[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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                      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.
      
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    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).
      
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          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.]

                                 
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