity for a
    hearing before an Equal Employment Opportunity Commission (EEOC)
    administrative judge has been eliminated. The Air Force pilot will be
    limited to 31 test bases.
        The Defense Commissary Agency Early Resolution Opportunity (ERO)
    pilot replaces informal counseling with ADR; provides for expedited
    investigations in cases where ADR is unsuccessful; provides electronic
    case processing; and shortens time frames at both the informal and
    formal stages of case processing. The DeCA pilot is limited to 3 zones
    in the 2 DeCA regional offices covering the continental United States
    and comprising 23 stores in 3 metropolitan areas.
        The DLA Pilot for Expedited Complaint Processing (PCEP) replaces
    informal counseling with an ADR process. PCEP is available only to
    employees at the DLA headquarters at Fort Belvoir.

        17. Senator Akaka. Dr. Chu, what provisions and safeguards are
    included in the pilot programs that allow employees to opt out and
    participate in the current EEO Federal sector process?
        Dr. Chu. EEO professional staff and EEO counselors at the
    installations participating in the Air Force, DeCA, and DLA pilot
    programs have been trained regarding opt out procedures. When a
    civilian employee at a pilot facility contacts an EEO counselor they
    will be informed about the regular Federal sector complaint procedures
    and the pilot procedures, including the opt out provisions. If the
    employee selects the pilot process they will be given more detailed
    information on the pilot process and opt out provisions emphasized.
    Whenever an employee opts out of a pilot, he or she will be given an
    opt out survey form to complete and submit to a DOD pilot program
    evaluation coordinator located in California.

        18. Senator Akaka. Dr. Chu, given the concern over the lack of an
    independent adjudicator for labor-management disputes and employee
    appeals under the NSPS, it is conceivable that more employees will file
    EEO complaints in an effort to have their cases decided by what may be
    perceived as a more neutral arbitrator. If so, how will the NSPS
    interact with EEO pilot programs?
        Dr. Chu. NSPS will not affect anti-discrimination laws or
    regulations, including the EEO complaints process. Employees who are
    converted to NSPS will have the same access to the EEO complaints
    process as other employees. While the implementation of NSPS may impact
    the number of EEO complaints in an organization, we are not planning on
    conducting the pilots based on whether the organization will be under
    NSPS. We would also point out that while there may be a perception that
    NSPS will not have independent adjudicators, the proposed NSPS
    regulations provide for independent third party resolution of both
    labor disputes and adverse action appeals. The proposed National
    Security Labor Relations Board will be structured to ensure the
    independence of its Board members; and employees will be able to appeal
    adverse actions to the Merit Systems Protection Board.

        19. Senator Akaka. Dr. Chu, during congressional consideration of
    the NSPS in 2003, the DOD testified that NSPS would aid the conversion
    of military positions to civilian positions. It was estimated at that
    time that there were approximately 320,000 positions that could be
    converted. How many positions have been converted to date?
        Dr. Chu. Military-to-civilian conversions often take a number of
    months to complete. The Department has devised a four-step process for
    crediting conversions. Based on this reporting construct, the Military
    Services indicate a total of 7,640 military billets were converted
    during fiscal year 2004. Of these, 4,281 were for the Army; 905 for the
    Navy, 1,790 for the Air Force, and 664 for the Marine Corps. In
    addition, 16,176 military-to-civilian conversions were included in the
    fiscal year 2006 President's budget for fiscal year 2005 and should be
    credited by the end of the fiscal year barring any schedule delays.

        20. Senator Akaka. Dr. Chu, how many of the converted positions
    have been subject to competitive sourcing and are now being performed
    by the private sector?
        Dr. Chu. Out of a total of 1,790 Air Force conversions in fiscal
    year 2004, 595 were a result of competitive sourcing. All of these 595
    billets were converted to private sector performance. None of the
    Army's 4,281 or the Navy's 905 conversions for fiscal year 2004
    resulted from competitive sourcing. However, the Army replaced 4,100
    National Guardsmen with contract security guards in fiscal year 2004.
    Out of a total of 664 Marine Corps conversions in fiscal year 2004, 241
    were a result of competitive sourcing. However, only 108 of these 241
    billets were converted to private sector performance. In total, 836 of
    the 7,640 fiscal year 2004 military-to-civilian conversions were
    accomplished through competitive sourcing. Of these, 703 were converted
    to private sector performance.

        21. Senator Akaka. Dr. Chu, what is the anticipated time line for
    converting the remaining positions?
        Dr. Chu. The fiscal year 2005 President's budget included 16,176
    military-to-civilian conversions for fiscal year 2005; 6,434 for fiscal
    year 2006; and 5,568 for fiscal year 2007. Additional conversions are
    planned through fiscal year 2011. When aggregated, current estimates
    for fiscal year 2004 through fiscal year 2011 range from 39,000 to
    42,000. Although these numbers are significant, the Department is
    continuing with its review of over 320,000 active duty military billets
    in commercial activities that are exempted from conversion. These are
    positions that can be considered for DOD civilian or private sector
    performance and the minimum number the Department is committed to
    reviewing. Also, as the Department completes its Quadrennial Defense
    Review and progresses with other initiatives, such as Active/Reserve
    Rebalancing, the number of military conversion could change
    dramatically. However, it's important to recognize that there are
    several reasons why not all of the military billets in commercial
    activities can be converted to DOD civilian or private sector
    performance. A sizable portion is needed for overseas and sea-to-shore
    rotation, career progression, wartime assignments, and other similar
    requirements. The ultimate size of the larger conversion will depend on
    the merits of each situation within the 300,000-plus positions up for
    review.

        [Whereupon, at 4:30 p.m., the subcommittee adjourned.]

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2006

                                  ----------

                           WEDNESDAY, APRIL 13, 2005

                                   U.S. Senate,
                             Subcommittee on Personnel,
                                   Committee on Armed Services,
                                                        Washington, DC.

          ACTIVE AND RESERVE MILITARY AND CIVILIAN PERSONNEL PROGRAMS

        The subcommittee met, pursuant to notice, at 1:34 p.m., in
    room SR-232A, Russell Senate Office Building, Senator Lindsey
    O. Graham (chairman of the subcommittee) presiding.
        Committee members present: Senators Graham and E. Benjamin
    Nelson.
        Committee staff member present: Leah C. Brewer, nominations
    and hearings clerk.
        Majority staff members present: Diana G. Tabler,
    professional staff member; and Richard F. Walsh, counsel.
        Minority staff members present: Gabriella Eisen, research
    assistant; Gerald J. Leeling, minority counsel; and Peter K.
    Levine, minority counsel.
        Staff assistants present: Nicholas W. West and Pendred K.
    Wilson.
        Committee members' assistants present: Meredith Moseley,
    assistant to Senator Graham; and Eric Pierce, assistant to
    Senator Ben Nelson.

        OPENING STATEMENT OF SENATOR LINDSEY O. GRAHAM, CHAIRMAN

        Senator Graham. Good afternoon. Thank you all for coming.
        We are going to be having votes at 1:45, so we will handle
    that the best we can. Senator Nelson, the ranking member, is on
    the way, but I thought I would try to do something unusual for
    the Federal Government: get started on time, and end in an
    efficient manner here. [Laughter.]
        But before we start, to show where our priorities are,
    General Helmly, you have some soldiers here I understand.
    Right?
        General Helmly. Yes.
        Senator Graham. Do you mind introducing them now?
        General Helmly. I would love to. Thank you.
        Sir, I would like to introduce 1st Lieutenant Matthew Brown
    and Specialist Jeremy Church. Both are veterans of the 724th
    Transportation Company that was ambushed outside Baghdad on
    April 9, the 1-year anniversary of the fall of Baghdad. That
    was the action in which we had several contractors killed, and
    several contractors wounded. It was the action in which
    Sergeant Matt Maupin was captured and remains captured to this
    day.
        Specialist Church was recently awarded the Silver Star, the
    third highest award for heroism in our country. His platoon
    leader was 1st Lieutenant Brown who was seriously wounded that
    day.
        I am privileged to introduce them to the distinguished
    members of this committee. [Applause.]
        Senator Graham. Thank you for your presence and that is a
    good reminder of what we are all here to do, to win the fight
    and take care of those people who are involved in the fight.
        The subcommittee will come to order.
        The subcommittee meets today to receive testimony on the
    National Guard and Reserve and civilian personnel programs in
    review of the defense authorization request for fiscal year
    2006.
        Last week we had our first subcommittee hearing of the year
    with Secretary Chu, the Service Personnel Chiefs, and witnesses
    from The Military Coalition and the National Military Alliance,
    who testified about key issues relating to the fiscal year 2006
    budget. We had a good discussion about legislative proposals,
    several of which would affect the National Guard and Reserve,
    proposals such as increased health care benefits under TRICARE,
    which I am committed to achieving; improved retirement and
    survivor benefits; and new incentive pays aimed at improving
    recruiting and retention. I anticipate that we will touch on
    some of these subjects at this hearing.
        Today our focus is on the status of the National Guard and
    Reserve. As we move into the third year of Operation Iraqi
    Freedom (OIF), we recognize the continuing stress on the force.
    We are concerned about the effects of wartime operations on
    meeting recruiting, retention, and readiness goals. We would
    like to hear your assessments about these challenges and about
    the well-being of Reserve and Guard families and the levels of
    support you are receiving from employers and communities across
    the Nation.
        I am sure our witnesses would agree that the threats our
    Nation faces today have resulted in difficult but essential
    reexamination of old ways of organizing, training, and
    mobilizing our Reserve Forces. We have benefited greatly from
    their leadership in overcoming many obstacles in wartime, while
    transforming forces that have distinguished themselves by their
    accomplishments at home and overseas.
        We have two panels before our subcommittee this afternoon.
    First we will hear from Thomas Hall, the Assistant Secretary of
    Defense for Reserve Affairs. Welcome, Mr. Hall. Thank you very
    much. He is joined by Lieutenant General H. Steven Blum, Chief
    of the National Guard Bureau; Lieutenant General Roger Schultz,
    Director of the Army National Guard; and Lieutenant General
    Daniel James, Director of the Air National Guard. Gentlemen,
    welcome to you all.
        General Schultz, I understand that this will be your last
    appearance before the subcommittee in your capacity as Director
    of the Army National Guard. Congratulations on your 42 years of
    Active and Reserve service which began in 1963. Senator
    Thurmond would have been proud of that. [Laughter.]
        I note that you have served since June 1998, almost 7
    years, as the Director of the Army National Guard, and that is
    a record to be proud of. Thank you for your great contribution
    to our Nation. [Applause.]
        Our second panel will consist of the chiefs of the Army,
    Navy, Marine Corps, and Air Force Reserve, and we would like to
    ask Secretary Hall to remain and participate on that panel, if
    you would, sir.
        At this time, my partner, a great Senator from Nebraska who
    has been a joy to work with, Senator Nelson, the ranking
    member.

                STATEMENT OF SENATOR E. BENJAMIN NELSON

        Senator Ben Nelson. Thank you very much, Mr. Chairman. I
    want to thank you for holding this important hearing today. I
    join you in welcoming all of our witnesses, both civilian and
    military, the leadership responsible for our Guard and Reserve
    Forces, and to say personally thank you for your kind remarks.
        Our Guard and Reserve Forces are facing some very
    significant challenges this year. We need to understand these
    challenges so we can authorize sufficient end strength to meet
    mission requirements and to ensure that our military leaders
    have the tools they need to recruit and retain the right
    people.
        It is also important that we understand where the
    Department of Defense (DOD) is going with the end strengths of
    Reserve components. Right now, I would say that the Department
    seems to be sending a mixed message. For example, last year DOD
    proposed, and we authorized, an increase of 300 airmen for the
    Air Force Reserve. This year DOD proposes to cut that increased
    end strength by 2,100 airmen. Last year, DOD proposed and we
    authorized a cut to the Naval Reserve of 2,500 military
    personnel. This year DOD proposes to cut an additional 10,300.
    These seem like very significant cuts for a Service with a
    current end strength of only 83,400.
        What we really need to understand is what the Department
    has in mind over the long haul, and we are not suggesting that
    there may not be something in mind, but we have to know what it
    is.
        Our Guard and Reserve Forces are being called into Active
    service at a far higher rate than any of us had ever
    anticipated. Today 46 percent of the troops in theater for
    Operation Enduring Freedom (OEF) and OIF are National Guard and
    Reserve personnel, and they are serving, I might add,
    magnificently, and for that we are deeply appreciative and very
    proud of that service.
        But the question remains, how long can we keep this up? How
    long can they keep this up?
        Frequent and long deployments have a significant impact on
    the service man or woman who is called away from home, family,
    and employment. These mobilizations also significantly impact
    the family and employers who have to figure out how they can
    function up to 2 years without the father or mother or a key
    employee who is off serving his or her Nation.
        It is unlikely that the Army National Guard or the Army
    Reserve will achieve their recruiting goals this year, even
    though we hope that they will. Despite excellent retention
    rates, that could put achieving authorized end strengths at
    risk.
        We need to look at recruiting and retention incentives to
    help them out. Offering the TRICARE health benefit, as you have
    proposed, Mr. Chairman, is certainly worthy of very serious
    consideration.
        I also believe that the Nation has yet to answer the
    question about the future role of our Reserve components. What
    is the role of our National Guard and Reserve Forces in today's
    National Security Strategy? How should they be integrated into
    homeland security and homeland defense? Do we need to limit
    deployments, both in length and number? Just where should our
    Guard and Reserve Forces fit in the array of military forces
    available for deployment?
        Last year, for example, we authorized a commission on the
    National Guard and Reserves to help us understand and address
    issues like these. The members of this commission have not yet
    been appointed. We need this commission to get up and running
    to help us understand the needs of our Guard and Reserve
    Forces.
        Our Guard and Reserve Forces must be trained and ready, but
    obviously, the question is, ready for what? Until we know how
    they will be used, we do not know what to train them for or
    even how to equip them. Today it appears that our National
    Guard and Reserve Forces are primarily forces available for
    deployment. Would they be better used if they were more
    integrated into our homeland security/homeland defense mission?
    If so, they would still be available for deployments, but not
    first in line. We need to know the vision for the use of our
    National Guard and Reserves so that we can ensure that they are
    prepared for that mission.
        I must say that as a former Governor, I understand the
    concerns of current Governors about whether their National
    Guard personnel will be available to them to respond to State
    emergencies. I had to use them on several occasions,
    unfortunately, and they were available. I believe that some
    States with a high risk of wildfires have a large portion of
    their National Guard currently deployed overseas. Other States
    are concerned that they will have to activate National Guard
    personnel who have just returned from long overseas
    deployments, but unfortunately, they may not have a choice.
        Mr. Chairman, we are all fully aware that our Nation cannot
    successfully conduct a significant military operation without
    the participation of our National Guard and Reserve personnel,
    and I know you know that personally.
        So I look forward to the testimony of our witnesses
    regarding these questions and how we can address the
    significant problems that they are facing, and therefore, we
    are facing. Thank you, Mr. Chairman.
        Senator Graham. Thank you, Senator Nelson.
        Both of us are very excited about this hearing because we
    want to help. Please be as candid as possible. You will help us
    immensely to help people like the lieutenant and the specialist
    here, and that is the goal, to make sure the force has what it
    needs.
        Mr. Secretary, if you want to put your written statement in
    the record, you may do so, and if you will kick it off and make
    an opening statement please.

       STATEMENT OF HON. THOMAS F. HALL, ASSISTANT SECRETARY OF
                      DEFENSE FOR RESERVE AFFAIRS

        Mr. Hall. Thank you. I hate, for many reasons, to see
    Lieutenant General Schultz leave because I, like he, joined in
    1963 when I joined the Navy, which is going to make me the
    oldest guy around now that the General is gone, and I hate to
    see that. [Laughter.]
        Chairman Graham and Senator Nelson, I want to thank you for
    the invitation to offer my perspective on the status and
    ability of America's Reserve components to meet current and
    future operational requirements.
        I also have something a bit different, if it is all right
    with you. I have talked to my colleagues, and they have agreed
    it is okay for me to make one opening statement and enter all
    of our statements in the record, and then get right on with the
    dialogue that we need.
        Senator Graham. That would be fine.
        Mr. Hall. Having visited with the Reserve component members
    all over the world, I would like to offer my perspective, which
    may assist you in making the critical and difficult decisions
    you face over the next several months. This committee has been
    and continues to be very supportive of our Reserve components,
    and we appreciate that. On behalf of those nearly 1.2 million
    men and women, I want to publicly thank you for all the help
    you are providing them. The Secretary and I are deeply
    grateful. Our military personnel certainly appreciate it, and
    we know the men and women who serve in the Guard and Reserve
    can count on your continued support.
        As the Assistant Secretary of Defense for Reserve Affairs,
    I consider it my personal responsibility to visit with our
    Reserve component members in the field. I forged that view from
    my 34 years of Active-Duty service and commanding the Naval
    Reserve for 4 years.
        During these visits to the field, I see America's finest
    young men and women serving their Nation with pride and
    professionalism, and I have taken to saying--and I believe it
    in all honesty--that this is the next ``greatest generation''
    we are seeing now. That wonderful World War II generation will
    always be, but they are quickly forging themselves into the
    next greatest generation.
        I just returned from Central Command (CENTCOM) area of
    responsibility (AOR) and have recently visited several States
    and Governors, and I can report to you that our Guard and
    Reserve men and women are performing vital national security
    functions at home and around the world in superb fashion.
    Throughout my travels, I have carefully listened to their
    comments, their concerns, and suggestions of the young men and
    women and their families. Many of my remarks will reflect what
    I hear from them directly on the drill deck and in the field.
        We are still in the midst of one of the longest periods of
    mobilization in our history. This mobilization continues to
    reveal many areas that need improvement. You have mentioned
    them. Our Service components remain at a pivotal point, and how
    we collectively navigate this turbulent period in our history
    will affect all of our forces, both Active and Reserve for some
    time to come. Our Reserve Forces are certainly stressed, as you
    have said, and they always are when the Nation is at war.
        Recruiting and retention are demanding tasks in today's
    environment. We are trying to simultaneous rebalance and
    transform to meet the challenges of the 21st century while
    still maintaining a viable warfare footing. We are continuing
    to closely monitor the impact of the ongoing mobilization of
    our Guard and Reserve members, their families and their
    employers. They are the key triad to the long-term viability of
    our Guard and Reserve.
        Some areas of our Reserve components are stressed, and some
    of these are a result of many factors, which include imbalance
    in the type of forces and skill sets, uncertainty about the
    frequency and duration of mobilizations, resourcing of
    equipment and materiel to reset the Reserve components. I am
    confident that the modifications you made to the statute in
    last year's authorization act, as well as management
    initiatives and policies that we have put in place, will help
    to mitigate some of the stress. We have more we need to do.
        The Secretary of Defense has expressed the need to promote
    careful use of the Reserve components through a series of force
    rebalancing initiatives that will allow us to fully employ more
    of our forces in the war effort. As part of this effort, he
    directed the military departments to structure the Active and
    Reserve Forces to reduce the need to always involuntarily
    mobilize these forces during the initial stages of a conflict,
    and he asked that all the Services develop planning factors to
    limit the frequency of involuntary mobilization for our Guard
    and Reserve Forces.
        All of the Services are in the process of doing this. Our
    efforts are being applied across the spectrum to guarantee we
    are doing everything we can to achieve success. Examples
    include aggressively implementing the bonus authorities, making
    permanent the new TRICARE authorities, increasing our efforts
    in recruiting and retention, aiding our military families, and
    ensuring our employers are informed and aware of service
    requirements. The legislative proposals we are submitting as
    part of the fiscal year 2006 budget will help in these efforts.
        Collectively my colleagues and I look forward to your
    questions, and again, thank you for this opportunity, Mr.
    Chairman.
        [The prepared statements of Mr. Hall, General Blum, General
    Schultz, and General James follow:]
                   Prepared Statement by Hon. Thomas F. Hall
                                  introduction
        Chairman Graham, Senator Nelson, and members of the subcommittee:
    thank you for the invitation to offer my perspective on the status and
    ability of America's Reserve component forces to meet current and
    future operational requirements. I would like to provide information to
    assist you in making the critical and difficult decisions you face over
    the next several months. This committee has always been very supportive
    of our National Guard and Reserve Forces. On behalf of those men and
    women, I want to publicly thank you for all your help in providing for
    our Reserve components. The Secretary and I are deeply grateful, our
    military personnel certainly appreciate it, and we know we can count on
    your continued support.
        the assistant secretary of defense for reserve affairs' mission
        The mission of the Assistant Secretary of Defense for Reserve
    Affairs (ASD/RA), as stated in Title 10 of the United States Code
    (U.S.C.), is the overall supervision of all Reserve components' affairs
    in the Department of Defense (DOD). I make it a priority to visit with
    our Reserve component members in the field, and during those visits I
    see America's finest young men and women serving their Nation with
    pride and professionalism. Our Guard and Reserve men and women perform,
    in a superb fashion, vital national security functions at home and
    around the world, and are closely interlocked with the States, cities,
    towns, and communities in America. Throughout my travels, I have seen
    and listened to the men and women in our Guard and Reserve at hundreds
    of sites throughout the world. My staff and I have spent time with
    members of the Guard and Reserve, and we have listened carefully to
    their comments, concerns, and suggestions. As you already know, the
    stress on the force has increased and we are continuing to closely
    monitor the impact of that stress on our Guard and Reserve members, on
    their families and their employers.
        In the 3 years since September 11, 2001, our Reserve components
    have performed extremely well in missions ranging from humanitarian
    assistance to high intensity combat operations; and in the case of the
    National Guard, State missions, too. At the same time, these operations
    have presented a number of challenges, particularly for our ground
    forces, which carry the weight of our security and stabilization
    efforts in Iraq and Afghanistan. The continuing challenge is to sustain
    our military forces for the current operations while meeting our other
    worldwide commitments.
        Currently, the deployment burden is not shared equally among all
    the Reserve components, but focused on those specific capabilities and
    skills required for stabilization and security operations in Iraq and
    Afghanistan. For example, there are currently high demands in theater
    for Military Police (MPs), Civil Affairs and military intelligence
    personnel, and engineers. In the Army, large portions of these
    communities are currently deployed, recently deployed, or scheduled to
    deploy. Further, since certain of these skills reside predominantly in
    our Reserve components, we have called upon many of our citizen
    soldiers to serve, and they have done so admirably.
                       purpose of the reserve components
        The purpose of the Reserve components has changed. They are no
    longer a strategic reserve--a force to be held in reserve to be used
    only in the event of a major war. They are an operational reserve that
    supports day-to-day defense requirements. They have been an operational
    reserve ever since we called them up for Operation Desert Shield.
        I appreciate the committee's support last year, when you authorized
    a change to the stated purpose of the Reserve components in title 10
    U.S.C. This revision more accurately reflects the way we have employed
    the Reserve and National Guard over the past decade and how we intend
    to utilize them in the future.
                        reserve component missions today
        The Reserve components have performed a variety of non-traditional
    missions, as a result of the events of September 11, in support of the
    global war on terrorism. One such mission is the training of the Iraqi
    and Afghan national armies. The Reserve components are now providing
    command and control and advisory support teams in support of the
    training that will allow Iraqi and Afghan forces to assume a greater
    role in securing their own countries.
        In addition, the Reserve component supports missions in the
    Balkans, at Guantanamo, in the Sinai, and are found integrated with our
    Active Forces throughout the world.
        By far the most demanding operations are Operation Enduring Freedom
    (OEF) and Operation Iraqi Freedom (OIF). Reserve components currently
    furnish 46 percent of the troops in theater, and will likely furnish 39
    percent in the next rotation. The Reserve components will remain an
    integral player in homeland defense, in Operation Noble Eagle, and the
    National Guard will remain a dual-missioned force under both Titles 10
    and 32.
                                    policies
        Recognizing that the global war on terrorism will last for a number
    of years, the Department established a strategic approach to ensure the
    judicious and prudent use of the Reserve components in support of the
    war effort. The personnel policy guidance published in September 2001
    established the guidelines for using the National Guard and Reserve to
    support combatant commander requirements. This policy guidance
    specified that:

             Reservists should normally be given 30 days notice of
            mobilization.
             No member of a Reserve component called to involuntary
            Active-Duty under the current partial mobilization authority
            shall serve on Active-Duty in excess of 24 cumulative months.
            (There are no plans to expand the mobilization period to a
            policy of 24 consecutive months.)
             Reserve members may serve voluntarily for longer
            periods of time in accordance with Service policy.
             Service Secretaries may release individuals prior to
            the completion of the period of service for which ordered based
            on operational requirements.

        In July 2002, the personnel policy guidance was expanded to require
    proactive management of Guard and Reserve members, particularly
    focusing on husbanding Reserve component resources and being sensitive
    to the quality-of-life of mobilized personnel and the impact on
    civilian employers of reservists. This policy guidance contained four
    key elements:

            1. It reemphasized the maximum period of mobilization.
            2. It reminded the Services of the requirement to achieve
            equitable treatment, to the extent possible, among members in
            the Ready Reserve who are being considered for mobilization--
            considering the length and nature of previous service, family
            responsibilities, and civilian employment.
            3. It required management of individual expectations,
            considering morale and retention, by ensuring:

                     Reserve component members are performing
                    essential and meaningful tasks.
                     Reservists are provided as much predictability
                    as possible.
                     Orders are issued in a timely manner, with a
                    goal of 30 days minimum prior to deployment. (Today,
                    early notifications are now the norm, not the
                    exception.)
                     Reservists are provided as much of a ``break''
                    as possible before involuntarily recalling the members
                    a second or subsequent time, with a goal of providing a
                    break of at least 24 months.

            4. It required tailoring mobilization and demobilization
            decisions by using both Selected Reserve units and individuals,
            as well as volunteers, prior to involuntarily calling members
            of the Individual Ready Reserve (IRR), unless precluded because
            of critical mission requirements; and maximizing the use of
            long-term volunteers when possible to meet individual
            augmentation requirements.

        It is within this framework that we have managed the Reserve
    components. We will continue to assess the impact mobilization and
    deployments have on Guard and Reserve members and adjust our policies
    as needed to sustain the Reserve components.
        In his July 9, 2003, Rebalancing Forces memo, the Secretary of
    Defense reiterated the need to promote judicious and prudent use of the
    Reserve components through a series of force rebalancing initiatives
    that reduce strain on the force. As part of this effort, he directed
    the military departments to structure the Active and Reserve Forces to
    reduce the need for involuntary mobilizations during the first 15 days
    of a rapid response operation, and to plan involuntary mobilizations,
    when feasible, to not more than 1 year in every 6 years.
                              stress on the force
        There has been considerable discussion about the stress that the
    global war on terrorism is placing on the force--both Active and
    Reserve. From my perspective, the dominant question is: what level of
    utilization can the Guard and Reserve sustain while still maintaining a
    viable Reserve Force?
        Answering this question involves a number of issues. But first it
    is necessary to quantify how much of the Reserve Force we have used as
    of January 2005 to support the global war on terrorism. Then I will
    describe the effect that our rate of utilization is having on the
    Reserve Force.
        The overwhelming majority of Guard and Reserve members want to
    serve, and they want to be part of the victory in this war on
    terrorism. That is why they joined the Guard or Reserve and that is why
    they serve this Nation. But we must also be mindful of the Reserve
    service commitment, which includes drills, annual training, and the
    requirement to serve on Active-Duty when called. We must do everything
    we can to provide reasonable service requirements within the context of
    that commitment by using the Reserve Force wisely. We must also be
    mindful of the additional responsibilities that National Guard members
    bear to their respective State or territory.
    Reserve Utilization to Date
        There are two ways to look at rates of mobilization for the Guard
    and Reserve. The first is to look at all Reserve component members who
    have served since September 11, 2001--the cumulative approach.
        Under the cumulative approach, a total of just under 430,000 Guard
    and Reserve members have been mobilized between September 11, 2001 and
    January 31, 2005. That represents just under 37 percent of the
    1,160,768 members who have served in the Selected Reserve during this
    period. Of the total number of Guard and Reserve members who have been
    activated under the current partial mobilization authority, 67,666 (or
    5.8 percent of all members who have served in the Selected Reserve
    Force since September 11, 2001) have been mobilized more than once. Of
    the 67,666, a total of 55,650 (4.8 percent) have been mobilized twice,
    9,101 (less than 1 percent) have been mobilized three times and just
    over 2,915 (three tenths of 1 percent) have been mobilized more than
    three times. No reservist has been involuntarily mobilized for more
    than 24 cumulative months.
        The other way to look at mobilization is in terms of today's
    force--those who are currently serving. Looking at today's force of
    840,596 Reserve component members currently serving, as of January
    2005, we have mobilized 364,360 Reserve component members, or 43
    percent of the force.
    Effects of Reserve Utilization
        The Department has monitored the effects of Reserve utilization and
    stress on the force since 1996. The key factors we track are: (1) end
    strength attainment; (2) recruiting results; (3) retention; (4)
    attrition; and (5) employer/reservist relations.
        End Strength Attainment
        From fiscal year 2000 (just before we entered the global war on
    terrorism) through 2003, the Reserve components in the aggregate were
    at or slightly above 100 percent of their authorized end strength. Last
    year the Reserve components in the aggregate were slightly below their
    authorized end strength: achieving 98.4 percent.
        Recruiting Results
        In a very challenging recruiting environment, the DOD Reserve
    components achieved 96 percent of their fiscal year 2004 recruiting
    objectives. Four of the six DOD Reserve components achieved their
    recruiting objectives. The Army National Guard fell short by 7,200
    (achieving 87 percent of its recruiting objective), and the Air
    National Guard fell short by less than 600 (achieving 94 percent). End
    strength results were stronger, because retention was up in the
    majority of the components.
        Fiscal year 2005 will continue to be a challenging year for Reserve
    recruiting--particularly in the Reserve components of the Army. During
    the first 4 months of fiscal year 2005, all of the Reserve components
    were somewhat below their recruiting objectives, with the exception of
    the Marine Corps Reserve, which exceeded its year-to-date recruiting
    objective.
        Retention
        The requirements to support the global war on terrorism--
    particularly our commitment in Iraq--have clearly placed a strain on
    the Reserve Force. Nonetheless, measuring those who reenlist at the
    completion of their current contract, we find that reenlistments were
    slightly higher (by about 4,000) in fiscal year 2004 than they were in
    fiscal year 2003 up from 94.5 percent of goal in fiscal year 2003 to
    95.5 percent of goal in fiscal year 2004. This is a very positive trend
    and appears to be holding for the first 4 months of fiscal year 2005.
    We are closely monitoring retention, particularly for those members who
    have been mobilized and deployed to support operations in Iraq and
    Afghanistan.
        Attrition
        Measuring all losses, regardless of reason, from the Reserve
    components, we find that enlisted attrition remained below established
    ceilings throughout fiscal year 2004, also a very positive trend.
        Through January 2005, enlisted attrition is on track to remain
    below the ceiling established by each Reserve component, except for the
    Army National Guard. At the current rate, it appears the Army National
    Guard may end the year at 2 to 3 percent above its established ceiling
    of 18 percent. The Navy Reserve is 2 percent above its historical
    attrition rate thus far, but this is the direct result of programmed
    end strength reduction.
        Employer/Reservist Relations
        We respond to all inquiries we receive from an employer, family
    member, or individual guardsmen or reservist. The number of complaints
    filed with the Department of Labor under the Uniformed Services
    Employment and Reemployment Rights Act (USERRA) declined each year from
    1995 through 2000. Complaints filed during the first 3 years of the
    global war on terrorism have increased, but the ratio (as seen below)
    to the total number of duty days of operational support actually
    declined. For example, over the last 3 years the duty days performed by
    reservists have tripled in relation to the complaints received.
    Mitigation Strategies
        The Department has employed several strategies to help reduce the
    stress on the force. One of the first and most important strategies is
    to rebalance the force. The purpose of rebalancing is to fashion the
    force to be responsive, producing the capabilities we need today. The
    old force was designed to respond to Cold War threats. Rebalancing
    improves responsiveness and eases stress on units and individuals by
    building up capabilities in high demand units and skills. This is
    accomplished by converting capabilities in both the Active and Reserve
    components that are in lesser demand, changing lower priority structure
    to higher priority structure, which will result in a new Active
    component/Reserve component mix. As outlined in the report Rebalancing
    Forces: Easing the Stress on the Guard and Reserve, which was published
    January 15, 2004, the rebalancing effort also seeks to establish a
    limit on involuntary mobilizations to achieve a reasonable and
    sustainable rate. The force structure planning goal aims to limit the
    involuntary mobilization of individual reservists to 1 year out of
    every 6.
        The Services are improving their posture with respect to Active
    component/Reserve component mix by rebalancing about 50,000 spaces
    between fiscal years 2003 and 2005. The Services have planned and
    programmed additional rebalancing initiatives for fiscal year 2006
    through 2011. The amount and type of rebalancing varies by Service. By
    2011 we expect to have rebalanced about 100,000 spaces. The Army, as
    the largest and the Service most stressed by the global war on
    terrorism, will have the bulk of the additional rebalancing. Easing
    stress on the force through rebalancing includes more than just
    military-to-military conversions.
        A second initiative is the conversion of military spaces to DOD
    civilian positions or contractors. The purpose of this initiative is to
    move military out of activities not ``military essential.'' The
    military resources gained through this initiative are being converted
    to high demand/low density units and stressed career fields, which
    reduces stress on the force. All the services have an aggressive
    program to convert military to civilian over the next few years. We
    converted over 8,400 military spaces to civilian manning in fiscal year
    2004 and plan to convert over 16,000 additional in fiscal year 2005.
        The application of technology is also being used to offset
    requirements for military force structure, making more military spaces
    available to ease the stress in high demand areas. The U.S. Air Force
    just completed a 2-year joint effort where-in Army Guard personnel
    furnished security for Air Force installations. This was a very
    successful interim step until the Air Force could field technology to
    meet their demands for installation security throughout the world.
        Third, to ease the burden on some high demand, low density units
    and skills, we have employed innovative joint concepts to spread
    mission requirements across the entire Reserve Force. For example, we
    have Navy and Air Force personnel augmenting ground forces in Iraq.
        A fourth area is innovative force management approaches under our
    continuum of service construct. This approach maximizes the use of
    volunteers, provides greater opportunities for reservists who are able
    to contribute more to do so, and offers innovative accession and
    affiliation programs to meet specialized skill requirements.
        Under the old rules, constraints in end strength and grade
    accounting hindered the use of Reserve volunteers. Because reservists
    were counted as Active-Duty end strength and were required to compete
    for promotion against Active-Duty personnel, reservists were reluctant
    to volunteer for extended periods of Active-Duty. We are extremely
    grateful to Congress for removing these barriers with a new strength
    accounting category that was included in last year's defense
    authorization act for reservists performing operational support.
        I want to take this opportunity to personally thank the committee
    for its support of our continuum of Service initiatives. These policies
    and initiatives were developed to preserve the nature of the ``citizen
    soldier'' while still allowing us to meet operational requirements.
    Predictability and reasonable limits on frequency and duration of
    mobilization are key elements of our policies, which are designed to
    not only support reservists, but also sustain the support of employers
    and families, and ultimately enable the components to meet recruitment
    and retention objectives. Similarly, the emphasis on volunteerism is
    designed to allow servicemembers who want to shoulder a greater burden
    of mobilization to do so.
        Adhering to these policy guidelines and program changes will allow
    the Reserve components to sustain a utilization rate not to exceed 17
    percent per year in the near future. Our policies limit the
    mobilization period and limit the frequency with which Reserve
    component members may be mobilized (e.g., to no more than 1 year in
    every 6 years). The Department must also complete its rebalancing
    effort. This will provide reservists with reasonable tour lengths and
    give reservists, their families, and their employers a reasonable
    expectation of the Reserve service requirements. We believe that with
    these parameters, we can sustain a viable Reserve Force and preserve
    the citizen-soldier.
    Meeting Future Requirements
        The Army's initiative to create provisional units--drawing upon
    underutilized skills to meet current mission requirements--and the DOD
    initiative to draw from skill sets in other components and Services--
    the joint solution--are the near-term strategies being employed today.
    We will continue to maximize the use of volunteers when possible.
    Retiree and IRR members provide a source of volunteers. While
    volunteers from members of the Selected Reserve are also an option,
    consideration must be given to pending unit deployments and the need
    for unit cohesion.
        Compared to Operation Desert Storm when we mobilized 30,000 IRR
    members, we have not used the IRR in as great a number to support the
    global war on terrorism. In the past 3 years, we have mobilized 8,631
    IRR members. The further utilization of the IRR remains a viable option
    for meeting both near-term and long-term commitments. We must establish
    the proper expectations for our Reserve component members, their
    families, their employers, and the public in general. We are
    undertaking a program to establish those expectations: reasonable
    service requirements for the 21st century based on the frequency and
    duration of military duty, and predictability to the greatest extent
    possible.
        For the long term, we will continue to pursue these transformation
    strategies energetically. Rebalancing the force will continue, as will
    the conversion of military to civilian positions. The Army's
    transformation to a modularized structure will significantly help
    relieve stress on the force.
        Specific examples of rebalancing include:

             Forming 18 provisional MP companies from artillery
            units;
             Converting underused force structure to Civil Affairs,
            psychological operations, chemical, Special Operating Forces,
            and intelligence; and
             Transitioning Reserve Naval Coastal Warfare squadrons
            to the Active component.

        The overall objective is to have a flexible force capable of
    meeting diverse mission requirements.
                           national guard utilization
        As evidenced by the three devastating hurricanes that hit Florida
    or the wildfires that blazed through our western states during 2004, or
    more recently the flooding in California; the National Guard is a
    crucial element in a Governor's response to natural disasters.
    Similarly, the National Guard has a prominent role in supporting local
    and state authorities in their efforts to manage the consequences of a
    domestic terrorist attack.
        An important part of this effort is the fielding of 55 Weapons of
    Mass Destruction Civil Support Teams (WMD CSTs), one in each State,
    Territory and the District of Columbia. These 55 teams are to support
    our Nation's local first responders as the initial state response in
    dealing with domestic chemical, biological, radiological, nuclear, or
    high yield explosives (CBRNE) by identifying the agents/substances,
    assessing current and projected consequences, advising on response
    measures and assisting with appropriate requests for additional state
    support. Each team is comprised of 22 highly-skilled, full-time, well-
    trained and equipped Army and Air National guardsmen. To date, the
    Secretary of Defense has certified 32 of the 55 congressionally
    authorized teams as being operationally ready.
        The fight against terrorism and the protection of our homeland will
    be protracted endeavors. To that end, many outside policy experts,
    independent panels, and analytic studies have advocated expanded roles
    for the National Guard in homeland security. Some have even suggested
    that the National Guard should be reoriented, reequipped, and retrained
    solely for the homeland security mission.
        However, there has been no national strategy change to justify the
    need to establish a separate role for the National Guard, under which
    it only performs homeland security related missions under new statutes
    or administrative guidelines. There are already sufficient legal
    mechanisms in place that enable state and territorial governors to
    employ their National Guard forces in support of local authorities to
    meet a wide range of these existing missions. For example, in Section
    512 of the Ronald W. Reagan National Defense Authorization Act for
    Fiscal Year 2005, Congress authorized the Secretary of Defense to
    provide funds to a Governor to employ National Guard units to conduct
    homeland defense activities the Secretary determines to be necessary.
        The National Guard is an integral part of the Air Force and Army
    Total Force mission capability. Their roles are vital to the survival
    of the Nation. Therefore, we believe the National Guard should remain a
    dual-missioned military force.
                       effect on recruiting and retention
        The high usage of the Reserve component force has been
    characterized as having a negative effect on Reserve component
    recruiting and retention. Empirical and anecdotal data do support the
    conclusion that the extremely high usage rates will have some negative
    effects. But, those same data also show that low levels of usage have
    negative effects, too. Our Reserve component members are willing to
    serve when called. Also, recent analysis indicates that retention is
    high among Reserve component members whose service and mobilization
    experiences match their expectations. Our job is to ensure that we use
    them prudently and judiciously.
        As we have seen in the first 4 months of this year, this will be a
    very challenging year for recruiting in the Reserve components. As I
    indicated earlier, the Reserve components, with the exception of the
    Marine Corps Reserve, got off to a slow start. But we are seeing
    improvements with overall attainment of recruiting objective for the
    Reserve components increasing from 75 percent in October to 81 percent
    at the end of January. The Marine Corps Reserve continues to lead all
    components at 101 percent of its goal through January, even though of
    the six DOD Reserve components, the Marine Corps Reserve has had the
    greatest percent of its force utilized since September 11, 2001, to
    support the global war on terrorism. All other Reserve components
    except the Army Reserve and Army National Guard have shown great
    improvement since the beginning of the fiscal year.
        To address the recruiting challenges the Reserve components are
    experiencing, they are expanding their recruiter force and using the
    new incentive enhancements in last year's authorization act that best
    meet their needs. The Army National Guard is working closely with the
    various states and territories to rebalance structure as needed to
    ensure the states are properly sized to meet their strength objectives.
    The Air Reserve components are taking advantage of the downsizing of
    the regular Air Force, and they are examining their incentive structure
    to ensure that they can attract and retain sufficient manpower
    resources. Both the Army Reserve and the Army National Guard are
    reallocating significant manpower and other resources to support a
    shift in recruiting emphasis on the non-prior Service market.
        The Department is formulating legislative proposals to enhance
    recruiting further. One area in particular where we need further
    assistance is in providing a reasonable incentive to join the Reserves
    for servicemembers who have separated but still have a military service
    obligation. We have a proposal that will do that by making permanent
    the temporary enhanced bonus authority provided in the fiscal year 2005
    supplemental. Also, the Advisory Committee on Military Compensation
    will be looking at incentive structures and may make suggestions for
    improvements that they believe will assist us in meeting our recruiting
    and retention objectives. We have a representative that is part of the
    staff supporting the commission to ensure the Guard and Reserve
    compensation issues are part of the commission's review. Finally, the
    Commission on the National Guard and Reserves will review personnel pay
    and other forms of compensation as well as other personnel benefits. We
    plan to work closely with these entities as they assess the
    compensation and benefits package needed to sustain a healthy National
    Guard and Reserve.
                               effect on families
        In a recent speech, President Bush stated, ``The time of war is a
    time of sacrifice, especially for our military families.'' This
    administration is sensitive to the hardships and challenges faced by
    Reserve component families, especially when the Reserve component
    member is called up and away from home for an extended period of time.
    All families play a critical role in retention and reenlistment
    decisions.
        We have taken an aggressive, Total Force approach to supporting
    military families. We recognize that many families of National Guard
    and Reserve members do not live close to a military installation where
    many of the traditional family support activities are located. To
    address this problem, we have established over 700 family support
    centers around the country. In fact, the National Guard alone has over
    400 family support centers. These family support centers are not
    component or Service specific, but they are available to the family of
    any servicemember, regardless of component or Service.
        For the first time ever, the Department has implemented a 24-hour/7
    day a week toll-free family assistance service--Military OneSource. The
    support provided through this service is particularly important for
    young families or families of reservists who are not familiar with
    military service. Military OneSource can assist with referrals for
    every day problems such as child care and how to obtain health care.
        We are also taking maximum advantage of technology--using the
    worldwide web to provide information that will help families cope with
    the mobilization and deployment of their spouse, son, daughter,
    brother, sister, relative or friend. The website includes a ``Guide to
    Reserve Family Member Benefits,'' which is designed to inform family
    members about military benefits and entitlements, and a ``Family
    Readiness Tool Kit,'' which provides information to assist commanders,
    servicemembers, family members and family program managers in preparing
    Guard and Reserve members and their families for mobilization,
    deployment, redeployment/demobilization and family reunions.
                 reserve component health benefit enhancements
        The Department is moving forward expeditiously to implement recent
    benefit enhancements for Reserve component members and their families.
    Recent legislative action dramatically improved health benefits. You
    have made permanent an earlier TRICARE eligibility (up to 90 days prior
    to activation) for certain Reserve component members and the extension
    of post-mobilization coverage for 180 days.
        In April 2005 the Department will implement the premium-based
    ``TRICARE Reserve Select'' program, offering medical coverage to
    reservists and family members who have participated in contingency
    operations since September 11 and who will commit to continued service
    in the Selected Reserve. DOD will offer the same coverage available to
    Active-Duty families under TRICARE Standard, the fee-for-service option
    of TRICARE. This coverage was originally modeled on Blue Cross and Blue
    Shield High Option coverage in the Federal Employee Health Benefits
    Program (FEHBP), and is comparable to many high-quality commercial
    plans. The statute requires that premiums be set at 28 percent of an
    amount determined to be reasonable for the coverage. DOD will use the
    premiums for Blue Cross and Blue Shield Standard option under the FEHBP
    and adjust them to reflect our population.
        Taking care of our servicemembers who have been wounded in combat
    or may experience adverse psychological effects of armed conflict is
    one of our highest priorities. To complement and augment service
    programs such as the Army's Disabled Soldiers Support System (DS3), and
    the Marine Corps' Marine for Life (M4L), the Office of the Secretary of
    Defense has opened the Military Severely Injured Joint Support Center.
    This center is a 24/7 operation to serve as a safety net for any
    servicemember or family member who has a question or is experiencing a
    problem.
                              effect on employers
        The mission of the National Committee for Employer Support of the
    Guard and Reserve (ESGR) is directly related to retention of the Guard
    and Reserve Force. ESGR's mission is to ``gain and maintain active
    support from all public and private employers for the men and women of
    the National Guard and Reserve as defined by demonstrated employer
    commitment to employee military service.'' Employer support for
    employee service in the National Guard and Reserve is an area of
    emphasis given the continuing demand the global war on terrorism has
    placed on the Nation's Reserve component and the employers who share
    this precious manpower resource. We should state up front that the
    broad-based, nationwide support for our troops by employers has been
    and continues to be superb. We owe all of our employers a debt of
    gratitude.
        One can grasp a sense of the enormous challenge facing ESGR by
    considering the following aggregate numbers, which help us understand a
    dynamic and complex human resource environment. There are 7.4 million
    employers identified by the U.S. Census Bureau. These employers, from
    the senior leadership, to the human resource managers, and down to the
    supervisors, must understand, observe, and apply the tenants of the
    USERRA. Towards that end, ESGR has established a Customer Service
    Center hotline (800-336-4590) to provide information, assistance, and
    gather data on issues related to Reserve component employment. We
    established the Civilian Employment Information (CEI) database
    requiring Reserve component members to register their employers in the
    Defense Manpower Data Center. The synergy derived from linking these
    databases enables ESGR to measure and manage employment issues.
        Misunderstandings between employers and Reserve component members
    do arise. ESGR Ombudsmen provide ``third party assistance'' and
    informal mediation services to employers and Reserve component members.
    Ombudsmen provide assistance in the resolution of employment conflicts
    that can result from military service. ESGR has an initiative to train
    volunteers in mediation techniques to provide more effective service.
    Mediation training will be expanded when additional resources are
    available.
        Other major initiatives by the ESGR National Staff include:

             Establishing a Defense Advisory Board (DAB) for
            Employer Support (comprised of senior leadership from the
            entire spectrum of the employer community) to provide advice on
            issues critical to shared human capital.
             Transitioning non-warfighting military billets on ESGR
            staff into DOD civilian positions or contractors in accordance
            with Secretary of Defense's military transformation initiative.
             Employing information technology systems to create
            ESGR volunteer manpower efficiencies.
             Initiating a scientific survey of employer attitudes
            in cooperation with the Uniformed Services University of the
            Health Sciences.
             Enhancing strategic relationships with employer
            organizations such as the U.S. Chamber of Commerce, National
            Federation of Independent Business, Society for Human Resource
            Management, and professional associations.
             Implementing a follow-up process to promote the
            mission of ``gain and maintain'' employer support by
            encouraging employers to sign a statement of support, review
            their human resource policies, train managers and supervisors,
            adopt ``over and above'' policies, and to become advocates.
             Building on marketing successes achieved in the Civic
            National Employer Outreach program, involved 9 governors, 2
            Senators, 19 mayors, 17 Adjutants General, and exposed ESGR to
            well over 250,000 employers.
             Gaining significant national exposure in traditional
            and new media with the singular focus of defining the American
            employers' role in national security.
                        equipment and facility readiness
    Equipment Readiness
        We're very proud of how the Reserve components are managing the
    resources they are given to support the war effort. Great strides have
    been made in the procurement of high-mobility multipurpose wheeled
    vehicle (HMMWVs), radios, Family of Medium Tactical Vehicles (FMTVs),
    construction and maintenance equipment, field medical equipment, M4
    Carbines, M240B machine guns, and night vision goggles, to name a few.
        The Services are looking at the combined effects of high war-time
    usage rates of equipment along with the harsh operating environment.
    These factors are causing higher operations and sustainment costs. The
    Army Depots are working to develop comprehensive repair and rebuild
    programs to extend the service life of this equipment, both in theater
    and stateside. Maintenance of aging equipment is a priority of the
    Department. Over the last 7 years, Depot level funding has averaged 84
    percent of the requirement.
        We are excited about the future. The Department is focused on the
    Reserve component efforts to integrate into a cohesive Total Force with
    the Active component. This will result in a Total Force capable of
    meeting all requirements through a combination of equipment
    redistribution from the Active component, new procurements, and
    sustained maintenance.
    Military Construction
        The Reserve components' military construction programs will provide
    new Readiness Centers, Armed Forces Reserve Centers, vehicle
    maintenance facilities, organizational maintenance shops, and aircraft
    maintenance facilities for Reserve component missions. These new
    facilities will continue to address both the new mission and current
    mission requirements of the Reserve components in support of military
    transformation programs. Future budget requests will also continue the
    Department's efforts to improve the quality of life for the Guard and
    Reserve, which for the non-mobilized reservist, is not normally housing
    and barracks, but rather where they work and train.
    Sustainment/Restoration and Modernization
        There is a concerted effort by the Department to increase the
    sustainment and restoration and modernization funding levels in order
    to ensure that facilities achieve their full potential, and deliver
    acceptable performance over their expected service lives. Sustainment
    provides resources for maintenance and repair activities necessary to
    keep the facility inventory in proper working order. Restoration and
    modernization provides resources for improving facilities that have
    been damaged, need replacement due to excessive age, or need alteration
    to replace building components or accommodate new building functions.
    The Reserve component facility readiness ratings will continue to
    improve as sustainment and restoration and modernization funding is
    allocated to the most pressing requirements.
    Environmental Program
        The installation environmental programs managed by each Reserve
    component continue to be a good news story of professionalism and
    outstanding efforts to protect, preserve, and enhance the properties
    entrusted to the Reserve Forces. All Reserve components are positively
    progressing on implementation of a new environmental management system.
    Joint Construction Initiatives
        The Reserve components are at the forefront of creating innovative
    ways to manage scarce military construction (MILCON) dollars. Joint
    construction is the practice of building one consolidated facility that
    fills the needs of two or more components. We have a Joint Construction
    Working Group to assist the Reserve components in identifying,
    planning, programming, and budgeting joint construction projects for
    future President's budgets. The goal is to secure a commitment by two
    or more components to pursue joint construction, identify a lead
    component, and prepare a Memorandum of Agreement to begin the process.
    Intuitively, most would agree one building costs less than two of
    similar size and function, but the benefits extend to reductions in
    force protection, sustainment dollars, contracting costs, and the
    additional benefits of cross-service cultural understanding. I thank
    Congress for their support of this effort, and we will continue to
    pursue more joint construction opportunities in the future.
                      fiscal year 2005 legislative action
        Last year's legislative efforts are extremely helpful in managing
    the Reserve components. Most notable was the ability to allow members
    to be on Active-Duty without the 179-day rule detracting from mission
    completion.
        Also, the increased bonus and incentive programs will make a
    difference for the Reserve components in meeting recruiting and
    retention goals in a very challenging environment. The Services are
    implementing the enhancements to the Reserve enlistment and
    reenlistment bonuses, which doubled and in some cases tripled the
    authorized bonus amount and the new Reserve officer accession/
    affiliation bonus. These changes will have far-reaching effects on our
    ability to recruit and retain members.
        The improved involuntary access to Reserve component members for
    enhanced training will enable us to train, mobilize, and deploy. This
    change provides commanders added flexibility to train for non-
    traditional emergent missions. It should also decrease the duration of
    operational mobilizations.
        We now have a very supportive set of medical benefits. To ease the
    transition to the military health care system, reservists and their
    eligible dependents are now eligible for early access to TRICARE before
    the member actually reporting for Active-Duty. Eligibility begins upon
    the member's receipt of orders to Active-Duty in support of a
    contingency operation or 90 days, whichever is later. Also, the period
    of transitional health care at the completion of the Active-Duty period
    is now 180 days--rather than the previous 60 or 120 days, depending on
    how many years of service the member had completed. Finally, Congress
    has codified the Reserve health care demonstration program the
    Department established shortly after September 11, 2001, by waiving the
    TRICARE deductible payments and allowing for payment of charges above
    the TRICARE authorized billing ceiling (up to 115 percent) for Reserve
    component members on Active-Duty (and their family members) for more
    than 30 days in support of a contingency operation.
        In addition to the above, reservists who serve 90 consecutive days
    in support of a contingency operation and their eligible dependents may
    now use TRICARE Standard on a cost sharing basis following release from
    Active-Duty. One year of eligibility is authorized for each 90
    consecutive days of service in support of a contingency operation. This
    program may help improve retention since it requires the member to
    agree to serve in the Selected Reserve in order to receive the benefit.
                                   conclusion
        A mission-ready National Guard and Reserve is a critical element of
    our National Security Strategy. The requirement for our Reserve
    components has not, and will not lessen. Our Reserve components will
    continue with their expanded roles in all facets of the Total Force.
        We cannot lose sight of the need to balance their commitment to
    country with their commitment to family and civilian employers. That is
    why relieving stress on the force is absolutely essential, rebalancing
    is so crucial, and ensuring utilization not turn into over-utilization
    so critical.
        Thank you very much for this opportunity to testify on behalf of
    the greatest Guard and Reserve Force this Nation, and the world, has
    ever known.
                                     ______

              Prepared Statement by Lt. Gen. H. Steven Blum, ARNG
        Mr. Chairman, members of the subcommittee, thank you for inviting
    me to update you on our continuing efforts to meet the challenges of
    the 21st century national security environment. The National Guard is a
    fully integrated member of the Joint Force team, firmly resolved to
    play its role in defending freedom here at home and abroad. As the
    members of the subcommittee are well aware, the national security
    environment has changed dramatically in a very short period of time.
    Working in concert with the Army and the Air Force, we are determined
    to make the changes necessary in order to meet this rapidly evolving
    environment head on.
        The state level Joint Force Headquarters represent a comprehensive
    structural command and control response to the evolving requirements of
    the post-September 11 security environment. Joint Force Headquarters--
    State represents the centerpiece of the National Guard effort to
    transform in response to a changing security environment. These
    headquarters allow for a coordinated response that cuts across local,
    State, Federal, and joint military lines in ways that were simply not
    possible before. For example, these organizations provide Northern
    Command with state-based organizations capable of acting as an
    essential interface with local governments; a key capability in meeting
    national homeland defense needs.
        Though the Joint Force Headquarters concept is still new, it has
    already achieved notable successes. These headquarters, acting in their
    new role, successfully managed operations supporting both the
    Democratic and Republican National Conventions. Joint Force
    Headquarters have proven highly successful in facilitating the
    interagency, State, and local communication and coordination
    requirements associated with Operation Vigilant Guard. They provide the
    capability to enhance the Weapons of Mass Destruction Civilian Support
    Teams (WMD CSTs) with consequence management capabilities (CERFP). They
    provide a ready made headquarters for the coordination of existing
    joint National Guard activities including counterdrug operations and
    other types of military support to civil authorities. In a very real
    sense, the Joint Force Headquarters represent a revolution in the
    ability to exercise effective command and control from the national to
    the local level.
        The Joint Force Headquarters represents the structural
    transformation of the Guard at the State and local level. Recent
    reforms in the title 32 language represent the statutory changes
    essential to allow the Joint Force Headquarters construct to reach its
    full potential.
        The changes enacted in the statutory language by the 108th Congress
    provide a host of improvements that facilitate the use of State
    National Guard personnel in meeting the needs of the Homeland Defense
    mission. The new authority allows the States to react to a Federal
    emergency within hours, rather than days or even weeks. Missions of
    interest to national security can be accomplished at the State and
    local levels, where flexibility, rapid decision making, and
    decentralized execution are the keys to successful mission
    accomplishment. Full implementation of the new Title 32 authority will
    also represent a significant economy of force, as states can make more
    effective use of their own Guard personnel and assets, thus raising the
    bar for commitment of Federal troops. Taken together with the Joint
    Force Headquarters concept, the reformed Title 32 language represents a
    real transformation in Guard capabilities at the State and local
    levels, and we are anxiously awaiting implementation guidance.
        While emerging missions, changing force structure and equipment
    requirements are all pressing, our primary focus remains on the men and
    women who make up our organization. The National Guard is working
    aggressively to address the growing end strength issues associated with
    the continuing stress on the force. We have deployed over 1,400
    additional recruiters across the Nation, with an additional 500 to be
    deployed by September 30. This will significantly enhance our ability
    to attract and process new accessions. At the same time, Congress has
    supported the development of greatly enhanced enlistment bonuses, which
    will positively affect our strength numbers. Of particular note is the
    authority included in the fiscal year 2005 supplemental, which provided
    for a variety of enhanced bonuses, including bonus increases for prior
    service soldiers contracting for 6 year enlistments. Other bonus
    enhancements, including increased bonuses for non-prior service
    enlistments and similar incentives for re-enlistments and extensions
    will have significant beneficial effects on the Guard's ability to meet
    our end strength goals.
        We are already beginning to see some signs of a turn-around in our
    recruiting and retention numbers, though we have a long way to go in
    achieving our year-end strength goals. With the initiatives currently
    in place and the continuing support of Congress, the National Guard
    will continue to recruit and retain high quality men and women in the
    months and years ahead.
        Even as we take the necessary steps to meet our strength goals, we
    also recognize that soldiers are only as good as the training and
    equipment they receive to accomplish their missions. We are working
    closely with the Army and Air Force leadership to ensure that our
    individual and collective training needs are known and that our
    equipment requirements are clearly understood.
        Equipping needs for the National Guard fall into three broad
    categories, including general equipment modernization requirements for
    the Army and Air National Guard, the Army National Guard requirement
    for equipment reset, and implementation of the Army Modular Force. Army
    National Guard equipment modernization shortfalls for the period fiscal
    year 2006-fiscal year 2011 total approximately $14.589 billion and
    include high-mobility multipurpose wheeled vehicles, small arms, night
    vision devices and tactical radios. Air National Guard equipment
    shortfalls over the same period total approximately $4.934 billion over
    the same period, including F-16 Pods, A-10 Pods, C-130H2 APN Radars,
    and the F-15 Joint Helmet Mounted Cueing System.
        Army National Guard participation in the Army Modular Force
    initiative represents a critical component in the seamless integration
    of the Active and Reserve component force structure. The Army has
    included Army National Guard Brigade Combat Team costs in their funding
    strategy. This plan outlines $3.0 billion in resourcing requirements
    for the Army Modular Force from fiscal year 2005 through fiscal year
    2007.
        Reset costs associated with Operation Iraqi Freedom and Operations
    Enduring Freedom represent another critical resource requirement for
    the Army National Guard. At present, $855 million in reset costs were
    included in the fiscal year 2005 supplemental request. Reset costs of
    approximately $850 million annually will result in a total reset
    resourcing requirement of approximately $2.55 billion from fiscal year
    2005 through fiscal year 2007.
        I am tremendously proud of the men and women of the National Guard
    and the superlative job they are doing for this Nation. I am optimistic
    that with your help, our organization will emerge from the global war
    on terrorism stronger and more vital to the defense of freedom than at
    any time on our Nation's history.
        Thank you.
                                     ______

             Prepared Statement by Lt. Gen. Roger C. Schultz, ARNG
        Mr. Chairman, members of the subcommittee, thank you for inviting
    me to update you on our continuing efforts to meet the challenges of
    the 21st century national security environment. The Army National Guard
    is a fully integrated member of the Army, firmly resolved to play its
    role in defending freedom here at home and abroad. As the members of
    the subcommittee are well aware, the national security environment has
    changed dramatically in a very short period of time. Working in concert
    with the Army Reserve, the Army, and the other Services, we are
    determined to make the changes necessary in order to meet this rapidly
    evolving environment head on.
        While the requirements of the global war on terrorism are
    challenging the Guard in many ways, our primary focus remains on the
    men and women who make up our organization. The Army National Guard is
    working aggressively to address the growing end strength issues
    associated with the continuing stress on the force. We have deployed
    over 1,400 additional recruiters across the Nation already this year,
    with 500 more to be deployed by the end of the year, which will
    significantly enhance our ability to attract and process new
    accessions. At the same time, Congress has supported the development of
    greatly enhanced enlistment bonuses, which will positively affect our
    strength numbers. Of particular note is the authority included in the
    fiscal year 2005 supplemental, which provided for a variety of enhanced
    bonuses, including bonus increases for prior service soldiers
    contracting to serve in the Selected Reserve. Other bonus enhancements,
    including increased bonuses for non-prior service enlistments and
    similar incentives for re-enlistments and extensions will have
    significant beneficial effects on the Guard's ability to meet our end
    strength goals.
        We are already beginning to see some signs of a turn-around in our
    recruiting and retention numbers, though we have a long way to go in
    achieving our year-end strength goals. With the initiatives currently
    in place and the continuing support of Congress, the Army National
    Guard will continue to recruit and retain high quality men and women in
    the months and years ahead.
        In addition to the numerous recruiting and retention initiatives
    for Guard members, we continue to pursue other means of reducing the
    financial burdens imposed by the lengthy deployment on some mobilized
    Guard personnel. We are in favor of tax credits for small businesses
    owned by or hiring Guard soldiers. We are examining a number of other
    potential tax incentives for mobilized Guard soldiers, all of which
    would serve to alleviate the financial stresses experienced by some
    personnel.
        While recruiting and retention bonuses and tax incentives address
    many of our soldiers' needs, we are also focused on ensuring their
    quality-of-life in other ways. We continue to work with the Army to
    streamline the pre-deployment mobilization processes. We also want to
    ensure that deployments are limited to a total of 24 months of
    cumulative service during the course of any mobilization authority. We
    are constantly working to reduce stress on families through the use of
    family support groups and other initiatives.
        Even as we take the necessary steps to meet our strength goals, we
    also recognize that soldiers are only as good as the training and
    equipment they receive to accomplish their missions. We are working
    closely with the Army leadership to ensure that our individual and
    collective training needs are known and that our equipment requirements
    are clearly understood.
        Equipping needs for the Army National Guard fall into three broad
    categories, including general equipment modernization needs, equipment
    reset requirements, and implementation of the Army Modular Force. The
    Army National Guard is working closely with the Army to identify
    equipment modernization requirements and setting the priority for
    procuring such items as high-mobility multipurpose wheeled vehicles,
    small arms, night vision devices, tactical radios, and other equipment.
        Army National Guard participation in the Army Modular Force
    initiative represents a critical component in the seamless integration
    of the Active and Reserve component force structure. Implementation of
    the Army Modular Force will significantly reduce the stress on our
    soldiers and their families by making deployments more predictable. The
    Army has included Army National Guard Brigade Combat Team costs in its
    funding strategy. This plan outlines $3.0 billion in resourcing
    requirements for the Army Modular Force from fiscal year 2005 through
    fiscal year 2007.
        Reset costs associated with Operation Iraqi Freedom and Operations
    Enduring Freedom represent another critical resource requirement for
    the Army National Guard. Obtaining this equipment is fundamental to
    ensuring our continuing capability to meet our state mission
    requirements. At present, $855 million in reset costs were included in
    the fiscal year 2005 supplemental request. Reset costs of approximately
    $850 million annually will result in a total reset resourcing
    requirement of approximately $2.55 billion from fiscal year 2005
    through fiscal year 2007.
        I am tremendously proud of the men and women of the National Guard
    and the superlative job they are doing for this Nation. I am optimistic
    that with your help, our organization will emerge from the global war
    on terrorism stronger and more vital to the defense of freedom than at
    any time in our Nation's history.
        Thank you.
                                     ______

              Prepared Statement by Lt. Gen. Daniel James III, ANG
        Mr. Chairman, members of the subcommittee. As we sit here today,
    the experienced, dedicated, and well-trained men and women of the Air
    National Guard are protecting the skies over our Nation as they have
    since 1953 when the Air National Guard began Air Sovereignty Alert. The
    citizen-airmen of the Air National Guard are serving at home and around
    the globe in both flying and support missions. The Air National Guard
    provided almost one-third of the fighter sorties for Operation Enduring
    Freedom, and one-third of the fighter and aerial refueling tanker
    sorties in Operation Iraqi Freedom. Since fiscal year 2004, Air
    National Guard aircrews have supported 75 percent of the tanker sorties
    and 60 percent of the airlift sorties worldwide. The Air National Guard
    is not providing just aircraft and aircrews. Air National Guard
    Expeditionary Combat Support units and individuals are supporting
    operations and exercises around the world. Since September 11, more
    than two-thirds of our citizen-airmen have participated in operations
    worldwide, most as volunteers. Today, Air Guard men and women,
    including chaplains, medical personnel, lawyers, finance specialists,
    security forces, weather forecasters, communications experts, and
    intelligence analysts are in 27 countries from Colombia to Iceland to
    Kyrgyzstan to Japan.
        It is not just the citizen-airmen that deserve our praise and
    thanks. The men and women on the frontline of our Nation's defense
    require support from the home-front--their families, employers, and
    communities. As the airmen of the Air National Guard answer their
    Nation's call, their families are fighting the many small ``battles''
    at home so their fathers, mothers, husbands, wives, brothers, and
    sisters can focus on their jobs defending the United States. We must
    also thank the employers and communities for stepping up to the plate
    by providing emotional, spiritual, financial, and employment security
    that often exceeds our expectations. My thanks to Congress for
    providing the support and the resources to take care of our citizen-
    airmen and their families. In the end, it is the families, employers,
    communities, and Congress that have made it possible for our Air
    National Guard members to concentrate on their number one job,
    defending the homeland in-depth.
        The Air National Guard is determined to remain ready, reliable,
    relevant . . . now and in the future. Air National Guard F-15 and F-16
    pilots who are protecting the skies over U.S. do not do it alone. They
    require a team of dedicated professionals. Likewise, they need your
    help preparing for their future.
        The transformation of our force and transition to different
    missions will provide the Air Guard with many opportunities to excel;
    we will be asking our members to move to new locations, cross-train
    into different Air Force specialties, and in some cases, work side-by-
    side with their Total Force counterparts. This transformation is
    essential for the Air National Guard as we capitalize on the strengths
    of the Total Force to relieve some of the stresses that have recently
    begun to affect our force. Many of those stresses are the result of a
    high operational tempo and a capabilities mix designed to meet the
    challenges of the Cold War era. These factors will challenge the key to
    the Air National Guard's success--its people.
        As the Air National Guard transforms, we will be looking for
    personnel transitional benefits to help shape our force and ensure our
    people are treated fairly.
        Like all the military services, we depend upon well-trained,
    dedicated professionals, but the core competency of the Air National
    Guard is its experienced people. In 2003, 52 percent of the men and
    women entering the Air National Guard had prior military service and
    approximately 62 percent of the enlisted members were rated as skill
    level 7 or higher. Our ability to recruit and retain this technically
    competent, stable work force is essential. While recruiting has trended
    downward, specifically in non-prior service airmen, I'm proud to say
    that the retention of our members remains the best of all the Services
    and components. How well we assume new missions and continue to support
    both the Air and Space Expeditionary Force and Homeland Defense is
    directly related to our achieving recruiting and retention goals
    through fiscal year 2006.
        Heading into fiscal year 2006, the Air Guard needs to continue to
    keep stride with all Services in the very competitive recruiting
    market. As we begin to transform our force, we will be competing for
    people from the same demographic pool. There are several programs that
    I feel would greatly improve the Air National Guard's ability to
    recruit and retain quality people. First, the 2005 National Defense
    Authorization Act increased the reenlistment and prior service bonus
    amounts. We would like to continue to utilize these incentives but
    currently have a $27 million shortfall for fiscal year 2006. Fully
    funding this program would definitely pay dividends in the long term.
        Second, increased funding for marketing and advertising is
    considered imperative for recruiting of non-prior service personnel and
    would include establishing a visible presence in our communities
    through storefront recruiting offices and targeted advertising. We have
    a $40.7 million in marketing and advertising that we consider
    imperative in the recruiting of non-prior service personal. This figure
    includes $3 million to establish a visible presence in our communities
    through storefront recruiting offices and $37 million in targeted
    advertising.
        Our people are and will remain our most valuable asset, but the
    future requires that we also transform our organizations and modernize
    our equipment. As we begin to transform ourselves through the addition
    of different missions and participation in the Total Force, we will
    continue to maintain a majority of the missions that we have today.
        The men and women of the Air National Guard understand these 21st
    century security challenges require a 21st century Air National Guard.
    We will continue to be an integral part of the Air Force's Air & Space
    Expeditionary Force and Homeland Defense teams. Our partnership with
    our Active and Reserve counterparts, and their partnership with us,
    aligns our forces to participate in some of the leading edge missions.
    Several initiatives are underway, and we have already seen positive
    results and increased capability from previous Total Force initiatives.
        Our men and women understand the need for new transformational
    organizational structures such as the association of the 192nd Fighter
    Wing of the Virginia National Guard with the Active component's 1st
    Fighter Wing at Langley Air Force Base forming the first operational F/
    A-22 wing. The door also swings the other way as we embark on a test of
    ``Community Basing'' with the Vermont Air National Guard hosting
    Active-Duty maintenance personnel thus capitalizing upon the Air
    National Guard's core competency of experience. Additionally, the Air
    National Guard is transforming by embracing new missions such as Global
    Hawk, space, intelligence operations, and Predator.
        We realize major changes are in store for our Air National Guard
    forces. We feel, however, the key to our support to the warfighter is
    to maintain proportionality within many of the current and emerging
    mission areas. We will continue to seek a capabilities mix mirroring
    the Active Air Force to ensure the Air Guard maintains a proportional
    presence across the full spectrum of Air Force missions.
    Proportionality also allows us to capture highly-technical skills from
    the Active Force that are still desperately needed by the combatant
    commanders and continuing to provide a surge capability across all
    mission areas.
        Finally, I wish to address the Air National Guard's role in our
    Nation's top priority mission--homeland defense. Our approach is ``One
    System--Two Missions.'' Be it aircraft, expeditionary medical support,
    hazardous material response, disaster preparedness, chemical and
    biological detection equipment, or a myriad of other capabilities
    resident in the Air and Space Expeditionary Forces of the Air National
    Guard.
        To quote President Lincoln, ``The occasion is piled high with
    difficulty, and we must rise with the occasion. As our case is new, so
    we must think anew and act anew.'' How well we address today the
    challenges of recruiting, retention, transformation, and modernization
    will affect our capability to defend our homeland tomorrow.
        Thank you.

        Senator Graham. Thank you, Mr. Secretary. Thank you very
    much.
        We have just started the first of three votes, and Senator
    Nelson, how would you like to do this? Do you just want to
    press on and do this in a staggered way, you stay, I stay, or
    go together?
        Senator Ben Nelson. I do not know how it will work when you
    have three.
        Senator Graham. It is going to be tough, is it not? Well,
    why do we not just go ahead and start, and we will come back
    when the votes are over, but we will try to do as much as we
    can now. Would you like to go first?
        Senator Ben Nelson. No, thank you.
        Senator Graham. Thank you, Mr. Secretary. I appreciate all
    of you coming today.
        It seems to me there are three things that every military
    worries about: recruiting, retention, and readiness. To define
    the problem for the Nation, as Senator Nelson indicated, it is
    my understanding that the utilization rates for the Guard and
    Reserve are at an all-time high since World War II. The nature
    of the war on terrorism has tapped into the Guard and Reserve
    Force in a way that the Cold War did not. The C-130 has always
    been an important platform, but in the war on terrorism, it is
    the air taxi for Afghanistan and Iraq, and it has been used
    abundantly. Every time I have been there, I have been on about
    15 or 16 flights, and all the crews involved have been Guard or
    Reserve, except one.
        The skill sets of the Guard and Reserve, as I understand
    it, are very much in demand when it comes to civil affairs,
    some medical specialists. Military police (MPs) are worth their
    weight in gold, because they have unique abilities.
        So given that understanding, that 40 percent of the people
    in the theater today are Guard and reservists and that their
    skills and their experience is needed to fight to win this war
    on terrorism, let us look at the recruiting picture, if we may.
        The numbers that have been provided to the subcommittee
    show a fairly significant shortfall here in the last couple of
    months about meeting our recruiting goals. If you would, as a
    panel, starting with General Blum, give us your assessment of
    the recruiting problem, whether it is chronic or acute, and
    what strategies we have to confront it.
        General Blum. Thank you, Mr. Chairman. Thanks for the
    opportunity to answer that question. I will frame it, and then
    General Schultz wants to provide a little more detail on the
    Army side. Then General James, if you would pick it up on the
    Air Guard side.
        Overall, the National Guard recruiting is a function of two
    things: input of new people and the ability to retain your
    experienced people. Let me start with retention first.
        The ability to retain our experienced people is
    extraordinary and remarkable and counter-intuitive to what is
    going on in the world today. We are using the Guard at an
    unprecedented rate for unprecedented operations both overseas
    and here at home. The length and frequency that we are calling
    on our Guard is unmatched in anything in our Nation's history,
    particularly since the All-Volunteer Force about 32 years ago
    was instituted.
        So the All-Volunteer Force appears to be withstanding the
    acid test in the crucible of war in a sustained conflict for
    the first time in our Nation's history with an All-Volunteer
    Force. We are keeping our experienced people at a higher rate
    today than we did prior to September 11, which is, as I say,
    remarkable and counter-intuitive. You would probably guess it
    would be the other way around.
        The other side of the personnel picture is how are we doing
    in attracting people into our formations in the Army and Air
    Guard that have never served before. With new authorities and
    with the new resources that Congress and the Senate have
    provided to the National Guard as recently as January, we are
    starting to see some significant improvement in our ability to
    recruit and attract non-prior service people to a better degree
    than we have seen in the immediate past.
        For instance, it is true we are 15,000 below where I would
    like to be in the Army National Guard, but we are right on
    target in the Air National Guard, or so close that it is
    statistically insignificant. On any given day, we are slightly
    above goal or slightly below goal, but it is only by several
    hundred, which in a big organization like that is
    insignificant.
        The Army National Guard is about 96 percent of where we
    need our end strength. It is roughly 332,000 and change as of
    this morning. Last month, the month of March, we had our best
    recruiting month that we have had in the last 14 months, and
    that is significant because of the change in policy, the change
    of statute, that the United States Congress allowed, and the
    resources you gave us for the bonuses and increasing the
    numbers of recruiters. While all of those recruiters are not
    trained and the effects of all of those recruiters have not yet
    been felt, we recruited 3,800 people in February, and that was
    higher than the month before that, and in March, we did 5,200,
    so we are on the road to recovery.
        If we continue at this rate, we can reestablish our end
    strength. I do not think it will happen between now and the end
    of this fiscal year. It could, but it is not likely. It would
    probably take a little bit longer than that because we were a
    little slow, frankly, in recognizing the problem and taking the
    corrective action, getting the authorities and resources to
    address the problem. I think we are substantially there now.
        There are 10 authorities and resourcing packages that I
    have asked Congress for, on behalf of the Army and the Air
    National Guard of the United States, that was a bottom-up feed
    from all of the adjutants general out in the field, and this is
    the top 10 list that they think they need to achieve the end
    strength the Nation expects us to have. That will be submitted
    for your consideration and hopefully, your support.
        I hope that gets to the core of your question, and General
    Schultz and General James will provide you any detail you might
    want beyond that.
        Senator Graham. Thank you.
        General Schultz. Thanks, Mr. Chairman. I appreciate your
    opening comments about my service. I want you to know I serve
    with a soldier from South Carolina, Command Sergeant Major
    Frank Lever. He is with us today, and is a first-rate soldier,
    to be sure.
        Senator Graham. I am very proud of it.
        General Schultz. The team back home grows first-rate
    soldiers.
        Mr. Chairman, General Blum has outlined the condition we
    find ourselves in today. I want you to know I am not proud to
    tell you we are missing our recruiting objectives, as he has
    outlined. For us, the challenge is the non-prior service
    category. We are at 68 percent of our recruiting objectives to
    date. That is in this fiscal year for our non-prior service
    soldiers.
        We need a little more flexibility. We have moved our
    bonuses this year from $8,000 to $10,000 as a way of increasing
    the opportunities for young soldiers to join. So the non-prior
    service population is in need of some consideration for an
    additional bonus.
        Senator Graham. Did you say 68 percent?
        General Schultz. 68 percent is our current performance
    against a goal that we have established so far this year.
        I do need to reinforce a point General Blum made, and that
    is that the incentives are working. We are almost 3 to 1,
    comparing this year's retention against last year's
    reenlistment rate. That is a significant change in the
    population. Frankly, Mr. Chairman, it is that ability to
    influence soldiers who are considering staying or not staying
    that is pacing us, at least with the end strength that we have
    today.
        Now, I must also say that turnover is going to be higher
    before we close out this fiscal year. There is a population of
    soldiers that are now coming home from Afghanistan and Iraq and
    duty around the world that is going to leave in higher
    percentages than we have experienced. Today we are just short
    of 20 percent turnover rate. Of course, that is not alarming,
    but if figures go much higher than that, 25 percent or even
    higher, then that will put additional pressure on the
    recruiting.
        Senator Graham. What is it in a non-wartime environment?
        General Schultz. 18 percent is our objective in a typical
    year.
        Senator Graham. So you are at 20 now?
        General Schultz. It is 20. It is not alarming yet, but we
    are watching this pretty carefully.
        Senator Graham. We have to watch it.
        General Schultz. Unfortunately, it is going in the
    direction that we would not necessarily hope for.
        So overall retention, Mr. Chairman, is right at 100
    percent. Non-prior service soldiers, just short of our
    objective, and the prior servicemembers are being retained at
    higher than 100 percent of our population goal.
        So for us the task, Mr. Chairman, is recruiting. We just
    need to access more soldiers.
        You know the reality. Soldiers join the Guard today. They
    are anticipating being called to Active-Duty, and so we are
    enlisting a different volunteer, clearly.
        That is all I have, Mr. Chairman.
        Senator Graham. Well, thank you. We have 7 minutes left. If
    you could give us a couple minutes, General James, and
    Secretary Hall, when we come back, you can weigh in here on the
    recruiting problems that we face.
        I think the best thing for Senator Nelson and I to do is to
    go vote. We have three votes. We will come back as quickly as
    we can. We will vote early on the third vote. Is that okay with
    you, sir?
        Senator Ben Nelson. Yes.
        General James. Thank you very much, Mr. Chairman. Thank you
    for the opportunity to speak before the committee.
        As General Blum outlined, our challenge also is in
    recruiting, but it is not as severe as some of the other
    Reserve components. However, we take it very seriously, and
    because of that, we have committed some $17 million in
    resources to the bonuses that you and the members of the Senate
    committee authorized and also appropriated some funds for. I
    would encourage your colleagues in the House to do the same
    thing; i.e., appropriate funds to go with the authorization for
    bonuses. We have taken that out of hide, retroactive to
    October, so that we can capture some of those people who did
    not join us then and encourage them to come and join us.
        Right now, the deficit is a little higher than what General
    Blum said. We are about 400 people short of where we were the
    same time last year.
        One of the things we have done, in addition to the bonuses,
    is we have asked our recruiters--and 15 of the 88 flying units
    have moved the recruiting locations from on the installations
    to what we call storefront locations, and we have committed
    some $3 million to what we call storefronts. You have seen them
    probably in some of the malls and some of the commercial sites
    throughout the community, because we want more visibility with
    it.
        The good news is in fact that our retention is higher than
    goal. We are almost a percentage point higher than goal. It
    will not offset the recruiting challenges, but we think that we
    are going to be very close, as General Blum mentioned.
        Senator Graham. Well, thank you.
        With that in mind, I think we will now recess and come back
    after the last vote. Thank you for your testimony thus far.
    [Recess from 2:00 p.m. to 2:35 p.m.]
        Thank you all for your indulgence. I think we got this
    series of votes out of the way. The hearing will come to order.
        Secretary Hall, if you would give us your thoughts about
    our recruiting situation and what we can do to help.
        Mr. Hall. I will be very short in my remarks. I would echo
    what the chiefs have told you.
        Bonuses make a difference, and I thank you, the committee,
    and Congress for the $15,000 bonus last year. Just to give you
    an example, I recently was in the AOR and I met with the
    retention team for the evening. They have been put there by the
    Services on site. Last year at the 4-month mark, they had
    reenlisted 600 people for the entire year. At that point this
    year, they had doubled it to 1,200 people and almost all of
    them took the lump sum, tax-free bonus, and it makes a big
    difference.
        I think there are a number of initiatives that we have
    which we need to continue to expand. In general, I do not like
    the idea of restricting bonuses to a certain period of time. I
    would like to expand that window of opportunity, because we
    need those mid-grade people from 14 to 16 years. We need to
    expand the time in which you can take advantage of the bonuses.
        The critical skills bonus, which is available for the
    Active-Duty, is not available for the Guard and Reserve. We
    have an initiative to look at that.
        The affiliation bonus. Frankly, I think everyone would
    agree that $50 a month for affiliation over a period of time
    for $2,400 total is a bit archaic. We need to expand that.
    Perhaps whether it is $10,000 or $15,000 to match with the
    other bonus, we just need to look at those opportunities.
        People will always be grateful for the Montgomery GI Bill
    (MGIB) (Sonny Montgomery's name), but I think we need to look
    at the parts of that which have atrophied somewhat and fix
    them.
        In the basic housing allowance (BAH) and in others, I think
    we need to make sure that our Guard and Reserve are consistent
    with our Active-Duty bonuses. I think last year we had over 50
    provisions changed in the law for the Guard and Reserve, and
    those are making a difference.
        You did ask one question I'd like to respond to.
    Historically, the attrition rate overall for all components
    averages about 18 percent. So the General was talking about
    around 20 percent, but the average is 18. We are averaging
    slightly below that for all the components now at about 17.5 to
    18 percent. So it is hanging in there.
        Senator Graham. General Schultz, is the 20 percent
    primarily people coming back from the theater?
        General Schultz. That is our overall attrition rate for the
    Guard. Some have not deployed, and some have returned from
    Active-Duty.
        Senator Graham. Well, thank you. These are all very good
    ideas. I am sold on the idea that flexibility and money matter,
    and you are better able to determine what incentives should be
    offered in terms of dollars, than any of us up here. I think
    the subcommittee will be very open-minded to making it
    flexible.
        I want to share a couple of thoughts with you and see what
    you think. I think we have a chronic problem more than an acute
    problem. If you join the Guard or Reserves today, as our
    lieutenant and our specialist will attest to, this is dangerous
    duty. The likelihood of you being in a war environment is real,
    and so our retention numbers are heartening. I think it shows
    you that Americans who sign up to serve their country feel a
    sense of reward for doing so and want to stay in.
        But there is another dynamic with certain specialties where
    there is over-utilization. The first time is a noble thing. The
    second time, the third time, and the fourth time is what I
    worry about.
        What I look at is a scenario of the worst case. What if we
    are in Iraq 2 years from now with 100,000-plus troops? What if
    35, 30, or 40 percent of the troop level is Guard and Reserve?
    In that kind of scenario, what can we do to get ahead of the
    problem?
        What I would encourage you to do is to understand that the
    benefit packages have to be beyond money, because you do
    recruit soldiers and airmen, but you retain families. I think
    that is very true of the Guard and Reserves.
        The reason I have offered the TRICARE amendment that would
    allow people to sign up for TRICARE in the Guard and Reserve
    and pay a premium like other Federal employees is it is very
    hard for me to justify a program to a group of Americans who
    are really going in harm's way and making sacrifices. They are
    the only group I know of that serve the Federal Government in a
    part-time capacity that is ineligible for any form of
    Government health care. One, I think that is just wrong on its
    face.
        Two, if we made health care available where you would pay a
    premium, I do believe it would help the employer community. It
    would also really help recruiting and retention because I hear
    enough anecdotal stories about money matters, but health care
    and security in health care matters a lot to Americans.
        What percentage of the Guard or Reserve is unable to be
    deployed in a timely fashion or in a normal fashion because of
    health care problems? Does anyone know?
        General Schultz. I will start with the Army Guard, Mr.
    Chairman. We have about 10 percent of our soldiers from the
    time of initial notification until deployment. It ranges in the
    10 percent range, 8 to 10 percent of our members. Some are
    injured during the training process, and so it is not all
    necessarily a medical condition. There is a percentage of our
    soldiers who do not have health care coverage, and that is
    about 30 percent on estimate now across our formations.
        I will tell you this, based on talking with family members
    very recently. I said just give me one thing that I can work on
    that would help you more than anything else, and they all
    answered health care in a second.
        Senator Graham. I think that is true of the population as a
    whole. I appreciate those candid comments.
        Secretary Hall or General Blum, would you like to comment?
        General Blum. Mr. Chairman, there are two things I would
    like to underscore before you move beyond where you are,
    because I think you are at a very critical point.
        Intentions are great. Programs are even better. Benefits
    are absolutely, I think, welcomed and being asked for by the
    rank and file. But what I think we need some assistance with,
    even with the existing TRICARE program we have, is the
    acceptance of TRICARE and elimination of the inconsistencies.
    We are giving a benefit to soldiers that is well earned and
    well deserved today, but they cannot utilize it because
    providers will not accept TRICARE. To me, to not accept a
    Government-sponsored health care system in a time of war for a
    family member or a servicemember is a shame. There should be
    some statutory rigor put into that. Otherwise, you are giving
    them a check with no money behind it, or you are giving them an
    empty box as a gift.
        Senator Graham. Well said, and I assure you the committee
    will try to follow your counsel and advice there.
        Do you agree with General Schultz that a more robust health
    care benefit for Guard and Reserve personnel would be helpful
    in your endeavors?
        General Blum. In every town hall meeting that I have in the
    United States, Iraq, Afghanistan, or Kosovo, Guantanamo or the
    Sinai, I hear one thing time after time after time from the
    rank and file, and you have the issue.
        Senator Graham. That is exactly what I hear.
        Now, I want to congratulate the Department, Secretary Hall.
    You all have done a good job. Last year we passed a compromise,
    if you recall that. For Active-Duty for 90 days, from September
    11 forward, in any capacity, you and your family were eligible
    for a year of TRICARE. You had to pay a premium. This is
    reflected in the brochure that I have been handed that you are
    passing out among the troops. I think it is an excellent
    brochure about what benefits are available, and I want to
    compliment the Department on getting the word out to our Guard
    and reservists, who have been deployed on Active-Duty.
        Well, that was very helpful. Secretary Hall, would you like
    to add anything?
        Mr. Hall. May I make one comment on it? I echo what General
    Blum says. I talked to about 2,000 troops in theater when I was
    there, and continuity of health care is most important. When
    you transition from that civilian policy to TRICARE, if you
    take Medicare as a doctor, you ought to also take TRICARE. We
    have to move on that. That is their first gripe.
        The second is they do view this as a good bridge. I think
    we need to use the word ``bridge'' because up to 8 years of
    coverage if you serve for 2 full years is a bridge. Having 90
    days prior to deployment and, 6 months after, it is up to 8
    years. We are implementing that.
        I do not disagree with you. We just have a different
    perspective on how we are implementing this right now. I think
    we need to see how it works, see how it is received by the
    Guard and Reserve, and I think for right now it is enough.
    Maybe we have a different perspective on that, but that is what
    I hear from the troops that I talk to.
        Senator Graham. I understand where the Department is, and I
    do appreciate your willingness to work with us. We are trying
    to get a compromise within the committee here.
        Let me end this part of the discussion with my view of
    where this helps.
        If 30 or 25 percent of your potential fighting force is
    uninsured without health care and every other Federal employee
    who does a part-time job is eligible, I think that is
    unacceptable. I do not think it is good military practice,
    because when you call people from this pool, I have heard as
    high as 20 percent cannot go to the fight. I guess numbers are
    the way we want them to be sometimes, but let us say it is 8 or
    10 percent. The enemy has not fired a shot, and 10 percent of
    our force is unable to go to the fight. So in terms of costs, I
    think we are being penny wise and pound foolish.
        We will continue that debate. I promise you, Secretary
    Hall, that we will robustly pursue the bonus programs that you
    would like and that we will continue to have this healthy
    discussion about expanding TRICARE to all guardsmen and
    reservists.
        General Schultz. Mr. Chairman, if I could make one comment
    on the dental benefit?
        Senator Graham. Please.
        General Schultz. We need your okay to spend Federal money
    earlier than we currently do, and I am talking now about units
    on alert status and then later mobilized. We have money
    available but cannot spend it because we do not have the
    authority to spend it. So a slight clause I think in the rules
    would allow us to appropriately spend Federal money earlier,
    and that would reduce the number of those non-deployable
    soldiers in the mobilization process.
        Senator Graham. Outstanding. One of the big problems for
    people is dental care because a lot of civilian plans do not
    have dental care. So we are going to try to have a fit force.
    We are going to try to have a force that has what they need
    because they have earned everything. We are asking people to
    pay a premium, but if we gave them TRICARE, that would not be
    inappropriate. I am not going to go down that road. We are
    going to have a premium requirement like other Federal
    employees.
        Now, when it comes to the recruiting problem, what
    anecdotal stories, if any, do you hear about non-prior service
    people? What is causing this drop?
        General Blum. Well, sir, it is not anecdotal. It is
    systemic. We are blessed with a strong economy in this country
    right now. That is good, particularly since our enemies are
    making that their number one target. So we are winning the war
    in that we have a strong economy while our adversaries are
    trying to weaken our economy. But that also exacerbates our
    problem competing for the talent pool that is out there in our
    young men and women. It gives them some other options, more
    options than when we have a weak economy. I am not advocating
    that we should have a weak economy.
        I think what we need to do is exactly what we have done. We
    have made the incentives and the bonuses and the authorities
    and the flexibility in policies such that we can compete more
    favorably with the non-prior service market than we were able
    to do in the past. Non-prior servicemembers are people that we
    do not know are going to make soldiers, sailors, airmen, and
    marines. We know they made good students. We know they got
    through high school or college or junior college, and we know
    they are drug-free and they are physically fit and they want to
    join. That is the other part of it, but we do not know whether
    they will get through service, and when you recruit young
    people in that category, you not only have to recruit them,
    just like you said earlier, you retain the family. You reenlist
    the family. When you are now bringing in a non-prior service
    person, they are significantly influenced by what the country
    thinks of the value of the service that they are about to
    enter, what they think of the organization they are about to
    enter, what the views of the adult influencers, teachers,
    preachers, parents are.
        As long as the American people are behind the American
    soldier--and I say soldier meaning citizen-soldier and airman,
    and I also mean it about the same people who are sitting behind
    me, the Marine Corps, the Coast Guard, the Navy, and the Air
    Force Reserve. As long as they look at service to the Nation
    with the high regard they do now, I am very optimistic that we
    will be able to sustain the All-Volunteer Force at the level it
    needs to be defend this Nation both here at home and abroad
    indefinitely. This is so even if we find ourselves in the worst
    case scenario that you described where I have 100,000 national
    guardsmen deployed 2 years from now somewhere for a long period
    of time.
        If we shorten the tours--and the Armed Forces are looking
    at that--and if they give us some flexibility in the tour
    length and the separation from employers and families, and we
    have a more predictable model on dwell time or recovery time
    between deployments, it would really help. I think all of these
    things are very favorable initiatives to ensure that the young
    men and women will continue to answer the call to the colors.
        I might add that the successes we have had happened while
    two other things happened. Our nonparticipation rate is at an
    all-time historical low, less than 2 percent nationally. When
    you talk about the National Guard, there is a paradigm shift of
    great magnitude. It means that the numbers out there are
    reliable, and that the numbers represent deployable, real
    people. That is the first thing, and it is a very important
    thing.
        The other thing is that the young men and women that are
    joining our ranks today know clearly why they are coming in and
    that there is a high probability that they will be deployed. So
    there is truth-in-lending and no false advertising. Our
    recruiting plans have been adjusted to focus on service to the
    Nation and that is what these young men and women are coming in
    to do.
        That to me speaks volumes about the youth of America that
    you do not often hear about. Anecdotally, we hear it the other
    way. I think we have a lot to be very proud of because the
    young men and women of this Nation seem to be responding for
    the right reasons and the right incentives.
        Senator Graham. Thank you.
        What your Active-Duty counterparts told us was that the big
    problem they see, in terms of the recruiting shortfall for the
    Active ranks, is selling family members, selling parents, and
    selling grandparents. The economy is also a factor, but the
    view that this war has lasted longer than people expected and
    is deadlier than people thought has definitely penetrated the
    recruiting pool family structure. Do you see or hear any of
    that feedback?
        Mr. Hall. A critical element to the prior service people
    enlisting, which you already discussed, for those with critical
    skills is that they feel they are going to go right back into
    theater and be used. It is essential that the Department
    proceed with its rebalancing of about 120,000 billets added to
    these critical skills.
        We are halfway there, and we are going to get to that
    120,000. At the same time, we need to civilianize a number of
    billets in which we have troopers, so we can build a larger
    pool to draw from in those critical skills.
        The other element, they tell me, is predictability, and
    that is predictability for the employer, for the family, and
    for the individual. We have to develop a model that says we are
    going to need you here once every 5 years or every 6 years and
    try to develop a predictability model as best as we can. We
    have erased the word ``weekend warrior.'' There is no such
    thing as a weekend warrior any longer.
        Senator Graham. I think that has been mentally erased by
    the country.
        Mr. Hall. What I get out there is you are now recruiting
    the families. You are not recruiting individuals. Every
    recruiter needs to understand how we are proceeding. All of
    those things, outside of bonuses, are going to affect the
    attitude of that young man or woman coming into the Service.
        Senator Graham. We have waived the high school requirement
    for Army Guard. Is that correct?
        General Blum. No, sir. We have not lowered our quality
    standards at all.
        Senator Graham. Have the Active Forces?
        General Blum. No, sir. The Chief of Staff of the Army,
    General Schultz, General Helmly, and I are pretty solid in that
    we want to keep the quality of the force. The type of
    soldiering that is being done right now is Ph.D level work.
    That young man or woman has to be a combat soldier in a
    moment's notice, and in the next minute, he or she may be a
    goodwill ambassador or a social worker. There has to be some
    thinking going on inside that helmet.
        Senator Graham. So that has not been waived.
        Mr. Hall. There is a current proposal to look at people who
    are not high school graduates but have the mental wherewithal
    to be good soldiers, to bring in a certain amount of them.
        Senator Graham. Are we thinking about waiving it?
        Mr. Hall. We are.
        Senator Graham. Do you think we should waive it, General
    Blum?
        General Blum. If they have a GED, sir, to me that is a
    completion of high school education, as far as I am concerned.
    I do not think we want to lower the quality standards.
        Senator Graham. What about you, General Schultz?
        General Schultz. I agree with General Blum.
        Senator Graham. General James?
        General James. We have not given any consideration to
    lowering the standards.
        Senator Graham. Okay. The 24-month cap, which is very
    popular, goes into what you are talking about, predictability.
    But let us talk about it in terms of the fight. How does
    putting a 24-month cap on service in theater affect your
    readiness?
        Mr. Hall. Are you talking about the cumulative versus
    consecutive? The current policy is when you have been mobilized
    under this current contingency for 24 cumulative months, then
    your clock is through. You do not serve again. What I can tell
    you is that it very important to people. If we had a 24-month
    consecutive policy in which you could go off duty and then
    bring you for 24 more months, and go off duty again, it would
    be, a death knell for our employers and our people. The
    cumulative rule now that we are under in this contingency,
    under which Reserves will not be remobilized is something I
    strongly support, although the law says consecutive.
        Senator Graham. That is very important to know, but how
    does that affect the pool? How does that affect readiness if
    you take them out of the fight, if they are nondeployable after
    24 months? Do we have people to go to?
        Mr. Hall. Well, one consideration is we normally have a
    turnover of 17 to 20 percent. So theoretically in 5 or 6 years,
    you have a new force. They are not the same people out there.
    If you have a model which you use at that time, you are
    refreshing your force by new recruits.
        General Blum. Mr. Chairman, if you change what exists now
    with the 24 months cumulative service, I withdraw everything I
    said about being able to maintain an All-Volunteer Force.
        Senator Graham. That is important.
        General Blum. That is how significant I think it is.
        Number two, I think it is a very positive factor in
    pressuring the Services, that are otherwise reluctant to do the
    rebalancing they need to do, to make sure that they can make
    that force generation model work. Without that kind of positive
    pressure, I do not think we will see the kind of change that
    the Secretary advocates, and I totally support what needs to be
    done.
        General Schultz. I am with General Blum on that topic, Mr.
    Chairman. If we change the policy now--and it has been in place
    now for years--we are breaking faith with the soldiers in the
    ranks.
        Senator Graham. I do not think anybody wants to. I just
    wanted to know. See, you have a recruiting problem. You are
    having at least a sign of a turnover problem beyond 18 percent,
    and if you have this policy locked down at 24 months you are
    out of the fight. I wonder how all this plays over time. I
    understand how important it is to you now, and I would never
    suggest we would change it.
        Mr. Hall. Interestingly enough, there is no prohibition
    beyond 24 months if you want to volunteer. We have a number of
    young men and women who want to volunteer and ask to stay
    beyond 24 months. So we do not prohibit that at all.
        Senator Graham. At this time, I would turn it over to
    Senator Nelson.
        Senator Ben Nelson. Thank you, Mr. Chairman, and thank you,
    gentlemen, for being here today.
        First I must introduce Lieutenant Colonel Russell Ponder
    and embarrass him. He was a military fellow in our office, and
    I know he is an aide to General James. I am sure he is doing
    the same great work for you that he did for us. It is good to
    have you here.
        General James. I have not seen him since he left your
    office. [Laughter.]
        Senator Ben Nelson. General Blum and General Shultz, the
    Armed Forces, but particularly the Army, have demonstrated new
    ideas in command and control of forces involved with homeland
    security missions. The Florida hurricanes and political
    conventions are examples where National Guard senior officers
    directed title 32 and title 10 forces to provide recovery and
    security operations. From everything that I have heard from all
    sources, these operations were unqualified successes. They
    demonstrated the ability of both Active and Reserve component
    forces under the National Guard commander with knowledge of the
    area to operate with unity of purpose.
        Do you see any continued or expanded use of the title 32
    forces in the support of homeland security missions? General
    Blum, let's start with you.
        General Blum. Yes, sir. Senator Nelson, as a former
    Governor, you know how important that really is. People say,
    who is in charge? If it is happening in a State or territory,
    the Governor is in charge. When? Always. Under what
    circumstances? Every circumstance. That is not well understood
    in the Pentagon, but it is starting to be understood.
        The National Defense Authorization Act put into statute, at
    the request of the Office of the Secretary of Defense (OSD) and
    because of the House and the Senate's good cooperative work
    together, a law that allows National Guard Forces to be
    operationally employed when vetted, when it is a legitimate
    defense need, and when decided by the Secretary of Defense or
    the President, that it is in the interest of the Nation, to be
    left in operational status in title 32 under the command and
    control of the Governors.
        Prior to this job, I was the Chief of Staff of the United
    States Northern Command. That is exactly the right way and the
    tool that Admiral Keating now needs as the combatant commander
    of Northern Command to defend this Nation when we have to use
    military forces or capabilities to either do homeland defense
    operations or to support the homeland security operations where
    we are supporting a lead State or Federal agency. It gives
    great flexibility to the President and the Secretary of
    Defense. It allows us to defend the Nation without tearing up
    the Constitution.
        I think you can tell that I strongly support this. So does
    the Assistant Secretary of Defense for Homeland Defense,
    Secretary McHale, and frankly, so does Secretary Rumsfeld,
    because he is the one who actually said, please, let us get
    this into law so it is not so ambiguous each and every time we
    need to do it.
        Senator Ben Nelson. Well, I assume that since the Secretary
    of Defense supports it, Secretary Hall supports it, General
    Schultz supports it, as does everybody else.
        Mr. Hall. For the record, I strongly support it, Senator.
    [Laughter.]
        Senator Ben Nelson. That is duly noted.
        Are there other areas where we might be able to find
    similar uses that might occur to you?
        General Blum. Yes, sir, I think so. I think it is starting
    to have traction or acceptance by some senior leaders in the
    Air Force, the Army, and the Joint Chiefs of Staff. General
    Myers and General Pace, in particular, see some great utility
    in this. The Chief of Staffs of both the Air Force and the Army
    actually see some very flexible utility in this, but it only
    would be used when we are talking about operations within the
    United States of America, its States or its territories or the
    District of Columbia. It does not apply overseas nor should it.
        Senator Ben Nelson. Yes, that is a different situation.
    Thank you.
        Secretary Hall, at the current time of increased
    deployment, U.S. National Guard and Reserve troops being
    deployed at the rate they are around the world, I would imagine
    that small to mid-sized businesses are beginning to be impacted
    by the unpredictable nature of our mobilization models. Of
    course, to that end, I think we are trying to find a way to
    deal with that.
        But up until now, how has the military reached out to the
    business community and explained the evolving mission of the
    Guard and Reserve and the potential impact on business down the
    road? Has the Department of Defense, for example, developed
    strategies that may enhance the predictability of mobilizations
    and demobilizations, and has that strategy been communicated to
    the employer community to get their input? In many respects
    they are the customers, and we want to know whether what we are
    doing will really serve their purpose, as well as what we think
    will serve our purpose.
        Mr. Hall. I spend most of my time doing exactly that,
    meeting with groups throughout the country. I was just in
    Florida and met with a large economic group, the Economic
    Council of Florida, and I met with Governor Bush. Anytime I go
    into a State, I ask the following. I would like to meet with
    the Adjutant General (TAG), the Governor, the Chamber of
    Commerce, and the Rotary Club, and to try to tell them about
    our predictability model, and try to take ideas from them.
        Also, Secretary Rumsfeld has tasked me with assembling
    groups of businessmen in the Pentagon for periodic meetings. To
    date, we have had about 50 of the top companies' Chief
    Executive Officers (CEOs) and chairmen of the board in to
    listen and to talk with them to see what their view is.
        We are cooperating with the Small Business Administration.
    We are getting ready to do a study of over 1,800 employers to
    ask what small businessmen do.
        We have met with the Governors Association that you are
    familiar with, and as I say, I meet with each and every State.
    My goal is to meet with those groups to communicate, but also
    to receive from them ideas of what more we might do.
        We have been very aggressive. I consider that one of my
    charters to get out throughout the country to spend time
    helping them and getting feedback.
        Senator Ben Nelson. You might want to also check, if you
    have not, with the National Federation of Independent Business
    (NFIB). They are small businesses in particular. I suspect, if
    you have not, they would be very helpful.
        Mr. Hall. We had one of their officials at the last group
    that met with Secretary Rumsfeld who said you have to meet with
    us because we are an important organization. He was included in
    the day-long event that we had in the Pentagon, in which both
    the Secretary and the Deputy Secretary met with them.
        Senator Ben Nelson. Good. I knew it was a good idea. Thank
    you. [Laughter.]
        Secretary Hall, the employer community has come to rely on
    the National Committee for Employer Support to not only mediate
    between employers and their Reserve component employees, but
    also to educate businesses and show the good work the employer
    community is doing in support of the National Guard and Reserve
    employees. Employer Support of the Guard and Reserve (ESGR).
    Everything has to come down to some initials or some alphabet
    description. [Laughter.]
        It provides this valuable service and should be commended
    for its hard work. But in the context of an overworked system,
    will we be able to continue to rely on an organization that
    provides the majority of its outreach through this voluntary
    operation, or should we be looking at ways to make ESGR more
    relevant and provide for a more full-time and coherent staff? I
    do not want to suggest, however, that the staff members are not
    coherent. [Laughter.]
        But for more continuity in the situation. I do not want to
    take away from what they are currently doing, but because of
    the nature of this and the ongoing challenges. I wonder if you
    have any thoughts about that?
        Mr. Hall. I do. Mr. Hollingsworth is the director and Mr.
    Janes is the national chairman. They are very aggressive in
    what they are doing. The 5,100 volunteers are very patriotic,
    but we have to work beyond that. There are three important
    things.
        The gentleman to my right was one of the first ones that
    said, ``I will stand up, and I will provide a uniformed officer
    in every State that can work with that committee.'' They will
    be the continuity, and he has established those, and they are
    in every State.
        The second thing is the staff itself did not have the
    continuity that it needed. We had military officers that turned
    over. So what we are doing--and it has been approved--is to
    civilianize and get professionals on the staff that will
    provide the continuity that we need.
        Third, we are going to expand, and probably add at least
    one more person per State, and increase their funding.
        We have spent a lot of time on this. They have five
    regional conferences throughout the country. My office attends
    each one of those. I will be speaking in 2 weeks to a State
    convention. I am going out with each and every one of them and
    seeking ideas, but we need to add more people, more funds, and
    probably make it more permanent. The volunteers are great, but
    we need something a bit more permanent, and we are moving on
    those three fronts.
        I want to thank General Blum for ponying up those people
    out of hide to put in each State to support the committee. I
    think the State chairs are working well with him, and I thank
    him for that.
        Senator Ben Nelson. Thank you. I know that the people in
    Nebraska, having met with them myself, are doing an outstanding
    job. You have pointed to the challenge that you have with
    volunteer efforts. So I thank you, and thank you, Mr. Chairman.
        Senator Graham. Thank you, Senator Nelson.
        We have another vote, probably less than 10 minutes from
    now. It could be a long day. I thank the panel. I just have a
    couple of very quick questions, and we will go to the next
    panel.
        Tax credits. 51 percent of the people coming into the Guard
    and Reserve community--they tell me about 50 percent--suffer a
    pay loss in terms of the civilian pay being greater than the
    military pay. Employers routinely voluntarily make up the
    difference. We are looking at tax credits of a certain amount
    for employers who will continue that practice.
        General James, what do you think about that? Would that
    help in the employer community?
        General James. Anything that would help the employer and
    make it easier for them, either financially or structurally, to
    actually retain that employee when they come back from service
    would be of great help. Right now they are doing it out of
    patriotism, out of their sense of having someone who is a good
    employee who is willing to serve the Nation. Right now, there
    is really nothing in it for the employer. Anything that you
    could do to have some compensation and make it easier, not just
    morally and supportively, but also financially, for the
    employer to employ Guard and Reserve personnel and to
    compensate Guard and Reserve personnel would be appreciated.
        Mr. Hall. We would have to defer to the Department of the
    Treasury on its financial impact, but in general, we need to
    rejoice in what these employers are doing. We need to help
    incentivize them, and that is one way in which we could thank
    them for their patriotism.
        Senator Graham. Very well.
        One last question. When the troops come home, one of the
    things we discovered from the first Gulf War was the Gulf War
    Syndrome. We had a lot of people who came home who decided not
    to stay around because of health care problems, or perceived
    health care problems, pay problems, or just an experience that
    was not up to par. How do you feel about what we are doing for
    the soldier coming home who may have experienced health care
    problems? Do we have a network in place to take care of these
    people?
        Mr. Hall. I have a couple of quick things. Then I will
    defer to my uniformed colleagues.
        I was there for Gulf War I and II and saw how we screened
    people out. There has been a tremendous effort by Dr.
    Winkenwerder and Health Affairs to make sure that this time the
    health screening is done for everyone. No one is allowed to
    leave without a formal health care screening, which is
    transmitted electronically and goes with them to identify any
    of the problems. Because of what we learned in Operations
    Desert Storm and Desert Shield, we are doing a much better job
    in ensuring that we are able to track that carefully. I am very
    encouraged, and I have not heard anyone say that they are not
    getting proper screening.
        The second thing is that there is closer cooperation
    between the Department of Veterans' Affairs (VA) and the DOD,
    and the American Association of Disabled Veterans. When I go
    out to Walter Reed, I see those offices side by side, because
    we take great care of them. That hand-off of the disabled
    servicemember to the VA is very important.
        Finally, the center that we have for the severely injured
    and disabled, which has been established in town, I hope you
    have an opportunity to visit, is not just for anyone disabled
    or severely injured. Any person who has a health care problem
    may call that center, whether they are Active, Guard, or
    Reserve, 24 hours a day, 7 days a week, and get advice from
    them on health care matters. It is a tremendous center, which
    is funded by DOD. It is operating now. I think that will all
    help a lot.
        Senator Graham. We are going to have to go vote. I have 2
    minutes.
        General Blum. Sir, in about 30 seconds I can tell you that
    the National Guard has a full-time funded position for ESGR. As
    Secretary Hall said, we also are fielding VA representatives,
    and we hope to hire a VA representative for each State
    headquarters, and at joint force headquarters. The first
    priority is a war-wounded soldier who can come in and work in
    each State and territory to assist in the transition from the
    military care to VA care and to help educate both that soldier
    and their family through the family readiness groups that we
    have in each State. This is not just for the National Guard.
    This is for any uniformed member who wants to avail himself of
    that. So we see this as a very real need, and we are investing
    in that.
        Senator Graham. If we can help, we will.
        We will go break for a vote. General James, I will write
    you about transformation and blending Guard units. You know how
    I feel about that. [Laughter.]
        We will not belabor that point, but I do appreciate you
    coming to my office and talking about it. I want to make sure
    we retain every guardsman who wants to serve, and whatever we
    do with the Active Forces makes sense in terms of retaining
    people.
        General Schultz, thank you very much for 40-plus years of
    service. When is your retirement?
        General Schultz. 24 May, Mr. Chairman.
        I just want to say, Mr. Chairman, Ron Helmly introduced a
    couple of soldiers here earlier. For me, it is easy to serve
    with soldiers like that, and we have them around the world
    today in the Guard and Reserve and on Active-Duty. It is a real
    honor, sir.
        Senator Graham. Hear, hear. Thank you for your service.
        We will be back just in a moment. We will stand in recess.
    [Recess from 3:15 p.m. to 3:25 p.m.]
        Thank you very much.
        Will our second panel please come forward?
        For the record, Senator Nelson is a very fast walker. To
    keep up with him, you have to run. [Laughter.]
        Secretary Hall, I think you will stay. Is that correct?
        Mr. Hall. Yes, sir. Mr. Chairman, if your questions are
    similar to the ones from the last panel, I will restrict my
    speaking to what I said before, unless you want me to
    reiterate, to allow the uniformed witnesses to answer.
        Senator Graham. Thank you. Would you like to make a
    statement at all?
        Mr. Hall. No, sir. I would just like to enter the same
    statement for this panel as I did before, and ask that it be
    entered into the record.
        [The prepared statements of General Helmly, Admiral Cotton,
    General McCarthy, and General Bradley follow:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                    ------

                 Prepared Statement by VADM John G. Cotton, USN
                                    opening
        Mr. Chairman and members of this subcommittee, thank you for the
    opportunity to speak with you today about some of the important changes
    that are happening in the Navy and its Reserve Force, and to give you a
    report on our accomplishments and current state of readiness.
        Last year, Admiral Vern Clark challenged us with the statement,
    ``Change to make us better is completely necessary . . . to make our
    Navy even better and to build the 21st century Navy, and the Reserve is
    a key part of our growth and our future.'' We have met this challenge
    and have attained dramatic improvements, changing our culture and the
    shape of the force, moving away from an obsolete Cold War construct to
    one that provides the flexible capabilities needed to fight the
    unconventional threats of the 21st century.
        You can't change culture with money; it takes leadership. I want to
    thank this subcommittee for the leadership you demonstrated in the
    National Defense Authorization Act for Fiscal Year 2005, providing
    authority for the Secretary of the Navy to facilitate changing our name
    from the United States Naval Reserve to the United States Navy Reserve.
    We soon hope to have Presidential approval, and are in the process of
    complying with the provisions of the act, including future submission
    of the required conforming legislation to Congress. Once we have become
    the U.S. Navy Reserve, the Chief of Naval Operations (CNO) intends to
    promulgate guidance to ``drop the R,'' like the marines did in 1997.
    Our great sailors have always been in the Navy . . . they are the
    Reserve component of the greatest Navy ever. The initials U.S. Navy
    Reserve (USNR), USNR-R, USNR TAR will no longer be used--we are all in
    the Navy. We will still have Reserve component commissions and
    designators that put us in the right personnel categories, but we're in
    the Navy, ready and fully integrated. We might work just 2 or more days
    a month, but you cannot turn off the honor, courage, and commitment
    that comes with being in the Navy 24/7/365, ready to serve.
        Today's busy Navy reservists have three missions. Their primary job
    revolves around increasing our Navy's warfighting capability. Periodic
    and predictable service provided by our Reserve component sailors, in
    the right place, at the right time, with the right skill sets enhances
    the operational effectiveness of the supported command--affordably.
    Second, reservists will be key players in homeland security and
    defense. By aligning our capabilities and shaping our force to support
    the missions of Northern Command (NORTHCOM), reservists have the skills
    that will not only improve security at home, but will enable Active
    Forces to take the fight to the enemy and win the ``away'' game.
    Lastly, every sailor acts as a Service ambassador and recruiter in
    every town in America. The broad distribution of these sailors provides
    a constant and visible reminder to citizens in every state, and
    especially in the Nation's heartland, that the Navy is on watch,
    providing them with unmatched capability in the maritime domain, as
    well as educating and calling our young people to serve our Nation.
    This affiliation with ``Main Street USA'' and the fabric of our Nation
    is something else that money can't buy, and is a mission that the Navy
    Reserve embraces.
                                    manpower
        Our most important asset is, always has been, and forever will
    remain, our sailors--our ``Sea Warriors.'' Admiral Clark stresses the
    importance of continuously enabling and developing every sailor, and
    has challenged the Navy to deliver a Human Capital Strategy (HCS) in
    2005. This HCS theme will repeat throughout my statement.
        The Navy's Total Force HCS will build upon last year's successes:

             Continue development of Active-Reserve Integration.
             Execute elimination of Naval Reserve ``titles'' and
            foster Active component ownership of the Reserve component
            elements in one Navy.
             Continue analysis of the functions and roles of the
            Reserve component in the future Total Force.
             Complete the consolidation of Active-Reserve
            recruiting.
             Continue to identify and develop Reserve component
            skills training and professional military education
            requirements for incorporation into Sea Warrior.

        The Navy will deliver a HCS that is both mission and cost
    effective, while remaining ``capability focused.'' Typically, when a
    24/7/365 presence is required, the Active component would provide the
    preponderance of the capability. When the requirement is periodic and
    predictable, the capability should be provided by a Reserve component
    sailor at about one-fifth the cost of their Active component
    counterpart. When the requirement is best supported by specialized
    skills and long-term continuity, our civilian workforce provides the
    best fill. Finally, when time critical requirements are identified that
    fall beyond the scope of Navy skill sets, then contractors should be
    utilized to fill the need pending development of the capability or for
    the duration of a short-term requirement. Presence, predictability,
    periodicity and skill sets determine work division, not arbitrary lines
    drawn between components.
        The Navy HCS is already demonstrating ``value added'' in that Navy
    requirements are met with Reserve component capabilities, no longer
    simply a matter of ``mobilization numbers.'' Historically,
    effectiveness of the Reserve component has been measured by the number
    of personnel mobilized and on Active-Duty. More than 28,000 Navy
    reservists have been mobilized since September 11, and nearly 12,000
    served on Active-Duty during the peak of OIF in May 2003. However, the
    mobilization metric falls far short of measuring the work being done by
    reservists each and every day. On any given day, over 20,000 reservists
    are on some type of orders, providing fully integrated operational
    support to their Active component and joint commands, both at home and
    overseas. This contribution is extremely valuable and represents a
    significant return on ``sunk'' training costs, enabling mature,
    seasoned and capable veterans to surge to fleet requirements. The
    judicious use of operational support enables the Navy Reserve component
    to meet surge requirements short of mobilization, while providing
    enhanced ``volunteerism'' options for our sailors. Thus, operational
    support provides full spectrum access to Reserve component
    capabilities, which are more relevant than ever.
        The greater readiness provided by full spectrum access is evident
    by the effective and judicious use of our ``high demand, low density''
    units and individual augmentee skill sets. A prime example is
    demonstrated daily by the Navy Reserve Intelligence Program, which is
    fully integrated into all fleet operations. These highly-skilled
    professionals face increased global war on terrorism demands not only
    from the Navy but also from every combatant commander (COCOM). Navy
    leadership is utilizing Intelligence reservists daily with inActive-
    Duty drills and annual training, Active-Duty for training, and Active-
    Duty for special work, and mobilization to provide consistent, high
    quality support to Joint Operating Forces. More than 1,700 sailors have
    been mobilized since September 11, representing over 40 percent of the
    Intelligence program's nearly 4,000 reservists, in support of 117 Navy
    and Joint Commands in 150 different locations worldwide, providing
    real-time operational support to senior decisionmakers and commanders
    in the field.
        The roles and missions of these professionals have been wide
    ranging. Reserve component targeting officers have augmented every
    Carrier Air Wing deployed for Operations Enduring Freedom and Iraqi
    Freedom (OEF/OIF) since September 11. Interrogators at Guantanamo Bay
    and elsewhere have obtained information leading to the breakup of
    global terror cells. They have deployed with Navy SEAL teams, augmented
    combat staffs aboard ships, stood counterterrorism watches, supported
    Joint Task Forces, and captured foreign materiel. Also, the effective
    use of Joint Reserve Intelligence Centers (JRICs) since September 11
    has added a new tool for deployed warfighters in all COCOMs.
        While most mobilized Reserve Intelligence professionals have
    reported to their supported Joint and Navy Commands, over 13 percent
    have been mobilized to 27 JRICs located throughout the country. They
    are an example of an evolving reach-back capability that directly
    supports forward operations and represents one more step in the Navy's
    progress toward a net-centric future. Intelligence reservists averaged
    over 80 days of Active-Duty per person each year since September 11.
    This high Reserve component personnel tempo is an excellent example of
    the immense value added by these sailors, largely through
    ``volunteerism.''
                               current readiness
    Global War on Terrorism
        Navy reservists are performing superbly in many important global
    war on terrorism roles. To date, 19 of our Reserve component sailors
    have made the ultimate sacrifice while deployed in support of current
    operations, with many more suffering serious injuries. On July 11,
    2004, I had the distinct privilege of presenting the Purple Heart Medal
    to 16 Seabees from Naval Mobile Construction Battalion (NMCB) 14, in
    Jacksonville, FL. A total of 7 sailors were killed and 19 were wounded
    in attacks on April 30 and May 2, 2004 while mobilized in support of
    OIF. The loss of these brave Americans underscores the honor, courage
    and commitment that drive our Nation's reservists, and the willingness
    of citizen sailors to make tremendous sacrifices for not only our
    freedom, but also for our coalition partners.
        Perhaps the biggest challenge involves the anticipated global war
    on terrorism demand for Navy reservists to support land-based missions
    in central command (CENTCOM). The Secretary of Defense has directed
    Navy to take a close look at the combat service support missions, and
    we are leaning forward to aggressively plan our engagement strategies.
    The global war on terrorism presents new and dynamic challenges to our
    Navy and our Nation, and will require a flexible Navy Reserve capable
    of supporting nontraditional missions.
        One way we are meeting this challenge is to develop a customs
    inspection capability to support deployed forces. Over 450 Selective
    Reserve and volunteers from the Individual Ready Reserve (IRR) were
    screened and selected for this new mission. Mobilized sailors reported
    to the Naval Expeditionary Logistics Support Force headquarters in
    Williamsburg, VA, in early December 2004 for outfitting and training,
    which included Customs Inspector certification and expeditionary
    warfighting skills. Subsequently, they deployed to Kuwait in late
    January 2005 for turnover with Air Force personnel.
        Additionally, Navy has assumed the responsibility for managing the
    detainee program at Guantanamo Bay, Cuba. Active component and Reserve
    component have blended qualified personnel as needed to enhance the
    security force.
        Mobilized Navy ``Seabees'' have continuously deployed in support of
    CENTCOM operations. Over 40 percent of the Seabee force has been
    mobilized since September 11, providing critical combat construction
    support to forces in Iraq and Kuwait. Navy construction forces rely
    heavily upon Reserve component sailors, bringing critical civilian
    skill sets, maturity and experience to the mission.
        In January 2004, Navy Expeditionary Logistics Support Force
    mobilized more than 525 sailors from 4 of its Cargo Handling and Supply
    Support Battalions, who relieved and augmented a variety of Army and
    Marine Corps logistics units. These Navy Reserve cargo handlers
    (stevedores, fuels, and mail) are working with the Army to provide
    critical combat support to soldiers and marines in Iraq and Kuwait in
    support of OIF. Subsequently, additional sailors have been mobilized
    and have relieved these forces in theater.
        In March 2003, the Navy deployed Helicopter Combat Support Special
    Squadron Five (HCS 5) to Iraq to provide a key capability in support of
    Active ground forces in OIF. Maintaining a high operational tempo, HCS
    5 supported the Joint Special Operations Aviation Command, flying
    combat missions against the enemy. One year later, HCS 5 was relieved
    by her sister squadron, HCS 4, who remains in theater to date. These
    two RE-serve squadrons represent 50 percent of Navy's helicopter combat
    support capability.
        The Navy Reserve will expand its role in combat service support.
    Our dedicated reservists will be placed into training pipelines for up
    to 4 months to develop and hone special skill sets and combat
    capabilities needed to support the global war on terrorism. These
    sailors will then go forward, ``boots on ground'' with the Army. When
    they return, we will establish Joint Provisional Units to house these
    unique skill sets, where reservists will remain on ``hot standby'' for
    consequence management in support of NORTHCOM Homeland Defense
    requirements.
    Homeland Defense
        ``We the People'' are all joined in a common interest, Homeland
    Defense. Only a few times in our history has the enemy brought the
    fight to our country. Declaring independence in 1776, we defeated the
    British twice in a span of nearly 40 years. No one can forget the ``Day
    of Infamy'' at Pearl Harbor on December 7, 1941, nor will anyone soon
    forget the events of September 11, 3 short years ago, in New York City,
    at the Pentagon, and in a field in Pennsylvania. We are now engaged in
    the global war on terrorism, another long war to preserve our way of
    life. We must win this ``away'' game to ensure that it never again
    becomes another ``home'' game.
        While most Reserve sailors are compensated for only a few days each
    month, they are in the Navy 24/7/365, selflessly serving their Nation
    with honor, courage, and commitment. As the President instructed them 3
    years ago, they stand fully ready . . . they are the new minutemen in
    the same tradition as those who stood on the Commons in Lexington and
    at the North Bridge in Concord, Massachusetts. As veterans, they
    provide military experience and capabilities as well as a myriad of
    civilian skill sets critical to the support of Sea Power 21, ready to
    quickly surge to any global crisis and respond to disasters at home.
    Reserve sailors live in every State and will become more regionally
    aligned with NORTHCOM as the Nation develops its homeland defense
    strategy. We are ready to answer the call, as Americans have done for
    229 years. The CNO recently stated, ``I am convinced that
    responsibility for Maritime Domain Awareness (MDA) should rest first
    and foremost with the United States Coast Guard. I am also convinced
    that there is a role for the United States Navy to play in response and
    in support of the Coast Guard, bringing our resources to bear wherever
    they are required.''
        The Navy is partnering with the Coast Guard because we share a
    common interest in defending our Nation's maritime approaches. When a
    ship comes near our coastlines, we need to know where it is going and
    what cargo it is carrying. MDA is the effective understanding of all
    elements of the global maritime environment that could impact the
    security, safety, economy or environment of the United States.
        Significant roles will be played by several combatant commanders,
    NORTHCOM, Southern Command (SOUTHCOM), Strategic Command (STRATCOM),
    and many other Federal and State Departments. Pacific Command (PACOM),
    European Command (EUCOM) and CENTCOM will also contribute to MDA if we
    are to be successful in countering threats far from our shores. Efforts
    by the Department of Defense (DOD) and Department of Homeland Security
    (DHS) to make MDA truly an interagency effort are just beginning, and
    the Navy Reserve has tremendous potential to join other major
    stakeholders in providing workable solutions to ensure a more cost
    effective MDA strategy.
        In November 2004, Admiral Tim Keating assumed command of NORTHCOM.
    In developing MDA, his staff will be utilizing lessons learned from
    many years of successful North American Air Defense operations that
    have monitored all air traffic in U.S. airspace. Navy reservists stand
    ready to augment the MDA staff with personnel from the Space Warfare
    Command, intelligence, naval control and guidance of shipping, Tactical
    Support Center, Mobile Inshore Undersea Warfare (MIUW), Military
    Sealift Command, Naval Air Force Reserve, and Distributed Common Ground
    System-Navy (DCGS-N) units.
        NORTHCOM is planning to stand up a Joint Reserve Unit with
    Intelligence Community watch standers and analysts that will conduct
    port security surveys while working with the Coast Guard's Joint Harbor
    Operation/Maritime Operations Centers. The Navy Reserve will fully
    support this new capability.
        One capability central to homeland defense is provided by Navy
    Coastal Warfare (NCW), whose mission is to provide surface and
    subsurface surveillance in littoral areas throughout the world.
    Secondary missions include command, control and communications
    functions. Navy Reserve MIUW units and Inshore Boat Units have, until
    recently, provided the sole capability for this mission within the
    Navy. Due to the ``high-demand/low-density'' mission and structure, the
    Navy has established eight Active component NCW units, under the
    operational control of the newly established Maritime Force Protection
    Command to aid in force protection missions. This vital capability will
    now be provided by a mixture of Active component and Reserve component
    forces, once again aptly demonstrating the ability of the Navy Reserve
    Force to serve as a test bed for new capabilities and as an enabler for
    transitioning validated capabilities to the Active component when
    required.
        The Navy has, in fact, already begun joint experimentation with the
    Coast Guard, exploring new situational awareness systems, and plans are
    being formulated to provide demonstrations later this year. One such
    system, a littoral version of DCGS-N, was provided to the Navy by
    Congress over the past few years. DCGS-N merges intelligence,
    surveillance, reconnaissance, targeting, mission planning, and
    situational-awareness functions into a Web-enabled, net-centric, joint-
    interoperable architecture. This invaluable capability, long the
    province of Strike Groups and major ground combat units, will soon
    demonstrate its potential value in supporting MDA.
        Another potential homeland defense capability is being demonstrated
    by Operation Vigilant Mariner. Embarked Security Teams (EST) will
    provide security augmentation to Military Sealift Command/Ready Reserve
    Fleet/Contract Carrier ships to detect, deter and defend against
    waterborne and land-based terrorist attacks. The initial teams will be
    composed of Active component sailors, with Reserve component ESTs
    providing ready surge capability for global operations. These Reserve
    component ESTs will also be able to perform continental United States
    (CONUS)-based force protection missions either in civilian ports or as
    an augmentation force to Navy installations and shore facilities
    requiring extra protection.
        To effectively support homeland defense initiatives, every State
    should have a joint headquarters, manned by personnel from each of the
    seven Reserve components. While the National Guard will focus on
    States, the Navy will focus on regions as part of Commander, Navy
    Installations' ongoing alignment initiative. When we respond to a
    crisis, we will do so under a regional construct, surging both Active
    component and Reserve component sailors to assist with threats. As we
    continue to develop this concept, we will work closely with the
    National Guard Bureau and other agencies. This structure further aligns
    our organizations to provide enhanced support and coordination by
    having citizen sailors protect their home regions.
                                future readiness
        The Navy is taking ownership of its Reserve component. Some
    specialized communities, such as public affairs, now direct the entire
    personnel selection and processing system, and are detailing reservists
    to supported commands. This is exactly how all Reserve component
    assignments will be done in the future, leveraging experience,
    demographics, special skill sets and desire to serve in operational
    units and perform operational mission support.
        The future detailing of our reservists will incorporate a Sea
    Warrior initiative known as the Career Management System. This self-
    service, Web-based tool will provide every sailor visibility into all
    available Navy billets. It will also provide the necessary details,
    including job description, required competencies, unit location and
    special requirements, so that our sailors can apply for jobs that best
    fit their career plans while meeting the needs of the Navy.
        In 2003, we began another very productive initiative to enable Navy
    leadership to view Reserve component readiness information through the
    Type Commander Readiness Management System (TRMS). We created an
    innovative module called the Navy Reserve Readiness Module that links
    numerous databases, including the Medical Readiness Reporting System
    (MRRS), the Navy Reserve Order Writing System (NROWS), the Reserve
    Headquarters System (RHS), and the Navy Marine Corps Mobilization
    Processing System (NMCMPS).
        Decisionmakers and force providers can use this system on any
    desktop computer to drill down through every region, every Reserve
    activity, every unit, down to the individual sailor. This easy-to-use
    system has greatly improved readiness and will allow the Active
    component to better match resources to requirements, identify gaps, and
    provide focused training to close those gaps. Active component
    ownership of, and responsibility for, the readiness of its assigned
    reservists is the objective. This is a significant shift in culture
    that will greatly improve the readiness and effectiveness of the Total
    Force.
        A major thrust over the past year has been the improvement of the
    Navy Reserve's enterprise efficiency while enhancing operational
    effectiveness. Knowledge Management (KM) methodology has been the
    driver of this effort, and the Navy Reserve is leading the way. KM has
    been applied across the enterprise, resulting in better organizational
    alignment with the Active component, better understanding of Navy
    requirements for its Reserve component, and development of quicker
    response mechanisms that will better support the joint force. KM
    focuses our efforts on readiness, and helps us get the most ``bang for
    the buck'' in terms of operational availability and speed of response.
                               quality of service
        The Secretary of Defense instituted a force structure planning goal
    of limiting the involuntary mobilization of reservists to 1 year out of
    every 6. When reservists deploy to support the war, they want to know
    three things: ``when, where, and for how long?'' They are ready to
    serve, and while deployed deserve the same pay and benefits earned by
    Active component personnel. The DOD is working toward a common pay and
    benefits system for personnel from all components, Active, Guard and
    Reserve, which will support the Navy's efforts to properly support
    sailors, whether mobilized or performing operational support.
        Additionally, the Navy's HCS is validating the requirement for
    different levels of Reserve component participation. Today, about one-
    third of our force participates at the traditional level of 38 days per
    year of Inactive-Duty drills and annual training. Another one-third
    operates at an increased level of participation between 38 and 100 days
    per year. The remaining one-third is able to serve in excess of 100
    days per year, with some being able to recall for years. Given a
    continued demand signal for all of these levels of participation,
    innovative methods to predict and budget for requirements will have to
    be developed by resource sponsors. The result will be a much more
    integrated Total Force and greatly enhanced full spectrum Reserve
    component operational support.
        One of our efforts to improve the delivery of support across the
    ``capability spectrum'' is the consolidation of the Reserve component
    military personnel (MILPERS) appropriation budget activity structure.
    The current two budget activity structure of Reserve component MILPERS
    appropriations, as set up over 20 years ago, is outmoded, cumbersome
    and not adequately responsive for 21st century budget execution. It
    leads to inefficiencies in the Department's administration of funds,
    creates unnecessary budget execution uncertainties, and can result in
    the receipt of unexpended funds so late in the year that their
    effective use is minimized.
        Combining the two Reserve component MILPERS budget activities, BA1
    and BA2, into a single budget activity within the Reserve component
    appropriation is a sensible adjustment which enables more efficient use
    of resources, permits sufficient continued oversight of budget
    execution, and supports the Secretary's desire to transform and improve
    financial processes.
        The Navy Reserve's fiscal year 2006 budget submission accounts for
    this consolidation and has been fully approved and supported by the
    Department of Defense. This initiative will have a dramatic impact on
    our ability to provide full spectrum operational support, as well as
    improve our sailors' quality of service through the ability to tailor
    their orders to actual requirements. This also furthers our ability to
    leverage the National Defense Authorization Act for Fiscal Year 2005
    authority to have up to 6,200 sailors performing full time operational
    support for up to 3 out of 4 years, a very welcome change in policy
    that enhances our ability to surge to global war on terrorism
    requirements.
        The timeliness and way that information flows to the Reserve Force
    is one of our biggest challenges in ensuring quality-of-service. The
    degree to which we effectively communicate significantly impacts our
    level of success. We have created several forums for communicating Navy
    priorities, key leadership messages, relevant news, and opportunities
    to and from the field, and they have proven to be very effective. We
    host a biweekly briefing by video teleconference to inform the force
    and solicit input from every echelon. We established an e-mail
    communication protocol through the Public Affairs Office to
    electronically distribute information to more than 5,000 key Navy
    reservists and DOD personnel. Our award-winning magazine, The Navy
    reservist, is mailed monthly to every Navy reservist's home (over
    80,000 individuals and their families). The flow of information enables
    us to quickly identify issues and opportunities and to target the
    proper audiences for action. The speed of actionable information has
    greatly increased as we build the Navy of the future.
        Most critical to our success remains the important roles of our
    families and employers in supporting our sailors. Our families enable
    us to go forward with love and support, and our employers guarantee our
    jobs when we return, often with additional benefits as their much
    appreciated contributions to the cause. We all serve together and
    cannot win the global war on terrorism without the many tremendous
    sacrifices Americans make for national defense.
        In the past year, we have worked to strengthen the already very
    effective Employer Support of the Guard and Reserve (ESGR) program. For
    the first time since the 1994 Uniformed Services Employment and
    Reemployment Rights Act (USERRA) was passed, the Department of Labor
    has published regulations to enhance understanding and assist in the
    enforcement of this landmark legislation. Never before have our
    Nation's employers played such a critical role in our national defense,
    with many providing benefits far beyond the USERRA requirements. We
    should continue to look for opportunities to further incentivize and
    partner with employers who do so much to care for our reservists.
                                   alignment
        Through ongoing transformation, the Navy is accelerating the
    Nation's warfighting advantage. Admiral Clark has detailed the state of
    the Navy more fully in his testimony, but several initiatives will have
    a direct and positive impact on the Navy Reserve, the most significant
    being Active-Reserve Integration (ARI). ARI is more than a ``bumper
    sticker.'' It is a key component of the evolving HCS. The key step in
    achieving ARI is to determine what the Active component requires its
    Reserve component to do, as well as how and when to surge reservists.
    Accordingly, Admiral Clark tasked Fleet Forces Command to conduct a
    review of all Reserve component capabilities, and in August 2004
    approved the results. This Zero-Based Review (ZBR) laid the groundwork
    for a more integrated and aligned Total Force in which Reserve
    component capabilities directly support Seapower 21.
        The ZBR systematically studied gaps in Active component
    capabilities that could or should be filled by the Reserve component.
    Cost and risk values were assigned to each validated Reserve component
    capability relative to the Active component mission to enable
    leadership to make informed decisions regarding appropriate levels of
    investment. The result was a blend of existing and new capabilities,
    while others were recommended for realignment or divestment. The review
    acknowledged two essential types of support the Active component will
    receive from the Reserve component: (1) units that stand up when
    required to provide a specific capability, and (2) individuals or
    portions of units that can augment existing active commands. Validated
    capabilities are designed to increase the warfighting wholeness of the
    Navy, and represent ``what the Active component needs to have,'' not
    just what is ``nice to have.''
        We have changed the way we assess ourselves, as well as the way we
    train in support of the Fleet Response Plan (FRP). We are transitioning
    to a capabilities-based force driven by Navy requirements. The ZBR
    inventoried the Reserve component against 61 capabilities and
    ``mapped'' them to Navy mission areas. Every billet and every unit was
    examined for both surge and operational support value. We are
    synchronizing data to enable us to plan and act as One Navy. The
    results of the assessment are included in the OPNAV programming,
    budgeting and execution system, partnering resources to provide better
    support to the warfighters.
        One of the most significant outcomes of the initial ZBR is that in
    fiscal year 2006, the Navy Reserve will reduce end strength by 10,300
    sailors. To execute the FRP, Navy Active and Reserve components have
    accelerated their alignment, synchronizing their efforts to become a
    more effective and efficient warfighting team. This is a ``win-win''
    scenario for the Navy and the taxpayer, reflecting not a reduction in
    capabilities, but rather capabilities more effectively and much more
    efficiently delivered!
        We are expending significant effort to ensure effective Reserve
    component management as well. Active component and Reserve component
    manpower experts are partnering to conduct a full-time support program
    Flag Pole Study to determine the most effective and efficient manner to
    structure and allocate our Reserve component management personnel
    across Navy Reserve activities and in fleet commands.
        Another key element of our full-time support program is our
    civilian employees. Over 100 civilian employees assigned to Commander,
    Navy Reserve Forces Command and the Office of the Chief of Navy Reserve
    will be among the first Navy employees to be administered under the new
    National Security Personnel System (NSPS). July 2005 transition
    activities will be preceded by on-line and class room training for all
    affected civilian employees and their supervisors (both civilian and
    military). This initial group represents approximately one-quarter of
    the Navy Reserve's civilian employee population.
        Another component of ARI is the alignment of Reserve component
    infrastructure. Commander, Naval Installations (CNI), the Navy's
    landlord, now includes every Navy Reserve activity in its regions for
    better processing of service and support requests. There are no longer
    any Navy Reserve bases, only Navy bases with different human capital
    strategies, and we're all working together to support the fleet.
        We can no longer think of ourselves as separate Reserve activities
    in every State. We must integrate as part of Navy regions. We hope to
    never build another Navy-Marine Corps Reserve Center, but will instead
    build only modern Armed Forces Reserve Centers or Joint Operational
    Support Centers that will promote joint operations, enhance
    interoperability and significantly reduce overhead costs. We will train
    jointly at home to deploy and fight jointly overseas.
        One significant alignment success story that has resulted in
    achievement of major efficiencies is the Navy Recruiting mission. The
    former Navy Reserve Recruiting Command has merged with Navy Recruiting
    Command to provide a seamless recruiting organization capable of
    providing all service options to potential Navy sailors. Not a mere
    name change, Reserve component recruiters and staff are serving
    alongside their Active component counterparts. Some of our Navy
    Recruiting Districts are commanded by full-time support officers (FTS).
    We also have senior enlisted (NRD) FTS Career Recruiter Force personnel
    serving as NRD Chief Recruiters. Total Force recruiting epitomizes a
    truly customer-oriented focus, where a potential sailor is exposed to
    every option for service in the Navy. Every career consideration and
    every possible enlistment incentive is now tailored to the needs of the
    individual. Our ultimate goal is to recruit 100 percent of the
    qualified applicants that ``cross the brow'' and retain 100 percent of
    the sailors with viable career options in the Navy, whether Active
    component or Reserve component.
        Our vision continues to be support to the fleet, ready and fully
    integrated. The Reserve component provides predictable and periodic
    surge support in the FRP, and has been very effectively integrated into
    all capabilities in the Navy's operating forces. The Navy is getting
    slightly smaller, but much more effective, providing increased
    warfighting wholeness and a much better return on investment.
                                    summary
        Navy RE-servists provide worldwide operational support and we are
    proud of our many accomplishments since September 11. We continue to
    push for further integration and alignment within the Navy, while
    surging with greater speed, flexibility, and responsiveness than ever
    before. Our dedicated sailors provide the key to future success. During
    OEF, a deployed combatant ship commanding officer said, ``People ask me
    if I'm worried about the youth of America today. I tell them not at
    all, because I see the very best of them every day.''
        Navy Reserve leadership agrees. Our sailors have never been so
    capable and committed. Their honor, courage and commitment make our
    profession the most highly respected profession in the United States
    today and our Navy the most admired around the world. We could not be
    more proud of the effort they put forth and the results they have
    achieved over the past year. We are looking forward to even greater
    success as our alignment efforts progress and many new initiatives
    mature and become adopted by the Fleet.
        In closing, I would like to thank this committee for the support
    you have provided the Navy Reserve and all of the Guard and Reserve
    components. The National Defense Authorization Act for Fiscal Year 2005
    provided several significant, positive benefits that will help us
    recruit and retain our talented sailors to better support the Navy and
    joint commands. As you can see, this is a very exciting period for the
    Navy and the Navy Reserve. The CNO has challenged every sailor to
    review current ways of doing business and suggest solutions that will
    improve effectiveness and find efficiencies. The Navy Reserve has
    accepted that challenge and promises the members of this committee that
    we will continue to do just that--examine every facet of our operation,
    to support the fleet, and to accelerate our Navy's advantages while
    providing the best value to the American taxpayer.
                                     ______

            Prepared Statement by Lt. Gen. Dennis M. McCarthy, USMCR
                                  introduction
        Chairman Graham, Senator Nelson, and distinguished members of the
    subcommittee, it is my honor to report to you on the state of your U.S.
    Marine Corps Reserve (USMCR) as a partner in the Navy-Marine Corps
    team. Your Marine Corps Reserve continues to be ``ready, willing, and
    able.'' We remain firmly committed to warfighting excellence. The
    support of Congress and the American people has been indispensable to
    our success in the global war on terrorism. Your sustained commitment
    to care for and improve our Nation's Armed Forces in order to meet
    today's challenges, as well as those of tomorrow, is vital to our
    battlefield success. On behalf of all marines and their families, I
    would like to take this opportunity to thank Congress and this
    subcommittee for your continued support.
                        your marine corps reserve today
        The last 4 years have demonstrated the Marine Corps Reserve is
    truly a full partner of the Total Force Marine Corps. I have been the
    Commander of Marine Forces Reserve since June 2, 2001, and as I prepare
    for retirement this summer, I can assure you the Marine Corps Reserve
    still remains totally committed to continuing the rapid and efficient
    activation of combat-ready ground, air, and logistics units to augment
    and reinforce the active component in the global war on terrorism.
    Marine Corps Reserve units, Individual Ready Reserve (IRR) marines,
    Individual Mobilization Augmentees (IMAs), and retired marines fill
    critical requirements in our Nation's defense and are deployed
    worldwide in Iraq, Afghanistan, Georgian Republic, Djibouti, Kuwait,
    and the U.S., supporting all aspects of the global war on terrorism.
        ``Train, activate, and deploy'' has always been a foundation of the
    Marine Corps Reserve. Following that foundation, your Reserve is
    maintained as a pre-trained, balanced and sustainable force capable of
    rapid deployment into a combat environment.
        Reserve marines continuously train to maintain high levels of
    combat readiness. Because we currently have the luxury of scheduled
    rotations, we utilize a 48-day activate to deploy schedule. A demanding
    mobilization and operational readiness deployment test program
    eliminates the need for post activation certification upon activation.
    The 48-day schedule includes a 9-day Security and Stability Operations
    (SASO) training package and completes the preparations for the Marine
    Reserve unit to deploy. The impact of the train, activate, and deploy
    foundation is the seamless integration with the Gaining Force Commander
    (GFC) of a combat capable Active-Duty Marine unit.
        Your Marine Corps Reserve is pre-trained--able to activate, spin-
    up, deploy, redeploy, take leave and deactivate all within 12 months.
    Twelve-month activations with a 7-month deployment have helped sustain
    the Reserve Force and contributed to the regeneration of our units. In
    so doing, the Reserves follow the same 7-month deployment policy as our
    Active Forces. This activation/deployment construct has allowed the
    U.S. Marine Corps to maximize management of the Reserve Force, maintain
    unit integrity, and lessen the burden on Marine Corps families by
    maintaining predictable deployments while allowing adequate dwell time
    between unit deployments.
        As of early March 2005, over 13,000 Reserve marines were activated
    in support of Operation Enduring Freedom (OEF), Operation Iraqi Freedom
    (OIF), and Horn of Africa operations. Of these marines, approximately
    11,500 were serving in combat-proven ground, aviation and service
    support units led by Reserve marine officers and noncommissioned
    officers. The remaining 1,600 Reserve marines were serving as
    individual augments in support of combatant commanders, the Joint
    Staff, and the Marine Corps. Since 11 September 2001, the Marine Corps
    has activated over 36,000 Reserve marines, and more than 95 percent of
    all Marine Forces Reserve units.
        The global war on terrorism highlights our need to remain flexible
    and adaptive as a force. During the aftermath of September 11 and the
    commencement of the global war on terrorism, the Marine Corps Reserve
    was the force the Marine Corps needed. As new warfighting requirements
    have emerged, we have adapted our units and personnel to meet them,
    such as with the rapid formation of security forces from existing
    units, or the creation of provisional civil affairs groups. We reviewed
    our Total Force Structure during 2004, and laid the blueprint for
    refining the force from 2005 to 2006. In the coming years, the Marine
    Corps Reserve will be increasing intelligence, security, civil affairs,
    mortuary affairs, and light-armored reconnaissance capabilities, while
    we pare down some of our heavier, less required capabilities, such as
    tanks and artillery. However, we are adjusting less than 8 percent of
    Reserve end strength to support these new capabilities required for the
    war on terrorism. By reassessing and fine-tuning our Reserve Force, we
    are enhancing our ability to provide required warfighting capabilities.
    Although adjusted, the Reserve Force will continue to provide a strong
    Marine Corps presence in our communities.
        Your Marine Corps Reserve continues to prove we are ready, willing,
    and able to accomplish our primary mission of augmenting and
    reinforcing the Active component with fully trained, combat capable
    marines.
                              return on investment
        The Marine Corps is committed to and confident in the Total Force
    concept as evidenced by the overwhelming success of Marine Reserve
    units serving in support of the global war on terrorism. Activated
    Marine Reserve units and individuals are seamlessly integrating into
    forward deployed Marine Expeditionary Forces (MEFs) and regularly
    demonstrate their combat effectiveness. The recent efforts of your
    Reserve marines are best illustrated in the following examples of a few
    of the many Reserve units supporting the war effort:
    Force Units
        Fourth Civil Affairs Group (4th CAG), commanded by Col. John R.
    Ballard USMCR, a professor at the Naval War College, and assisted by
    his senior enlisted advisor, Sgt. Maj. Joseph A. Staudt, a construction
    appraiser and project manager, was instrumental in rebuilding
    communities from the ground up in the Al Anbar Province of Iraq. They
    assisted in everything from recreating the infrastructure for a city or
    town, to clearing unexploded ordnance and equipment left by the Iraqi
    army from school buildings. Fourth CAG was instrumental in projects
    such as supporting local elections in Fallujah and assisting the Iraqis
    in reopening schools in Al Anbar province. Just last month, 4th CAG
    ended its tour of duty in Iraq and were replaced by 5th Civil Affairs
    Group (5th CAG), commanded by Col. Steve McKinley USMCR, a retired
    bonds salesman from Wachovia, with the assistance of Sgt. Maj. John A.
    Ellis, a Baltimore fireman.
    Fourth Marine Division
        First Battalion, 23d Marines (1/23), under the command of Lt. Col.
    Gregory D. Stevens USMCR, a building contractor in southern California,
    supported by his senior enlisted advisor, SgtMaj David A. Miller, a
    military academy instructor, were the first to enter and assess the
    threat in Hit, Iraq last year and won decisive battles with insurgents
    in that city. Sgt. Herbert B. Hancock, a sniper from 1/23 was credited
    with the longest confirmed kill in Iraq during the battle for Fallujah,
    taking out insurgent mortarmen from a distance of over 1,000 yards.
    From October 2004 to January 2005, the Mobile Assault Platoons of 1/23
    patrolled the supply routes around the Haditha Dam area in Iraq. With
    the aid of long-range optics, night vision and thermal imaging scopes,
    they vigilantly watched day and night for insurgent activity, while
    remaining unobserved. During their last month in Iraq, the efforts of
    the Mobile Assault Platoons caused an 85 percent decrease in the total
    number of mines and improvised explosive devices (IEDs) utilized in the
    Haditha Dam area.
        Second Battalion, 24th Marines, commanded by Lt. Col. Mark A. Smith
    USMCR, an Indiana state policeman, with Sgt. Maj. Garry L. Payne, a
    business owner, as his senior enlisted advisor, supported the 24th
    Marine Expeditionary Unit (24th MEU) by bringing a measure of security
    to northern Babil Province. Marines with law-enforcement background
    were so common in the battalion that even the smallest units boasted of
    having a few police officers. Many law-enforcement strategies and
    tactics employed in the Chicago area were mimicked in Iraq such as
    executing raids, handling heavy traffic jams and conducting crime scene
    analysis. The battalion even used police procedures in its intelligence
    battle, comparing anti-Iraqi forces to criminals back home. As Chief
    Warrant Officer-5 Jim M. Roussell, an intelligence officer and 28-year
    veteran of the Chicago Police Department stated, ``There are a lot of
    similarities between street gangs and the guys we're fighting out
    here.'' Working alongside Iraqi security forces, the marines rounded up
    nearly 900 criminals, thugs and terrorists and seized more than 75,000
    munitions to make the local area safer for the Iraqi residents.
    Fourth Force Service Support Group
        Throughout my tenure as Commander, Marine Forces Reserve, I have
    made repeated visits to marines serving abroad. During a recent trip to
    Iraq with my senior enlisted advisor, Sgt. Maj. Robin W. Dixon, I
    visited our marines from Fourth Force Service Support Group (4th FSSG)
    who were serving with 1st FSSG. I can confidently state that the
    Reserve marines were fully integrated with 1st FSSG and were meeting
    all the challenges to ensure marines throughout Iraq had everything
    from food and medicine to mail and ammunition. They willingly braved
    dangerous roads filled with IEDs to ensure supplies arrive at their
    destination. Our marines who are on the front lines can do their tasks
    superbly because their needs back at the base camp are all being met by
    the marines of FSSG. From refueling to performing major overhauls on
    vehicles, to moving the fuel and materials of war from the rear to the
    front, to distributing ``beans, bullets, and bandages''--the FSSG takes
    care of all the needs of their fellow marines.
        The most sobering task that the Reserve marines from 4th FSSG
    perform in Iraq is Mortuary Affairs, which is predominately a Reserve
    mission. Chief Warrant Officer-2 Anthony L. High, the Officer in Charge
    of Mortuary Affairs, ensures that the remains of the fallen in Iraq
    return home with the proper dignity and respect they deserve for the
    price they have paid for our country. Even enemies killed in Fallujah
    were given burials commensurate with the customs and procedures of
    their native country and religious beliefs, winning approval of Iraqi
    religious leaders.
    Fourth Marine Aircraft Wing
        The accomplishments of Marine Aerial Refueler Transport Squadron
    452 (VMGR-452), of Marine Aircraft Group 49, 4th Marine Aircraft Wing,
    under the command of Lt. Col. Bradley S. James, USMCR, a United
    Airlines pilot, supported by his senior enlisted advisor, Sgt. Maj.
    Leland H. Hilt, Jr., an auditor for the IRS, show the overwhelming
    commitment we impose on our Reserve marines. VMGR-452 has been
    activated twice since September 11. A detachment from VMGR-452 was
    activated in January 2002 to support OEF. The remainder of the squadron
    was activated later in support of OIF I. Upon deactivation, the
    squadron reverted back into their normal high operational tempo,
    supporting Reserve missions worldwide. The squadron supported the full
    spectrum of KC-130 missions that included aerial delivery in support of
    Special Operations Command (SOCOM), performing multiple aerial
    refueling missions in support of the Fleet Marine Force and the U.S.
    Army, logistics runs in support of Marine Forces Europe and deployed
    units in Djibouti, and support of a Hawaii Combined Arms Exercise
    (CAX). The entire squadron was reactivated in June 2004 and deployed in
    August to Al Asad Air Base, Al Anbar Province, Iraq. They quickly began
    combat operations in support of First MEF. The squadron conducted
    numerous types of tactical missions, to include logistics support,
    fixed-wing aerial refueling (FWAR) and radio relay throughout several
    countries to include Iraq, Kuwait, Qatar, Bahrain, Turkey and Italy. On
    7 November, when Operation Phantom Fury commenced in Fallujah, VMGR-452
    found its versatile KC-130 platforms greatly needed for a variety of
    missions. The squadron flew 341 sorties, logged 864.9 flight hours,
    transported 1,273,150 pounds of cargo and 1,980 personnel, and
    offloaded 4,324,300 pounds of fuel to 502 receivers during the
    operation. After Operation Phantom Fury, the squadron conducted its
    most important mission of the deployment--the movement of Iraqi
    election officials during Operation Citadel II. During this operation,
    the squadron transported over 1,200 Iraqi election officials from An
    Najaf to Al Taqaddum and Mosul so that they would be in place before
    the election on 30 January. Following the elections, the squadron
    transported the election officials back to An Najaf in less than 6
    hours by running three fully loaded KC-130s continuously. February saw
    the squadron surpass 3,000 mishap-free flight hours for the deployment.
                             activation philosophy
        Sustaining the force has been consistent with Total Force Marine
    Corps planning guidance. This guidance was based on a 12-month
    involuntary activation with a 7-month deployment, followed by a period
    of dwell time and, if required, a second 12-month involuntary
    reactivation and subsequent 7-month deployment. This force management
    practice was designed to enhance the warfighting and sustainment
    capability of the Marine Forces Reserve by providing trained, well-
    balanced and cohesive units ready for combat. We view this both an
    efficient and effective use of our Reserve Marines' 24-month cumulative
    activation as it serves to preserve Reserve units to sustain the long-
    term nature of the global war on terrorism that will require future
    Reserve Force commitments.
                               activation impact
        As of January 2005, the Marine Corps Reserve began activating
    approximately 3,000 Selected Marine Corps Reserve (SMCR) unit marines
    in support of the next OIF rotation and 500 SMCR unit marines in
    support of OEF. Even with judicious use of our assets and coordinated
    planning, the personnel tempo has increased. As the members of this
    committee know, Reserve marines are students or have civilian
    occupations that are also very demanding, and are their primary means
    of livelihood. In the past 2 years, 933 Reserve marines exceeded 400
    days deployed time. In total, approximately 3,900 Reserve marines have
    been activated more than once; about 2,500 of whom are currently
    activated. Information from March 2005 indicates that approximately 65
    percent of the current unit population and 47 percent of the current
    IMA population have been activated at least once. About 1 percent of
    our current IRR population deployed in support of OIF/OEF. If you
    include the number of marines who deployed as an active component and
    have since transferred to the IRR, the number reaches 31 percent. This
    is worth particular note as the IRR provides us needed depth--an added
    dimension to our capability. Volunteers from the IRR and from other
    Military Occupational Specialties (MOS), such as artillery, have been
    cross-trained to reinforce identifiable critical specialties.
        Although supporting the global war on terrorism is the primary
    focus of the Marine Corps Reserve, other functions, such as pre-
    deployment preparation and maintenance, recruiting, training,
    facilities management and long term planning continue. The wise use of
    the Active-Duty Special Work (ADSW) program allows the Marine Corps to
    fill these short-term, full-time requirements with Reserve marines. In
    fiscal year 2004, the Marine Corps executed 947 work-years of ADSW at a
    cost of $49.1 million. Continued support and funding for this critical
    program will enhance flexibility thereby ensuring our Total Force
    requirements are met.
                            recruiting and retention
        Like the Active component, Marine Corps Reserve units primarily
    rely upon a first term force. Each year approximately 6,000 new marines
    join Marine Corps Reserve units, while a similar number move into the
    IRR, IMAs, Active Reserve or Retired Reserve communities. Currently,
    the Marine Corps Reserve continues to recruit and retain quality men
    and women willing to manage commitments to their families, their
    communities, their civilian careers and the Corps. Recruiting and
    retention goals were met in fiscal year 2004, but the long-term impact
    of recent activations is not yet known. While current attrition is
    below the averages of previous years, the Marine Corps Reserve is
    monitoring post-mobilization retention very closely to assess the
    impact of deployment on marines, their families, and their civilian
    careers. As always, the training, leadership and quality of life of our
    marines remain significant Marine Corps priorities. Despite the high
    operational tempo, the morale and patriotic spirit of Reserve marines,
    their families, and employers remains extraordinarily high.
        At the end of fiscal year 2004, the SMCR was over 39,600 strong.
    Part of this population is comprised of Active Reserve marines, IMAs,
    and Reserve marines in the training pipeline, but the preponderance,
    about 32,500, belong to the units of Marine Forces Reserve. An
    additional 60,000 marines serve as part of the IRR, representing a
    significant pool of trained and experienced prior service manpower,
    which, as stated, the Marine Corps has frequently drawn upon for
    volunteers. Reserve marines bring to the table not only their Marine
    Corps skills but also their civilian training and experience as well.
    The presence of police officers, engineers, lawyers, skilled craftsmen,
    business executives, and the college students who fill our Reserve
    ranks serves to enrich the Total Force. We are very mindful of the
    sacrifices that they and their employers make so that they may serve
    this country. The Marine Corps appreciates the recognition given by
    Congress to employer relations, insurance benefits and family support.
    Such programs should not be seen as ``rewards'' or ``bonuses,'' but as
    tools that will sustain the force in the years ahead.
        Support to the global war on terrorism has reached the point where
    80 percent of the current Marine Corps Reserve leadership has deployed
    at least once. Nevertheless, the Marine Corps Reserve is currently
    achieving higher retention rates than the benchmark average from the
    last 3 fiscal years. As of January, fiscal year 2005, the Office of the
    Secretary of Defense (OSD) attrition statistics for Marine Corps
    Reserve unit officers is 10.9 percent compared to the current benchmark
    average of 15.8 percent. For the same time period, Reserve unit
    enlisted attrition is 6.4 percent compared to 8.5 percent average.
        Good retention goes hand-in-hand with the successes of our
    recruiters. In fiscal year 2004, the Marine Corps Reserve achieved 100
    percent of its recruiting goal for non-prior service recruiting (6,165)
    and exceeded its goal for prior service recruiting (2,083). For our
    Reserve component, junior officer recruiting remains the most
    challenging area. This is due mainly to the low attrition rate for
    company grade officers leaving the Active Force and that the Marine
    Corps recruits Reserve officers almost exclusively from the ranks of
    those who have first served an Active-Duty tour as a Marine Corps
    officer. We are successfully expanding Reserve commissioning
    opportunities for our prior-enlisted marines in order to grow some of
    our own officers from Marine Forces Reserve units and are exploring
    other methods to increase the participation of company grade officers
    in the SMCR through increased recruiting efforts and increased Active-
    Duty command emphasis on Reserve opportunities and participation. We
    thank Congress for the continued support of legislation to allow
    bonuses for officers in the SMCR who fill a critical skill or shortage.
    We are aggressively implementing the Selected Reserve Officer
    Affiliation Bonus program and expect it to fill 50 vacant billets this
    year, with plans to expand the program in the coming years. We
    appreciate your continued support and funding of incentives such as
    this, which offset the cost that officers must often incur in traveling
    to billets at Marine Corps Reserve locations nationwide.
                                quality-of-life
        Our future success will rely on the Marine Corps' most valuable
    asset--our marines and their families. We, Marine Forces Reserve,
    believe it is our obligation to arm our marines and their families with
    as much information as possible on the programs and resources available
    to them. Arming our marines and their families with information on
    their education benefits, available childcare programs, family
    readiness resources, and the health care benefits available to them,
    provides them with unlimited potential for their quality-of-life.
    Education
        Last year, I testified that there were no laws offering academic
    and financial protections for Reserve military members who are college
    students. I was glad to see that there is movement in Congress to
    protect our college students and offer greater incentives for all
    servicemembers to attend colleges. I appreciate recent 2005 legislation
    protecting a military member's college education investments and status
    when called to duty.
        More than 1,000 Reserve marines chose to use tuition assistance in
    fiscal year 2004 in order to help finance their education. This tuition
    assistance came to more than $1.9 million in fiscal year 2004 for more
    than 3,700 courses. Many of these marines were deployed to Afghanistan
    and Iraq, and took their courses via distance learning courses. In this
    way tuition assistance helped to mitigate the financial burden of
    education and maintained progress in the marine's planned education
    schedule. We support continued funding of tuition assistance as
    currently authorized for activated Reserves. I fully support
    initiatives that will increase Montgomery G.I. Bill (MGIB) benefits for
    Reserve and National Guard servicemembers, as it is a key retention and
    recruiting tool and an important part of our commandant's guidance to
    enhance the education of all marines. House Resolution 4200, passed by
    both the House and Senate in October 2004 authorized MGIB benefits for
    certain Reserve and National Guard servicemembers and increased the
    benefits for others. I heartily thank you for this initiative and look
    forward to it's anticipated implementation by the Department of
    Veterans Affairs (VA) in September 2005.
    Child Care Programs
        Marines and their families are often forced to make difficult
    choices in selecting childcare, before, during and after a marine's
    deployment in support of the global war on terror. We are deeply
    grateful for the joint initiative funded by the Department of Defense
    (DOD) and announced on March 3, 2005, by the Boys and Girls Clubs of
    America and the National Association of Child Care Resource and
    Referral Agencies. Without the fiscal authorization provided by the
    Senate and House, these programs could not have been initiated or
    funded. These combined resources have immeasurably contributed to the
    quality-of-life of our marines' and their families. I thank you all for
    your support in the past and the future in providing sufficient funds
    for these key initiatives.
    Family Readiness
        Everyone in Marine Forces Reserve recognizes the strategic role our
    families have in our mission readiness, particularly in our
    mobilization preparedness. We help our families to prepare for day-to-
    day military life and the deployment cycle (pre-deployment, deployment,
    post-deployment, and follow-on) by providing educational opportunities
    at unit family days, pre-deployment briefs, return and reunion, post-
    deployment briefs and through programs such as the Key Volunteer
    Network (KVN) and Lifestyle Insights, Networking, Knowledge and Skills
    (L.I.N.K.S.). We also envision the creation of regional quality-of-life
    coordinators, similar to the Marine Corps Recruiting Command program,
    for our Reserve marines and their families.
        At each of our Reserve Training Centers, the KVN program serves as
    the link between the command and the family members, providing them
    with official communication, information and referrals. The key
    volunteers, many of whom are parents of young, unmarried marines,
    provide a means of proactively educating families on the military
    lifestyle and benefits, provide answers for individual questions and
    areas of concerns and, perhaps most importantly, enhance the sense of
    community within the unit. The L.I.N.K.S. program is a spouse-to-spouse
    orientation service offered to family members to acquaint them with the
    military lifestyle and the Marine Corps, including the challenges
    brought about by deployments. Online and CD-ROM versions of L.I.N.K.S
    makes this valuable tool more readily accessible to families of Reserve
    marines not located near Marine Corps installations.
        Marine Corps Community Services (MCCS) OneSource is another
    important tool that provides marines and their families with around-
    the-clock information and referral service for subjects such as
    parenting, childcare, education, finances, legal issues, elder care,
    health, wellness, deployment, crisis support, and relocation via toll-
    free telephone and Internet access.
        The peacetime/wartime support team and the support structure within
    the inspector and instructor staff uses all these tools to provide
    families of activated or deployed marines with assistance in developing
    proactive, prevention-oriented steps such as family care plans, powers
    of attorney, family financial planning, and enrollment in the Dependent
    Eligibility and Enrollment Reporting System.
        All of these programs depend on adequate funding of our manpower
    and operations and maintenance (O&M) accounts.
    Managed Health Network
        Managed Health Network, through a contract with the DOD, is
    providing specialized mental health support services to military
    personnel and their families. This unique program is designed to bring
    counselors on-site at Reserve Training Centers to support all phases of
    the deployment cycle. Marine Forces Reserve is incorporating this
    resource into family days, pre-deployment briefs, and return and
    reunion briefs to ensure a team approach. Follow-up services are then
    scheduled after marines return from combat at various intervals to
    facilitate on-site individual and group counseling.
    TRICARE
        Since September 11, Congress has gone to great lengths to improve
    TRICARE benefits available to the Guard and Reserve and we are very
    appreciative to Congress for all the recent changes to the program.
    Beginning April 2005, TRICARE Reserve Select will be implemented,
    providing eligible Guard and Reserve members with comprehensive health
    care. This new option, similar to TRICARE Standard, is designed
    specifically for Reserve members activated on or after September 11,
    2001, who enter into an agreement to serve continuously in the Selected
    Reserve for a period of 1 or more years. Other key provisions include
    coverage for Selected Reserves after an activation, which provides a
    year of coverage while in non-Active-Duty status for every 90 days of
    consecutive Active-Duty. The member must agree to remain in the
    Selected Reserve for one or more whole years. Also, a permanent earlier
    eligibility date for coverage due to activation has been established at
    up to 90 days before an Active-Duty reporting date for members and
    their families.
        The new legislation also waives certain deductibles for activated
    members' families. This reduces the potential double payment of health
    care deductibles by members' civilian coverage. Another provision
    allows DOD to protect the beneficiary by paying the providers for
    charges above the maximum allowable charge. Transitional health care
    benefits have been established, regulating the requirements and
    benefits for members separating. We are thankful for these permanent
    changes that extend health care benefits to family members and extend
    benefits up to 90 days prior to their activation date and up to 180
    days after de-activation.
        Reserve members are also eligible for dental care under the Tri-
    Service Dental Plan for a modest monthly fee. In an effort to increase
    awareness of the new benefits, Reserve members are now receiving more
    information regarding the changes through an aggressive education and
    marketing plan. I would like to also ask Congress and this committee
    for their support of the new fiscal year 2005 legislation that includes
    improvements. These initiatives will further improve the health care
    benefits for our Reserves and National Guard members and families.
    Casualty Assistance
        One of the most significant responsibilities of the site support
    staff is that of casualty assistance. It is at the darkest hour for our
    marine families that our support is most invaluable. By virtue of our
    dispersed posture, Marine Forces Reserve site support staffs are
    uniquely qualified to accomplish the majority of all Marine Corps
    casualty notifications and provide the associated family assistance.
    Currently, Marine Forces Reserve conducts approximately 92 percent of
    all notifications and follow-on assistance for the families of our
    fallen Marine Corps brethren. In recognition of this greatest of
    sacrifices, there is no duty to our families that we treat with more
    importance. However, the duties of our casualty assistance officers
    (CAOs) go well beyond notification. We ensure that they are adequately
    trained, equipped and supported by all levels of command. Once an
    officer or staff noncommissioned officer (NCO) is designated as a CAO,
    he or she assists the family members in every possible way, from
    planning the return and final rest of their marine, counseling them on
    benefits and entitlements, to providing a strong shoulder when needed.
    The casualty officer is the family's central point of contact, serving
    as a representative or liaison with the media, funeral home, government
    agencies, or any other agency that may be involved. Every available
    asset is directed to our marine families to ensure they receive the
    utmost support. The Marine Corps Reserve also provides support for
    military funerals for our veterans. The marines at our Reserve sites
    performed 7,621 funerals in calendar year 2004.
        The Marine Corps is also committed to supporting the wishes of
    seriously injured marines, allowing them to remain on Active-Duty if
    they desire or making their transition home as smooth as possible.
    Leveraging the organizational network and strengths of the Marine for
    Life (M4L) Program, we are currently implementing an injured support
    program to assist injured marines, sailors serving with marines, and
    their families. The goal is to bridge the gap between military medical
    care and the VA--providing continuity of support through transition and
    assistance for several years afterwards. Planned features of the
    program include: advocacy for marines, sailors, and their families
    within the Marine Corps and with external agencies; pre- and post-
    service separation case management; assistance in working with physical
    evaluation boards; an interactive Web site for disability/benefit
    information; an enhanced MCCS OneSource capability for 24/7/365
    information; facilitation assistance with Federal hiring preferences;
    coordination via an assigned marine liaison with veterans, public, and
    private organizations providing support to our seriously injured;
    improved VA handling of marine cases; and development of any required
    proposals for legislative changes to better support our marines and
    sailors. This program began limited operations in early January 2005.
    We are able to support these vitally important programs because of the
    wide geographic dispersion of our units.
    Marine for Life
        Our commitment to take care of our own includes a marine's
    transition from honorable military service back to civilian life.
    Initiated in fiscal year 2002, the M4L program continues to provide
    support for 27,000 marines transitioning from Active service back to
    civilian life each year. Built on the philosophy, Once a Marine, Always
    a Marine, Reserve marines in over 80 cities help transitioning marines
    and their families to get settled in their new communities. Sponsorship
    includes assistance with employment, education, housing, childcare,
    veterans' benefits, and other support services needed to make a smooth
    transition. To provide this support, the M4L program taps into a
    network of former marines and marine-friendly businesses, organizations
    and individuals willing to lend a hand to a marine who has served
    honorably. Approximately 2,000 marines are logging onto the Web-based
    electronic network for assistance each month. Assistance from career
    retention specialists and transitional recruiters helps transitioning
    marines tremendously by getting the word out about the program.
    Employer Support
        Members of the Guard and Reserve who choose to make a career must
    expect to be subject to multiple activations. Employer support of this
    fact is essential to a successful activation and directly effects
    retention and recruiting. With continuous rotation of Reserve marines,
    we recognize that a rapid deactivation process is a high priority to
    reintegrate marines back into their civilian lives quickly and properly
    in order to preserve the Reserve Force for the future. We support
    incentives for employers who support their activated Guard and Reserve
    employees such as the Small Business Military reservist Tax Credit Act,
    which allows small business employers a credit against income tax for
    employees who participate in the military Reserve component and are
    called to Active-Duty.
                                   equipment
        Currently, the Marine Corps has approximately 30 percent of its
    ground equipment forward deployed. In certain critical, low-density
    items, this percentage is closer to 50 percent. This equipment has been
    sourced from the Active component, Marine Forces Reserve, the maritime
    prepositioned force as well as equipment from Marine Corps Logistics
    Command stores and war reserves. Primarily, our contributed major items
    of equipment remain in theater and rotating Marine Forces fall in on
    the in-theater assets. In some cases where extraordinary use has
    resulted in the inordinate deterioration of equipment (such as the
    Corps' Light Armored Vehicles), equipment rotations have been performed
    as directed and managed by Marine Corps headquarters.
        Maintaining current readiness levels will require continued support
    as our equipment continues to age at a pace exceeding replacement peace
    time rates. The global war on terrorism equipment usage rates average
    eight to one over normal peacetime usage due to continuous combat
    operations. This high usage rate in a harsh operating environment,
    coupled with the added weight of added armor and unavoidable delays of
    scheduled maintenance due to combat, is degrading our equipment at an
    accelerated rate. If this equipment returns to the Continental United
    States, costly, extensive service life extension and overhaul/rebuild
    programs will be required in order to bring this equipment back into
    satisfactory condition. My recommendation would be to leave the worn
    out equipment behind and procure new equipment.
        Even with these wartime demands, equipment readiness rates for
    Marine Forces Reserve deployed ground equipment in the Central Command
    (CENTCOM) area of responsibility (AOR) is averaging 93 percent. At
    home, as we continue to aggressively train and prepare our marines, we
    have maintained ground equipment readiness rates of 91 percent. The
    types of equipment held by home training centers are the same as those
    held within the Active component. However, the ``set'' of ground
    equipment presently in garrison is not the full equipment combat
    allowance for Marine Forces Reserve. To reach the level of full
    equipment combat allowance for Marine Forces Reserve would require us
    to draw ground equipment from other allowances and inventory options
    across the Marine Corps. Additionally, due to the Marine Corps' cross-
    leveling efforts of equipment inventories to support home station
    shortfalls resulting from equipment deployed in support of the global
    war on terrorism, Marine Forces Reserve will experience significant
    equipment shortfalls of communication and electronic equipment. This
    specific equipment type shortfall will approximate 10 percent across
    the force in most areas, and somewhat greater for certain low density
    black box type equipment sets. Also, an infantry battalion of equipment
    originating from Marine Forces Reserve remains in support of deployed
    forces in the CENTCOM AOR. Although the equipment shortfalls will not
    preclude sustainment training within the force, the equipment
    availability is not optimal.
    Strategic Ground Equipment Working Group
        For the past year, headquarters, Marine Corps installations and
    logistics have chaired the Strategic Ground Equipment Working Group
    (SGEWG). The mission of this organization is to best position the
    Corps' equipment to support the needs of the deployed global war on
    terrorism forces, the Corps' strategic programs, and training of non-
    deployed forces. My staff has been fully engaged in this process and
    the results have been encouraging for Marine Forces Reserve, leading to
    an increase in overall supply readiness of approximately 5 percent. The
    efforts of the SGEWG, combined with the efforts of my staff to
    redistribute equipment to support non-deployed units, have resulted in
    continued training capability for the Reserve Forces back home.
    Individual Combat Clothing and Equipment, Individual Protective
            Equipment
        In order to continue seamless integration into the Active
    component, my ground component priorities are the sustained improvement
    of individual combat clothing and equipment, individual protective
    equipment, and overall equipment readiness. I am pleased to report that
    every Reserve marine deployed over the past year in support of OIF and
    OEF, along with those currently deployed into harm's way, were fully
    equipped with the most current individual clothing/combat equipment
    (ICCE) and individual protective equipment (IPE). Continued funding
    support in this area is most appreciated.
    National Guard and Reserve Equipment Appropriation
        National Guard and Reserve Equipment Appropriation (NGREA)
    continues to provide extraordinary leverage in fielding critical
    equipment to your Guard and Reserves. In fiscal year 2005, NGREA
    provided $50 million ($10 million for OIF/OEF requirements, and $40
    million for title III procurement requirements), enabling us to
    robustly respond to the pressing needs of the individual marine, Total
    Force, and combatant commanders in both ground and aviation programs.
    This funding also enhanced our ability to sustain the readiness of our
    units in support of OEF and OIF. NGREA enabled the procurement of
    important systems such as the virtual combat convoy trainer-marine
    (VCCT-M), a cognitive skills simulator that provides realistic convoy
    crew training and incidental driver training to your marines. The first
    of these systems will be deployed to Naval Station Seal Beach, home
    site to 5th Battalion, 14th Marine Regiment, to assist in their
    preparation for deployment to Iraq. Another device procured through
    NGREA is the medium tactical vehicle replacement training simulator, a
    combined operator and maintenance training system that supports our new
    medium tactical vehicle. We have also been able to phase out our legacy
    simulator systems with the purchase of 50 indoor simulated marksmanship
    trainer-enhanced (ISMT-E) systems. Fourth Marine aircraft wing has
    procured critically needed warfighting requirements such as another 4
    HNVS FLIR systems for the CH-53Es, 10 sets of aircraft survivability
    equipment for the AH-1Ws, and 26 sets of lightweight armor/cockpit
    seats for the CH-46s. I am also proud to report that we have a combat
    capable F/A-18A+ squadron currently deployed as a direct result of
    previous years' NGREA funding for F/A-18A ECP-583 upgrades. Marine
    Fighter/Attack Squadron-142 has already seen action in Iraq.
    Critical Asset Rapid Distribution Facility
        In order to ensure that this equipment is available to the
    deploying forces, I created the Marine Forces Reserve Materiel
    Prepositioning Program and designated my special training allowance
    pool (which traditionally held such items as cold weather gear) as the
    Critical Asset Rapid Distribution Facility (CARDF). The CARDF has been
    designated as the primary location for all newly fielded items of
    individual clothing and combat equipment for issue to Marine Forces
    Reserve. Equipment such as the improved load bearing equipment,
    lightweight helmet, and improved first aid kit has been sent to the
    CARDF for secondary distribution to deploying units.
    Training Allowance
        For principle end items (PEIs), Marine Forces Reserve units have
    established training allowances (on average approximately 80 percent of
    their established table of equipment). This equipment represents the
    minimum needed by the unit to maintain the training readiness necessary
    to deploy, while at the same time is within their ability to maintain
    under routine conditions. Establishment of training allowances allows
    Marine Forces Reserve to better cross level equipment to support the
    continental U.S. training requirements of all units of the force with a
    minimal overall equipment requirement. Of course, this concept requires
    the support of the service to ensure that the ``delta'' between a
    unit's training allowance and table of equipment (that gear necessary
    to fully conduct a combat mission) is available in the event of
    deployment. Current Headquarters Marine Corps policy of retaining
    needed equipment in theater for use by deploying forces ensures that
    mobilized Marine Forces Reserve units will have the PEIs necessary to
    conduct their mission. Continued congressional funding for Marine Corps
    equipment procurement/replacement will remain vital in order for the
    service to continue to do what the Nation asks, and I am confident that
    you will continue to respond to the needs of your Marine Corps.
                                 infrastructure
        Marine Forces Reserve is and will continue to be a community-based
    force. This is a fundamental strength of Marine Forces Reserve. Our
    long-range strategy is to retain that strength by maintaining our
    connection with communities in the most cost effective way. We are not,
    nor do we want to be, limited exclusively to large metropolitan areas
    nor consolidated into a few isolated enclaves, but rather we intend to
    divest Marine Corps-owned infrastructure and locate our units in Joint
    Reserve Training Centers throughout the country. Marine Forces Reserve
    units are currently located at 185 sites in 48 States, the District of
    Columbia, and Puerto Rico; 35 sites are owned or leased by the Marine
    Corps Reserve, 150 are either tenant or joint sites. Fifty-four percent
    of the Reserve centers we occupy are more than 30 years old, and of
    these, 41 are over 50 years old.
        The age of our infrastructure means that much of it was built
    before Anti-Terrorism/Force Protection (AT/FP) was a major
    consideration in design and construction. These facilities require AT/
    FP resolution through structural improvements, relocation, replacement
    or the acquisition of additional stand-off distance. With the changes
    in force structure mentioned earlier, extensive facilities upgrades are
    required at a few locations. Maintaining adequate facilities is
    critical to training that supports our readiness and sends a strong
    message to our marines and sailors about the importance of their
    service.
    BRAC 2005
        We look at Base Realignment and Closure (BRAC) 2005 as an
    opportunity to realize our long-range strategic infrastructure goals
    through efficient joint ventures and increased training center
    utilization without jeopardizing our community presence. In cooperation
    with other Reserve components, notably the Army Reserve and the Army
    National Guard, we are working toward Reserve basing solutions that
    reduce restoration and modernization backlogs and AT/FP vulnerability.
                                   conclusion
        As I have stated in the beginning of my testimony, your consistent
    and steadfast support of our marines and their families has directly
    contributed to our successes, both past and present, and I thank you
    for that support. As we push on into the future, your continued concern
    and efforts will play a vital role in the success of Marine Forces
    Reserve. Due to the dynamics of the era we live in, there is still much
    to be done.
        The Marine Corps Reserve continues to be a very young force and is
    always looking for outstanding citizens who strive to give their best
    for their country. Recruiting initiatives, especially within the
    education realm, are always an added incentive for our prospective
    marines.
        I would also ask for your continued support for initiatives that
    provide assistance to the Reserve and Guard members, their families and
    employers who are sacrificing so much in support of our Nation. Despite
    strong morale and good planning, activations, and deployments place
    great stress on these Americans. Employer incentives, educational
    benefits, medical care and family care are just some of the issues that
    would contribute to the sustainment of Reserve marines.
        Equipment and facilities are the last two areas of concern that I
    have. The continuous support from congress for upgrades to our
    warfighting equipment has directly impacted the saving of American
    lives on the battlefield. However, as I stated earlier, our current
    operational tempo has led to the rapid deterioration of much of the
    same fighting equipment throughout the force. In this regard, I fully
    support the fiscal year 2005 supplemental request and, in particular,
    actions taken by the House to provide funding for our top priorities:
    Light Armored Vehicles (LAV) and LAV Product Improvement Program. I ask
    the Senate to do the same.
        Although we currently maintain a high level of readiness, we will
    need significant financial assistance to help maintain and/or replace
    our warfighting equipment in the very near future. Also, as the Marine
    Forces Reserve makes adjustments in warfighting capabilities over the
    next 2 years, several facilities will need to be converted to provide a
    proper training environment for the new units. Funding for these
    conversions would greatly assist our warfighting capabilities.
        My time as Commander, Marine Forces Reserve has been tremendously
    rewarding. Testifying before congressional committees and subcommittees
    has always been a great pleasure, as it has afforded me the opportunity
    to let the American people know what an outstanding patriotic group of
    citizens we have in the Marine Corps Reserve. Thank you for your
    continued support.
                                     ______

              Prepared Statement by Lt. Gen. John A. Bradley, USAF
        Mr. Chairman, and distinguished members of the committee, I
    appreciate the opportunity to appear before you today. I want to thank
    you for your continued support, which has helped your Air Force Reserve
    (AFR) address vital recruiting, retention, modernization, and
    infrastructural infrastructure needs. Your passage of last year's pay
    and quality of life initiatives sent a clear message to our citizen
    Airmen that their efforts are appreciated and supported by the American
    people, and also by those of you in the highest positions of
    government. Wherever you find the United States Air Force (USAF), at
    home or abroad, you will find the Active and Reserve members working
    side-by-side, trained to one tier of readiness, seamlessly integrated
    into a military force that is READY NOW!
                                  total force
        The AFR continues to address new challenges in 2005. Although
    partial mobilization persists, demobilizations have increased
    significantly. In spite of the strains that mobilization has placed on
    the personal and professional lives of our Reserve members,
    volunteerism continues to be a significant means of contribution.
    Volunteerism is the preferred method of fulfilling requirements for
    future global war on terror actions. While dedicated members of the AFR
    continue to meet validated operational requirements, the AFR, in
    cooperation with the Air Force personnel requirements division is
    exploring ways to enhance volunteerism, including use of volunteer IRR
    members. Recruiting and retention of quality servicemembers are top
    priority for the AFR and competition for these members among other
    services, as well as within the civilian community has reached an all-
    time high.
    Recruiting
        In fiscal year 2004, and for the last 4 consecutive years, Air
    Force Reserve Command (AFRC) exceeded its recruiting goal. This
    remarkable feat is achieved through the outstanding efforts of our
    recruiters and with the superb assistance of our Reserve members who
    help tell our story of public service to the American people. Despite
    the long-term effects of high operations tempo (OPTEMPO) and personnel
    tempo (PERSTEMPO), AFRC only fell short of its fiscal year 2004 end-
    strength by .7 percent, reaching 99.37 percent, or merely 578 assigned
    short of congressionally funded requirements.
        Recruiting continues to face significant challenges. The pool of
    Active-Duty separatees continues to shrink from itsdue height prior to
    force reductions over the last decade ago, and the competition for
    these members has become even keener. The Active-Duty is intensifying
    its efforts in retention and the National Guard is competing for these
    assets as well. Additionally, the current high OPTEMPO/PERSTEMPO and a
    perceived likelihood of activation and deployment are being routinely
    cited as significant reasons why separating members are declining to
    choose continuing military service in the Reserve. These issues further
    contribute to the civilian sector's ability to attract these members
    away from military service. One consequence of the reduced success in
    attracting separating members from Active-Duty is the need to make up
    this difference through attracting non-prior service (NPS) members.
    Historically, Reserve recruiting accesses close to 25 percent of
    eligible separating Active-Duty Air Force members (i.e. no break in
    service), which accounts for a significant portion of annual
    accessions. While having enough Basic Military Training (BMT) and
    Technical Training School quotas has long been an issue, the increased
    dependence on NPS accessions strains these requirements even further.
    To meet training requirements, 4,000 training slots per year are now
    allocated and funded for the AFR.
        A new forecasting tool developed by our training division allows
    everyone, from unit level to wing training managers, to Numbered Air
    Force (NAF) and AFRC Air Force Specialty Code (AFSC) functional
    managers, to participate in the forecasting with the Chief of
    Recruiting Services providing final approval.
        Finally, with overall end strength of the AFR dipping below 100
    percent, some career-fields are undermanned. In order to avoid possible
    readiness concerns, recruiters will continue to meet the challenge of
    guiding applicants to critical job specialties.
        The Reserve is taking advantage of an Active-Duty Force shaping
    initiative. Beginning in fiscal year 2004 and ending in fiscal year
    2005, the Air Force will offer Active-Duty members the opportunity to
    use the Palace Chase program to change components. The AFR is using
    this opportunity to access prior servicemembers with critical career
    skills. In fiscal year 2004, 1,200 Active-Duty members utilized Palace
    Chase to join the Air Reserve component, with over half selecting the
    Air Force Reserve. This number may grow in fiscal year 2005.
        For recruits who have not served in a military component, the
    development of the Split Training Option which began in October 2003,
    provides a flexible tool for recruiters to use in scheduling BMT
    classes and technical school classes at non-consecutive times.
    Retention
        Though retention was improved through ``Stop-Loss'' in recent
    years, the eventual effects of this program were realized in fiscal
    year 2004. Retention in both officer and enlisted categories has
    remained strong. Fiscal year 2004 ended with officer retention at 92.3
    percent and overall enlisted retention at 88.4 percent. These retention
    rates are in line with averages over the last 5 years.
        As the Reserve component continues to surge to meet operational
    requirements necessary for the successful prosecution of the global war
    on terrorism, we continue to examine existing laws and policies that
    govern enlisted incentives and related compensation issues. The Reserve
    enlisted bonus program is a major contributor to attract and retain
    both unit and individual mobilization augmentee members in those
    critical unit type code tasked career fields. To enhance retention of
    our reservists, we work to ensure relevant compensation statutes
    reflect the growing reliance on the Reserve component to accomplish
    Active-Duty missions and provide compensatory equity between members of
    both components. The reenlistment bonus authority of the Active and
    Reserve components is one area we are working to change. We continue to
    explore the feasibility of expanding the bonus program to our Active
    Guard Reserve (AGR) and Air Reserve Technician (ART) members; however,
    no decision has yet been made to implement this. In addition, the
    Aviation Continuation Pay (ACP), the Career Enlisted Flyers Incentive
    Pay (CEFIP) and Aircrew Incentive Pay (ACIP) continue to be offered to
    retain our rated assets, both officer and enlisted.
        The Reserve has made many strides in increasing education benefits
    for our members, offering 100 percent tuition assistance for those
    individuals pursuing an undergraduate degree and continuing to pay 75
    percent for graduate degrees. We also employ the services of the
    Defense Activity for Non-Traditional Education Support (DANTES) for
    College Level Examination Program (CLEP) testing for all reservists and
    their spouses.
        We will continue to seek innovative ways to enhance retention.
    Quality-of-Life Initiatives
        We expanded the AFR Special Duty Assignment Pay (SDAP) program by
    including an additional six Air Force specialty codes to enhance
    recruitment and retention, improve program alignment, and provide
    parity to Reserve members. Where there is Reserve strength, the
    expansion authorizes the payment of SDAP to a reservist qualifying in
    the same skill and location as their Active-Duty counterpart. The AFR
    SDAP program has continued to evolve and improve since Secretarial
    authority removed the tour length requirement for the Air Reserve
    component in July 2000.
        We appreciate the support provided in the National Defense
    Authorization Act (NDAA) for Fiscal Year 2005 that expanded the Reserve
    health benefits. At your direction, the Department is implementing the
    new TRICARE Reserve benefits that will ensure the individual medical
    readiness of members of the Guard and Reserve, and contribute to the
    maintenance of an effective AFR force. The Department has made
    permanent their early access to TRICARE upon notification of call-up
    and their continued access to TRICARE for 6 months following Active-
    Duty service for both individuals and their families. We are
    implementing the TRICARE Reserve Select (TRS) coverage for AFR
    personnel and their families who meet the requirements established in
    law. TRS is a premium-based healthcare plan available for purchase by
    certain eligible members of the National Guard and Reserves who have
    been activated for a contingency operation since September 11, 2001.
    This program will serve as an important bridge for all Reserve and
    Guard members as they move back to other employment and the utilization
    of the private health care market. We believe that the design of TRS in
    a manner that supports retention and expands health benefits is
    creative and should be studied before any futher adjustments are
    contemplated.
        The NDAA for Fiscal Year 2004 included some temporary authorities,
    providing enhanced Health Care/TRICARE benefits for RC members. Under
    Section 702, Selected Reserve members with proof of unemployment became
    eligible to purchase TRICARE benefits. Policy guidance is required
    prior to implementation. Under Section 703, members activated in
    support of a contingency operation for more than 30 days are also
    eligible for this program. Members and their families became eligible
    for benefits upon receipt of a delayed-effective-order to Active-Duty
    for more than 30 days in support of a contingency operation, or up to
    60 days before the date on which the 30-day period of Active-Duty is to
    commence, whichever is later. Policy guidance has been implemented.
    Additionally, the NDAA extended the Transitional Assistance Management
    Program benefit period from 60 and 120 days to 180 days for eligible
    members and their families. Benefits under these temporary authorities
    were effective from 6 November 2003 to 31 December 2004.
        A change in the Joint Federal Regulation Travel policy authorized
    expenses for retained lodging for a member who takes leave during a TDY
    contingency deployment to be paid as a reimbursable expense. This
    change became effective 24 February 2004, and has since alleviated the
    personal and financial hardship deployed reservists experience with
    regard to retaining lodging and losing per diem while taking leave.
                              fleet modernization
    F-16 Fighting Falcon
        Air combat command and AFRC are upgrading the F-16 Block 25/30/32
    in all core combat areas by installing global positioning system (GPS)
    navigation system, night vision imaging system (NVIS) and NVIS
    compatible aircraft lighting, situational awareness data link (SADL),
    target pod integration, GPS steered ``smart weapons,'' an integrated
    electronics suite, pylon integrated dispenser system (PIDS), digital
    terrain system (DTS), and the ALE-50 (towed decoy system). The
    acquisition of the Litening advanced targeting pod (ATP) marked the
    greatest jump in combat capability for AFRC F-16s in years. At the
    conclusion of the Persian Gulf War, it became apparent that the ability
    to employ precision-guided munitions, specifically laser-guided bombs,
    would be a requirement for involvement in future conflicts. Litening
    affords the capability to employ precisely targeted laser-guided bombs
    (LGBs) effectively in both day and night operations, any time at any
    place. This capability allows AFRC F-16s to fulfill any mission tasking
    requiring a self-designating, targeting-pod platform, providing needed
    relief for heavily tasked Active-Duty units. These improvements, and
    recent funding to upgrade all Litening pods to the latest version
    (Litening AT), have put AFRC F-16s at the leading edge of combat
    capability. The combination of these upgrades are unavailable in any
    other combat aircraft and make the Block 25/30/32 F-16 the most
    versatile combat asset available to a theater commander.
        Tremendous work has been done to keep the Block 25/30/32 F-16
    employable in today's complex and demanding combat environment. This
    success has been the result of farsighted planning that has capitalized
    on emerging commercial and military technology to provide specific
    capabilities that were projected to be critical. That planning and
    vision must continue if the F-16 is to remain useable as the largest
    single community of aircraft in America's fighter force. Older model
    Block 25/30/32 F-16 aircraft require structural improvements to
    guarantee that they will last as long as they are needed. They also
    require data processor and wiring system upgrades in order to support
    employment of more sophisticated precision attack weapons. These models
    must have improved pilot displays to integrate and present the large
    volumes of data now provided to the cockpit. Additional capabilities
    are needed to eliminate fratricide and allow weapons employment at
    increased range, day or night and in all weather conditions. They must
    also be equipped with significantly improved threat detection, threat
    identification, and threat engagement systems in order to meet the
    challenges of combat survival and employment for the next 20 years.
    A/OA-10 Thunderbolt
        There are five major programs over the next 5 years to ensure the
    A/OA-10 remains a viable part of the total Air Force. The first is
    increasing its precision engagement capabilities. The A-10 was designed
    for the Cold War and is the most effective Close Air Support (CAS)
    anti-armor platform in the USAF, as demonstrated during the Persian
    Gulf War. Unfortunately, its systems have not kept pace with modern
    tactics as was proven during Operation Allied Force. Until the Litening
    II ATP was integrated, the AGM-65 (Maverick) was the only precision-
    guided weapon carried on the A-10. The integration method used to
    employ the targeting, however, was an interim measure and the A-10
    still lacks a permanent, sustainable means of integrating the Litening
    pod into its avionics. Additionally, there has been a critical need for
    a datalink to help identify friendly troops and vehicles, which will
    reduce fratricide. There has been a datalink solution available for the
    A-10 since 1996 and is currently employed on the F-16. Newer weapons
    are being added to the Air Force inventory regularly, but the current
    avionics and computer structure limits the deployment of these weapons
    on the A-10. The Precision Engagement (PE) and Suite 3 programs will
    help correct this limitation, but the AFR does not expect to see PE
    installed until fiscal year 2008 and it still does not include a
    datalink. Next, critical systems on the engines are causing lost
    sorties and increased maintenance activity. Several design changes to
    the accessory gearbox will extend its useful life and reduce the
    existing maintenance expense associated with the high removal rate. The
    other two programs increase the navigation accuracy and the overall
    capability of the fire control computer, both increasing the weapons
    system's overall effectiveness.
        Looking to the future, there is a requirement for a training
    package of 30 PRC-112B/C survival radios for 10th Air Force fighter,
    rescue, and special operations units. While more capable, these radios
    are also more demanding to operate and additional units are needed to
    ensure the aircrews are fully proficient in their operation.
        One of the A-10 challenges is resource money for upgrade in the
    area of high threat survivability. Previous efforts focused on an
    accurate missile warning system and effective, modern flares; however,
    a new preemptive covert flare system may satisfy the requirement. The
    A-10 can leverage the work done on the F-16 Radar Warning Receiver and
    C-130 towed decoy development programs to achieve a cost-effective
    capability. The A/OA-10 has a thrust deficiency in its operational
    environment. As taskings evolved, commanders have had to reduce fuel
    loads, limit take-off times to early morning hours and refuse taskings
    that increase gross weights to unsupportable limits. Forty-five AFRC A/
    OA-10s need upgraded structures and engines (2 engines per aircraft
    plus 5 spares for a total of 95 engines).
    B-52 Stratofortress
        In the next 5 years, several major programs will be introduced to
    increase the capabilities of the B-52 aircraft. Included here are
    programs such as a crash survivable flight data recorder and a standard
    flight data recorder, upgrades to the current electro-optical viewing
    system, chaff and flare improvements, and improvements to cockpit
    lighting and crew escape systems to allow use of night vision goggles.
        Enhancements to the AFRC B-52 fleet currently under consideration
    are:

             Visual clearance of the target area in support of
            other conventional munitions employment;
             Self-designation of targets, eliminating the current
            need for support aircraft to accomplish this role;
             Target coordinate updates to JDAM and WCMD, improving
            accuracy; and
             Bomb damage assessment of targets.

        In order to continue the viability of the B-52, several
    improvements and modifications are necessary. Although the aircraft has
    been extensively modified since its entry into the fleet, the advent of
    precision guided munitions and the increased use of the B-52 in
    conventional and operations other than war (OOTW) operation require
    additional avionics modernization and changes to the weapons
    capabilities such as the avionics midlife improvement, conventional
    enhancement modification (CEM), and the integrated conventional stores
    management system (ICSMS). Changes in the threat environment are also
    driving modifications to the defensive suite including situational
    awareness defense improvement and the electronic counter measures
    improvement (ECMI).
        Recently, the B-52 began using the Litening advanced targeting pod
    to locate targets and employ precision weapons. The targeting pod
    interface has adapted equipment from an obsolete system. The system
    works but requires an updated system to take full advantage of the
    targeting pod capability.
        Like the A-10, it also requires a datalink to help reduce
    fratricide as its mission changes to employ ordinance closer and closer
    to friendly forces. The Litening pod continues to see incremental
    improvements but needs emphasis on higher resolution sensors and a more
    powerful, yet eye-safe laser, to accommodate the extremely high
    employment altitudes (over 40,000 feet) of the B-52.
        The B-52 was originally designed to strike targets across the globe
    from launch in the United States. This capability is being repeatedly
    demonstrated, but the need for real time targeting information and
    immediate reaction to strike location changes is needed. Multiple
    modifications are addressing these needs. These integrated advanced
    communications systems will enhance the B-52 capability to launch and
    modify target locations while airborne. Other communications
    improvements are the Global Air Traffic Management (GATM) Phase 1, an
    improved ARC-210, the KY-100 Secure Voice, and a GPS-TACAN Replacement
    System.
        As can be expected with an airframe of the age of the B-52, much
    must be done to enhance its reliability and replace older, less
    reliable or failing hardware. These include a fuel enrichment valve
    modification, engine oil system package, and an engine accessories
    upgrade, all to increase the longevity of the airframe.
    MC-130H Talon
        In 2006, AFRC and Air Force Special Operations Command will face a
    significant decision point on whether on not to retire the Talon I.
    This largely depends on the determination of the upcoming SOF Tanker
    Requirement Study. Additionally, the MC-130H Talon II aircraft will be
    modified to air refuel helicopters. The Air Force CV-22 is being
    developed to replace the entire MH-53J Pave Low fleet, and the MC-130E
    Combat Talon I. The CV-22 program has been plagued with problems and
    delays and has an uncertain future. Ultimately, supply and demand will
    impact willingness and ability to pay for costly upgrades along with
    unforeseeable expenses required to sustain an aging weapons system.
    HC-130P/N Hercules
        Over the next 5 years, there will be primarily sustainability
    modifications to the weapons systems to allow it to maintain
    compatibility with the remainder of the C-130 fleet. In order to
    maintain currency with the Active-Duty fleet, AFRC will accelerate the
    installation of the APN-241 as a replacement for the APN-59.
    Additionally, AFRC will receive two aircraft modified from the ``E''
    configuration to the search and rescue configuration. All AFRC assets
    will be upgraded to provide night vision imaging system (NVIS) mission
    capability for C-130 combat rescue aircraft.
    HH-60G Pave Hawk
        Combat search and rescue (CSAR) mission area modernization strategy
    currently focuses on resolving critical weapon system capability
    shortfalls and deficiencies that pertain to the combat Air Force's
    combat identification, data links, night/all-weather capability, threat
    countermeasures, sustainability, expeditionary operations, and Para
    rescue modernization efforts. Since the CAF's CSAR forces have several
    critical capability shortfalls that impact their ability to effectively
    accomplish their primary mission tasks today, most CSAR modernization
    programs/initiatives are concentrated in the near-term (fiscal year
    2000-2006). These are programs that:

             Improve capability to pinpoint location and
            authenticate identity of downed aircrew members/isolated
            personnel;
             Provide line-of-sight and over-the-horizon high speed
            LPI/D data link capabilities for improving battle space/
            situational awareness;
             Improve command and control capability to rapidly
            respond to ``isolating'' incidents and efficiently/effectively
            task limited assets;
             Improve capability to conduct rescue/recovery
            operations at night, in other low illumination conditions, and
            in all but the most severe weather conditions;
             Provide warning and countermeasure capabilities
            against RF/IR/EO/DE threats; and
             Enhance availability, reliability, maintainability,
            and sustainability of aircraft weapon systems.
    WC/C-130J Hercules
        The current fleet is being replaced with new WC-130J models. This
    replacement allows for longer range and ensures weather reconnaissance
    capability well into the next decade. Once conversion is complete, the
    53rd weather reconnaissance squadron will consist of 10 WC-130Js.
    Presently, there are 10 WC-130J models at Keesler Air Force Base (AFB),
    MS undergoing qualification test and evaluation (QT&E). Deliveries were
    based on the resolution of deficiencies identified in test and will
    impact the start of operational testing and the achievement of interim
    operational capability (IOC). Major deficiencies include: propellers
    (durability/supportability) and radar tilt and start up attenuation
    errors. AFRC continues to work with the manufacturer to resolve the
    QT&E documented deficiencies.
    C-5 Galaxy
        Over the next 4 years, there will be primarily sustainability
    modifications to the weapons systems to allow the C-5 to continue as
    the backbone of the airlift community. Several major modifications will
    be performed on the engines to increase reliability and
    maintainability. Additionally, the remainder of the fleet will receive
    the avionics modernization that replaces cockpit displays while
    upgrading critical navigational and communications equipment. Also,
    consideration is being made to install Aircraft Defensive Systems on C-
    5A aircraft. Installation of Aircraft Defensive Systems will increase
    the survivability of the C-5A in hostile situations.
    C-17 Globemaster
        In the summer of fiscal year 2005, the first AFRC Unit Equipped C-
    17 squadron will stand up at March AFB. This new squadron will enhance
    the mobility capabilities for the United States military in peacetime
    and in conflict by rapid strategic delivery of troops and all type of
    cargo while improving the ability of the total airlift system to
    fulfill the worldwide air mobility requirements.
    C-141 Starlifter
        For the past 31 years, the C-141 has been the backbone of mobility
    for the United States military in peacetime and in conflict. In
    September 2004 the C-141 retired from the Active-Duty Air Force;
    however, Air Force Reserve Command will continue the proud heritage of
    this mobility workhorse and will fly the C-141 through the third
    quarter of fiscal year 2006. AFRC remains focused in flying the mission
    of the C-141 and looks to the future in transitioning to a new mission
    aircraft.
    C-130 Hercules
        AFRC has 127 C-130s including the E, H, J, and N/P models. The
    Mobility Air Forces (MAF) currently operate the world's best theater
    airlift aircraft, the C-130, and it will continue in service through
    2020. In order to continue to meet the Air Force's combat delivery
    requirements through the next 17 years, aircraft not being replaced by
    the C-130J will become part of the C-130X Program. Phase 1, Avionics
    Modernization Program (AMP) program includes a comprehensive cockpit
    modernization by replacing aging, unreliable equipment and adding
    additional equipment necessary to meet Nav/Safety and GATM
    requirements. Together, C-130J and C-130X modernization initiatives
    reduce the number of aircraft variants from 20 to 2 core variants,
    which will significantly reduce the support footprint and increase the
    capability of the C-130 fleet. The modernization of our C-130 forces
    strengthens our ability to ensure the success of our war fighting
    commanders and lays the foundation for tomorrow's readiness.
    KC-135E/R Stratotanker
        One of Air Force Reserve Command's most challenging modernization
    issues concerns our unit-equipped KC-135s. Eight of the nine air
    refueling squadrons are equipped with the KC-135R, while the remaining
    one squadron is equipped with KC-135Es. The KC-135E, commonly referred
    to as the E-model, has engines that were recovered from retiring
    airliners. This conversion, which was accomplished in the early- to
    mid-1980s, was intended as an interim solution to provide improvement
    in capability while awaiting conversion to the R-model with its new,
    high-bypass, turbofan engines and other modifications. The final KC-
    135E squadron is currently transitioning to the KC-135R/T Model
    aircraft which is scheduled to be completed in fiscal year 2005.
        The ability to conduct the air-refueling mission has been stressed
    in recent years. Although Total Force contributions have enabled
    success in previous air campaigns, shortfalls exist to meet the
    requirements of our National Military Strategy. Air Mobility Command's
    (AMC) Tanker Requirements Study-2005 (TRS-05) identifies a shortfall in
    the number of tanker aircraft and aircrews needed to meet global
    refueling requirements in the year 2005. There is currently a shortage
    of KC-135 crews and maintenance personnel. Additionally, the number of
    KC-135 aircraft available to perform the mission has decreased in
    recent years due to an increase in depot-possessed aircraft with a
    decrease in mission capable (MC) rates.
        I would like to close by offering my sincere thanks to each member
    of this committee for your continued support and interest in the
    quality-of-life of each Air Force reservist. The pay increases and
    added benefits of the last few years have helped us through a
    significant and unprecedented time of higher operations tempo. This is
    my first opportunity to represent these fine young men and women as the
    Chief of Air Force Reserve, and I know that we are on the right path in
    establishing a stronger, more focused, force. It is a force no longer
    in reserve, but integrated into every mission of the Air Force.

        Senator Graham. Thank you.
        Well, we appreciate the first panel. That was very
    informative.
        Senator Nelson, do you want to go first?
        Senator Ben Nelson. Thank you, Mr. Chairman. Thank you all
    for being here today. We appreciate you coming to help us
    understand what we can do together to improve our Guard,
    Reserve, and Active-Duty components and keep them voluntary,
    and to solve any of the issues that we are currently facing and
    anticipating, as well as future issues.
        One of the questions that I would like to ask each of the
    Reserve chiefs pertains to the publicity lately about the
    challenges that your individual forces face in meeting
    recruiting goals this year. If you followed the last panel, you
    heard what your colleagues are facing.
        I fully understand that because of high retention in the
    Active components, the prior service market, which has
    historically been the source for most enlistments in the
    Reserve components, is smaller, and many leaving Active-Duty
    choose not to join the Guard and Reserve for fear of being
    mobilized and returned to Active-Duty in a very short period of
    time.
        In addition, frequent and lengthy mobilizations and an
    improving job market, which creates competition for the same
    personnel, are also causing many qualified candidates to not
    consider military service at the present time.
        I would like each of you to give us a candid assessment of
    the posture of recruiting and retention in your particular
    force. Once you do that, maybe you could also outline as part
    of that explanation and assessment what you are doing to
    address the recruiting shortfalls. Perhaps just as important,
    address any additional legislation from Congress that might be
    helpful to you in that regard.
        We will just start from my left and work right across.
    General Helmly.
        General Helmly. Yes, sir. In fact, sir, the Army Reserve is
    authorized an end strength objective of 205,000 with a 95
    percent confidence factor under current conditions. Absent
    major changes in any of the accessioning agencies, we will end
    this year on September 30 at approximately 194,000 or so. That
    is a significant issue. In fact, I consider it to be the single
    biggest issue that we confront that is within my
    responsibility.
        To get to the heart of the matter, it would require more
    time than we have here. It is a rather intricate subject. As we
    have heard, part of this was expectations that had been set in
    past years of 1 weekend a month, 2 weeks in the summer. We
    changed all of our recruiting ads a couple of years ago, but
    culture change is a long, drawn-out process. So setting the
    right kinds of expectations is very challenging.
        I want to assure you all our quality marks are higher than
    Army and DOD standards. We will sustain those. Army Recruiting
    Command recruits for us. We provide the resources, dollars, and
    recruiters.
        It is also intricate with retention. I do not completely
    accept the argument that because Active component retention is
    higher and stop loss is on, that that is a simple solution. It
    is a part of the problem.
        Having said that, historically, our Army has set its
    objective for Active to Reserve service--and I qualify. When I
    say Reserve, I mean National Guard also--too low. We in the
    Army Reserve have asked for 2 years running that the target
    goal for Active to Selected Reserve service be set at 50
    percent or higher, and it has not been set that high. We have
    unilaterally increased the number of transition counselors at
    the transition points.
        Secretary Hall noted in the last panel that the $50 per
    month affiliation stipend is provided as an incentive, but that
    incentive is some years old. The National Defense Authorization
    Act for Fiscal Year 2005 provided an incentive of a $6,000
    bonus to incentivize the departing Active component officer to
    transfer. That was enacted in law around February of this year,
    when the President signed the bill. It is still too new to have
    empirical data. I will tell you that we need at least a similar
    incentive for enlisted, and then we need to set ourselves a
    stretch goal.
        I completely support statements made by DOD superiors in
    the past that set a concept of continuum of service. We have,
    as you properly noted, magnificent young Americans in all the
    services and all the components, and once they have proven
    themselves, it is my judgment that we should apply ourselves to
    retention.
        Our retention in the Army Reserve is on average almost 100
    percent. The problem there is first term reenlistment stays
    down. The 2005-enacted $5,000 to $15,000 reenlistment bonus is
    paying handsome dividends, however.
        The numbers Secretary Hall mentioned again for in theater
    reenlistments are up four- to six-fold over this time last
    year. As I reenlisted over 100 Army Reserve soldiers in
    January, I asked why. They gave me two answers. First, I am
    finally getting an opportunity to do that which I enlisted for,
    and I am part of a good team. That says that Active service
    makes a difference. Second, the $15,000 bonus helped my family
    understand my decision.
        I have a couple last points. Amongst those soldiers we have
    mobilized, 78 percent of those eligible to reenlist do so. That
    is higher than the non-mobilized population. So the issue is
    not calling to Active-Duty Reserve members. It is how often and
    the extent, or the period of time. I think we know that.
        Second, with regard to the propensity to enlist, the
    experts at Army Recruiting Command note that amongst non-prior
    service people, the biggest discriminator is parental
    influence. The propensity to enlist is down 2 percent this year
    over last year. You now see changes in recruiting ads focused
    on parental influence.
        Lastly, it is my judgment we have to do a better job at the
    senior levels of our Government advancing the societal and
    political arguments that note it is an honorable thing to do,
    to serve one's Nation, and amongst the kinds of service,
    include service in the Armed Forces. I think that the way OIF
    has unfolded has played out in the media that it is all about
    war. It is all about Iraq, and we all know it is much larger
    than that.
        So I have tried to make that cryptic, but I appreciate the
    depth and sincerity of your question.
        Senator Ben Nelson. Thank you.
        General Bradley, as you respond, could you additionally
    address the question about what the lost opportunity costs are
    for every one we do not retain or we do not get from the
    Active-Duty to the Reserve? Comment on what it has cost us to
    train those individuals and what we lose when we do not get
    them and we do not keep them?
        General Bradley. Yes, sir. Sir, as you noted, there are a
    lot of challenges in recruiting. In the Air Force particularly,
    15 years ago 50,000 people a year were leaving the regular
    force because their commitment was up, and we would gain a good
    percentage of the folks that are getting out. Now that number
    is down to about 15,000 a year. The Air Force has held onto a
    lot of people now. They are going through some force shaping
    that is getting some people out to get to their authorized end
    strength, as the Secretary has directed the Air Force.
        There is evidence in some surveys that we get a slight
    decline in the number of folks leaving the Active Air Force to
    join the Reserve or the Guard, because they know that we are
    doing pretty much the same missions that the Active folks are
    doing. They want a tad more stability. It is a little tougher
    than it used to be.
        I will tell you, though, sir, right now the Air Force
    Reserve is at 114 percent of its annual recruiting goal. I am
    very pleased with that. That does not mean I worry that next
    week it will turn around some. Our retention is 89 to 90
    percent. I am very pleased with that. Again, you never know
    when that changes. We really work hard on making sure that our
    commanders and our supervisors at all levels make sure their
    folks know how much we appreciate their service and how badly
    we need them to stay with us. We do a lot of encouraging people
    to stay with us. I think it is paying off, but it is something
    we always have to keep our minds on.
        The authorities that you all have given us to award bonuses
    have been extremely helpful. As Secretary Hall said, it would
    be nice to have a tad more latitude throughout the year, or
    points at which we can do those things. It would also be
    helpful to have some additional appropriations to go along with
    that authority to make it a tad less painful so that we do not
    have to take it out of other parts of our budget. But the
    authorities have been extremely helpful.
        I am pleased with our recruiting and retention situation in
    the Air Force Reserve. We will make our end strength this year.
    In fact, we will be near 100 percent, where last year we were
    about 1 percent down or 99 percent.
        It is, as your question leads me to say, a lot more
    expensive to recruit people off the street, to send them
    through basic training or technical school training, and then
    get them several years of experience. That costs a lot of
    money, so we do lose a lot of money when people leave the
    regular force.
        Now, we do not try, in the Air Force Reserve, to encourage
    people to leave the Active Air Force, but once that person has
    made a decision to get out, we will go after that guy or gal to
    join the Air Force Reserve because that is a lot cheaper, and
    we have years of experience that we can bring in the Reserve. I
    think that has been one of our strengths, having several years
    of experience. It keeps our experience base high. It also cuts
    our training costs dramatically when we can access those people
    leaving the Active Force.
        Senator Ben Nelson. Do you have any idea? I have heard
    several hundred thousand dollars. I think it costs about
    $100,000 to train and equip a member.
        General Bradley. Yes, sir.
        Senator Ben Nelson. I wonder if you have thought about how
    much investment you have in terms of that person leaving.
        General Bradley. Yes, sir. The best I can tell you off the
    top of my head is probably $200,000 or $300,000. But I can get
    you a figure. We would be glad to provide that to your staff
    very quickly. That is easy to do, but I just do not know the
    numbers.
        Senator Ben Nelson. No. That is okay. Thank you.
        Admiral Cotton.
        Admiral Cotton. Yes, sir. I would like to add to that
    discussion that it is really skill set dependent, and if there
    is one theme in the Navy now, it is that we are doing a better
    job of measuring the skill sets required for war. It can be
    millions of dollars for an
    F/A-18 pilot down to a couple hundred thousand dollars. That
    experience we have shown really counts in combat. Every study
    we have of OEF and OIF shows that experience counts. With the
    Reserve Force, they are just a little older and more mature.
    They are 28 or 30 years old vice a 21-year-old. That experience
    counts, which is why we want to hold onto every person we train
    and use taxpayer money for.
        Sir, I would like to say that the Navy Reserve's authorized
    strength at the end of this year is 83,400. We presently sit at
    78,400. We did something unusual about 3 years ago. We stopped
    what we were doing and asked, what is the requirement? We went
    to the customer, the Navy, and said, okay, for the global war
    on terrorism, the rules have changed. What do we do for the
    future? Rather than trying to preserve the past in every unit
    we had, we took five analysts, looked at every single billet,
    every single unit, every single lay-down, and put some precepts
    in there. We want to be in all 50 States. We want to have these
    kind of capabilities. We came up with a force of about 70,000,
    plus a few thousand for surge paid for by the cost of war. So
    our request in 2006 is going to be for 73,100.
        We set a target this year of 13,000 to recruit. We have
    about 30 percent of that now, but the best months are coming
    up. Last month increased 43 percent, but the best thing is that
    the culture in the Navy is changing. Down at the deck plate, at
    the commanding officer, command master chief, and the XO level,
    they realize that. If you can keep them in the Reserve Force,
    you have not lost anyone. The transition and force shaping
    tools we are looking at, the changing rates, and some
    authorities you have given us, are increasing our ability to
    retain these valuable sailors. That is the good news.
        We also think that we should not have resignation letters
    anymore, but that you should apply for transition from the
    Active component to the Reserve component. That would force an
    individual to find out that there are opportunities in either
    the full-time Reserve, the part-time Reserve, or Select
    Reserve. Every one of their skill sets go into the Individual
    Ready Reserve (IRR).
        I would also submit that we do not measure the IRR very
    well. We do not know who is there, or how long we keep them
    there, but with our IT systems, we can do that much better. So
    this is the focus for the Navy in the future.
        Overall, I am very confident, based on the leadership of
    Secretary England and especially Admiral Clark, that the
    culture of the Navy is changing to be one team, a human capital
    strategy, or as we call it, a Total Force.
        Senator Ben Nelson. Thank you, Admiral Cotton.
        General McCarthy.
        General McCarthy. Mr. Chairman, Senator, the Marine Corps
    Reserve is going to meet its end strength target this year. We
    will meet it both in quality and in quantity. This is the best
    information that I have, but I echo General Bradley's comments.
    That could change, and we need to watch it very closely all the
    time.
        The Marine Corps Reserve demographic is exactly the same as
    the Active component, which makes sense, since we provide
    forces across the full spectrum of the Active component. So we
    need to have units that look just like the Active component
    unit. That means that the Marine Corps Reserve is largely a
    first-term force, just as the Active Marine Corps is.
        It should be a split of about 70 percent non-prior service
    and 30 percent prior service. The only thing that I see right
    now that worries me just a little bit is that our ratio is just
    a little bit off. We are somewhere between 75 and 80 percent
    non-prior service and a little bit down on the prior service
    side. I think all of the reasons that others have discussed
    come into play there and apply to us.
        All of the things that the committee has asked about and
    talked about in terms of incentives, in terms of medical care,
    in terms of support for employers, are as important to the
    Marine Corps Reserve as they are to all of the Services so that
    we can keep the right shape and balance of our forces, but
    right now, the numbers, both in quality and quantity, look very
    good.
        Senator Ben Nelson. Thank you, General McCarthy. It was
    pointed out to me that this is your last appearance before this
    committee. We very much appreciate your distinguished service.
    We hope that the afterlife from the military will be as good to
    you as you have been for the military and for the service to
    your country. We very much appreciate that service.
        Mr. Hall. Senator Nelson, could I add to that? His wife,
    Rosemary, is also here in the audience. I have worked with this
    couple many years, and we all know who served a long time. It
    is truly a family matter. His wife has demonstrated concern for
    the families, has been to every conference, and I would like to
    congratulate her as much as Dennis because they are a wonderful
    team.
        Senator Ben Nelson. We certainly want to, for the record,
    reflect your long service to the country as well in supporting
    General McCarthy. Your presence here today makes the point that
    is so clear in retention, the old adage, recruiting an
    individual, retaining a family. Obviously, we have been able to
    retain your family very well, and thank you so much.
    [Applause.]
        Mr. Chairman.
        Senator Graham. Thank you, Senator. I think it is 38 years.
    Is that right, General McCarthy?
        General McCarthy. Commissioned in 1967, yes, sir.
        Senator Graham. It goes by fast.
        I will state the premise that I have previously and get you
    to respond to it. I think we are facing a chronic problem not
    an acute problem. General Helmly, you said some things in a
    memo, I think, back in December--I cannot remember when it
    was--about your concerns about retaining the force and about
    recruiting, and I want to publicly say that I appreciate those
    comments. I thought they were sincerely offered. I think they
    are right on the mark, and the committee would be better off
    hearing comments like that so that we can help turn what I see
    to be a potential problem around.
        When it comes to parents and grandparents talking about
    whether or not their children should go in the Reserves or the
    Guard or the Active Forces, Iraq is on 24/7. You see people
    suffering, losing life and limb, and there is a greater mission
    out there than just Iraq, serving in the military. I am in. I
    was a lawyer. The only people that ever wanted to kill me were
    my clients. [Laughter.]
        But I certainly benefited from wearing the uniform, and
    still do. I think we need to do a better job talking about
    serving one's Nation. It is truly the highest calling.
        We have a historic trend in the Guard and Reserve that
    people stay to 30 because they like their unit, and they become
    part of a family.
        What I worry about is that with the multiple deployments of
    certain skill sets, people begin to look for a way out, because
    their family gets tired and worn out and they get to where they
    cannot handle it because the Guard and Reserve family,
    Secretary Hall, as you well know, does not have the
    institutional support that an Active-Duty family has. Lord
    knows, the Active-Duty families suffer greatly in terms of
    stress, but there is no PX many times for the Guard and
    Reserve. There is no counseling service. There is no after-
    school care. We have to come together as a family in the Guard
    and Reserve and make it up as we go.
        Secretary Hall, you have done a great job of providing
    better infrastructure to families as they face long
    deployments.
        What I worry about is that multiple deployments are going
    to take a toll on the force, and when you are having to go from
    35 to 39 years of age for enlistee and when you are considering
    waiving the high school educational requirement, that is a good
    sign to me that we are really having to think outside the box
    to keep the force from bleeding any further.
        There is a proposal that would allow guardsmen and
    reservists to retire earlier than 60 based on continued service
    past 20. If you serve 22 years, you can retire at age 59; 24
    years, you retire at age 58; all the way to 55, if you serve
    30. Could you give me some feedback as to whether or not you
    think that program, if implemented, would help retain people
    past 20 years, and do we have a problem with people past 20?
    Secretary Hall, would you start?
        Mr. Hall. We have talked about this, and we have a
    different perspective on it. My perspective is not to say it is
    not a good idea. Almost anyone, if you said retire at 25 or 30,
    would say yes. I think it is a matter of the tradeoffs.
        We have carefully looked at that. We have asked RAND and a
    number of other groups to take a look at the propensity of
    people if they were allowed to retire earlier at 55 or whatever
    age, and we have not found that that will have, in the studies
    that they have done, a significant effect on the recruiting and
    retention.
        In fact, my view is I would like to incentivize people to
    stay longer rather than leave earlier. People are healthy. We
    need to keep them longer. We have 130,000 or so people between
    the ages of 55 and 60. About 30,000 are still serving, many as
    military technicians. You are very familiar with military
    technicians. They are most experienced, and they are great
    Americans. We would like to keep them longer rather than
    incentivizing them to leave earlier.
        The cost we talked about, whether it is in the billions--
    and you can argue about it, depending upon the take rate--is a
    consideration.
        My personal view mirrors the administration, but personally
    I believe that with a limited budget with only a limited amount
    of money, targeting the benefits towards other things has a
    higher priority than the 55 year retirement. It comes down to
    that. If I only had this much money, I would like to do that.
    If I had unlimited appropriations, then it would be a different
    matter. What I am trying to do is target them. That is my
    perspective.
        Senator Graham. I understand. That is a very good and fair
    answer.
        Do you have a problem retaining people in the Marine Corps?
    Is there a trend of getting out at 20 versus staying to 30, or
    is that not so?
        General McCarthy. Senator, we probably have not just the
    smallest number but the smallest percentage of those who retire
    because of this heavily weighted force toward the junior
    enlisted marine.
        We have seen some signs--this is probably a little bit
    anecdotal--but particularly in the aviation community, of
    people retiring at 20 rather than staying for what some might
    consider a full career of 30 years of commissioned service. I
    do not have statistics to tell you that, but I would say to you
    that in every group of marines that I talk to, whether it is at
    home or in the theater, somebody asks me about this.
        Senator Graham. That is why I am asking you, because I
    cannot go 3 feet without somebody asking me.
        General McCarthy. I have to think that it is on their mind.
    It is not just people who are rapidly approaching retirement. I
    had a young 30-year-old captain ask me about it in Iraq a month
    ago. I think from the Marine Corps standpoint, it is an issue
    that is out there, and certainly if Congress is going to do
    anything, there ought to be a linkage between changing the
    retirement and incentivizing continued service beyond 20 years.
        Senator Graham. Right.
        General Helmly, would you like to comment?
        General Helmly. Sir, let me say that I support your
    contention completely that this is a chronic issue. This is the
    first extended duration conflict, as we know, that we have
    fought with the All-Volunteer Force. In September 2003, I
    personally gave a speech at the National Defense University
    where I warned that we needed to begin changing the policies,
    practices, and procedures that govern how we approach manning
    the various components, not only Reserve, but also Active,
    owing to the discrete requirements of each, Active, Reserve,
    and in between the Services.
        For my part, our acceptance of a 20-year retirement letter
    is up approximately 5 percent in the past year. It is my
    judgment it would have risen in the past, but when we stop-loss
    people and as we alert units, we stop-loss everyone in the
    unit. As we see lower numbers mobilizing, we are stop lossing
    fewer people, and we are having more who are approaching the
    20-year marker accept that. I would also note that the average
    age at which those people retire is significantly less than 55.
    I too am in favor of keeping people longer.
        That is why I must tell you, in my considered judgment, we
    should genuinely explore the formula you have offered of a 1-
    year reduction below age 60 for an increase of 2 years beyond
    20, if you will stay for 30, you accept non-regular retired pay
    at age 55. We should develop the empirical data on this. It is
    a rich cost, but in my view I am afraid it has been dismissed
    because it is costly, and we have not tied it to the increase
    in service.
        You asked earlier about cost to enlist. The average cost to
    enlist a non-prior service 18- to 22-year-old young man or
    woman in the Army Reserve is $103,000. That cost is going up
    because we are now having to add, due to that decreased
    propensity to enlist, about 700 recruiters over our former
    recruiting force, so your cost per average is going to go up
    significantly higher.
        Out of that first-term cohort, we suffer about a 35 percent
    attrition rate, that is those who do not make it to the end of
    6 years for trainee-based discharges and all sorts of reasons.
        I think we are much better off to retain the person off
    Active-Duty or for continued Reserve service. Certainly in
    business terms, quality, reliability, readiness, and capability
    are all reasons that say retention is much preferred.
        I will note two final points.
        The current policies we find ourselves governed by on our
    Active, Guard, and Reserve Force, which is Reserve members on
    Active-Duty, the richest single force we pay into, about 15,000
    strong, requires me by policy to retire at the end of 20 years
    Active Federal service. That makes no sense at all when we are
    investing in these people to send the officers to senior
    service college, et cetera. We need to be keeping them longer,
    but that is simply not done because of the way we have done
    business all these years. We have not looked at this in a
    strategic, holistic sense.
        Senator Graham. I could not agree with you more. You have
    some people 38 years of age who can retire but still have a lot
    to offer. I am 49. I think I have a few years left. So I would
    hate to be kicked out of the door.
        General Helmly. Sir, I am looking up to you. [Laughter.]
        We do not offer Reserve component members a reenlistment
    bonus beyond 16 years of service. I would be in favor of
    looking at that at the 18-year mark where you keep them for 24
    at a minimum.
        Senator Graham. Along those lines--I hate to interrupt--
    that is a great idea. Senator Nelson and I were talking about--
    from the Active-Duty panel--this from Blue to Green--as the
    Navy is trying to reshape its force people are leaving the
    Navy. We are doing everything we can to hang onto people. Maybe
    there is a place in the Marine Corps. Maybe there is a place in
    the Army or some other service for a very talented person who
    does not have a Navy home anymore.
        Senator Nelson and I were talking about his idea about
    offering a bonus for someone who is leaving the Navy because of
    force restructuring to go into the Army Guard. Is there such a
    program in existence, and would that help?
        Mr. Hall. There is not, but I think if it is a prior
    service person whose military occupational specialty (MOS) or
    skill can be transferred, then we are trying to get prior
    service people to come in. We need to do whatever we can do to
    attract prior service personnel. They can be prior service from
    another service if they have the MOSs. It is certainly worth
    exploring as we have people coming out of the Navy and the Air
    Force.
        Senator Graham. Do you think that would help you if you had
    that tool available to come up with a skill-specific bonus
    program?
        Mr. Hall. I think any program that can help get prior
    service people to enlist or affiliate in greater numbers who
    have the skills we need is helpful.
        Admiral Cotton. May I add one more thing, sir? There is a
    transition period, and those of us that leave Active service
    for whatever reason, after a period of time, we miss it, and we
    want to come back to it. For myself it was 14 months. For the
    Chief of Naval Operations (CNO), it was 11 months. We sometimes
    put the hustle on somebody, whatever program it is, and once
    they go away, we do not follow it up. Yes, we might send them a
    letter after 6 months, but I think all of those with these
    skill sets, like the Secretary said, need to be followed up
    with a 3-month phone call, a 6-month phone call, or maybe even
    all the way up to 18 months. That is why this tracking of skill
    sets in the IRR is so important when folks want to come back
    and re-serve. So I think we need to do a better job of that.
    Force shaping tools and bonuses would certainly incentivize
    people to want to come back and serve in any of our components.
        Senator Graham. I have one last question and then I will
    turn it over to Senator Nelson.
        We have had a lot of anecdotal stories about pay being
    interrupted, pay not being there when people need it in the
    Reserves, or being held over for medical problems, and it is a
    nightmare. What have we done to address those problems?
        Mr. Hall. It has been an acute problem, mostly with the
    Army. Starting in March--and it has already kicked off--we have
    the Forward Compatibility Pay (FCP) initiative. We are working
    on the Defense Integrated Military Human Resources System
    (DIMHRS) toward a common pay and personnel system. However,
    that is not supposed to happen until 2007.
        Out of personnel and pay, I consider pay to be the biggest
    problem, although they are both a problem. When I was in, I
    wanted my pay on time. My family wanted the pay.
        We have decided to invest in that system and get a common
    pay system this year, kicking off first with the Army. It is
    called FCP. By the end of the year, we hope to have that common
    pay system. We will have to bridge to DIMHRS, which will have a
    common pay and personnel system. We are expending some money up
    front so that we could wait for it, but I do not think we ought
    to wait. We'll do that this year, then transition to a slightly
    different common pay and personnel system in the DIMHRS.
        We recognize the criticality of it. The Army, of course,
    hired more contractors, and added more pay companies to handle
    the immediate problem, which I think is under control. But we
    needed to do something this year. That has commenced for a
    common pay system by the end of the year.
        General Helmly. Senator, the Government Accountability
    Office (GAO) did an audit focused on Army Guard and Army
    Reserve, with special hearings last summer. By that time, the
    Army, working in conjunction with the Defense Finance and
    Accounting Service (DFAS), had zeroed in, and we were making
    improvements.
        As the Secretary noted, FCP integrates Active, Guard, and
    Reserve in one system. Our Secretary personally follows that on
    a monthly basis. Most recently we have been informed that the
    development of that system, which is a significantly large
    effort, was behind schedule.
        We all made the decision which was made by the Secretary,
    and supported by all of us, that we would not use our soldiers
    as guinea pigs given the fact that with the flaws in today's
    Reserve component pay system for Guard and Reserve, we and the
    Guard, supported by Army, have made major improvements. If you
    will, they are bandaids, but they have reduced the error rate
    by almost 75 to 90 percent of what it was about this time last
    year. That is a broken system, to be sure. We have reduced the
    error rate and invested the dollars in FCP, as Secretary Hall
    said.
        But FCP, we now find, is behind schedule. We have made the
    decision that we will not go to that until the developers bring
    in a satisfactory system. Our Assistant Secretary for Financial
    Management and our Secretary personally follow that on a very
    frequent basis.
        Senator Ben Nelson. Thank you, Mr. Chairman.
        Admiral Cotton, the CNO some time ago testified that the
    Navy is looking at restructuring pay to deal with skill sets,
    and the need for technologically adept and trained people is
    increasing significantly. As the Active Navy has begun to do
    that--and I am assuming that they are in the process of doing
    that--has that changed what your requirements are as you add
    and recruit and try to retain within the Navy Reserve?
        Admiral Cotton. Most certainly, sir. In the future, a Navy
    manpower document will include both Active component and
    Reserve component personnel, and the commanding officers of the
    two units will work together for the readiness of both. It is
    really the Active component commander who is responsible for
    all that readiness. So the best recruit we have is the Navy
    veteran. Tracking those skill sets is important. We call it the
    5-vector model and SkillsNET. This system is so advanced that
    even industry is looking at Navy and how we are measuring this.
    There are over 450 functionalities we have, and there are
    another 800 civilian skill sets that the Reserve component has
    that the Active component sometimes would like to use.
        We also utilize reservists in an entirely different manner
    than we did during the Cold War. About a third of the force
    does 38 days or less. Another third of the force does 38 days
    to 100 days, and another third of the force is doing from 100
    to 365 days each year. In fact, we have 24,000 people on orders
    right now at supported commands. The best reservist is one that
    does maybe 4 days, 5 days, or 10 days a month rather than a
    mobilization every couple years.
        It is imperative that we measure these skill sets and
    incentivize behavior of the good ones, and with the skill sets
    we do not need anymore in this transition period, send them to
    school and teach them new skill sets. This way we retain that
    sailor. I would agree, sir.
        Senator Ben Nelson. You are retaining the sailor rather
    than counsel them out of the military, recognizing that you
    already have a certain investment in them that you want to
    retain.
        General Helmly, the chairman asked you about a memorandum
    that you wrote back in December of 2004 regarding your
    concerns. Has anything changed? Has anybody come to you and
    said your concerns are well noted and how can we help you
    respond to those? It probably does not work that way.
    [Laughter.]
        General Helmly. Well, in some of those meetings, other
    words have been used. [Laughter.]
        Frankly, I believe that we have discussed this before with
    regard to my motivation. My motivation was simply to ensure
    that my superiors before congressional hearings were formally
    aware of the complexities that underlie our strength. It is not
    a simple equation of enlistment, and reenlistment, Active to
    Reserve. It is very intricate.
        Having said that, there are the three issues addressed
    there. Nonparticipants had been a matter of a GAO audit, IRR
    obligated status, and also going beyond mandatory retirement
    date.
        The nonparticipants and the IRR obligors have been taken to
    the Secretary of the Army. The Secretary has authorized us to
    proceed with development of streamlined discharge procedures
    for nonparticipants. That still complies with law with regard
    to my right to respond and ensure that I am aware of the types
    of discharges that may ensue. Our nonparticipant rate is
    significantly down beyond the time of the GAO audit. That is
    important from a stewardship responsibility.
        I would like to add at this point simply that no one here
    wishes to fracture the quality of the All-Volunteer Force by an
    intentional legal act to make someone serve.
        Having said that, it is my considered judgment when we
    apply the kinds of bonuses and the kinds of incentives and
    entitlements that the DOD, supported by Congress, has provided
    in recent years, we have a stewardship responsibility to you to
    ensure that those are applied in the most productive way. Thus,
    this nonparticipant and IRR obligor was a source of manpower,
    we had people on our books who were not participating. Not only
    did they have to then remain on our books, presenting a false
    picture of readiness, but we have to pay in through numbers
    into the defense health program the Government portion of the
    premium for the Servicemembers' Group Life Insurance (SGLI).
        Thus, the GAO audit said we had spent about $46 million on
    nonparticipants in fiscal year 2003.
        It was my intent that as we came forward to try to ask for
    improved and increased incentives, entitlements, and bonuses--
    the Secretary has talked about TRICARE expansion and those
    kinds of things--that we understood in a disciplined way that
    if I accepted those, I incurred an obligation to serve and
    fulfill my obligation.
        Our Secretary has forwarded to DOD some proposals. It is my
    judgment those are now being addressed in a hard business kind
    of way with due consideration for people. We are going forward
    with a plan to begin involuntarily assigning the obligated
    portion of the IRR, that portion of the IRR which is obligated
    for selected Reserve service.
        So, yes, sir, I am very satisfied with the effort by our
    Secretary and chief to address those issues. Thank you.
        Senator Ben Nelson. Thank you, Mr. Chairman.
        Senator Graham. Thank you.
        General McCarthy, in your written statement, you talked
    about a concern about young officers. One of the things that we
    are looking at doing is doubling the number of Reserve
    Officers' Training Corps (ROTC) scholarships available for
    people to come into the Reserves. Would that help you? Would it
    help for the Army and the Air Force? Would that help you if a
    ROTC scholarship recipient could come right into the Marine
    Corps Reserve?
        General McCarthy. I am taken off guard, sir, because I
    really have not thought that one through. We do have a very
    serious concern about young officers. The thought of bringing
    somebody directly into the Marine Corps Reserve from an ROTC
    scholarship is quite frankly not something I ever thought
    about.
        I will tell you that our strength is, in the past, 90-plus
    percent, probably 95 percent of the junior officers in the
    Marine Corps Reserve serve 4 to 6 or so years on Active-Duty,
    and that has been a tremendous positive strength. We want that
    to continue to be our primary source of officers.
        However, we have also always tried to promote some officers
    from the ranks serving in units, but they too have a more solid
    background.
        I am not sure how ROTC direct commissioning would apply to
    that, but I think it is certainly worth looking into because
    getting enough young officers into the ranks is a very serious
    issue for us. I would like to take a look at that and see
    whether that would be helpful.
        Senator Graham. General Bradley, every time I have been to
    Iraq--I have been three times--you fly out of Kuwait, you take
    a C-130, and every crew except one has been a Reserve crew.
    Have we seen any problems retaining our C-130 folks?
        General Bradley. No, sir, we have not. Now, we have
    mobilized a lot of folks, and they are staying with us. It
    certainly is a strain. The folks out there working hard are
    both the maintenance and the aircrew members. We are very proud
    of the work that they do over there.
        By the end of this year, every C-130 squadron that we have
    in the Air Force Reserve will have completed 2 years of
    mobilization. We have not seen our numbers go down yet. It
    could happen anytime. You never know until they are ready to
    leave, once they have finished their commitment. But so far,
    they are staying with us. In fact, sir, this is true even after
    they have been demobilized, and we have already demobilized a
    lot.
        Senator Graham. Could you repeat that? Of the C-130 Reserve
    crews, how many of them have met the 24-month----
        General Bradley. Probably two-thirds now of the Air Force
    Reserve are C-130 crews. The Air National Guard crews would be
    a slightly different number. They have a lot more. But we have
    had two-thirds of our C-130 squadrons in the Air Force Reserve
    mobilized and demobilized with 2 years of service.
        Senator Graham. So they are out of the fight.
        General Bradley. They are done. They are done with
    mobilization, sir.
        We still use them in a voluntary status to do a lot of
    other things. We are doing Operation Joint Forge in Europe with
    volunteers. We are doing Coronet Oak missions in U.S. Southern
    Command with volunteers. We have experienced the same thing in
    the strategic airlift world, with the same sort of numbers,
    about two-thirds of them, C-17s at Charleston, McChord, and
    other places.
        Senator Graham. Is that two-thirds also?
        General Bradley. Pretty close to two-thirds, yes, sir. In
    fact, two of the squadrons at Charleston have been demobilized.
    The other one is mobilized now. It is the same with C-17s at
    McChord in Washington State.
        But, sir, the ones that are not mobilized currently are
    still volunteering to go just as often as those that are
    mobilized.
        When they are mobilized, they are not over in Kuwait or
    Iraq for 2 years. They cycle back and forth through the States
    on a 90- or a 120-day schedule. That is how Air Mobility
    Command does it. So they come home, and while they are home
    while mobilized, they fly a lot of missions for Air Mobility
    Command. They are on their mobilization orders for 1 to 2
    years, but as I have said, about two-thirds of them have done
    the 2 years. The folks are still volunteering to do other
    missions.
        Senator Graham. What kind of pressure does that put on your
    Active Forces who fly into the theater?
        General Bradley. Well, sir, I do not know. A lot of the
    folks that are over in the theater right now are Active. There
    are a lot of Active folks over there, but most of the C-130s
    are in the Guard and the Reserve.
        Senator Graham. I wanted to talk about C-17s for a moment.
        General Bradley. Yes, sir.
        Senator Graham. About 50 percent of the aircrews flying
    missions today are Guard and Reserve. Is that correct?
        General Bradley. That is true, yes, sir.
        Senator Graham. So if two-thirds of the Reserves have met
    their 24-month cap, that has to have a ripple effect somewhere
    along the line.
        General Bradley. Sir, if you mean that we cannot do the
    missions anymore, it is not happening that way, because people
    are still volunteering to go on shorter-notice missions. We can
    put them on Active-Duty in other ways for shorter periods of
    time.
        Senator Graham. I understand.
        General Bradley. They are just not involuntarily mobilized
    anymore. At the end of this year, every C-130 crew that I have
    will have done 2 years.
        General McCarthy. Sir, if I could add to that. We have two
    squadrons of KC-130s in the Marine Corps Reserve, and they are
    in exactly the same situation. Both squadrons have been
    mobilized for a full 2 years, but they are continuing to
    generate sorties using volunteers, and using a combination of
    the Active component members of the squadrons and volunteers.
    But I think you are closing in on the capability that we have
    stretched pretty far.
        Senator Graham. Your testimony really hit me pretty hard
    when you said that of the one area that you thought that the
    incentive to stay past 20 might help was in the aviation units.
    Now I am beginning to know why they are checking out.
    [Laughter.]
        General McCarthy. Sir, I did not want to indicate that. I
    think a lot of these officers who are not going beyond 20 in
    part do it because they think they are going to have to stop
    flying. They complete command of squadrons as lieutenant
    colonels and hit the 20-year mark, and a lot of them say, what
    else is there to live for?
        Senator Graham. Yes, but why the change, though? Because
    you could not fly past 20 before. Or did your flying
    opportunities went down.
        General McCarthy. The flying opportunities just dwindled
    down.
        Senator Graham. But now we are flying out of the wazoo. If
    you want to fly, now is the time to be in.
        General McCarthy. Exactly right.
        Senator Graham. I think there is something a little deeper
    going on. What it speaks to is not only the patriotism of the
    men and women of the Guard and Reserve. But also you will never
    convince me that if two-thirds of the Guard and Reserves in the
    aviation part of the business have met their 24-month
    involuntary deployment, that that will not have a ripple effect
    if this war continues at the pace it is going.
        Mr. Hall. Senator, I have one comment.
        Senator Graham. Please.
        Mr. Hall. We need to be a little bit careful on the
    definition of whether we have mobilized and utilized units--and
    we deal in this all the time--because you might have mobilized
    two-thirds of the units, but what about the people. That is
    different.
        Senator Graham. That is what I am asking.
        Mr. Hall. I think we need to take a look at this, because
    we refresh those people. People come in and they go. So it is a
    different answer if two-thirds of the people presently serving
    are at their 24 months or two-thirds of the units have used 24
    months.
        Senator Graham. Well, what about people?
        Mr. Hall. People is what we try to look at.
        Senator Graham. What is the people number?
        Mr. Hall. I would be interested in seeing whether it is
    units or people.
        General Bradley. Sir, it is people.
        Senator Graham. Yes.
        General Bradley. I can give you exact data.
        Senator Graham. I know because I met them three or four
    times in Iraq myself. I have been going for 2 years, and I see
    the same people.
        General Bradley. I have to tell you my guys are over there
    for longer periods of time than many Active folks. I am getting
    some ripple effect there. I hear about that a little bit. But I
    think they are dedicated, patriotic people who really think
    they are doing something important.
        Senator Graham. I do not doubt that. Amen to that. I just
    express my concern about down the road, if we are doing this 2
    years down the road, eventually something has to give.
        General Bradley. Yes, sir, I am very worried about it too.
        Senator Graham. I have one last thing, and I will turn it
    over to Senator Nelson and let him do whatever he wants to do.
        We had a problem bringing people from the Guard and Reserve
    into mobilized status and being ready to go to the fight. There
    are physical problems. They were not ready medically. Has there
    been any turnaround, General Helmly, from the Army in that
    regard? Would all of you comment quickly about that?
        General Helmly. Sir, this comes to a matter of internal
    force discipline. That is my responsibility as a commander. The
    answer to that simply is yes. We have instituted a new
    physicals management process. We do physicals, and have done so
    for about 3 or 4 years through a program called FEDSHEAL, and
    with that, we partner with other Federal agencies that have
    physicians in them to use their physicians to do our physicals.
    We send them a voucher and pay for that.
        We have now changed the FEDSHEAL contract that says that
    the provider, the physician, sends the electronic results of
    all the laboratory and the physical examination to a
    centralized profiling office at our Human Resources Command in
    St. Louis. I have resourced that office with about 10 people
    who are trained under the guidance of a full colonel, Active
    component physician. They apply a centralized profile. They
    then enter that into one's personnel records electronically,
    send a copy to you that is available to you through our Two
    Times a Citizen Web site, and then if you are deemed
    nondeployable, we send that to your command with a 90-day
    suspense to initiate the physical evaluation board/medical
    review board process.
        That is what I call putting starch in people's shorts, so
    we get out of the business of, ``I sent you your physical.''
    You wanted to retain your drill status. You hid it in your desk
    drawer, and then it popped on us when we mobilized you, so
    given a couple more years and an expedited effort we have
    underway to clean out the backlog of permanent profiles, and we
    will remedy ourselves and bring this to a manageable level.
        Senator Graham. How about the Marine Corps?
        General McCarthy. Sir, it was not a problem. Over 98
    percent of the marines who have been mobilized were physically
    ready, and medically ready to go. We have, I think, managed
    that pretty well, and most importantly, we are a young force.
        Senator Graham. It is phenomenal. That is right.
        General McCarthy. The guys and gals are fit. So it has not
    been an issue for us.
        Senator Graham. The same for the Navy and the Air Force?
        Admiral Cotton. There is just one more thing I would like
    to add, sir. We are less than 5 percent, but I think the
    visibility on this between our Services and the building also
    involves looking at the systems by which we measure this. I
    would say for Navy, we are now looking at Internet Technology
    systems for both Active and Reserve exactly the same. We report
    it the same way. It has been slow to change, and I think the
    last 3 years has sped up that change to have digital medical
    records vice the old stacks of paperwork like we had. I think
    even the rest of the country is going to be going here pretty
    quickly. I think it is a trend we are all going to follow.
        General Bradley. Sir, we have not had a problem in the Air
    Force Reserve with medical readiness.
        Senator Ben Nelson. I do not have anything further.
        Senator Graham. Well, thank you all.
        Mr. Secretary, yes, sir, please.
        Mr. Hall. I wanted to pass on a couple of bits of good
    information. We have not known in the past whom our reservists
    and guardsmen worked for. We have never had a database, and we
    are about halfway through now populating the entire database
    for civilian employ information. So for the first time, we are
    going to be able to actually know our first responders. We will
    even know how many lawyers we have in the database.
        Senator Graham. Probably too many. [Laughter.]
        Mr. Hall. We hope by the end of this year to be able to
    take this database at any one time and say we have mobilized
    this many policemen, et cetera.
        Senator Graham. That is terrific.
        Mr. Hall. So this is something we have had to do.
        Senator Graham. How many self-employed people do you have
    in the Guard and Reserve?
        Mr. Hall. We do not know this either. So we are looking at
    the amount of self-employed.
        Also, we have two commissions this year: one on the Guard
    and Reserves and one on pay and compensation. I think it is an
    obligation of all of us to use those independent commissions
    that will report to you. Admiral Pilling is heading the pay and
    compensation commission--to take our ideas and to make sure
    that we are not piecemealing the benefits or the pay, because
    sometimes we take a portion of it, and then it ends up with
    unintended consequences. They are charged with looking at the
    entire structure. We are going to provide inputs. All of us
    will be with those commissions, and hopefully that will be of
    some assistance to us on these. So I wanted those for the
    record.
        Senator Graham. Thank you all for your service to our
    country, to your families who have served alongside of you, and
    Secretary Hall, thank you for coming up. This has been the most
    helpful hearing I have been to.
        [The prepared statement of the Naval Reserve Association
    approved for inclusion in the record of this subcommittee
    hearing follows:]
              Prepared Statement by the Naval Reserve Association
        Chairman Graham, Senator Nelson, and distinguished members of the
    subcommittee: on behalf of our 22,000 members, and in advocacy for the
    80,000 Active Naval reservists and the mirrored interest of Guard and
    Reserve personnel, we are grateful for the opportunity to submit
    testimony, and for your efforts in this hearing.
        We very much appreciate the efforts of this subcommittee, the full
    Committee on Armed Services, and like committees in the House of
    Representatives to support our deployed personnel and their families.
    Your willingness to address and correct issues facing guardsmen and
    reservists affirms their value to the defense of our great Nation. Your
    recognition of these men and women as equal partners in time of war
    stands you well in the eyes of many. Your willingness to look at issues
    related to the use of the Guard and Reserve on the basis of fairness
    sets the legislative branch well above the executive branch which
    seemingly develops its positions on the basis of cost.
        We had hoped that many of these issues would have been addressed by
    the commission on the Guard and Reserve. We had great hopes that the
    commission would give Congress and the administration a holistic view
    of the myriad issues facing today's Guard and Reserve. It is a great
    disappointment that the commissioners have not been named and the work
    not yet begun.
        That said, there are issues that need to be addressed by this
    committee and this Congress. Recruiting and retention issues are moving
    to center stage for all Services and their Reserve components. In all
    likelihood the Navy will not meet its target for 13,000 new naval
    reservists and the Naval Reserve will be challenged to appreciably slow
    the departure of 17,000 experienced personnel this fiscal year. Other
    Services and their Reserve components likely face these same
    challenges.
        We believe that Congress should give the Services the following
    tools targeted to mid-career personnel in the Guard and Reserve: (1)
    authorize critical skills bonuses for guardsmen and reservists that
    would provide $100,000 over an entire career (no authorization exists
    for guardsmen and reservists personnel while one with a $200,000 limit
    exists for Active-Duty personnel); (2) increase affiliation bonuses to
    $15,000 to attract veterans; (3) restore the Reserve Montgomery G.I.
    Bill (MGIB) to 50 percent of the Active-Duty entitlement (presently at
    28 percent) and make it available throughout a career; and, (4) an
    earlier than age 60 retirement.
        The Department of Defense is dead set against an earlier than age
    60 retirement. We've heard that Reserve chiefs are in agreement
    expressing concern that senior personnel will leave in droves.
    Hopefully this is more than conscript thinking. A compromise solution
    to this earlier than age 60 retirement issue is something modeled after
    Social Security--if you take Reserve retirement as early as age 55 you
    do so with a greatly reduced annuity for life. This Naval Reserve
    Association conceived proposal would significantly reduce the estimated
    costs to the government over other plans being proposed. The money has
    been accrued; the costs then would be those associated with
    administering monthly payments earlier than expected and any lost
    interest on the accrued amount. The greatly reduced annuity for life
    may very well serve as a disincentive to early retirement for the
    senior leaders who truly have upwardly mobile careers.
        The first three recommendations are relevant to the needs of the
    services today. The fourth (early retirement) is on the minds of many
    guardsmen and reservists. We urge you to put these issues to the
    Reserve component chiefs during this hearing for their opinions.
        There is one Navy-related issue that will be considered by the
    committee--the distribution of U.S. Naval Reserve flag officer billets.
    The National Defense Authorization Act for Fiscal Year 2005 contained
    the following: ``The conferees expect the Navy to provide the Committee
    on Armed Services of the Senate and the House of Representative with
    additional information justifying modification to existing allocations
    in section 12004(c) based on the results of its zero-based review.'' In
    appreciation of the outcomes of the Navy's zero-based review and
    concomitant manpower reduction in most of the programs resident in the
    Navy's Reserve, the Naval Reserve Intelligence Community will become
    the largest single program. With over 4,000 naval reservists, who on
    average give 80 days each year, it the most integrated Naval Reserve
    program in the joint arena. The sole Naval Reserve Intelligence Flag
    Officer serves as Commander, Naval Reserve Intelligence Command, on the
    Chief of Naval Operations' (CNO) staff as N2R and reports to Commander
    Fleet Forces Command as additional duty.
        Unlike other Reserve components, the Navy's Reserve does not fill
    any joint intelligence billets. We think that it should, and recommend
    to the committee that any reallocation of flag billets come with the
    stipulation to the Navy that they fill at least two, possibly three, of
    their URL allocation with Reserve Intelligence Officers.
        In summary, we believe the committee needs to address the following
    issues for our guardsman and reservists in the best interest of our
    national security:

             Name the members for the commission on the Guard and
            Reserve as soon as possible
             Address and authorize recruitment and retention
            issues:

                     Authorize critical skills bonuses for
                    guardsmen and reservists--$100,000 over an entire
                    career
                     Increase affiliation bonuses to $15,000 to
                    attract veterans
                     Restore Reserve MGIB to 50 percent of the
                    Active-Duty entitlement
             Reduce annuity for Reserve retirement before age 60

                     Authorize increased allocation of Naval
                    Reserve Intelligence Flay Officer billets to coincide
                    with their utilization and size.

        We thank the committee for consideration of these tools to assist
    the Guard and Reserve in an age of increased sacrifice and utilization
    of these forces.

        Senator Graham. So the hearing is adjourned.
        [Questions for the record with answers supplied follow:]
                  Questions Submitted by Senator Susan Collins
                         armed forces training centers
        1. Senator Collins. Secretary Hall, I would like to discuss the
    importance of training our National Guard and Reserve members. I have
    been an advocate to ensure that members of the Guard and Reserve are
    properly compensated. For example, I strongly supported including
    language in the National Defense Authorization Act (NDAA) for Fiscal
    Year 2005 that would allow Guard and reservists to receive improved
    health care coverage.
        In addition to increased benefits such as health care, we in
    Congress must also ensure that our Guard and Reserve training is second
    to none. The impressive contributions of Guard and reservists in
    Operation Enduring Freedom and Operation Iraqi Freedom (OIF) have shown
    the truly essential role they play in our Nation's defense forces.
        In Maine, the training of National Guard and Reserve members
    currently occurs at three separate armories. To consolidate facilities,
    improve training practices, and lower costs, the Maine National Guard
    has proposed as its top priority this year that a Joint Armed Forces
    Reserve Center is hosted at the Naval Air Station in Brunswick, Maine.
        Such a facility would streamline operations and provide a cohesive,
    functional, and cost-effective training center. Our Guard members and
    reservists would be able to train in the facilities they need. All
    branches of the Service--Army, Navy, Air Force, and Marine Corps--would
    benefit.
        Could you please comment on the Department of Defense's (DOD) views
    of joint Armed Forces training centers and their benefits of
    consolidation of training, resources, and manpower in one location, and
    is this a priority for the military?
        Mr. Hall. The Department strongly supports and encourages joint
    construction. There is a statutory requirement in title 10, chapter
    1803, which requires the construction of Reserve component joint
    facilities ``to the greatest practicable extent.'' Therefore, improving
    the joint use and utilization rate of physical assets is a primary
    objective included in the Department's 2004 Defense Installations
    Strategic Plan. Joint construction meets the facility needs of more
    than one Reserve component, and often meets them quicker than when the
    components program for unilateral construction projects. Additional
    benefits of joint Armed Forces training centers include joint training
    capabilities, joint utilization of infrastructure assets, reduced force
    protection costs, and reduction in construction and continued
    sustainment costs.

        2. Senator Collins. Secretary Hall, does the DOD recognize the
    importance of spreading joint training centers throughout all of the
    geographic regions of the U.S.?
        Mr. Hall. The Department supports joint use of installation assets
    and additional consolidation and integration of training centers. As
    part of defense transformation, the Department's 2004 Defense
    Installations Strategic Plan calls for a joint basing initiative to
    highlight global opportunities for increased jointness to reduce life-
    cycle cost and overhead. The Department established a Joint
    Construction Working Group to facilitate program alignment, resources,
    and agreements between Reserve components. This review of the Future
    Years Defense Program allows better communication and eliminates
    roadblocks in planning regional joint training centers.
                                     ______

                 Questions Submitted by Senator Saxby Chambliss
                          reserve component retirement
        3. Senator Chambliss. Secretary Hall, there has been some
    discussion in the Senate Armed Services Committee about potentially
    lowering the age at which retired reservists could collect their
    pensions. Additionally, we are well aware that some parts of the
    Reserve components are experiencing some recruitment and retention
    challenges. Looking at these two issues together, and in order to
    incentivize ``volunteerism'' in the Reserve component, has the DOD
    conducted any analysis to determine whether it would be feasible to
    lower the age by 1 year at which a retired reservist could collect his
    pension for each year the reservist was mobilized in support of an
    operational contingency, and what is your reaction to this proposal?
        Mr. Hall. As part of the ongoing study being conducted by RAND on
    the Reserve retirement system, we have asked RAND to assess the effect
    on recruiting and retention of lowering the age at which a reservist
    could begin receiving an annuity. We should have those results in the
    near future, and I would be happy to share those findings with the
    committee.

        4. Senator Chambliss. Secretary Hall, Lieutenant General Helmly has
    recommended that the DOD eliminate the current policy to retire Army
    Reserve officers at their 20th year of Active Federal service, and has
    recommended that mandatory retirement dates for Reserve officers be
    extended to allow both categories of officers to continue to serve on a
    voluntary basis. Additionally, he recommended that the process to
    recall volunteer retired officers be streamlined to allow volunteer
    retired officers to be looked upon as a first source of personnel
    rather than as the last source as is currently the case.
        What actions has the DOD taken to implement these three
    recommendations, and what changes in the law are required to give the
    DOD the authorities needed to more effectively manage Reserve
    personnel?
        Mr. Hall. The law already permits Reserve officers to serve beyond
    20 years of active Federal service, and Office of the Secretary of
    Defense (OSD) policy does not encumber that authority. The Navy, for
    example, allows their full-time support officers to serve on Active-
    Duty to the statutory years-of-service limits. OSD provides the
    Services with the flexibility to manage their Active Guard and Reserve
    Force in a way that meets service needs and provides reasonable career
    progression opportunities.
        The law also permits Reserve officers to be retained in an active
    status beyond the normal years of service imposed for each grade. In
    fact, Congress supported an amendment we offered by enacting
    legislation in the NDAA for Fiscal Year 2004 that gives the Secretaries
    of the Military Departments greater flexibility in continuing Reserve
    officers.
        Shortly after the attacks of September 11, the Department developed
    a strategy for the use of military retiree volunteers. Recognizing the
    considerable talent that military retirees provide, the strategy asked
    the Secretaries of the Military Departments to consider, when
    practical, the use of retirees who volunteer. Unit training and
    cohesion are factors that must be considered, but we also have many
    requirements for individual skills that may be ideally suited for a
    military retiree to fill. Each Service has a process to manage
    individual volunteers and recall them to Active-Duty when they can fill
    a military requirement.
        Finally, as part of our continuum of service initiative, we are
    continuing to review force management issue, and as we find laws that
    inhibit our ability to optimize the use of our force we submit proposed
    changes through the Department's legislative process.

                                  mobilization
        5. Senator Chambliss. Secretary Hall, Lieutenant General Shultz,
    and Lieutenant General Helmly, many people have called our current
    mobilization policies products of the industrial age. I've noted that
    the Army's medical department 90-day rotation policy speaks to
    ``minimizing the mobilization process time'' by ``pre-certifying
    personnel for deployment.'' Has DOD or the Army learned any lessons
    from this initiative that will be applicable to reforming the
    mobilization process as a whole in order to bring this system into the
    21st century?
        Mr. Hall. The Department's policy is to give as much flexibility
    and support as possible to the Services in their execution of
    deployment rotations. An example is our support of the Army's 90-day
    rotation policy of professional medical personnel. The Office of the
    Surgeon General has received positive feedback from the soldiers that
    have deployed under this policy. In support of minimizing the
    mobilization process time, the Department continues to support other
    opportunities where a member's accredited and professional skills are
    fully transferable to their military function, as long as it is
    acceptable to the Service who is providing the solution and the
    combatant commander who is requesting the capability.
        General Shultz. We have sought ways to minimize the amount of time
    units spend at the mobilization station by continuously examining the
    policies that we follow to support the mobilizations of our soldiers
    and units. Our primary goal is to ensure that the burdens are shared
    equitably across our force. To support this goal, we have established a
    force rotation/transformation model, Army Forces Generation (ARFORGEN)
    which we have developed with the States. By implementing the ARFORGEN
    model, we have now established a cycle that will provide the necessary
    resources over the course of the 5 years between a unit's
    mobilizations. At the end of those years, our units will be ready to
    deploy.
        The situation in Iraq has forced the Army to revise the post-
    mobilization training plan for our units. The training for 90-day
    medical professionals has been changed from 1 to 2 weeks to ensure they
    are better prepared to face the conditions in theatre.
        Army National Guard soldiers are screened for medical and dental
    problems prior to mobilization to ensure that only deployable soldiers
    are mobilized. The post-mobilization process is being improved by
    integrated databases and automating as many tasks as possible.
        The technology of the 21st century is enabling us to increase the
    speed at which we process our soldiers through the initial phase of
    post-mobilization training. Our adversaries' symmetric approach to
    warfare necessitates that we provide our soldiers with as much real-
    time training as possible prior to their deployment. Our soldiers may
    be expected to conduct full-spectrum combat operations, peace-keeping/
    enforcement operations, and civil-military support operations over the
    course of their deployment.
        We will continue to look at ways to minimize the time our soldiers
    spend between their mobilization and deployment date, but we cannot
    compromise on the quality of their post-mobilization training.
        General Helmly. The 90-day rotation policy was put into effect to
    address retention issues for a relatively small population of medical
    professionals. These medical professionals do not participate in unit
    combat preparation training prior to deployment; they undergo the
    administrative soldier readiness processing at the mobilization station
    and deploy. Such a policy would not be efficient for the remainder of
    the Army Reserve. Compared to medical professionals, the training
    required to prepare a unit for mobilization requires more time to build
    a cohesive team capable of performing combat missions. This training
    involves certification in individual skills as well as unit or
    collective skills. Individual skills are those required for basic
    safety, examples include weapons and chemical mask training. Collective
    skills are those required to perform the mission of a unit, an example
    would be convoy ambush training. It would also exceed the capacity of
    mobilization stations to process and train soldiers, be costly in terms
    of lift capabilities, and not allow soldiers to attain maximum
    competence before redeployment. A better approach to bring the
    mobilization system into the 21st century is implementation of the Army
    Reserve Expeditionary Force (AREF) which will support Army Force
    Generation. The AREF will allow the Army Reserve to systematically
    select and prepare soldiers and units for mobilization on a 5-year
    rotational concept.

        6. Senator Chambliss. Secretary Hall, Lieutenant General Shultz,
    and Lieutenant General Helmly, are any new legislative authorities
    needed to reform the mobilization process?
        Mr. Hall. The Department continuously assesses policy and law
    affecting the Services' mobilization processes. Currently, there are no
    legislative barriers preventing us from supporting their mobilization
    process re-engineering efforts.
        General Shultz. The laws governing the mobilization process are not
    hindering our ability to provide ready, trained forces to the combatant
    commanders.
        General Helmly. No. Additional legislative authorities are not
    needed.
        The mobilization process is procedurally cumbersome, but this is
    due to policy restrictions, to antiquated personnel and financial
    systems and to poor preparation in past times. Policies that have
    affected mobilization include:

             Tour Length. Tour lengths have gone from 6 months to
            270 days to 1 year `boots on the ground' time. The decision to
            use soldiers for only a part of the period allowed by law has
            the effect of using a greater percentage of a soldier's Active-
            Duty time in processing, pre-deployment training, and travel
            (compared to actual employment time) and wasting up to 30
            percent of the available force.
             Recall to Active-Duty. The restriction against recall
            of previously mobilized soldiers to Active-Duty means that none
            of the `wasted time' can be recovered.
             Deployment Criteria. Historically, Army Reserve units
            have been staffed and funded at C3 readiness levels (65-74
            percent available personnel strength). From the outset, the
            deployment criteria have been set well above this level, which
            necessitated there assignment of soldiers on a massive scale
            and which reduced the readiness levels of later deploying
            units.
             Predictability. Department of the Army preparation for
            mobilization requires that the requirements in each rotation
            identified as early as possible down to grade/military
            occupational specialty (MOS)/number level of detail. This is as
            critical for Combat Support (CS) and Combat Service Support
            (CSS) units as it is for Combat Arms units since many of the
            CS/CSS units will require personnel reassignment, equipment
            cross-level action, retraining of non-MOS qualification
            soldiers, phased mobilization, and possibly recall of
            Individual Ready Reserve (IRR) soldiers.

        The combination of continuing mobilization requirements, personnel
    shortages and mobilization policy requires significant personnel
    crossleveling to meet mission requirements. Title 10, U.S.C. 12302
    allows multiple mobilization limited to 24 months in duration. Current
    policy interpretation dictates that soldiers can be involuntarily
    mobilized for up to 24 months of cumulative duty. This is commonly
    known as the mobilization clock. In order to continue to support
    continuous mobilization requirements, there will need to be a revision
    of the policy as it relates to cumulative duty, or a new mobilization
    authority under title 10.
        Finally, current personnel and discounted systems were never
    designed to allow for seamless transfer of data between the Active and
    Reserve components. Deployed soldiers created ad hoc systems to manage
    theater personnel accountability, and nondeployed Army Reserve
    headquarters had little visibility of their mobilized soldiers.

                          non-participating reservists
        7. Senator Chambliss. Secretary Hall, Lieutenant General Helmly has
    recommended that members of the selected Reserve who fail to meet the
    terms of their contractual obligations be either called to Active-Duty
    or discharged. His recommendation would affect the over 16,000 ``non-
    participants'' who are essentially absent without leave (AWOL) from
    duty, but whose numbers swell the rolls of the Reserves and require the
    Army to pay Servicemember's Group Life Insurance and Defense Health
    Program premiums for them. A 2004 Government Accountability Office
    (GAO) report cited the Army Reserve for spending $46 million in 2003 on
    these AWOL non-participants while getting no service in exchange.
    Additionally, because these AWOL soldiers are on the rolls and included
    in number counts, the Army Reserve has great difficulty even
    determining its true recruitment and retention requirements.
        What actions has the DOD taken to either call these soldiers to
    Active-Duty or expeditiously discharge them?
        Mr. Hall. My office assisted the GAO when it was conducting its
    review of the non-participant issue by helping them determine the scope
    of the problem. Since that time, my staff has worked closely with the
    Reserve components to reduce the number of non-participants. This is a
    process that each component must manage, and the OSD role is to
    continually monitor the percent of non-participants to ensure that the
    Reserve components are within acceptable limits. There is a statutory
    provision under which an unsatisfactory participant may be called to
    Active-Duty--10 U.S.C. 12303. The maximum total period that the
    reservist can be required to serve on Active-Duty under this provision
    is 24 months, which includes all previous Active-Duty service. This
    does provide an alternative to address unsatisfactory participants that
    we may choose to use. However, we would recommend a more positive
    management approach before invoking this provision, and we would
    strongly urge not employing this option until we ensure that all Ready
    Reserve members are informed of the possibility that they could be
    involuntarily placed on Active-Duty for failing to participate in
    accordance with their service commitment. The Army has initiated a
    communications plan to inform and educate members on their obligations,
    requirements, and opportunities.

        8. Senator Chambliss. Secretary Hall, when will the DOD and the
    Army be complete with this process?
        Mr. Hall. This is an ongoing process. We always have some members
    who fail to honor their service commitment. It is our job, both OSD and
    the Reserve components, to either get these non-participants back to a
    satisfactory status, or take the necessary management actions, whether
    that is to use the call-up authority, transfer to another status
    depending on the mobilization potential of the reservist, or discharge
    with the appropriate separation code.
                                     ______

                Question Submitted by Senator Edward M. Kennedy
                   air national guard flying force structure
        9. Senator Kennedy. Secretary Hall, Lieutenant General Blum, and
    Lieutenant General James, what plans has the Air Force been working
    with you on to help synchronize the draw-down of the Air National Guard
    (ANG) flying force structure with training requirements for new
    missions to ensure your members are ready to assume these new missions
    and don't go for a significant period of time without a mission?
        Mr. Hall. The mission of the Assistant Secretary of Defense for
    Reserve Affairs, as stated in title 10 U.S.C., is the overall
    supervision of all Reserve components' affairs in the DOD. To meet this
    requirement, I like to apply an axiom I call, my ``Acid Test for the
    Guard and Reserve'' which is ``to ensure the Guard and Reserve are:
    assigned the right mission; have the right training; possess the right
    equipment; are positioned in and with the correct infrastructure; are
    physically, medically, and operationally ready to accomplish the
    assigned tasks; are fully integrated within the Active component; and
    are there in the right numbers required to fight and win any
    conflict.'' In order to conduct this overview, the Air Force provided
    my staff and me with a Future Total Force (FTF) brief outlining the
    serious future challenges all three components of the Air Force are
    facing: a shrinking budget, an aging aircraft fleet, emerging missions
    as well as transition missions that are up for consideration. The FTF
    envisioned by the Air Force will allow them to apply revolutionary
    technological advances to a more capable force structure while taking
    advantage of the wealth of experience that resides in the Guard and
    Reserve by means of new organizational constructs. For instance, the
    very successful associate unit concept may be expanded from the Air
    Force Reserve to the Air Guard as well. From a new mission perspective,
    the Guard is well on its way to establishing multiple unmanned aerial
    vehicle (UAV) control operations (e.g., Predator). In addition, the
    training issues and the challenges associated with these changes are
    also being addressed. Specifically, the FTF Director solicited my
    support and active participation to help refine and improve the
    implementation plans, as well as to gain legislative support in these
    areas. Most importantly, my office was invited to participate on the
    FTF Integrated Process Team (IPT) for the purpose of ensuring the Air
    National Guard would have relevant missions, and that Guard manpower
    would be retained.
        General Blum and General James. The Air National Guard is making
    every effort to work with the Air Force to ensure that we ``bridge the
    gap'' between our divestiture of legacy systems and our standup of
    these new and emerging missions. Our greatest concern is ending up in a
    position where we have transferred out of a system prematurely, thereby
    losing our most valuable asset . . . our experienced guardsmen. As we
    move forward we will continue to keep a watchful eye on the training
    pipelines for these new roles and ensure our guardsmen have adequate
    access to training. In addition, we are working with the Air Force to
    identify adequate resourcing for these new and emerging mission areas.
    We will make every effort to ensure our future guardsmen are equipped
    and trained for their new role.
        Because we await the basing decisions of Base Realignment and
    Closure (BRAC) we cannot predict with any certainty which units will
    get which missions, and the time phasing of their lay down; but, as
    soon as BRAC announcements are made, please be assured that the Air
    National Guard will work with the Air Force to make any ANG unit
    transition, if deemed necessary, as smooth as possible.
                                     ______

                 Questions Submitted by Senator Daniel K. Akaka
                           special skills recruiting
        10. Senator Akaka. Secretary Hall, in your prepared statement for
    this subcommittee, you state that the reservists most frequently
    deployed are those that possess specific capabilities and skills needed
    for stabilization and security operations in Iraq and Afghanistan.
        What are you doing to ensure that your recruitment efforts focus on
    acquiring the skills needed for these operations and at the same time
    proactively determine and acquire skills that will be needed in future
    environments?
        Mr. Hall. We are aggressively pursuing initiatives to rebalance the
    force in order to provide more rotational depth in the skills that are
    stressed and we know we will need in the future military environment.
    For example, the Army has rebalanced approximately 40,000 spaces of
    force structure and will complete the majority of their rebalancing--a
    total of over 100,000 spaces--to increase the number of high demand
    capabilities in both the Active and Reserve Forces by 2007. The
    additional rotational depth will decrease the frequency and duration of
    deployments for both Active and Reserve component members. Reserve
    component recruiting incentives, which were significantly enhanced in
    last year's NDAA, are being used effectively to attract new recruits,
    and reenlistment incentives are paying huge dividends in helping the
    components retain their battle-tested warriors. This year, we are
    asking for your support by increasing the bonus amount we can pay to
    members separating from Active-Duty who agree to serve in the Selected
    Reserve. We are also seeking your support in authorizing a new Reserve
    critical skills retention bonus--similar to the Active-Duty critical
    skills retention bonus. This bonus will provide the Reserve components
    with a flexible tool to target existing and emerging critical
    shortages. As we identify other needs, we will seek your support
    through the Department's legislative process.

                               reserve rotations
        11. Senator Akaka. Secretary Hall, in your prepared statement you
    indicate that reservists currently furnish 46 percent of troops in
    theater in Iraq and Afghanistan. You also state that your goal for the
    rotation policy is to provide reservists a break of at least 24 months
    between rotations.
        What is your current success rate in meeting this goal for each of
    the Service's Reserve components?
        Mr. Hall. In those limited cases where there is a need to
    involuntarily remobilize specific Reserve members, a rigorous process
    is in place in which the Secretary of Defense scrutinizes the
    remobilization requirement by considering the following factors: (1)
    how long since the previous involuntary mobilization, (2) was the duty
    in support of Operation Noble Eagle, (3) what was the duration of the
    previous mobilization, (4) how hazardous was the previous mobilization,
    (5) did the member deploy out of the continental United States, and (6)
    what is the demand for the skill set. The goal of the DOD is to provide
    at least 24 months dwell time between involuntary mobilizations of
    Reserve members.
        In those cases where we have had to recall Reserve members more
    than once, the requirements are typically for those skill sets that are
    in great demand (such as civil affairs, transportation, military
    police, and supply), but are in short supply. However, application of
    current DOD systems precludes us from differentiating between those
    Reserve members who have been involuntarily remobilized, and those who
    have volunteered for multiple tours. Though about 69,000 Reserve
    members have been called to Active-Duty more than once, based on
    informal tracking, we estimate that approximately 2,000 members (or
    less than 3 percent of those called up more than once) have been
    involuntarily remobilized.
        In order to better track voluntary calls to Active-Duty and
    involuntary mobilizations, the Reserve components have been directed to
    begin reporting the legal authority under which a member is placed on
    Active-Duty. This will enable the Department to provide a much clearer
    picture, in the future, on how a member was placed on Active-Duty
    (voluntary or involuntary), and provide for determination of dwell time
    between involuntary mobilizations. This new reporting requirement is
    currently being tested.

        12. Senator Akaka. Secretary Hall, you provided statistics in your
    prepared statement regarding Reserve rotation rates. You state that
    nearly 12,000 reservists have been mobilized more than twice with
    nearly 3,000 more than three times.
        What is the long-term impact on your retention rates and the
    recruitment goals with such high rates of re-deployment becoming more
    common?
        Mr. Hall. Having any Reserve members serve more than once is a
    concern to the Department, and is something that we are watching very
    closely. The 12,000 reservists mobilized more than twice is a
    significant number, but it represents less than 3 percent of the number
    of Reserve members called-up and less than 1.5 percent of the current
    Selected Reserve strength. Similarly the 3,000 Reserve members called
    up more than three times represents an even lower percentage. But even
    more importantly, it should be noted that most of these members who
    have served multiple times are volunteers. Considering these facts,
    along with the current attrition and reenlistment rates in the Reserve
    components, I do not believe that that there has been a significant
    impact upon either retention or recruiting. Our latest data continues
    to indicate that both reenlistment and attrition rates remain at their
    historical levels. We have no evidence that recruiting is appreciably
    impacted based upon multiple mobilizations. This is supported by a
    preliminary finding being conducted by the Center for Naval Analysis
    which is studying attrition among the Reserve components to identify
    trends. We will continue to monitor multiple call-ups, as well as
    recruiting, reenlistments, and attrition to ensure that that they
    remain within acceptable levels.

        13. Senator Akaka. Lieutenant Generals Blum, Schultz, James,
    Helmly, McCarthy, Bradley, and Vice Admiral Cotton, I have heard
    numerous reports that when National Guard units and Reserve components
    return from their rotations in Iraq that their equipment is kept in
    theater and that they do not have adequate equipment to train with when
    they return to their home duty station.
        How are the Services addressing this and ensuring that all
    components have the equipment necessary to maintain readiness and train
    adequately?
        General Blum, General Shultz, and General James. Stay Behind
    Equipment (SBE) is equipment that is taken from units in theatre prior
    to redeploying back to the continental United States (CONUS). The SBE
    is used to mitigate equipment gaps that exist between redeploying units
    and units on the ground, to include newly deployed Army National Guard
    (ARNG) units that arrive in  theatre that must be equipped at near 100
    percent of equipment requirements. Prior to this war, the Army and ARNG
    have been resourced to significantly less than 100 percent of equipment
    requirements (ARNG generally at 75 percent). It is Army policy that
    deploying units be equipped to 100 percent or better. These shortages
    are filled by cross-leveling from Army, ARNG, and Army Reserve units
    that are directed to leave equipment in theatre prior to redeploying to
    CONUS. With this said, the Army is currently working a resourcing
    strategy to improve this situation.
        There have been approximately 105,897 pieces of ARNG equipment used
    as SBE or Theatre Provided Equipment (TPE). This equipment has come
    from ARNG units from all 54 States or Territories. Vehicles with armor
    or add-on armor are routinely designated as Theatre Provide Equipment
    and will rotate between outgoing and incoming units.
        These ARNG equipping issues are ongoing; however, the Army G8 has
    developed an equipment strategy that includes approximately $2.8
    billion worth of equipment purchases in our current and future budgets
    to help solve this situation. We will see improvements in our equipment
    readiness when those resources allow us to field equipment next year
    and through the program objective memorandum (POM) years.
        General Helmly. The Army Reserve recognizes the Army's challenge in
    resourcing the force with the most modern equipment. While the Army has
    recognized our equipment needs and is attempting to fill the total
    Army's requirements, the Army Reserve has implemented an innovative
    equipment strategy. This strategy has units receiving their minimum
    essential equipment for training at home station. The remaining
    equipment is divided among several centralized individual and
    collective sites to support training. This strategy maximizes the use
    of our limited modernized and available equipment, allowing the AR to
    provide trained and ready troops when needed. With the support of
    Congress, this equipment strategy will ensure the AR continues its
    faithful stewardship of the Army resources.
        General McCarthy. The Commandant of the Marine Corps established
    the policy that retains all equipment for forward deployed marines in
    support of OIF to remain in the theater. The policy supports the most
    cost effective strategy and ensures stable and seamless operational
    support during force rotations. Initial forces deployed in support of
    OIF included Reserve component units and their associated equipment. In
    order to better support the operational strategy, the equipment the
    Reserve units deployed with remains in Iraq today.
        Second order effects of the policy to retain equipment in theater
    has led to home station unit equipment shortfalls for both our Active
    and Reserve components. These shortfalls have direct impact on the
    ability of Marine Forces to train in order to prepare for immediate and
    future deployments in support of the global war on terrorism. In order
    to ensure that our forces are equipped to properly train for current
    and future operations, actions were initiated to transfer equipment
    between units throughout the Marine Corps. This transfer of equipment
    included to and from both the Reserve and Active component.
        Headquarters Marine Corps intends to reconstitute Reserve and
    Active component equipment utilizing excess equipment from Iraq as
    force requirements are reduced, fiscal year 2005 and future
    supplemental purchases, active fielding plans, equipment from scheduled
    and non-scheduled depot programs, and the cross leveling of equipment
    between Active and Reserve component Marine Forces at Home Station.
        General Bradley. Air Force Reserve Command (AFRC) units have had to
    leave a significant amount of equipment in the CENTCOM AOR. An
    assessment conducted in February 2005 revealed that it would cost $14.1
    million to completely fund replacement of this equipment.
        AFRC has employed creative strategies to overcome the training
    challenges associated with not having this equipment available. These
    strategies have involved stretching our use of residual equipment to
    include equipment sharing between units. These strategies have
    sufficiently addressed all of our training challenges except those
    associated with the long-term loan of our aircraft Litening targeting
    pods.
        AFRC has loaned an extensive number of Litening targeting pods to
    the AOR for operational necessity and to the Air National Guard to help
    mitigate their own shortfalls. This has resulted in an almost complete
    loss of Precision Engagement/Close Air Support (PE/CAS) training
    capability within our A-10 community and a reduced PE/CAS training
    capability within our F-16 community. Because of this, we are carefully
    considering additional requests for these targeting pods. We expect
    this training challenge to linger until November 2005 when we will
    begin to receive back targeting pods currently out for modification. In
    sum, this is primarily a short-term issue that can only be resolved in
    the short term by return of the targeting pods. This issue should be
    resolved in the long term once the Air Force is able to field the new
    Sniper targeting pod.
        Admiral Cotton. The primary Navy Reserve component ``equipment
    units'' that have deployed to Iraq include Naval Military Construction
    Battalion (SeaBees), Naval Coastal Warfare, Explosive Ordnance
    Disposal, as well as various AntiTerrorism/Force Protection units.
        Approximately 50 percent of Seabee gear currently in use in Iraq
    was initially prepositioned aboard Maritime Prepositioning Force ships.
    The remaining 50 percent is deployed and returned with each battalion.
    Training gear (essentially two Battalion's Table of Allowance) is
    specifically reserved and remains in the continental United States at
    all times, with one exception. If deployment of all 20 Seabee
    Battalions was directed, the last 2 battalions would deploy with the
    gear normally reserved for training purposes. Deployment of all 20
    Seabee battalions is neither scheduled nor anticipated to occur. Seabee
    units have not experienced incomplete training objectives due to lack
    of training equipment.
        Naval Coastal Warfare, Explosive Ordnance Disposal, and various
    Anti-Terrorism/Force Protection units use a prepositioning philosophy
    to managing equipment. Leaving certain gear in theater as units rotate
    reduces maintenance requirements, lift requirements, and results in
    less wear and tear on the equipment. Specific shortfalls on equipment,
    whether training or operational, are being successfully addressed in
    the budget process and through cost of war supplemental funding. There
    have been no instances of failure to meet training objectives due to
    non-availability of equipment. All units successfully complete a Final
    Evaluation Period prior to deploying to ensure completion of their
    training objectives.
        Navy Expeditionary Logistics Support Force (NAVELSF) training
    requirements may fulfilled at either of two locations: Maritime
    Administration Ships in various East and West coast ports, or crane
    simulators located at ELSF Headquarters in Williamsburg, Virginia.
    Training certification is not dependent on any equipment currently
    overseas, but rather on a unit's proximity to one of the training
    sites. All detachments are fully trained prior to deploying and no
    objectives have been waived due to non-availability of equipment.
    Currently, NAVELSF units are deploying and falling in on Army equipment
    (portable cranes and various Civil Engineering Support Equipment) per
    the approved Deployment Order. Navy personnel receive training on this
    equipment, which is very similar to Navy equipment, either prior to
    deployment or during the turnover process after arrival in theater.
    Normal training and certification paths do not require use of this Army
    gear, thus the fact that it remains in theater does not impact NAVELSF
    training in the continental United States.

        [Whereupon, at 4:20 p.m., the subcommittee adjourned.]